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Keeping the world below 2 degrees is a $12.1 trillion investment opportunity, BNEF report says
Keeping the world below the 2 degrees Celsius pathway presents a US$12.1 trillion investment opportunity over the next 25 years, a new analysis states.
The report Mapping the Gap: The Road From Paris, presented by Bloomberg New Energy Finance (BNEF) at the 2016 Investor Summit on Climate Risk hosted by Ceres, shows the opportunities and challenges of filling the ‘gap’ between the business-as-usual (BAU) investment in renewable energy and what is needed to avoid the worst effects of climate change.
At the Summit, the UN Secretary-General Ban Ki-moon called investors to at least double their investments in clean energy by 2020, adding that “we must begin the shift away from fossil fuels immediately.”
Earlier in January, another BNEF report showed how global clean investment attracted a record US$329 billion last year – about six times the amount invested in 2004.
Just a month ago, countries signed at COP21 in Paris a historic agreement to tackle climate disruption and keep global warming well below 2 degrees Celsius, compared to the pre-industrial era. However, the report by BNEF shows that to achieve this goal, investment in new renewable power generation must increase 75% above the BAU trajectory.
In fact, if governments and business leaders take no additional steps to what they have planned today, the investment opportunity for tackling climate change is US$6.9 trillion, or US$277 billion per year.
The ‘gap’ between this scenario and what is needed to keep the world safe is US$5.2 trillion, or US$208 billion per year. To put the numbers in perspective, authors point out this is far less than the US$454 billion per year that people in the US ask every year to get their auto loans.
Nevertheless, “there still remains much to be done,” says Mark Kenber, CEO, The Climate Group, in a recent blog. “While the leaders in the investment, corporate and sub-national communities have demonstrated that bold climate action brings economic benefits, the task now is to ensure those in the mainstream follow this leadership.”
To reach this point, renewable investment must scale up quickly in the next 15 years, grasping opportunities already available today to reach 12,500 gigawatts globally by 2040.
Under this scenario, which excludes large hydropower investment, wind and solar have the lion’s share growing 46% and 43% respectively in the first decade – thanks in particular to their increasingly lowering prices and off-grid potential.
In fact, the report forecasts that the cost per unit of clean energy is due to decline consistently through the full 25 years analyzed, from an average of US$1.74/megawatt (MW) in the 2015-2020 period to $1.03/MW by the 2036-2040 period.
Policies and solutions
To scale up the opportunities offered from the 2 degrees pathway, many policies have proven to be successful. One of these solutions is putting a price on carbon, such as the system created in 2014 by Québec and California – governments that are part of The Climate Group’s States & Regions Alliance – that created the first cross-border market in North America.
Also Ontario, another valuable member of the States & Regions Alliance, last year launched a ‘cap-and-trade’ system to curb its emissions, aiming to link it to the system set up by Québec and California.
Other solutions envisaged by the report are tax incentives, to accelerate investments on clean power plants and manufacturing facilities, and feed-in tariffs to spur a widespread adoption of renewables among customers and businesses.
“Clean energy financing is poised to ‘grow up’ to more fully resemble other, better established infrastructure sectors,” conclude the authors of the report, “such as transportation or real estate, from a financial structure perspective.
“These new finance vehicles will present massive new opportunities for capital deployment. Policy makers need to ‘mind the gap’ to ensure that investment grows at the speed and scale required.”
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USTR Public Hearing: Trade and Investment in Africa – Jim Kolbe Testimony
Washington, D.C., 28 January 2016
Mr. Ambassador, Mr. Chairman, Members of the Committee:
It is a great pleasure to appear today for this public hearing on the topic of trade and investment opportunities in Africa. The subject is very timely. Africa, at long last, is getting some of the attention it deserves from economists, policy makers and – most importantly – from the commercial and investment sectors in the developed world.
Six of the ten fastest growing economies in the world are to be found in Africa. The explosion of technology in communications, while occurring world-wide has been more pronounced and rapid in Africa than any other part of the globe. More people in the past decade have emerged from poverty and into the middle class in Africa than any other continent or country with the exception of China. Trade among members of the new Tripartite Free Trade Area (TFTA) has increased from $2.3 billion annually in 1994 to $36 billion in 2014 – a twelve fold increase in twenty years.
And yet, the potential for development on the African continent remains largely unrealized. Seventy percent of Africa has either inadequate or no electric power. Africa’s trade total accounts for only 3% of all world trade. Within the African continent, intra-regional trade has increased from 7% to 25% during the last twenty years, but remains substantially below that of Europe at 70% or Asia at 50%. Breaking this figure down further, we find that 14% of all imports in Africa come from other countries on the continent, while just 10% of exports go to continental neighbors. In short, we find that Africa’s trade is a woefully small share of the world’s trade, and that most of it finds its way to and from Europe and Asia – not to other African countries.
