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Post-Council Briefing on the SADC Council of Ministers, March 2016
Statement by Hon. Kenneth Matambo, Minister of Finance and Development Planning and SADC Chairperson of Council of Ministers, on the outcome of the meeting of the Council of Ministers held on 14-15 March 2016 in Gaborone, Botswana
The SADC Council of Ministers fruitfully deliberated on several issues of significant importance to regional integration and development, and made decisions on how to overcome challenges faced by the region and how to accelerate implementation of previous Summit and Council decisions.
The Council of Ministers reviewed implementation of its decisions; approved the SADC budget for the 2016/2017 SADC activities of US$71,987,435, and reviewed progress made on the implementation of 2015/2016 Plan and budget.
Council took specific measures to mitigate natural disasters, particularly drought and food security. In this regard, Council approved the Declaration of the Regional Drought Disaster and issuing of Statement of Appeal for assistance by Summit through the Chair of SADC in consultation with Summit Members. Council also approved the establishment of a regional Logistics Team to coordinate a regional response in close collaboration with Member States and International Cooperating Partners. Furthermore, Council invited Member States to provide immediate relief to meet the food and non-food requirements of more than 28 million vulnerable populations who are affected by the previous poor season; provide preliminary data on cereal and other food requirements for the 2016/17 marketing year by 30 March 2016 in order to facilitate planning logistics and resource mobilisation; and scale up appropriate climate smart technologies on agriculture, energy, water and other relevant areas in order to adapt and mitigate against the impact of climate change.
Council approved the proposed timelines for the finalisation of indicative investment costs to implement the Revised RISDP 2015-20 for submission to Council at its next meeting in August 2016. This is in line with the implementation of priorities outlined in the revised Regional Indicative Strategic Development Plan 2015-2020, which prioritises industrialization and market integration; infrastructure development to support regional integration; peace, security and political cooperation; special programmmes of regional dimension. In this regard, Council urged Member States to submit reports on the implementation of the RISDP and other SADC Programmes/Projects by 30 May 2016. A consolidated Progress Report on the implementation of the RISDP will be submitted to Council in August, 2016.
Council approved the SADC Trade Facilitation Programme which will be mainstreamed in the RISDP implementation plan to support trade integration, industrialization, and mobilization of resources. In this regard Member States have been urged to align national and regional instruments with the provisions of WTO Trade Facilitation Agreement; and Member States who have not ratified the WTO Trade Facilitation Agreement have been urged to do so.
On progress on preparation of the costed implementation plan of the SADC Industrialisation Strategy and Roadmap, Council directed the Secretariat to expedite the finalisation of the Draft Costed Action Plan. Council also urged Member States to ensure that national level interventions are clearly mapped out in the Action Plan to facilitate effective implementation by Member States.
On the Tripartite Free Trade Area, Council urged Member States to expedite conclusion of outstanding Phase 1 negotiation issues, which include rules of origin, trade remedies, and finalization of tariff negotiations in order to fully operationalize the Tripartite Free Trade area and endorsed the proposal by the Tripartite Task Force to convene a Tripartite Council of Ministers, preceded by the Sectoral Ministerial Committee meeting on 9-14 May 2016 to facilitate unlocking of all outstanding Phase 1 issues; and directed the Secretariat as current chair and coordinator of the Tripartite Task Force to facilitate the legal scrubbing of all completed Annexes before the proposed Sectoral Ministerial Committee; and mobilization of resources for Phase 2 TFTA issues.
On the combating of poaching of wildlife, Council approved the proposal by Ministers of Environment and Natural Resources for the convening of a meeting of the Ministers of Environment and Natural Resources and Ministers of Organ on Politics, Defence and Security, to discuss the implementation modalities for the SADC Law Enforcement and Anti-poaching Strategy; and the establishment of a SADC Wildlife Crime Prevention and Coordination Unit and that this should be considered as part of the restructuring process of the SADC Secretariat.
Council has directed the Secretariat to submit a proposal to the Ministerial Committee of the Organ regarding the translation of all volumes of the Hashim Mbita Publication in all SADC official languages.
Council endorsed the candidature and nomination of Hon. Walter Mzembi by the Government of Zimbabwe to the position of Secretary General of the United Nations World Tourism Organisation.
Council expressed its gratitude to the government and people of the Republic of Botswana for the hospitality extended to all delegates and the excellent facilities placed at the disposal of delegates, making the Council of Ministers meeting a resounding success.
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Tougher environmental laws do not hurt export competitiveness – OECD study
Countries that implement stringent environmental policies do not lose export competitiveness when compared against countries with more moderate regulations, according to a new OECD study that examines trade in manufactured goods between advanced and emerging economies.
The findings suggest that emerging economies with strong manufacturing sectors like China could strengthen environmental laws without denting their overall share in export markets. High-pollution or energy-intensive industries like chemicals, plastics and steel making, whether in the BRIICS or in Europe or North America, would suffer a small disadvantage from a further tightening of regulations, but this would be compensated by growth in exports from less-polluting activities.
Do Environmental Policies Affect Global Value Chains? challenges the conventional wisdom that regulations to curb pollution and energy use hurt businesses by creating new costs. The so-called Pollution Haven Hypothesis suggests that tightening environmental laws often prompts manufacturers to simply relocate some production stages to countries with laxer regulations.
“Environmental policies are simply not the major driver of international trade patterns,” said OECD Chief Economist Catherine L. Mann, presenting the study at the London School of Economics. “We find no evidence that a large gap between the environmental policies of two given countries significantly affects their overall trade in manufactured goods. Governments should stop working on the assumption that tighter regulations will hurt their export share and focus on the edge they can get from innovation.”
The new OECD study analyses historic export data in high and low pollution industries in 23 advanced countries and six emerging economies. It takes the domestic value added in export data and uses an OECD Environmental Policy Stringency indicator that ranks countries according to more or less stringent policies.
It shows that countries with stringent environmental laws suffer a very small disadvantage in pollution-intensive sectors such as steel-making, chemicals, plastics and fuel products. This is compensated by an edge gained in cleaner industries like machinery or electronics. Both effects are tiny compared to factors including market size, the lifting of trade tariffs, globalisation and a country’s intrinsic assets.
For example, domestic value added in exports of goods from high-pollution industries from the most environmentally stringent countries (Denmark, Germany and Switzerland) to the BRIICS rose by USD 11.157 billion from 1995 to 2008. That figure would have been 3% percent higher if green laws weren’t so stringent, yet the same stringent laws boosted exports in cleaner industries by 3% – almost the same amount in dollars.
Countries where manufacturers already pollute less should therefore gain global market share as tougher domestic laws are put in place. Industries and firms that become cleaner over time will prosper under more stringent policies, but those that fail to adapt will see their export performance erode.
As governments consider ways to tighten environmental regulations in line with new climate change pledges, this analysis offers evidence that doing so would not hurt trade. It bears out theoretical studies showing that factors like market conditions and workforce quality are likely to have much more impact on trade competitiveness. Tough environmental standards may also drive firms to become more innovative, improving both their economic and environmental performance.
The OECD Environmental Policy Stringency indicator is a composite index based on the explicit or implicit cost of environmental policies related mainly to climate and air pollution. It shows policies have become increasingly stringent in advanced economies since the 1990s, with the highest costs on polluting behaviour in Denmark, Germany, the Netherlands and Switzerland and the UK and US around average. Policies are more lenient in the BRIICS.
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Energy crisis continues to be Africa’s metaphor for backwardness – Adejumobi
The metaphor for Africa’s continued backwardness is the energy crisis that many countries in the region are grappling with, says Economic Commission for Africa sub-regional office for Southern Africa director Said Adejumobi.
And Malawi’s Secretary to the Treasury Dr Ronald Mangani says sufficient energy is crucial for the well being and livelihood of Africans and is a pre-requisite for the continent’s industrialisation efforts.
Speaking during a two-day ad-hoc expert group meeting on ‘The energy crisis in Southern Africa: perspectives for the future’ in Malawi on Monday, Adejumobi said the energy crisis was one of the greatest challenges facing the African continent.
“Three decades ago, the indicators for describing Africa as the ‘heart of darkness’ were high levels of poverty; ignorance; illiteracy, disease and other factors. Today, with the ‘Africa rising’ story, the metaphor for Africa’s continued backwardness is the energy crisis, precisely the provision of electricity,” Adejumobi said.
“When a satellite picture of Africa is taken at night vis-a-vis other parts of the world, Africa is seen to be in darkness; hence some continue to describe Africa as the Dark Continent. The energy crisis in Africa is one of the greatest challenges of our time. It is not a problem for Southern Africa alone; it’s a problem for the entire continent. The World Bank estimates that 32 of the countries in sub-Saharan Africa are confronted with serious energy crisis. But for Southern Africa, the problem has recently assumed debilitating dimensions with power outages and load shedding affecting virtually all countries in the region,” Adejumobi noted.
He noted that less than 30 per cent of Africa’s population was connected to the electricity grid, worse still in rural areas.
Adejumobi said Africa’s energy supply was barely more than that of Spain.
“Yet modern progress and development is inconceivable without adequate energy supply. Energy is the life-wire of modern economy and society. Without adequate energy supply, industrialisation cannot occur; manufacturing firms will not function optimally, the bureaucracy both in public and private will be impaired and households will be badly affected,” he said.
“…imagine in a world where television sets don’t work, mobile phones cannot be charged, the refrigerators cannot be used, fans and air conditioners do not work and food has to be prepared on firewood and cannot be preserved? This would certainly be a throwback in the Stone Age!”
Adejumobi said nature had now presented a paradox for the Southern region on the energy crisis.
He said the decline in rainfall in the region in the last one year was putting considerable pressure on hydro-electricity generating capacity as energy supply sources like the Kariba Dam were dwindling.
The dam has water allocation for electricity generation plummeting from around 45 billion cubic metres to 33 billion cubic metres per annum, decreasing electricity supply by around 400 mega watts.
“Yet in nature also lies the solution to this. Solar power which is also nature based can be one of the alternatives to be taken very seriously in Africa,” said Adejumobi.
Gracing the meeting, Dr Mangani said it was sad that the recovery process of the energy crisis in region had been very slow.
“Sufficient energy is crucial for the well-being and livelihood of the people and it is a prerequisite for the continent’s industrialisation effort. The energy crisis that has affected Southern Africa has not spared Malawi. With 95 per cent of electricity supply provided by hydropower, the country is not immune to the vagaries of weather. This has led to the unfortunate consequence of load-shedding and all its knock-on effects. As of today, Malawi is one of the only three SADC countries not connected to the Southern African Power Pool grid,” Dr Mangani said.
“The SADC region is facing crippling energy challenges and many factors have been attributed to this the current power shortages obtaining in the region. There has been a slow pace of recovery by the region from this crippling situation.”
He was hopeful that through SAPP, the region would be able to provide reliable and economical electricity supply to consumers of each of the members.
Dr Mangani said in Malawi, the Millennium Challenge was helping in trying to address the power challenges by, among other things, rehabilitating, upgrading and modernising the country’s generation, transmission and distribution assets that need urgent repair.
“This project once completed will help in preserving the existing generation, improve the capability of the transmission and distribution network, and increase the efficiency and sustainability of hydropower generation in Malawi,” said Dr Mangani.
“Malawi’s installed capacity in 2015 was 74 megawatts, but with planned projects such as the Kamwamba Coal fired power station, the capacity could be increased significantly.”
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tralac’s Daily News Selection
The selection: Tuesday, 15 March 2016
The UNCTAD 14 pre-conference negotiating text, submitted by the Chair of the Preparatory Committee, is posted.
UNCTAD 14 on the agenda at civil society event in Africa: The event, held in Accra from 29 February to 3 March, was hosted by UNECA and the Third World Network-Africa and brought together civil society organizations from across the continent. The last two days of the meeting were used as a strategy session to determine how civil society organizations could effectively influence Continental Free Trade Area negotiations, and to develop a strong African civil society position on the UNCTAD 14 sub-themes.