A major step toward improving African trade and investment took place this past year with the ten year extension of AGOA – the African Growth and Opportunities Act. After seemingly countless starts and stops and short term extensions – too short to be useful in making long term investment decisions – the preference act was both extended for a meaningful period and the coverage significantly expanded. The European Union had already expanded their preferences. These dual actions will help spur significant investment in Africa with a commensurate increase in two way trade.
Within Africa, an even more encouraging development has been the Tripartite Free Trade Area, or TFTA. TFTA is a planned free trade area that would integrate the members of three regional economic communities – the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community, known as SADC. The TFTA, when fully implemented, would link 26 countries from Egypt in the north to South Africa at the southern tip of the continent. Its objective in the first place would be the elimination of tariffs and non-essential barriers to trade. Promotion of trade in services would follow more gradually. Other objectives would go beyond trade as that term might be narrowly defined, to include investment promotion and free movement of business persons between countries.
While this represents a hopeful development, especially since it is internally generated and not resulting from intervention by the developed countries of Europe or the United States, it also highlights the need for more internally generated reforms. Set alongside the small amount of intra-continental trade previously referred to, it suggests that far more can be done by African countries themselves.
The hard truth is that there is a growing disillusionment in Congress and in the business community for preference programs, a sentiment not altogether unwarranted. AGOA may represent a major opening for trade an investment on the African continent, but there has to be a reciprocal showing from the other side. The quality of governance matters – tackling corruption, a competitive procurement process, transparency, an independent judiciary and adherence to the rule of law, the quality of the work force – these all matter to a business thinking of making a major investment in Africa.
This brings me to the main point of my remarks. As important as preference programs may be, as helpful as foreign assistance can be in bringing about infrastructure developments, I am convinced that the most important objective of our assistance program in Africa must be the facilitation of internal reforms. A simple thing such as developing a uniform Letter of Credit can greatly facilitate trade. Reforms that focus on internet access, enforcement and arbitration of contracts, simplifying customs forms and regulations, and reducing petty corruption are likely to do more for trade and development than all our trade preference programs or infrastructure development.
I remember a visit to Tanzania a few years ago and learning about the difficulties in exporting fresh cut flowers from Tanzania to Europe. Because they lacked adequate air cargo facilities in Tanzania, much of the product crossed the border to Kenya for shipping from the Nairobi airport. But because of the endless paperwork and inadequate staffing, Tanzanian exporters were experiencing on average a 24 hour additional shipping time to cross the border into Kenya. Translated into remaining freshness once the flowers reached their end market, the result was a significant increase in spoilage.
Congress and the administration are to be congratulated on the extension of AGOA – the longest period of continuous preferences since AGOA was first adopted. Now we should turn our attention to the details of making it work. The impetus will have to come from the African country themselves. But we can help if we re-focus our assistance from promoting more preference programs to assisting African countries in removing the regulatory and non-tariff barriers which constitute the biggest impediment to trade and investment on the continent.
Thank you Mr. Chairman.
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Report on the SADC Standardization, Quality Assurance, Accreditation and Metrology (SQAM) Programme
This document contains information provided by SADC at the Technical Barriers to Trade (TBT) Committee meeting of 4-6 November 2015 under Agenda Item 4 (Update by Observers).
Elimination of TBTs in the SADC region is addressed under the framework known as the TBT Annex to the SADC Protocol on Trade. The Trade and Industry, Finance and Investment Directorate is a custodian of this framework and it supports the SADC Free Trade Area.
There are four International Cooperating Partners / International Development Partners (ICP / IDPs) supporting the developmental aspects of the SQAM programme on TBT components at a regional level. These are the European Union, GIZ, PTB, and the Southern Africa Trade and Investment Hub / USAID. Support for national quality infrastructure projects is obtained from UNIDO and is Member State driven.
For SADC Member States, the SQAM Programme has been actively engaged on assisting Member States to have available at least a basic technical infrastructure and in further building capacity as required by the TBT Annex to the SADC Protocol on Trade. The SADC SQAM Programme follows a strategic proactive and developmental approach to continually strengthen the quality infrastructure available in the region in the quest to reduce and eliminate TBTs. Main activities include:
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Raising awareness for relevant stakeholders in SADC Member States on the importance and benefits of SQAM;
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Organizing and convening SADC Annual Quality Awards at regional level;
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Facilitating accreditation of Conformity Assessment Bodies (CABs);
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Facilitating training for Lead and Technical Assessors for SADC Accreditation Services (SADCAS);
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Operationalizing the SADC Technical Barriers to Trade Stakeholder’s Committee;
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Facilitating the identification of Technical Regulations hindering trade; and
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Coordinating the harmonization of standards, measurement systems and conformity assessment procedures, for harmonization of technical regulations.