African Transformation Forum highlights:
Africa needs to chart own development model - experts (New Times)
Carlos Lopes, the executive secretary for UN Economic Commission for Africa, said the continent has the privilege of being the transformation “latecomer”, to acquire, learn and reinvent other development models to fit into the African context. But what kind of industrialisation? Lopes said it cannot be the industrial experiment that Americans, Asians or Europeans used. None. “It has to be a completely different one. If you look at those experiments in other parts of the world, they do not adjust to our (African) needs right now, because they were implemented under the world economic conditions that are no longer available to Africa,” he said. Lopes said African industrialisation has to benefit the continental and regional market first before it goes beyond, with special emphasis on agro-processed products, and value addition to mineral exports. [Follow AFT debates: #ATF2016]
ATF documentation: Promoting manufacturing in Africa (Yaw Ansu, John Page, Margaret McMillan, Dirk Willem te Velde), Trade facilitation and economic transformation in Africa (Joe Amoako-Tuffour, Neil Balchin, Linda Calabrese, Maximiliano Mendez-Parra), Access to finance for SMEs (prepared by World Bank Ghana office), Developing youth skills for employment (William Baah-Boateng), Public and private sector collaboration for economic transformation (Yaw Ansu, David Booth, Tim Kelsall, Dirk Willem te Velde)
World manufacturing production, Quarter IV, 2015 (UNIDO)
The growth of manufacturing output in developing and emerging industrial economies decreased to 4.6%, down from 5.2% growth in the previous quarter. The growth outlook varies between different developing and emerging regions and groups; e.g. manufacturing output grew by 6.1% in developing countries in Asia and the Pacific compared to the same period of the previous year, while it declined by 4.0% in the Latin America region. Manufacturing output fell slightly in Africa (by 0.2%), however, negative growth has only been observed in one country in the region while the rest of the region registered positive growth figures. Manufacturing output grew by 1.1% in Egypt, by 0.4% in Morocco, by 5.8% in Senegal and by 0.8% in Tunisia. A decline of 1.4% was registered in South Africa where the economy - as an exporter - has been hit by the low commodity prices.
Energy crisis continues to be Africa’s metaphor for backwardness - Adejumobi (The Post)
Speaking during a two-day ad-hoc expert group meeting on ‘the energy crisis in Southern Africa: perspectives for the future’ in Malawi yesterday, Said Adejumobi, Economic Commission for Africa sub-regional office for Southern Africa director, said the energy crisis was one of the greatest challenges facing the African continent. “Three decades ago, the indicators for describing Africa as the ‘heart of darkness’ were high levels of poverty; ignorance; illiteracy, disease and other factors. Today, with the ‘Africa rising’ story, the metaphor for Africa’s continued backwardness is the energy crisis, precisely the provision of electricity,” Adejumobi said. [Infrastructure Africa Business Forum: update]
Tomorrow: a Brand South Africa, University of Johannesburg seminar on findings from Brand SA fieldwork on the reputation and exposure of South Africa in peer African markets. [Perspectives on South Africa’s reputation on the African continent: This presentation [17 November 2015] explores South Africa's reputation on the African continent, the country's performance on the 2015 Nation Brand Index, and indices on our global competitiveness. It also presents Brand South Africa fieldwork research, as part of the SA Inc series.]
Sam Mkokeli: 'Will Zuma’s visit to Nigeria bolster trade?' (Business Day)
Trade and foreign policy expert Tom Wheeler says the state visit was a very important one and the big delegation from the South African side showed the seriousness with which attempts to improve trade are being handled. He says a lot of work needs to be done in to improve the relationship beyond the symbolism of the state visit. That includes getting rid of the regulatory bottlenecks frustrating businesses on both sides.
George Rautenbach: 'SA’s ignorance of Africa does everyone a disservice' (Business Day)
Recently Cape Town hosted the first Bloomberg Africa Business and Economic Summit. The presentations focused on the validity in the argument that Africa is booming. While it certainly was worth the effort to attend, I was surprised and perplexed at our ignorance as South Africans of the world in general and our continent in particular. This was reflected throughout the summit. Why was this event important and what can be learned from it? Strangely enough we can draw conclusions from both the content and the absence of content. A summit that was supposed to answer many questions turned out to raise more questions instead.
Enterprise Mauritius team in SA (Business Day)
Enterprise Mauritius CE Arvind Radhakrishna said the trade missions sought to strengthen existing relationship, while seeking new buyers in different categories, such as boutique outlets. "The timing of the mission is particularly opportune in light of the depreciation of the South African rand, since Mauritian manufacturers enjoy zero rate of duty when entering the South African market."
Chinese imports threaten cement sector (IOL)
Donald Mackay, a director at XA International Trade Advisers, claimed yesterday that at least one factory in China had already been approved to export cement to South Africa and other Chinese producers were believed to have applied for approval. “It won’t be long before a number of other Chinese factories are approved and we see Chinese cement simply replacing the Pakistani cement in South Africa,” he said. Mackay said the weakening in the value of the rand meant that Pakistan’s US dollar-based exports had become significantly more expensive, while the depreciation in the value of the Chinese yuan had suddenly made Chinese exports more competitive.
Related: South Africa-Saudi Arabia Joint Economic Commission Session: update (GCIS), SA retains US duty-free access (Bloomberg), Policy over scrap metal requires industry input (Business Day), Saudi firm to invest R35bn in South African energy projects (Business Day)
Concluding today: the 11th CII-EXIM Bank Conclave on India Africa Project Partnership. Highlights of the inaugural session included the release of the EXIM Bank report on ‘Focus Africa: enhancing India’s engagement with Southern African Development Community’ and a background report on India-Africa Project Partnership.
Focus Africa: Enhancing India’s engagements with Southern African Development Community (Exim Bank)
The study dwells on the strategic importance of SADC countries as investment destination for India. The SADC region accounts for nearly 30% of Africa’s GDP and is the second-largest bloc (in terms of economy size) in the continent, after Economic Community of West African States. For India, especially, the SADC region is of strategic importance, accounting for nearly 40% of its total trade with Africa, and a substantial portion of India’s investments, with major destinations like Mauritius, Mozambique and South Africa, among others. In the SADC region, Indian multi-national enterprises (MNEs) have ventured into both Greenfield and Brownfield investments, spanning across various sectors including manufacturing, mining, construction and energy, among others. According to data from the Ministry of Finance and the Reserve Bank of India, India's approved cumulative investments in the SADC region during April 1996 to March 2015 amounted to US$ 46.5bn.
Capacity building vital for India-Africa cooperation: VK Singh (Business Standard)
He said technology is a strong foundation of India-Africa partnership and there are fields such as health-care, space, pan Africa e-network, reduction of the digital divide between Africa and the rest of the world. "We are also looking to work in the areas of sustainable development of economy, solar energy because Africa has partnered with us in solar alliance, and climate resilient agriculture. Our focus is to jointly implement these initiatives and realise the targets through joint efforts and collaboration," he added. The minister also urged LDCs in Africa to take full benefits from the Duty Free Tariff Preferential Scheme extended to LDCs by Government to increase African LCDs share of total African exports to India. [South Africa's Adcock in talks to sell part of its India business (Economic Times)]
Tanvi Madan: 'What India thinks about China's One Belt, One Road initiative (but doesn't explicitly say)' (Brookings)
More, and more productive, jobs for Nigeria: a profile of work and workers (World Bank)
This report presents an updated picture of jobs in Nigeria and identifies opportunities for improving the quality of jobs. This report has shown that Nigeria combines middle-income status and Africa’s largest economic power with high poverty levels, largely because the main sectors of economic growth are disconnected from the sectors that provide employment, notably subsistence activities in the agricultural and services sectors. Finally, the diagnostics included in this report show that both new and existing jobs, whether in agriculture or other sectors, will need to be more productive to help the population move out of low-earning employment and poverty.
Djibouti: Country Strategy Paper 2016-2020 (AfDB)
The African Development Bank Group's 2016-20 CSP for Djibouti has been prepared against a backdrop of steady improvement in the country's economic growth since 2011, calming of the socio-political environment and start of implementation of the Djibouti Vision 2035 and the 2015-19 SCAPE. A small country with barely 800,000 inhabitants, covering an area of 23,200 km, Djibouti has since 2011 enjoyed economic prosperity accompanied by relative political stability. The economic growth trend has been positive over the past four years, rising steadily from 4.5% in 2011 to 5.9% in 2014. This momentum is expected to be maintained over the coming years, with a projected growth rate of 6.0% in 2015 and 2016. In addition, GDP per capita has more than doubled in 15 years from USD 762 in 2000 to USD 1,670 in 2013.
Specific roles and responsibilities for institutions key for implementing Agenda 2063 (ACBF)
The presentation made by Prof Nnadozie also focused on the complex and heavy institutional architecture at the regional and continental level including lack of clarity of mandates among AU organs as well as duplication of roles, functions and activities. He also proposed specific roles for NEPAD planning and Coordinating Agency, the African Peer Mechanism, and the Pan African Parliament. At the end of his presentation, he recommended that the Constitutive Act should be reviewed and realigned to meet the needs of the continental agenda while mandates of institutions should be revisited in order to further clarify, harmonize and reduce duplication and ‘turf’ congestion.
La Francophonie and Agenda 2063: synergies promoting development (21 March, AU)
Ngozi Okonjo-Iweala: 'How can we ensure Africa continues to rise?' (WEF, Project Syndicate)
As they make these investments, policymakers must not forget that much of Africa’s recent growth can be credited to good macroeconomic policies and sound economic management. Extending the continent’s rise will require strengthening the continent’s economic fundamentals. This means ensuring that prices in the economy are correct, starting with the exchange rate. Some countries may need temporary controls to curb damaging capital outflows, but policymakers should aim for a market-based exchange rate and a solid plan for governing inflation, debt, foreign-exchange reserves, current accounts, and fiscal balances.
Tanzania seeks sugar curbs (East African Business Week)
The government is seeking an extended derogation from a SADC law permitting duty-free access of sugar markets among member countries in a bid raise domestic competitiveness and prevent dumping by larger producers after African export quotas to EU end in September 2017. "We are in SADC, yes, but despite the fact that the SADC protocol on trade requires sugar to come at zero tariffs into our country, what we are saying is we need time for us to grow also," he said.
Adrien M. Ratsimbaharison: 'A social network analysis of trade within and outside the SADC' (SSRN)
ECOWAS workshop: mainstreaming nutrition into NAIPs (AU)
Deloitte Africa Outlook 2016 conference: summary report
Kenya: IMF Executive Board approves new arrangements totaling US$1.5bn (IMF)
Growing Chinese debt leaves Angola with little spare oil (Reuters)
UNCTAD Advisory Group report on innovation knowledge for inclusive and sustainable development
4th Meeting of Algerian-US Dialogue on Trade and Investment: update
Malawi's Joseph Njovuyalema appointed SG for Africa MPs on SDGs (Nyasa Times)
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Africa needs to chart own development model – experts
In pursuit of socio-economic transformation, African countries have often tried to either follow into the Western or Asian development footprints, often too, oblivious to the fact that their systems may not be compatible back home.
During the first day of the inaugural African Transformation Forum (ATF) in Kigali, yesterday, several economists said Africa does not need to follow anyone’s development model but rather chart its own path to unlock rapid and sustained growth.
The two-day meeting is co-hosted by African Centre for Economic Transformation (ACET), one of Africa’s leading think-tanks, and the Government of Rwanda.
It seeks to unlock Africa’s rapid and sustained growth and establish the continent as part of the global supply chain and make Africa globally competitive not only in terms of exports but also as a frontier manufacturing base, through peer-to-peer exchange of ideas on transformation pathways.
Carlos Lopes, the executive secretary for UN Economic Commission for Africa, said the continent has the privilege of being the transformation “latecomer”, to acquire, learn and reinvent other development models to fit into the African context.
“Africa needs structural transformation; which is changing the compositions of the economic structure. And the best way to do it is through industrialisation,” he said.
But what kind of industrialisation?
Lopes said it cannot be the industrial experiment that Americans, Asians or Europeans used. None.
“It has to be a completely different one. If you look at those experiments in other parts of the world, they do not adjust to our (African) needs right now, because they were implemented under the world economic conditions that are no longer available to Africa,” he said.
Africa for Africa first
Lopes said African industrialisation has to benefit the continental and regional market first before it goes beyond, with special emphasis on agro-processed products, and value addition to mineral exports.
“For instance, if we transform minerals by 15 per cent and export them, we can create five million jobs a year.
You can choose to export melted copper and coltan, this does not need sophisticated technology, it only needs electricity and you export an improved product,” he said.
Lopes said Africa needs effective structural transformation by making significant productivity gains in rural areas with agri-business, translating Africa’s youth bulge into a demographic dividend, access to social services that meet minimum standards of quality regardless of location, reduced spatial and gender inequality and making progress toward an inclusive green growth.
Kingsley Amoako, president of ACET, said value addition to Africa’s main exports will bring a huge contribution to her development.
“Africa has abundant land, we have to make use of it by making it more productive. With the right manufacturing, in terms of agro-processing and value addition to our minerals, Africa can leverage our development path,” he said.
Amoako called on African countries to open up markets for each other to promote intra-regional trade, and allow free movement of goods and people if the continent is to create jobs for her 80 per cent youthful population.
Rwanda leadership lauded
Meanwhile, several speakers lauded Rwanda’s leadership, saying it has steered the country to a desirable level, compared to many African countries.
Amoako said Rwanda’s leadership has promoted sustainable and inclusive transformation and facilitated institutions to participate in accelerating the country’s economic growth.
Claver Gatete, the minister for finance and economic planning, said the conference is timely since it would provide Rwanda with relevant information that could propel the country to further development ambitions.
The minister said the just concluded 13th leadership retreat discussed about Vision 2020, implementation of the second Economic Development and Poverty Reduction Strategy, and drafting of Vision 2050, which requires a lot of inputs.
“We haven’t even reached the middle income status yet, so we are far away from reaching where we need to be.
We have started preparing Wision 2050; looking at how far we need to reach and the transformative ingredients we need in that vision. To move our economic growth to double digits, we need input of passionate Africans who will challenge us to reach our potential. This is partly the purpose of this meeting,” Gatete said.
The forum has attracted some of the continent’s leading analysts drawn from various backgrounds.
It comes at a time African countries have been called upon to work closely to deepen integration and scale up trade with one another for sustainable development.
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South Africa keeps U.S. duty-free access after trade dispute
South Africa will retain preferential access for its farming goods to the world’s biggest market after meeting benchmarks set by President Barack Obama to allow the import and sale of U.S. meat products.
“I have determined that suspending the application of duty-free treatment to certain goods is no longer necessary to promote compliance by South Africa with such requirements,” Obama said on Monday in a proclamation.
Obama said in January the U.S. would suspend South Africa’s preferential access for agricultural products under the African Growth and Opportunity Act if it failed to implement an agreement with the U.S. on meat trade. The deal included that U.S. bone-in chicken pieces can be sold in South Africa without anti-dumping duties.
South Africa has been under pressure to open its market to American meat in order to retain benefits under AGOA, as the act is known, which favors 39 African nations by eliminating import levies on more than 7,000 products ranging from textiles to manufactured items. The government published regulations in December allowing for an annual quota of 65,000 metric tons of poultry from the U.S. The first shipment arrived at the port of Durban on Feb. 19, the USA Poultry & Egg Export Council said Feb. 29.
“South Africa has met the benchmarks that we’ve set forth and they’ve taken the needed steps to make American poultry, pork and beef available to consumers in South Africa,” U.S. Trade Representative Michael Froman told reporters on a conference call on March 2. “The removal of these barriers could mean an additional $160 million of exports from the U.S. each year.”
To remain beneficiaries of AGOA, countries are required to cut barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.
Shipments of farming goods worth $154 million made up about 14 percent of South African exports to the U.S. under AGOA in the first nine months of 2015, according to data from the Trade Law Centre, based in Stellenbosch, near Cape Town. The nation is the largest non-oil-exporting beneficiary under AGOA and the bulk of its shipments under the accord are vehicles and car parts.
Losing AGOA access would have hurt the nation’s citrus, nut and wine industries, associations for the products said in January.
Presidential Proclamation – To Take Certain Actions Under the African Growth and Opportunity Act
March 14, 2016
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In Proclamation 7350 of October 2, 2000, the President designated the Republic of South Africa (South Africa) as a beneficiary sub-Saharan African country for purposes of section 506A(a)(1) of the Trade Act of 1974 (the “1974 Act”) (19 U.S.C. 2466a(a)(1)), as added by section 111(a) of the African Growth and Opportunity Act (title I of Public Law 106-200) (AGOA).
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Sections 506A(d)(4)(C) (19 U.S.C. 2466a(d)(4)(C)) and 506A(c)(1) (19 U.S.C. 2466a(c)(1)) of the 1974 Act authorize the President to suspend the application of duty-free treatment provided for any article described in section 506A(b)(1) of the 1974 Act (19 U.S.C. 2466a(b)(1)) or 19 U.S.C. 3721 with respect to a beneficiary sub-Saharan African country if he determines that the beneficiary country is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending such duty-free treatment would be more effective in promoting compliance by the country with those requirements than terminating the designation of the country as a beneficiary sub-Saharan African country for purposes of section 506A of the 1974 Act.
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In Proclamation 9388 of January 11, 2016, pursuant to section 506A(c)(1) of the 1974 Act, I determined that South Africa was not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa with such requirements than terminating the designation of South Africa as a beneficiary sub-Saharan African country. Thus, pursuant to section 506A(c)(1) of the 1974 Act, I suspended the application of duty-free treatment for all AGOA-eligible goods in the agricultural sector from South Africa for purposes of section 506A of the 1974 Act, effective on March 15, 2016.
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Pursuant to section 506A of the 1974 Act, based on actions that the Government of South Africa has taken to come into compliance with the requirements described in section 506A(a)(1) of the 1974 Act, I have determined that suspending the application of duty-free treatment to certain goods is no longer necessary to promote compliance by South Africa with such requirements.
NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States of America, including but not limited to sections 506A(d)(4)(C) and 506A(c)(1) of the 1974 Act, do proclaim that:
(1) Proclamation 9388 of January 11, 2016, is hereby revoked.
(2) Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency.
IN WITNESS WHEREOF, I have hereunto set my hand this fourteenth day of March, in the year of our Lord two thousand sixteen, and of the Independence of the United States of America the two hundred and fortieth.
BARACK OBAMA
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How can we ensure Africa continues to rise?
Africa’s rise is in danger of faltering. After years during which the continent’s economy grew at an average annual rate of 5%, global uncertainty, depressed commodity prices, and jittery external conditions are threatening to undermine decades of much-needed progress. Ensuring the wealth and wellbeing of the continent’s residents will not be easy; but there is much that policymakers can do to put Africa back on an upward trajectory.
First and foremost, policymakers must secure the financing needed to pursue sustainable development in an uncertain global environment. The World Bank estimates that Africa will require at least $93 billion a year to fund its infrastructure needs alone. Climate-friendly, sustainable infrastructure will cost even more. And yet, as long as global growth remains weak, Africans cannot count on developed countries to fully honor their commitments to help attain the Sustainable Development Goals.
Africa must rapidly develop its own resources, beginning by nearly doubling tax revenues. Across Sub-Saharan Africa, tax revenues account for less than one-fifth of GDP, compared to more than one-third in OECD countries. This means there is plenty of room for improvement. From 1990 to 2004, for example, Ghana reformed its tax system and raised revenues from 11% to 22% of GDP. Admittedly, such progress is difficult; in Nigeria, we saw an opportunity in raising non-oil tax revenues, but struggled to seize it.
Another source of domestic resources is the roughly $380 billion in pension assets held by just ten African countries. Policymakers should be leveraging these considerable sums.
At the same time, African countries will have to find a way to diversify their economies. Diversification requires investment in the future, in the form of education and well-developed infrastructure, including telecommunications, power, roads, rail, and water.
There are plenty of models to follow: Dubai, Singapore, Thailand, Malaysia, Mexico, Indonesia, and South Korea are all admired by Africans as economies that managed to transform themselves. Dubai, for example, set out more than three decades ago to prepare for a future without oil. The government implemented a step-by-step transformation of the country into a service economy, putting in place the infrastructure and incentives necessary to build up financial services, tourism, medical services, real estate, media, arts, and culture. South Korea and Singapore, which had few natural resources on which to rely, are no less inspiring.
The secret behind these countries’ success is relentlessly focused leaders, whether entrenched but benign dictators or democratically elected politicians with a shared vision of a broad-based economy. Sub-Saharan Africa has paths for diversified growth that many of the trailblazers did not: value-added agriculture and agro industry, the processing of mineral resources, petrochemical complexes, manufacturing of durable and consumer goods, tourism and entertainment, and an emerging information-technology sector.
As the necessary measures for diversification are implemented, policymakers must ensure that the economic growth they are pursuing creates jobs. Sadly, this has not always been the case. Much of the recent growth has benefited only a few, leaving many behind – most notably young people and women. From 2006 to 2013, inequality rose in many of the continent’s most important economies, including South Africa, Nigeria, Ghana, Tanzania, and Rwanda.
These were challenges that we were starting to address in Nigeria when I was finance minister. We knew that we needed not just to secure growth, but also to improve the quality of that growth.
To that end, policymakers must ensure that growth is channeled into sectors that create jobs, such as agriculture, manufacturing, and services. They may also have to redistribute income and strengthen social safety nets to protect better those at the bottom of the ladder.
Matching skills to job opportunities will be crucial. Some 70% of Africa’s population is under 30, and the continent is home to half the world’s primary-school-age children who have been deprived of the opportunity to study. Offering Africa’s children basic reading, writing, and technology skills, as well as vocational, technical, and entrepreneurial training, must be a top priority.
Weak health-care systems must also be strengthened in order to tackle the endemic diseases that sap productivity, such as malaria, as well as improving preparedness for outbreaks of deadly epidemics. The stakes are high. The World Bank estimates the Ebola outbreak shrank the economies of Sierra Leone, Guinea, and Liberia by 16%.
As the world economy sputters, African countries will have to develop trade with one another. In 2013, African goods and services accounted for just 16% of trade within the continent, and just over 3% of world trade. One problem is that most African countries produce the same type of commodities and trade them with very little value-added. Policymakers must encourage greater specialization; differentiated goods and services will add value and volume to trade.
Logistics pose another obstacle to intra-African trade. Policymakers must make it easier to move goods across borders, by improving connectivity between countries and reducing bureaucratic hurdles and administrative costs. For example, road transport tariffs across Africa are estimated at $0.05-$0.13 per ton-kilometer, compared to the average of $0.01-$0.05 for all developing countries.
The Rift Valley Railway project, which will eventually link Mombasa on the Kenyan coast to Kampala in Uganda, is a good example of the benefits that investments in transportation could provide. The African Development Bank estimates that it will double the volume of trade between the two countries, while reducing marginal costs by 30%.
As they make these investments, policymakers must not forget that much of Africa’s recent growth can be credited to good macroeconomic policies and sound economic management. Extending the continent’s rise will require strengthening the continent’s economic fundamentals.
This means ensuring that prices in the economy are correct, starting with the exchange rate. Some countries may need temporary controls to curb damaging capital outflows, but policymakers should aim for a market-based exchange rate and a solid plan for governing inflation, debt, foreign-exchange reserves, current accounts, and fiscal balances.
Africa’s potential can hardly be overstated. The continent is well placed to build diversified economies based on low-carbon, sustainable infrastructure. But policymakers cannot simply assume that Africa’s rise will continue. They must take the right steps to ensure that it does.
Ngozi Okonjo-Iweala is a former finance minister and foreign minister of Nigeria, and former Managing Director of the World Bank.
This article is published in collaboration with Project Syndicate.
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Nigeria’s booming population requires more and better jobs
With over 170 million people and a high rate of population growth, Nigeria needs to create 40 to 50 million additional jobs between 2010 and 2030. To reduce poverty and promote more inclusive growth, these jobs need to be more productive and provide higher incomes than the country’s jobs today. Three new World Bank reports focus on this challenging agenda.
The report “More, and More Productive, Jobs for Nigeria” provides a detailed overview of jobs, workers, and employment opportunities, while “Understanding and Driving Private Sector Growth in Nigeria” studies constraints and drivers of firm-level growth and implications for employment.” The third report “Skills for Competitiveness and Employability” examines the demand in priority economic and job growth sectors and how to ensure that Nigerians have the right skills.
“Understanding where people work, constraints to firm growth, and the skills needed is fundamental for formulating appropriate policies,” says Rachid Benmessaoud, World Bank Country Director for Nigeria. “The solid, detailed diagnostics in these reports are critical inputs to developing education and jobs strategies for Nigeria.”
The reports show that “two Nigerias” seem to be emerging: one in which high and diversified growth provides more job and income opportunities, and one in which workers are trapped in traditional subsistence activities. The reports also show a geographic divide, with northern Nigeria having low levels of education access and high youth underemployment than the South. Although skills required in Nigeria remain mostly manual, the South is experiencing more demand for the cognitive skills required by the new knowledge economy.
According to the studies, the majority of adult Nigerians are employed but locked into low-productivity and low-income work, with no job or income security. The studies find that half of working Nigerians are in small-holder farming and another 30 percent working as self-employed in small or micro household enterprises in the non-agricultural sector. Their work is not enough to escape poverty, or attain middle class status for their households.
The reports call for attention to key areas for the country’s education, competitiveness, and jobs agenda. Among the solutions they offer:
First, a transition into more productive employment requires more skills. Nigeria needs to improve basic skills levels. Some 30 percent of youth have not completed more than primary education. Beyond basic skills, better policies and programs would improve access and market relevance of technical vocational education and training. Better job market information and facilitation would strengthen job accreditation and certification and expand opportunities for school-to-work transition. At the same time, informal short programs could help existing workers upgrade skills and become more employable.
Second, the private sector generates employment but firm growth is too small to absorb a large number of Nigerians. About 4 million microenterprises are capable of generating wage jobs, indicating that the informal sector should not be overlooked in development strategies. The formal sector appears to have an even greater potential to grow and generate employment but is limited by low productivity especially in northern Nigeria. The biggest gains to productivity would come from reducing crime, improving access to credit, reducing losses due to power outages, and increasing use of the Internet.
Third, a focus on agriculture is critical, as it will remain the largest employer for the foreseeable future. But there is a disconnect. Agriculture contributed 22 percent to GDP in 2012, but employed half of the working population. Raising agricultural productivity – incorporating small farmers in value chains, increasing access to markets, inputs, and technology would both help raise income opportunities for small holder farmers and simultaneously tap into the significant potential for domestic agriculture and agribusinesses in Nigeria.
Fourth, the reports advocate programs that reduce income volatility over the short term. Safety nets are needed to prevent people from falling into poverty and to protect economic development over the longer term. A coherent framework and institutional set-up for social safety nets is needed.
Finally, efforts to identify appropriate employment policies must be based on reliable data and rigorous analysis. Insufficient and poor quality data is still a constraint in monitoring jobs in Africa’s most populous country.
Jobs in Nigeria: Closing the gaps in a polarized labor market
The latest World Bank Group report for Africa’s most populous country provides an in-depth analysis of Nigeria’s labor market, noting the diversity across geographic areas, sectors, and demographic groups.
“More, and More Productive Jobs for Nigeria: A Profile of Work and Workers,” examines Nigeria’s complex labor market to explore how better jobs and income-earning opportunities can form the basis for more diversified growth, more evenly distributed poverty reduction, and social cohesion. The findings point to a distinct polarization that will require an accelerated structural transformation to significantly increase productive employment opportunities.
“Nigeria is facing a real challenge when it comes to creating enough good jobs for the many new entrants to the job market, and it was important to have reliable data to better understand all the various dimensions of this phenomenon,” said Kathleen Beegle, World Bank lead economist and co-author of the report.
The report notes that “business as usual” gross domestic product (GDP) growth is fostering the emergence of “two Nigerias” one in which high and diversified growth provides more job and income opportunities to a small share of the population, and one in which workers are trapped in a low-productivity and traditional subsistence activities. This polarization was also observed geographically with the report revealing a divide between northern Nigeria, which has low levels of education access and high youth underemployment, and southern Nigeria, where jobs and income opportunities are concentrated.
This geographic divide also has sectoral dimensions, with two thirds of the population in the North East occupied in agriculture, compared to less than one in five in the South East. Despite the fact that half of working Nigerians are in smallholder farming, agriculture only contributed to 22% of GDP in 2012. In addition, half of those working in agriculture belong to the poorest 40% of the population compared to only 17% of wage workers.
The report calculates that given the country’s rapidly growing population, it will require 40 to 50 million additional jobs to employ its population. The transformation of employment opportunities will need to be balanced and inclusive to also address the gender gap in the labor market and youth unemployment.
However, the report notes that higher employment rates are not a silver bullet to reducing poverty. A majority of the population works, although most work in low-productivity, low-income jobs that allow them to consume what they produce or live off of modest profits from what they sell, according to the report. Thus, the report emphasizes the importance of the quality of Nigeria’s employment opportunities to ensure that the population can move towards attaining middle income status.
The report offer a series of solutions to address Nigeria’s job challenges, including:
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In education, Nigeria needs to improve basic skills levels and build better policies and programs that would boost access and market relevance of technical vocational education and training
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In agriculture, increase access to markets, inputs, credit, and technology.
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To help grow private businesses and increase their employment capacity, Nigeria will need to improve the business climate. The biggest gains in productivity would come from reducing crime, improving access to credit, reducing losses due to power outages, and increasing use of the internet.
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A coherent framework and institutional set-up for social safety nets is needed to prevent people from falling into poverty and protect economic development over the long term.
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President Jacob Zuma: Meeting of South Africa-Nigeria Business Council
President Jacob Zuma addressed the South Africa-Nigeria Business Forum on 9 March 2016 at the Hilton Transcorp in Abuja, Nigeria. The Business Forum focused on, among others, the following sectors: manufacturing and advanced manufacturing; infrastructure, energy and mineral beneficiation; and services (hospitalities, pharmaceuticals/health, ICT and finances). Zuma’s full speech is available below.
Let me once again, thank His Excellency President Buhari, the Nigerian government as well as the people of Nigeria for the warm welcome to me and my delegation. It is a distinct pleasure for me to be addressing this forum of both South African and Nigerian business delegates, on the occasion of my State Visit to Nigeria.
Your participation in this State Visit as business people from both countries contributes immensely to the advancement of relations between South Africa and Nigeria, especially at an economic level. We view this State Visit as being truly significant as it has taken relations between our two countries to a much higher level. The Visit has sought to further deepen the historic relations between South Africa and Nigeria, which were forged during the struggle for liberation in our country.
We held very productive discussions yesterday between the two governments. The relations between the two countries are managed through a Binational Commission. We have taken an important decision to elevate the Commission to head of state level.
The South Africa-Nigeria Binational Commission will thus be chaired by President Buhari and myself and we will take full responsibility for managing relations between the two leading economies on the African continent.
In our discussions with President Buhari yesterday we noted with satisfaction the ever growing cooperation in many sectors including trade and investment; defence and security; immigration matters; energy; mineral resources, to mention but a few. We agreed on the need to further deepen economic cooperation.
In this regard, we have agreed to formalise the South Africa-Nigeria Business Council, as it is an important instrument that will assist us in managing and advancing the economic relations between the two countries.
South Africa is optimistic about the further growth of economic ties between the two countries. Nigeria has opened up its economy to South African companies in various sectors such as engineering, telecommunications, construction, aviation, media, hospitality, banking, hospitality, entertainment, property, retail, and oil and gas exploration services.
We welcome this significant development. We would like to see the numbers of Nigerian investments in South Africa also increasing, as we promote two way trade between these two nations.
We take note of the fact that this State Visit takes place during a depressed economic climate globally. The global economic downturn has impacted both our economies due to the falling prices of the commodities from which we gain much of our revenue.
These developments have just made it more urgent that we diversify away from our reliance on raw materials and fast track our industrialisation and regional integration efforts. In this regard, I am glad that regional integration is an important aspiration of the African Union’s (AU) Agenda 2063 to which both countries subscribe. The planned integrated market in Africa will see a market of over one billion people and approximately two point six trillion US dollars.
Business in both countries should also begin pursuing opportunities that will come about as a result of regional integration and intra-Africa trade efforts which will create the Continental Free Trade Area. Against this backdrop, our two leading economies should be at the helm of ensuring sustainable economic and inclusive growth, through the creation of a larger regional market and improving Africa’s integration in the global economy.
In our talks, we have also committed to provide an enabling environment for business to take place and for people, goods and services to be able to move much easier between the two countries.
Let me congratulate Nigeria on the measures that have been put in place to promote the ease of doing business and to revive some sectors of the economy. For example, we are encouraged by the work that has been done by Nigeria to revive the automotive industry. We will continue with the technical and industrial cooperation commitments agreed upon by the two countries.
We further commend Nigeria on the implementation of the Nigeria Industrial Revolution Plan, which provides actionable industrialisation plans in specific sectors such as agro-processing, Mineral Beneficiation as well as the Oil and Gas Sectors.
We have also noted with interest the measures aimed at the beneficiation of abundant natural resources. We thus look forward to partnering with Nigeria in taking forward some of these plans. Some of these partnerships will be enabled by our development finance institutions which have been mandated to establish their presence in several African countries.
The Industrial Development Cooperation (IDC) has been set up to promote economic growth and industrial development. It supports commercially sustainable industrial development and innovation to benefit both South Africa and the continent as a whole. With respect to Nigeria, the IDC is in discussions with the Ministry of Solid Minerals Development on future collaboration to develop the mining sector in Nigeria.
The IDC is also exploring other avenues of investment and has led sessions on opportunities for partnerships during this visit. Our Export Credit Insurance Corporation (ECIC) is mandated to provide political and commercial risk insurance as well as medium- and long-term export credit and investment insurance. Furthermore the South African Bureau of Standards will be cooperating with its Nigerian counterpart in the harmonisation of Standards, Quality, Accreditation and Measurements in terms of trade facilitation.
Honoured business delegates,
We have also listened with keen interest to the challenges that you have put forward to the two governments. As the two leading economies on the continent, our governments are obliged to create environments that enable seamless trade and make our countries attractive for both local and international investment.
Our Ministers and their teams are already engaging at different levels with the private sector to find amicable solutions to some of the challenges that you have highlighted. I trust that in your deliberations during the sector breakaways you have concretised avenues of continuing, increasing and encouraging both trade and investment initiatives in our respective economies.
By working together, both South African and Nigerian companies will contribute meaningfully to the Developmental Agenda of the African continent as a whole.
Our message as we conclude the State Visit today, is that South Africa and Nigeria should unite and work together towards achieving the vision of a prosperous Africa in which all of its citizens benefit from its natural resources.
The abundant mineral wealth in our continent which is making other continents richer, must improve the lives of Africans. It must help us defeat poverty, disease and helplessness amongst our peoples.
Our two countries should also unite in bringing about peace and stability in the continent, through providing maximum support to the peace and security efforts of the African Union. Our people need peace. They need development, and they need to see their lives getting better every day.
This State Visit has given me great hope that Nigeria and South Africa are ready to work together more than ever before, in the promotion of prosperity, good governance, peace and security and a better life for our peoples.
Let me thank the government and people of Nigeria for this very successful State Visit.
Let me also thank you as business people for your participation in this forum. Let us work together in partnership, towards a better Africa.
I thank you!
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African Transformation Forum 2016: SET Background papers
From 14-15 March 2016, the African Center for Economic Transformation (ACET), in partnership with the Government of Rwanda, will convene the first African Transformation Forum (ATF) in Kigali, Rwanda.
The first objective of the ATF is to facilitate knowledge sharing and peer learning across global and African luminaries from the public and private sectors. These participants will contribute their rich insights, and uncover challenges and solutions for galvanizing economic transformation in Africa. The discussions will fall into two categories: i) the coordinated development and implementation of national development plans; and ii) catalysing transformation within critical sectors, notably: extractives; light manufacturing; agriculture; skills development; entrepreneurship; financial inclusion; infrastructure; and regional integration.
The second objective of the ATF is to launch the Coalition for Transformation in Africa, a new leadership network organized in chapters, each addressing a specific thematic area. These chapters and the policy makers, business leaders and development partners who will constitute their membership will examine and develop implementable solutions for development. ACET will serve as the Secretariat for the Coalition, building consensus, coordinating activities and assisting the membership in securing funding to support their agreed initiatives. The chapters will also report their progress at subsequent African Transformation Forums.
The SET team has collaborated with ACET on background papers to inform discussion sessions on three areas, as outlined below:
Public and Private Sector Collaboration for Economic Transformation
The goal of economic transformation raises the stakes for policy-making in Africa. Achieving a pattern of economic growth where productivity, export competitiveness and employment are continuously increased is not just a matter of agreeing a higher level of ambition. It calls for an active search for solutions to numerous specific problems currently blocking or delaying needed investments. Underlying each of those particular challenges, moreover, is a deeper and more general issue: how to establish a strategic relationship between government and private sector actors that makes it possible to address these problems without repeating the errors that derailed transformational ventures in the past.
Reviewing global experience, the roles of state and private enterprises, of large and small firms and of formal or informal business associations have been very different among countries. The successful models have in common, however, that they have been able to satisfy a small number of basic requirements that appear universally relevant. This finding seems to be reinforced, in both positive and negative ways, by Africa’s so far limited success in constructing more transformation-friendly state-business relations. The basic requirements seem to include:
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constructing a consensus among key actors that establishes economic transformation as a nation-building project, with shared commitments extending well beyond a single electoral term
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giving at least one public agency sufficient autonomy, budgetary control and political authorisation to override interdepartmental coordination problems and engage in a practical way with credible private sector organisations
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creating institutional arrangements that can coordinate a sufficient set of powerful public and private actors so as to ensure (1) an appropriate level of technically justified public support to promising sectors or firms; and (2) that this support is conditioned on mutually enforceable performance standards
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enabling discovery of approaches that work for transformation in the particular country context by means of explicit experimentation, good feedback and timely correction
Key issues to be considered are:
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Which types of public agency are most suited to providing authoritative policy coordination and to leading engagement with the private sector? How can they be empowered to perform effectively?
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What kinds of private sector organisations are likely to prove the most credible strategic partners of governments seeking to support transformation?
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How do we ensure that annual budgets align with the transformation strategy and are implemented effectively? What works best to obtain value-for-money in government investments? What should be the roles of the ministry of finance, the ministry of planning and the coordinating agency, where the three are not the same?
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Are there feasible mechanisms for ensuring that discretionary support to promising sectors or firms is consistent with transformation objectives and governed by enforceable performance standards, so as to achieve results and avoid patronage and corruption? What should they look like?
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What forms of state-business consultation are most likely to deliver fast feedback on the way policies and programmes are working, allowing timely correction of errors and joint discovery of paths of transformation that work?
Promoting Manufacturing in Africa
Industrialisation, particularly the expansion and increased sophistication of manufacturing production and exports, and also the expansion of manufacturing employment, remains an essential part of Africa’s economic transformation. Unfortunately, manufacturing as a share of gross domestic product has declined over the past few decades in most African countries, even though in absolute terms it is growing.
Although African countries face difficult challenges in breaking into world manufacturing markets, new developments work in their favour. These include rising wages in China and a rebalancing in Asia away from export-led towards domestic and regional consumption-led growth; Africa’s growing regional markets; falling transport costs; greater access to abundant natural resources; improved firm productivity and access to global value chains; and better general economic policy environments. But governments should not stand aloof; to seize these new opportunities they will have to formulate and implement coherent industrial development strategies. The key elements of such strategies must include:
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continued improvements in the basics, including sound macroeconomic management, stronger general investment climate and support for the private sector and development of public infrastructure and relevant skills
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an export push, including regional trade and integration
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agglomeration through building and running efficient special economic zones (SEZs) and industrial parks
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active foreign direct investment (FDI) promotion and building linkages with local firms
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supporting productivity enhancement of local small and medium enterprises (SMEs) and their access to technology and long-term finance to help them venture into production of new or technologically more sophisticated products
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improved coherence and implementation coordination within government and
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strengthened consultation and collaboration between government and the private sector
Key issues
Separate panels at the African Transformation Forum were dedicated to several of the elements of the strategy above (e.g. panels on public infrastructure, skills development, regional trade and integration, public–private consultation mechanisms). For this panel, the key issues participants may wish to consider are as follows:
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How do countries raise their focus and commitment to manufacturing and develop a coherent strategy to promote it? In what visible forms should this be expressed?
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What key measures can countries take to improve their FDI promotion efforts and link the FDI firms to domestic suppliers?
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How can the performance of SEZs and industrial parks be improved? Should the private sector’s role in developing and managing SEZs and industrial parks be increased? How can public–private collaboration be increased in this area?
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How best can the state support access of local SMEs to technology?
How do we increase access of SMEs to long-term finance? In particular, how can development banks (and similar institutions) be made more market- and performance-oriented? What are the changes needed in their governance? What is the scope for public-private sector collaboration in improving SME access to long-term finance for manufacturing?
Trade Facilitation and Economic Transformation in Africa
Trade facilitation can stimulate economic transformation in Africa by raising exports, supporting export diversification, reallocating resources to more productive activities, improving access to cheaper and better-quality imported inputs and enabling participation in value chains. Many African regions have begun to formulate regional approaches to trade facilitation, and there are important examples of particular approaches working well. The introduction of one-stop border posts (OSBPs) at Chirundu (on the Zambia-Zimbabwe border) and at the Busia border crossing between Kenya and Uganda have reduced the time and costs involved in moving goods across borders. The OSBP at Busia has also made it easier for small traders to cross the border, giving them access to a wider market and improving their livelihoods. Similar improvements in border crossing times have been recorded along the Trans Kalahari, Maputo Development and Northern Corridors.
Outside of these examples, however, the implementation of trade facilitation agreements has generally been problematic. It remains a challenge to translate the good intentions expressed in Africa’s regional trade agreements into concrete actions towards trade facilitation.
Key issues to be considered are:
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What more can be done to harmonise regional trade facilitation instruments in cases where countries have overlapping membership in more than one regional economic community?
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What are the remaining constraints (political and other) to the elimination of NTBs hampering cross-border trade flows in Africa? How can these be addressed?
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What can be done to ensure effective implementation of mutually agreed protocols, programmes or schemes aimed at promoting intra-regional trade in Africa?
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Do governments provide enough space for engagement with the private sector on issues related to trade facilitation?
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Why are African countries not jumping to ratify the World Trade Organization Trade Facilitation Agreement? Is it a governance problem? Or is it because of a lack of policy coherence?
In addition, the paper raises issues related to specific regions:
SADC
- How can SADC countries improve coordination in the management of regional transit systems?
- What should be done to address concerns about the potentially adverse effects of trade facilitation on local employment, revenues and the livelihoods of the most vulnerable?
EAC
- How can cross-country coordination in the operationalisation of trade facilitation be improved in a way that takes into account the varying levels of commitment to regional integration across EAC member states?
ECOWAS
- How can ECOWAS countries mitigate internal constraints hampering them from being more effective partners in regional development and integration processes?
- How can ECOWAS countries enhance the role of the private sector in regional integration in order to promote economic transformation?
ECCAS
- What are the remaining bottlenecks hampering implementation of the free trade area in the ECCAS region? How can they be addressed?
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Deloitte Africa Outlook 2016 conference: Summary Report
With Sub-Saharan Africa’s (SSA) growth rate forecast to be above that of the global average in 2016, the fundamentals for improved growth and sustained development are still in place for the continent, according to Lwazi Bam, Chief Executive Officer of Deloitte Africa.
While difficulties such as corruption, poor infrastructure, currency volatility, terrorism, climate change and the commodity price plunge are evident in both local and global markets, the African continent still remains attractive. The young population, a growing middle class, investments in infrastructure projects, the use of mobile infrastructure and relative political stability (which should not be underestimated), all build the foundations of Africa’s real growth story in 2016 and beyond.
In light of the current headwinds faced not only by South Africa but also other emerging markets, including China, Brazil but also resource-producing African economies, collaborative strategies that identify and position African economies to be more competitive should be the focus for both the private sector and governments. In order to survive and thrive in 2016 and beyond, it is essential for African economies to diversify, especially those that are highly resource-dependent. Global shocks such as the commodity price plunge and the sharp drop in the price of oil are clear signs to this end.
Beyond resource commodity exports, tourism and agriculture are some of the key sectors that African countries need to consider in restructuring their economies.
With the foundation in place for Africa’s growth story, African governments and private sector in the continent’s economies need to work to identify their various unique value propositions in order to be competitively positioned in the global arena. While cognisant of the fact that Africa’s trade infrastructure is still underdeveloped and economies are fragmented along language lines, greater efforts in bilateral and regional integration, all in an effort to come up with an Africa story that is more optimistic and more pronounced, is an important step forward.
This report is a summary of the Frontier Advisory Deloitte Africa Outlook 2016 conference which took place on 21 January.
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Infrastructure Africa 2016: Provider of opportunity
Infrastructure Africa 2016 has partnered with the African Development Bank (AfDB) to focus on Africa’s regional gender equality within the infrastructure space
Africa needs US$95 billion per annum within the coming decade to meet its infrastructure demands. The Continent’s need for infrastructure is driven by rising populations and rapid urbanisation and is causing a shift for all players in the sector. Africa must roll out its infrastructure plans if it is to meet its growth forecasts for the coming years; this growth can be fuelled in part by infrastructure spending. Internationally, the outlook is positive between now and 2020, signalling many new business opportunities for the sector across the continent.
According to the World Bank, Africa’s trade potential is undermined by the constraints that African women face. The contribution of women to trade is much less than it could be because of barriers that impinge on their trade activities, which jeopardises their capacity to grow and develop businesses. The AfDB has sought to mainstream gender in all its sectors, especially in sectors that it invests heavily in such as transport, energy and IT. Because so many women are breadwinners in Africa, if they are empowered in the infrastructure and other sectors, then their businesses can grow accordingly and Africa will benefit.
The upcoming fifth Infrastructure Africa Business Forum aims to accelerate the business of infrastructure development and women’s empowerment in Africa. The two-day conference and exhibition provides an opportunity for companies to focus on the continent’s growth hotspots, discuss infrastructure trends, meet project developers and relevant government authorities, whilst exploring infrastructure business opportunities.
In a move which will greatly enhance the conference’s offering and Africa’s trade potential, Infrastructure Africa has partnered with the African Development Bank (AfDB) to host the Africa Inclusive Infrastructure Forum (AIIF) from 9-10 June, 2016 at the Sandton Convention Centre, Johannesburg, South Africa.
Africa Inclusive Infrastructure Forum
The Africa Inclusive Infrastructure Forum will have a key focus towards issues of gender in infrastructure development across the continent. The event will discuss financing for women-owned businesses in the energy, transport, IT & telecoms and water sectors across Africa. Cross-border and regional trade will feature highly on the discussion agenda and ministers and industry specialists will participate and share their expertise and unpack a roadmap for the way forward.
The AIIF will act as the first regional policy dialogue of its kind. It is increasingly recognised that, for African economies to continue their recent substantial growth there is a need to address inequality, especially gender inequality. The AfDB has made gender one of the areas of special emphasis in all the Bank’s operational areas and across its ‘High-5s’.
The Infrastructure Africa Business Forum will once again offer attendees the exclusive formal business matchmaking programme to allow for crucial business networking. This programme affords all exhibitors and conference delegates the opportunity to meet and engage with this year’s high-level speakers, exhibitors, sponsors and delegates on a one-on-one private meeting basis at the event. It is uniquely designed to help delegates make the right contacts, fulfil their business and target market objectives and establish long-lasting and valuable contacts in the infrastructure space.
Key sectors to be featured at the 2016 event include: water, energy, IT & telecoms, transport and finance.
Conference Overview
The African economy has undergone fundamental changes over the last decade. Growth in investor interest is driven by strong economic growth, rising foreign exchange reserves, quality and cost competitiveness and encouraging Government policy-making. The strong level of economic growth achieved in Africa in recent years has led to an expansion of industry, commerce and per capita income. This in turn has fuelled demand for infrastructure services including energy, transportation, ICT, water supply, growing agriculture and urban infrastructure.
Partnerships in Africa will pave the way for development and this annual conference will bring together Africa’s most senior business leaders, policy makers, regulators and media to advance debate and champion delivery of Africa’s critical infrastructure requirements, while providing expert advise on the current state of infrastructure and the anticipated impact of future development.
The Infrastructure Africa event, comprises of a two-day high-level conference, Ministerial Infrastructure and Development Roundtable discussion and the official Gauteng Infrastructure projects workshop.
Objectives
The Infrastructure Africa 2016 Business Forum aims to broadly cover the following topical themes in various business sessions:
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To provide a platform for informative and interactive sessions with the prime movers of Infrastructure sector across various spheres like Government, Policy makers, Industrial leaders, Academia and Potential investors.
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To enhance policy and regulatory framework to boost investor confidence in the infrastructure sector
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To find a way around to turn excruciatingly slow pace of infrastructure developments at the ground level
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To showcase some of Africa’s megaprojects
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To explore new potential areas in order to provide financial assistance as well as access to finance to the infrastructure players
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To focus on 5 key industry sectors and explore growth potential within these sectors, as well as unpacking challenges and obstacles and finding the solutions for growth in each sector.
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To encourage Public Private Partnership in the process of developing world class infrastructure
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tralac’s Daily News Selection
The selection: Monday, 14 March 2016
Starting today: three conferences
Northern, Central Corridor workshop on sustainable freight transport and finance: The workshop aims to raise awareness and share experiences and best practices among relevant public and private sector stakeholders on the various aspects of sustainable freight transport and finance. The aim is also to build the capacity of relevant stakeholders, including in particular, policy makers, transport corridor managers and operators, financial institutions and investment agencies to identify relevant policy priority areas as well as action required to promote and implement sustainable freight transport systems. The training will benefit close to 85 participants from Burundi, Democratic Republic of Congo, Kenya, Tanzania, Rwanda, South Sudan and Uganda.
African Transformation Forum: ATF background paper Public and private sector collaboration for economic transformation (prepared by ODI, ACET)
World Bank's Land and Poverty Conference 2016: This year’s conference pays special attention to working at scale, mainstreaming innovations, and sustaining investments in land governance. To download the presentations, many with an African focus, click on the individual session titles. [Klaus Deininger: Harnessing the data revolution and improving land management through geospatial technology]
SADC Council of Ministers: updates from the ongoing Gaborone meeting
Today: remarks by SADC Executive Secretary (Government of Botswana)
Allow me to highlight few key achievements during the period, which include: i) substantial progress has been made in the preparation of costed action plan for the Industrialization Strategy, the Plan will be tabled in August 2016; ii) recognizing the importance of value chain, beneficiation and value additions, a regional value chain and value addition strategy in priority sectors has been developed - this will facilitate effective implementation of the SADC Industrialization strategy...
[Also] Progress in exchange of offers and ratification of the Tripartite FTA has nonetheless been very slow. It is unlikely that the deadline set by the Tripartite Summit will be met. May I kindly appeal to Members States to fast-track exchange of offers that will enable effective operationalization of the TFTA, and signing and ratification of TFTA, and in doing so honouring commitments made in Sharm El Sheik. We will only be able to utilize opportunities created by TFTA market, if and when the outstanding elements are fully addressed. [Today: remarks by Minister Kenneth Matambo]
SADC Ministers of Trade approve trade facilitation programme (SADC)
In her remarks, SADC Executive Secretary, Dr Stergomena Tax indicated that this programme has identified trade facilitation activities that are essential in facilitating easy movement of goods, while reducing the cost of doing business in the region. The programme will among others address the impediments to movements of goods across the region, covering but not limited, to the following: accession to and implementation of the World Customs Organization’s Revised Kyoto Convention, which is a benchmark for mentioned Customs laws and procedures; data exchange and interconnectivity amongst customs administrations; implementation of the electronic certificate of origin in SADC; and improvements to infrastructure at selected major border posts. [SADC Committee of Ministers of Finance and Investment agree to finalize establishment of SADC Development Fund]
Traders welcome new EAC 'Business Code of Conduct' (New Times)
Business operators in the East African Community are optimistic that the Code of Conduct for Business in the region, endorsed by regional leaders recently, will go a long way in curbing corruption and unethical business behaviour that remain serious constraints to economic development of the bloc. Denis Karera, chairperson the East African Business Council, the apex body of the private sector in the bloc, last week told reporters that the code of conduct was intended to create a sense of ethical business operations “among us business operators” in the region. Karera said: “The code of conduct was necessary because we do business in very unethical ways.”
1st East African Co-Operatives Conference: download the conference papers
Migration from the Horn of Africa: @RMMS_4Mi: Europe is the number one destination for migrants from the Horn of Africa, followed by RSA and USA (The 4Mi Mixed Migration website)
Continental talks on implementing Agenda 2063 (COMESA)
Deputy Chair of the African Union Commission Mr Erastus Mwencha said the low level of integration and transformation was the most critical issues facing the continent. “Until we deal with those two points, we are in a vicious circle, going through cyclical ups and downs and creating more hurdles in the way of our African economic development,” Mr Mwencha said. “As we look at our agenda today, in developing agenda 2063, we have examined 35 national development plans; implemented true participatory approaches and come up with a set of seven aspirations and 20 goals that are of highest importance to the people of Africa, and are in perfect alignment with the post 2015 sustainable development goals.”
Aviation-tourism convergence in Africa: update (UNECA)
The meeting reviewed the report, ‘Fostering Africa’s tourism growth: the aviation and tourism policy’, as the continent looks for ways to tap into the growing international tourism receipts. The report, commissioned by the ECA on the two economic sectors, identifies a number of factors, including unfavourable regulatory environments, policies that limit air connectivity, restrictive visa regimes, uncoordinated consumer protection regulations, restrictive taxes, among others levies, as constraining the growth of the two industries.
Foreign workers must possess relevant qualifications says Diogo (Club of Mozambique)
Mozambican Labour Minister Vitoria Diogo declared on Friday that foreign workers must possess the relevant academic and professional qualifications, if they are to work in Mozambique. Speaking in Maputo at a seminar on “Chinese companies and labour questions in Mozambique”, Diogo stressed that foreigners can only be admitted to work places when there are no Mozambicans with the required qualifications, or there are not enough of them. Data from the Labour Ministry indicate that in 2015 inspectors found that 1,182 foreigners were being employed illegally, and they were suspended from their posts.
Impediments Malawian transporters or business people face in Mozambique (Club of Mozambique)
During the bilateral trade talks Malawi held with Mozambique in Tete, Mozambique on Friday (4 March), Malawi outlined various impediments its transporters and traders were facing in Mozambique. One of the concerns raised by Malawi was on a transit code Mozambique demands for Malawian transporters passing through the country known as the contra marca. It is a code that is issued to a clearing agent automatically once the agent submits information into Mozambique’s trade system. The Malawi delegation also complained that it sometimes takes up to eight days for Malawian trucks to load and offload cargo and that Malawian transporters are disadvantaged on allocation and loading of cargo at the Beira Port. The other problem was the unreceipted charges paid at the port. This, they said, eats into the transporter’s profit margin.
Tanzania: Southern Agricultural Growth Corridor investment (World Bank)
The newly-approved SAGCOT Investment Project is financed by the International Development Association and seeks to develop income opportunities for 100000 smallholder farming households by providing them new technologies and marketing practices and expanding partnerships with lucrative agribusinesses in the Southern Corridor of Tanzania. Once implemented, the project will directly benefit over half a million people and engage 40 agribusiness operators, with emphasis on including women in successful commercial value chains.
Afrieximbank, Ecobank set to promote trade among African countries (StarAfrica)
Speaking during the opening of the strategy meeting held at the Afreximbank Headquarters in Cairo, Dr. Benedict Oramah, President of the Bank, said that intra-African trade represented a clear pathway for Africa to realize its economic potentials and that collaboration with Ecobank would be in line with the vision of the founding fathers of Afreximbank to increase the development impact of the continent’s commercial banks. “With a presence in 33 African countries, there is no better partner for Afreximbank to work with in its drive to develop intra-African trade,” Oramah said.
Ghana: Exporters ask for long-term financing (GhanaWeb)
The President of the Federation of Ghanaian Exporters, Anthony Sikpa, has urged government to create a separate funding scheme that will provide long-term financing for producers and exporters to boost economic growth. In an interview with the B&FT, he decried the inability of the Export Trade, Agricultural and Industrial Fund’s (EDAIF) to support many exporters as a result of pressure on the funds. “Apart from EDAIF, there is no other dedicated long-term financing for exporters. Even the EDAIF itself was initially for exports alone, but currently that objective has been broadened to other areas so exporters are constrained when it comes to accessing funds,” he said.
Poverty in a Rising Africa (World Bank)
Poverty across the continent may be lower than what current estimates suggest, though the number of people living in extreme poverty has grown substantially since 1990, according to the latest World Bank Africa poverty report. Poverty in a Rising Africa, the first of two upcoming reports on poverty in Africa, documents the data challenges facing the region and reviews the status of Africa’s poverty and inequality, both monetary and nonmonetary, taking these data challenges into account.
USAID 2017 budget request: testimony of Roman Napoli (USAID)
The budget request also includes $75m for Trade Investment Capacity Building, which will align, focus and expand current US Government bilateral and regional trade programs in sub-Saharan Africa. An additional $10 million is requested for the Young African Leaders Initiative to support young African leaders returning to Africa following their fellowship training and professional development activities in the United States. The budget requests $2.3bn to strengthen democracy and governance around the world. This support is essential at a time when we're seeing troubling trends like democratic backsliding and closing space for civil society, independent voices and aid workers alike. Particular focus regions include Africa, Asia, Eurasia, and Central America. [9 things to know from a new report on USAID PPPs (Devex)]
Mitigating risks and vulnerabilities in the energy-food-water nexus in developing countries (Sustainability Institute)
The report analyses global nexus interconnections (such as the dependence of food systems on energy at every stage of the food value chain) and identifies key drivers, which include economic and population growth, resource depletion, environmental degradation, climate change and globalisation. The study also delved into more detail by analysing the nexus in three case study countries (Malawi, South Africa and Cuba), which represent different levels and types of economic development and ‘socio-metabolic regimes’ (agrarian, industrial and agro-ecological).
First conference on Global Value Chains, Trade and Development (30-31 March, Washington)
The impact of electronic payments on economic growth (Visa)
UN statistical body agrees to global indicators to measure sustainable development goals (UN)
Australia: 'Staying open for business with China' (editorial comment, East Asia Forum)
Raghuram Rajan's Ramnath Goenka lecture: full text (Scroll)
Ranil Wickremesinghe: 'Trade in a time of protectionism' (Project Syndicate)
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Meeting of the SADC Council of Ministers: Statement by SADC Executive Secretary Dr Stergomena L. Tax
Statement by SADC Executive Secretary, H.E. Dr Stergomena Lawrence Tax, on the occasion of the Meeting of the SADC Council of Ministers in Gaborone, 14 March 2016
Allow me, to begin by thanking the Government and people of the Republic of Botswana for the hospitality, and the excellent facilities placed at our disposal. This is yet a further testimony of the commitment of the Government of Botswana to SADC Regional Integration and the generosity of the people of Botswana.
Implementation Progress
This meeting provides an opportunity to receive progress reports on the implementation of SADC plans for 2015/2016, implementation of Council Decisions, and to deliberate on plan and budget for 2016/2017. Major milestones during financial year 2014/2015 included finalization of the Regional Indicative Strategic Development Plan (RISDP) 2015-2020 and SADC Industrialization Strategy 2015-2063, which were approved in April 2015.
During financial year 2015/2016 the Secretariat has finalized coordination costs for the RISDP, while preparing a costed implementation Plan for the Industrialization Strategy. Furthermore, the Secretariat focused on the implementation of key priorities in line with these strategies as supported by other SADC strategies, and also on preparation of the needed instruments to operationalize SADC strategies.
I am glad to report that substantial progress was recorded during the year as contained in the report that will be presented to you in the course of this meeting. Allow me to highlight few key achievements during the period, which include;
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Finalization of the Secretariat Coordination costs which were approved in August 2015, and finalization of national public coordination costs which will be tabled for your consideration during this meeting;
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Substantial progress has been made in the preparation of costed action plan for the Industrialization Strategy, the Plan will be tabled in August 2016;
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Recognizing the importance of value chain, beneficiation and value additions, a regional value chain and value addition strategy in priority sectors has been developed. This will facilitate effective implementation of the SADC Industrialization strategy;
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Recognizing that food security and management of natural resources and environment are key enablers to economic development, and thus to industrialization, a Regional Agricultural Policy Implementation framework was developed; this will facilitate trade, and industrialization, while contributing to food security;
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Electricity generators and transmission expansion plan was implemented contributing to more power generation in the region, thus addressing one of the major challenge, affecting almost all the Member States;
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Significant progress has also been recorded in the establishment of SADC development fund, a long overdue initiative that will contribute significantly to Infrastructure Development and Industrialization. Finance and Investment Ministers received a report in their meeting held on 12th March 2016 and agreed to operationalize SADC RDF through a two-phased approach; Phase 1 focusing on project preparation and development; and Phase 2 focusing on infrastructure development, industrial development, integration and economic adjustment and social development windows.
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Policy, standards, strategic and regulatory framework of regional infrastructure network were adopted, and this will facilitate project development and resource mobilization;
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Shared River Basin Management Strategies/Plans were adopted in targeted River Basins;
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Oceanic Blue Economy Strategy was also developed and this will enable the region to exploit maritime resources;
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Revised Regional Qualification Framework was approved contributing to increased mobility of standards, comparability of qualifications, and creation and utilization of the region’s employment opportunities;
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Regional Innovation and Technology transfer framework was developed, promoting the use of science and technology and innovation, and thus contributing to socio-economic development, including industrialization;
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Macro-economic convergence peer review undertaken contributing to economic performance and development;
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Guidelines for the essential medicine list and regional standards treatment guidelines developed contributing to increased access to quality and affordable medicines; and
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Regional multi-dimensional Women Economic Empowerment programme has been finalized, contributing to gender equality, and equity at different levels of society in the region.
These are some of the key milestones during financial year 2015/2016. Details are contained in the report that will be presented to you.
In August 2015, the Council directed the Secretariat to facilitate the operationalization of Tripartite Free Trade Area as directed by the Sharm El Sheik Declaration launching the Tripartite FTA, in particular the finalization of negotiations on outstanding areas under Phase I of the TFTA, as well as the legal scrubbing of the remaining Annexes. Pursuant to that directive, and in collaboration with our sister Regional Economic Communities (RECs), COMESA and the EAC, the legal scrubbing of remaining Annexes have been finalized except for one Annex on Dispute Settlement, and negotiations are ongoing.
Progress in exchange of offers and ratification of the Tripartite FTA has nonetheless been very slow. It is unlikely that the deadline set by the Tripartite Summit will be met. May I kindly appeal to Members States to fast-track exchange of offers that will enable effective operationalization of the TFTA, and signing and ratification of TFTA, and in doing so honouring commitments made in Sharm El Sheik. We will only be able to utilize opportunities created by TFTA market, if and when the outstanding elements are fully addressed.
Sustainable financing of SADC development and integration agenda remains a major challenge. The outcome of ongoing work on alternative sources to sustainably finance SADC Programmes will be presented in your meeting in August 2016.
Food Security
During the last two rainfall seasons, the region has experienced droughts. The current drought for 2015/2016 rainfall season is the worst in more than 35 years and has affected nearly all SADC Member States. It has negatively impacted on water, energy, health, agriculture and food security sectors, among others. Food prices are likely to increase and the overall economic growth and development of the region will be adversely affected. Currently, about 28 million people need humanitarian support (i. e. food and non-food). This figure is likely to substantially rise due to the continuing effects of the drought. In recognition of this challenge, measures are being taken, especially the establishment of a Logistical Team at the Secretariat to coordinate the regional response and support to the disaster. For the logistic Team to effectively address this challenge, we appeal to Member States to expeditiously submit the needed information that will enable the Team determine the required assistance.
Governance
In your previous meetings, the Council expressed concerns regarding weaknesses in internal controls, and Member States not getting value for money. I am glad to report that the Secretariat has taken measures to further address internal controls challenges. Systems are in place and most of the issues have been addressed as reported in the Audit Committee report before you. The Secretariat has also taken measures to put in place a functional result based planning, budgeting, monitoring and evaluation system that will among others, address the persistent low absorption capacity, while strengthening SADC Secretariat’s performance management system. Once finalized, the system will enable the Secretariat to monitor progress made in terms of outputs, and the impact of SADC integration.
Plan and Focus for 2016/17
Plan and budget focus for financial year 2016/2017 continues to be on the implementation of RISDP priorities, Industrialization, and consolidation of peace and security. So as to assess progress made, and the impact of our cooperation, the focus will also be placed on finalizing a robust Monitoring and Evaluation Framework that will enable timely and effective monitoring, with a view to ensuring that SADC cooperation and integration objectives are realized; specifically the realization of “sustainable and equitable economic growth and socio-economic development, that will enhance standard and quality of life of the people of Southern Africa” as enshrined in the Treaty. I wish to reiterate that industrialization is the only sure path to achieve sustainable and deep-rooted socio-economic development.
Since your last Council Meeting in August 2015, SADC observed general and Presidential elections in the United Republic of Tanzania and the Republic of Seychelles. I wish to congratulate the Governments and peoples of these Member States for holding peaceful and credible elections. The Region remains peaceful and politically stable, albeit few challenges in some of the Member States. I thank the Organ on Politics, Defence and Security and the Double Troika Members who have time and again continued to address emerging challenges.
As your Secretariat we remain responsive to the aspirations of Member States. We greatly thank Member States for the continued guidance and support. The Secretariat will continue to implement decisions of Council and Summit diligently.
In conclusion, let me seize this opportunity to extend our gratitude to Honourable Kenneth Matambo, Minister of Finance and Development Planning and Chairperson of the SADC Council of Ministers and his entire Team for his dedication and continued guidance and support, that have enabled the Secretariat to realize 2015/2016 milestones. I wish also to thank the Secretariat Staff for their hard work which enabled the Secretariat deliver on 2015/2016 milestones. Let me also commend the Senior Officials and for the job well done in preparing for this meeting.
Ke a leboga! Pula! Pula!
Thank you!
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SADC Ministers of Trade approve Trade Facilitation Programme
The 16th Meeting of the Ministerial Task Force on Regional Economic Integration took place on Sunday, 13 March 2016 in Gaborone.
The main objective of the meeting was to receive progress made in the development of a costed Action Plan for the pdf Industrialization Strategy and Road Map 2015-2063 (2.34 MB) approved in Harare on 29 April 2015. This costed Action Plan is crucial in order to effectively drive Industrialization in the SADC region. The meeting took note of the progress made and directed the Secretariat to finalize and submit in August for approval.
Delivering his welcome and opening remarks, the Minister of Trade and Industry of Botswana and Chairperson of the SADC Ministerial Task Force on Regional Economic Integration, Hon. Vincent Seretse reminded the Delegates on the purpose and importance of adopting the Strategy in 2015 and added: “The strategy sets out a pathway for the SADC region to rise up and increase its contribution to global trade. Its significance requires visionary leadership, and compels us to remain seized with the process to ensure implementation for results.”
The meeting also approved the Trade Facilitation Programme which is one of the targeted outputs in the Revised Regional Indicative Strategic Plan (RISDP). In her remarks, SADC Executive Secretary, Dr Stergomena L. Tax indicated that this programme has identified trade facilitation activities that are essential in facilitating easy movement of goods, while reducing the cost of doing business in the region.
The programme will among others address the impediments to movements of goods across the region, covering but not limited, to the following:
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Accession to and implementation of the World Customs Organization’s Revised Kyoto Convention, which is a benchmark for mentioned Customs laws and procedures;
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Data exchange and interconnectivity amongst customs administrations;
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Implementation of the electronic certificate of origin in SADC; and
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Improvements to infrastructure at selected major border posts.
Related News
Visa-commissioned study estimates migration to electronic payments added nearly $300b to GDP across 70 countries
Visa Inc. has released the results of a new 2016 study conducted by Moody’s Analytics that analyzed the impact of electronic payments on economic growth across 70 countries between 2011 and 2015. The Visa-commissioned study found that increased use of electronic payment products, including credit, debit and prepaid cards, added US$296B to GDP, while raising household consumption of goods and services by an average of 0.18 percent per year.
In addition, Moody’s economists estimate that the equivalent to 2.6 million new jobs were created on average, annually, over the five-year period as a result of increased use of electronic payments. The 70 countries in the study make up almost 95 percent of global GDP.
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation,” noted Mark Zandi, Chief Economist, Moody’s Analytics. “Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
Findings from the study were shared in the report, “The Impact of Electronic Payments on Economic Growth,” which also indicated that the electronification of payments benefited governments and contributed to a more stable and open business environment. Additionally electronic payments helped to minimize what is commonly referred to as the grey economy – economic activity that is often cash-based and goes unreported. As a result, electronic payments provided a higher potential tax revenue base for governments, while also bringing the added benefits of lower cash handling costs, guaranteed payment to merchants and greater financial inclusion for consumers.
”These findings reinforce the many positive benefits that electronic payments bring to local economies all over the world,” said Charlie W. Scharf, Chief Executive Officer, Visa Inc. “This research also suggests that the right public policies can create an open, competitive payment environment, and contribute to economic growth and job creation. At Visa we are partnering globally with governments, financial institutions, merchants and technology companies to develop innovative payment products and services that will accelerate electronic acceptance, grow commerce, and bring the benefits of card payments to more people everywhere.”
Highlights of the global study include:
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Growth Opportunities:
Card Penetration: Real consumption grew at an average of 2.3 percent from 2011 to 2015, of which 0.01 percent is attributable to increased card penetration. This implies that card usage accounted for about 0.4 percent of growth in consumption. Since consumption growth is, on average, faster in emerging economies, those countries also have more to gain by increasing card usage. Card Usage: Countries with the largest increases in card usage experienced the biggest contributions in growth. For example, big increases in GDP were recorded in Hungary (0.25%), the United Arab Emirates (0.23%), Chile (0.23%), Ireland (0.2%), Poland (0.19%) and Australia (0.19%). In most countries, card usage increased regardless of economic performance.
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Contribution to Employment:
Increased card usage added the equivalent to almost 2.6 million jobs on average, per year, across the 70 countries sampled between 2011 and 2015. Notably, the two countries with the greatest average job increases were China (427,000 jobs added) and India (336,000 jobs added), which both had large gains in employment due to the combination of fast growing labor productivity and increased card usage.
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Emerging Markets and Developed Countries:
Both emerging markets and developed countries experienced gains in consumption due to higher card usage. Increased card usage added 0.2 percent to consumption in emerging markets, compared with 0.14 percent in developed countries between 2011 and 2015. The corresponding figures for GDP were 0.11 percent for emerging economies and 0.08 percent for developed countries, and suggests that all markets, regardless of current card penetration rates, can benefit from increases in consumption due to increases in card usage.
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Potential Future Growth:
Across the 70 countries in the study, Moody’s found that every 1 percent increase in usage of electronic payments could produce, on average, an annual increase of approximately $104 billion in the consumption of goods and services. Assuming all future factors remain the same, this could result in an annual average increase of 0.04 percent to GDP attributable to card usage.
The study highlights that expanding electronic payments alone will not necessarily increase a country’s prosperity – it requires the support of a well-developed financial system and healthy economy to have the greatest impact. The report recommends at a macro-level, to encourage the further electronification of payments, countries must promote policies that minimize unneeded regulation, create a robust financial infrastructure, and lead to greater consumption.
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WTO Farm committee to monitor implementation of Nairobi decision
WTO members confirmed in a regular meeting of the Agriculture Committee on 9 March that they will monitor the implementation of the Nairobi decision to abolish export subsidies during the next dedicated discussion on export competition to be held in June.
The committee also undertook its more routine work to review countries’ policies through questions and answers.
Implementing Nairobi decisions
The committee considered the implementation of a decision to eliminate export subsidies and discipline other forms of export support adopted at the WTO Nairobi Ministerial Conference in December 2015. The decision instructs the regular Committee on Agriculture to monitor the implementation of the decision, based on information from members on their export measures.
The Chairperson, Mr. Michael Wamai of Uganda, reminded members that an examination of export subsidies and other export support measures would take place in the committee’s June meeting. It is the continuation, as decided by members in Nairobi, of the annual discussions on the export support measures held by the committee since 2014, following a decision at 2013 Bali Ministerial Conference where members agreed to “exercise utmost restraint” in using export subsidies.
Members expressed their commitment to faithfully implement the decision; several members with export subsidy reduction commitments said that they have already started internal process to revise their schedules for export subsidies in accordance with the Nairobi decision.
Review of world trade growth
The review is part of an exercise to monitor global trade growth and detect abrupt export increases. It is based on a document compiled by the WTO Secretariat, which highlights the annual shares of world trade of major agriculture exporters.
Members noted that trade had increased in most agriculture sectors, and an increasing number of countries are taking part in agriculture trade. In particular, developing countries’ share in global agriculture trade increased – while the EU and the US remain the largest exporters of many agriculture products, emerging countries are quickly catching up. Some members noted that an open trading system contributed to the increasing number of countries taking part in trade.
Questions and answers
The committee undertook its regular monitoring of countries’ agriculture policies, through a review process where members share information of their agriculture policies and ask questions to each other.
Out of the questions discussed in this meeting – see document – 24 arose from information available elsewhere that has not yet been notified, and 27 were about members’ notifications on their farm programmes. Questions and answers from all meetings are compiled in the Agriculture Information Management System database, and can be searched using their ID.
Net food importing countries
Morocco, on behalf of the African Group, pointed to the decline of food aid delivered to net food-importing developing countries and least-developed countries. A document prepared by the WTO shows that total food aid delivered to these countries have been following a declining trend over the last ten years. The African Group called on members to increase the financial and technical assistance.
Qatar asked to be added to the list of net food-importing developing countries, noting that over 90% of its foodstuff was imported last year. A few members indicated that they need more time to study the data and consider the request.
Notifications
The committee looked at the state of compliance with notification obligations – see its latest version. Over a third of domestic support notifications are overdue (769 or 37% of the total expected) and a similar figure for export subsidies (805 or 35%). The chairperson reminded members that compliance with their obligations to provide data is crucial to enable the committee’s work.
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While poverty in Africa has declined, number of poor has increased
Poverty across the continent may be lower than what current estimates suggest, though the number of people living in extreme poverty has grown substantially since 1990, according to the latest World Bank Africa poverty report.
Poverty in a Rising Africa, the first of two upcoming reports on poverty in Africa, documents the data challenges facing the region and reviews the status of Africa’s poverty and inequality, both monetary and nonmonetary, taking these data challenges into account.
“The main messages which emerge from this effort to assess poverty in Africa are both encouraging and sobering,” said Kathleen Beegle, World Bank program leader and co-author of the report. “Although the data show that the share of the African population in extreme poverty did decline, major poverty challenges still remain, especially in light of the region’s rapid population growth.”
According to latest World Bank estimates, the share of Africans who are poor fell from 56% in 1990 to 43% in 2012. The report argues that the poverty rate may have declined even more if the quality and comparability of the underlying data are taken into consideration. However, because of population growth many more people are poor, the report says. The most optimistic scenario shows about 330 million poor in 2012, up from about 280 million in 1990. Poverty reduction has been slowest in fragile countries, the report notes, and rural areas remain much poorer, although the urban-rural gap has narrowed.
Other key findings of the report are:
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Nonmonetary dimensions of poverty have been improving, but the challenges remain enormous. Compared with 1995, adult literacy rates are up by four percentage points and the gender gap is shrinking. Newborns can expect to live six years longer and the prevalence of chronic malnutrition among under five-year-olds is down six percentage points to 39%. At the same time, despite substantial improvement in school enrollment, the quality of schooling is often low and more than two in five adults are still illiterate. Reinvigorating Africa’s primary educational achievements is urgent. Paradoxically, citizens in resource-rich countries have worse outcomes in human welfare indicators, conditional on income. This findings underscores that while economic growth is critical for poverty reduction, it is not sufficient.
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The picture on African inequality is complex. Seven of the 10 most unequal countries in the world are in Africa, most of them in southern Africa. Excluding these countries and controlling for GDP levels, inequality is not higher in Africa than elsewhere in the world. The household survey data do not reveal a systematic increase in inequality across countries in Africa. But the number of extremely wealthy Africans is increasing. Differences between urban and rural areas and across regions are large. Intergenerational mobility in education and occupation has improved, but remains low.
The report concludes with a plea to strengthen Africa’s poverty data. While the availability, comparability and quality of data to track non-monetary poverty has improved, in 2012, 25 of Sub-Saharan Africa’s 48 countries had conducted at least two household surveys over the past decade to track monetary poverty, and many of these surveys are not comparable over time. On October 15, the World Bank and its partners announced stronger support to complete household-level surveys every three years in the world’s poorest countries, including several in Africa, to address huge data gaps that have previously stunted poverty-fighting efforts.
“Better data will make for better decisions and better lives,” said Luc Christiaensen, World Bank lead economist and co-author of the report. “It is not just about quantity, the quality of the data also matters. The report offers examples of missed opportunities when surveys are not conducted with quality standards. Maintaining and accelerating the momentum of progress of the past two decades requires collective efforts.”
» Download: Poverty in a Rising Africa (PDF, 11.67 MB)
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ECA’s Biha calls for aviation-tourism convergence in Africa
A two-day meeting looking into the aviation and tourism industries in Africa opened in Addis Ababa Thursday with the Economic Commission for Africa’s Deputy Executive Secretary Ms. Giovanie Biha urging experts to focus on ways through which the continent can maximise the cooperative opportunities for the two sectors.
In her opening remarks to the two-day meeting at the United Nations Conference Centre (UNCC), Ms. Giovanie said aviation’s central role in supporting tourism is well acknowledged but said more still needs to be done on the continent to harmonise aviation and tourism policies.
“With increased connectivity warranting long term growth for aviation and tourism, the interlinked sectors represents lasting opportunities for all those involved in the tourism value chain,” said Ms. Biha.
“But if these socio-economic benefits are to fully harnessed, tourism and aviation must address persisting divergent policies and work towards a stronger, integrated position on inter-sectorial issues.”
Last year 53 percent of over 1.2 billion tourists travelled by air to reach international destinations in 2014. This number covered 80 percent for Landlocked Developing Countries (LLDCs) and Small Island Developing States (SIDS).
Equally important, said Ms. Biya, is the fact that aviation and tourism jointly supports in excess of 58 million jobs and more than 2.4 trillion dollars in global GDP.
The ECA is hosting the two-day experts’ meeting to look into a new report on aviation and tourism policies in Africa as tourism fast becomes an important vehicle for the continent’s economic development.
The meeting will review and validate the report, titled ‘Fostering Africa’s Tourism Growth: The Aviation and Tourism Policy’, as the continent looks for ways to tap into the growing international tourism receipts.
The report, commissioned by the ECA on the two economic sectors, identifies a number of factors, including unfavourable regulatory environments, policies that limit air connectivity, restrictive visa regimes, uncoordinated consumer protection regulations, restrictive taxes, among others levies, as constraining the growth of the two industries.
Speaking ahead of the meeting, RITD Director, Stephen Karingi said; “A collective and effective strategy to address these challenges will enable the symbiotic growth for the tourism and air transport to stimulate growth of the overall economy and create opportunities for employment and entrepreneurship as Africa continues to enjoy sustained tourism growth.”
The tourism sector’s contribution to GDP on the continent ranges from 4.5% on the lower end in Burundi for example, and 56.5% on the higher level for a country like Seychelles.
The United Nations World Tourism Organisation (UNWTO) projects that international tourist arrivals will increase by approximately 3.3% every year from 2010 to reach 1.8 billion by 2030.
The region’s share of international tourist arrivals, according to 2013 figures, was low at about 5% of the global total.
Experts blame the general poor performance of Africa’s aviation industry, which accounted for a mere 3% of global air transportation in 2013, for Africa’s low share in international tourist arrivals.
“It is because of this that the ECA has organised the expert group meeting to look into all these issues,” says Karingi.
Regional stakeholders from both the aviation and tourism sectors on the continent are attending the meeting.
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SADC Committee of Ministers of Finance and Investment agree to finalize the establishment of the SADC Development Fund
SADC Committee of Ministers of Finance and Investment met on Saturday, 12 March 2016 in Gaborone, Botswana. The main objective of this meeting was to consider the outcome of the assessment sanctioned by Ministers, on the operationalization of the SADC Regional Development Fund, and to devise mechanisms to sustainably fund the SADC regional development and integration agenda.
The meeting was opened and chaired by SADC Chairperson of Council of Ministers, Hon. Kenneth Matambo who said: “It is necessary to review progress in the development of the long envisaged SADC Regional Development Fund while we continue to seed other sustainable ways of financing our regional programs.”
In her opening remarks, the SADC Executive Secretary, H.E. Dr. Stergomena Lawrence Tax gave a brief overview of the progress made since the last meeting held in August 2015.
Deliberating on progress made, the Ministers agreed to expeditiously operationalize the SADC Development Fund through a two phased approach; phase one to focus on project preparation and development, and phase two to focus on infrastructure development, industrial development, integration and economic adjustment and social development windows.
Opening Remarks by SADC Executive Secretary, Dr Stergomena L. Tax
Meeting of the Committee of Ministers of Finance and Investment
It gives me great pleasure and privilege to welcome you all to this meeting of the Committee of Ministers of Finance and Investment, taking place in this beautiful city of Gaborone. On behalf of the SADC Secretariat, I would like to thank the Government of the Republic of Botswana for hosting this important meeting and many other preceding and upcoming meetings in this long series of Council Meetings. It is my conviction, that the issues that will be discussed today will go a long way to improve the livelihood of the people of this region. As you are all aware, today is Mauritius's independence day. May I take this opportunity to wish the Republic of Mauritius a Happy Independence day.
This meeting comes at a time when the implementation of the Revised Regional Indicative Strategic Development Plan (2015-2020) has gained momentum and key priorities for the region are being addressed, key among these being:
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the implementation of the Industrialization Strategy, and infrastructure development in support of regional integration; and
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sustainable financing of regional integration.
I would like to highlight our commitment as your Secretariat in continuing to coordinate and monitor the implementation of the RISDP, in all the four pillars: Industrial Development and Market Integration, Infrastructure Development in support of regional integration, Peace and Security cooperation and Special programs of regional dimension. I am glad to report that, a number of strides were recorded during the year. Of specific interest to this Committee, is the consolidation of Integrated Regional Electronic Settlement System (SIRESS), constituting to a sound and robust payment environment in the region. I would like to thank and commend the CCBG for this achievement that makes cross border settlements more efficient.
This meeting is convened primarily for Honourable Ministers to consider the outcome of the assessment sanctioned by Ministers on the operationalization of the SADC Regional Development Fund, and devising mechanisms to sustainably fund SADC regional development and integration agenda.
Honourable Ministers will recall that at your meeting held in Bulawayo, Zimbabwe in August 2015, you noted progress with regard to the operationalization of the SADC Regional Development Fund. Because of the importance of this subject, you directed the Secretariat to widen the scope of consultations to include all Member States to review the report and recommendations of the study.
SADC Member States' Senior Treasury Officials and Legal Experts met twice in the last three months to interrogate the findings of the report and provide input to the finalisation of the Study. The recommendations will be presented to you in the course of this meeting. I believe that the stage has been set for the region to move forward and establish the needed mechanism for Resource mobilisation, and take its rightful place in the global arena. As custodians of Member States financial resources, I believe honourable Ministers will facilitate expeditious finalization of this noble course, which facilitate putting financial resources into SADC programs that will improve the livelihood of our people.
I am also happy to report that the SADC Project Preparation and Development Facility is progressing very well, facilitating preparations of some regional projects. Nonetheless, resources remain a challenge. Improvement of the region’s infrastructure is key to the realization of SADC Development and Integration Agenda, thus sustainable financing of our integration agenda remains among our priorities. May I report that the Secretariat guided by the Senior Treasury Officials continues to develop proposals on alternative sources of fund, and a report will be presented for your consideration in June 2016, and thereafter to Council in August, 2016.
We need to also be cognizant of the challenges currently facing the region, which may impact the economic performance of Member States and, by extension, the pace of implementation of the regional integration agenda. I am referring in particular to the low prices of commodities caused by the decrease in demand from global markets due to economic slowdown experienced in both the industrialized countries and the emerging economies. It is my belief that collectively as a region we can also take advantage of our regional arrangements to develop strategies that will minimize the impact of negative effects of Globalization on our economies. As I conclude my remarks, may I thank the Senior Officials and the Secretariat for the job well done in preparing for this meeting. May I now take this opportunity to invite the Chairperson of the Committee of Ministers of Finance and Investment to make his remarks and officially open the meeting. I wish you fruitful deliberations.
Ke a leboga
I thank you.