Progress on the implementation of the activities is summarized below.
Promotion campaign of the SADC Annual Quality Awards
SADC Annual Quality Awards serve as a platform for private sector engagement on quality of goods and services. The objective of the awards is to recognise enterprises that are implementing quality management principles for competitiveness and market access. In the last year, four Member States organized their national quality competitions with a total of fourteen entries received from three Member States, covering categories on Organisation of the year, Product of the year, Service of the year, Exporter of the year, for both large and small and medium enterprises and Individual Award.
Out of the fourteen entries that were considered, four received awards, representing Mozambique, Namibia and Zimbabwe. Etosha Fishing Corporation, a large enterprise from Namibia was awarded as SADC Organisation of the year and Exporter of the year, Nutriconsult LDA a small and medium enterprise from Mozambique was awarded for SADC Service of the year, and Schweppes Zimbabwe, a large enterprise was awarded for SADC Product of the year.
SADC Annual Quality Awards contribute to increased awareness of the importance on a quality culture and use of international standards for product competitiveness and in trade. SADC Member States continue to give support and engage departments and institutions to continue to organize the National competitions and encourage private and public sector institutions to participate.
Preparation of Conformity Assessment Bodies (CBAs) for accreditation
The strategic long term plan for SADC SQAM Programme on CABs is to encourage CABs to pursue accreditation in order for their test certificates to be recognized the world over by their trading partners. The strategy is to assist CABs prepare for accreditation in way that will address seeming delays due to fundamental systems and processes not being in order for accreditation. While accreditation bodies can point out non-conformances they are not able to assist such bodies to carry out corrective actions before assessments. The idea is to assist these bodies to prepare well in order to avoid delays before accreditation.
The development of the strategy to assist CABs prepare for accreditation commenced in the 4th quarter of 2014/2015 financial year, and was expected to be finalised in the 2nd quarter of 2015/2016. So far a data collection exercise on challenges being faced by laboratories and certification bodies in their attempts to become accredited is underway. Inspection bodies will also be engaged following which the draft strategy will be developed. The strategy document was expected to be finalized by the end of March 2016. While we await the completion of the strategy, in March 2014, 23 representatives from CABs were trained on conducting vertical assessments of their own facilities.
During the 2015/16 financial year the same group will be trained on method validation in preparation for accreditation. Method validation was identified as a constraint during the vertical assessment training. Whilst a start has only just been made in training laboratory representatives in preparation for accreditation, during awareness workshops, enterprises are being encouraged to use existing accredited CABs for their conformity assessment needs which should encourage existing non-accredited CABs to seek accreditation. The conclusion of the CAB Strategy is expected to assist in getting non-accredited CABs ready to apply for accreditation.
Training for lead and technical assessors
In the quest to qualify and register lead and technical assessors for the SADC Accreditation Service (SADCAS), 22 candidate Assessors who were trained on ISO/IEC 17025:2005 (ISO standard for testing and calibration bodies) earlier in 2014, received additional training in March 2015, on Technical Assessing Techniques based on ISO/IEC ISO 17025:2005 to determine their competency levels for accreditation assessments, a prerequisite for registration with SADCAS. Thirteen (13) of these trainee assessors have been recommended for mentoring. As part of mentoring, the trainees will be expected to conduct assessments in various Conformity Assessment Bodies (CABs) in the region under supervision by SADCAS Qualified Assessors.
Further training of Lead and Technical Assessors on ISO/IEC 17020 (Inspection Bodies), ISO 15189 (Medical Testing Laboratories), and the mentoring of Lead and Technical Assessors on ISO/IEC 17020 (Inspection bodies), ISO 15189 (Medical Testing Laboratories), ISO/IEC 17025 (Testing Laboratories) will be carried out in January 2016. The overall output of the training programme over the next two years is not only to have assessors trained but also to qualify and register them in the accordance with the ILAC/IAF requirements for international recognition.
SADCAS peer evaluation for international recognition
In May-June 2015, SADCAS underwent a peer evaluation on the Testing Laboratory Accreditation Programme (TLAP) and Calibration Laboratory Accreditation Programme (CLAP). The evaluation team confirmed that the overall system of SADCAS meets African Accreditation Cooperation (AFRAC) and International Laboratory Accreditation Cooperation (ILAC) requirements. In particular the team highlighted that SADCAS operates its TLAP and CLAP substantially in accordance with the requirements of ISO/IEC 17011:2004 and IAF/ILAC-A5:11/2013. Laboratories accredited by SADCAS have been assessed against and found to comply with the requirements of ISO/IEC 17025: 2005. SADCAS adopts and substantially implements the applicable AFRAC and ILAC policies and guidelines. The team further noted that the full time SADCAS staff is skilled and technically qualified for the functions they perform, and that the organization has a satisfactory foundation of accreditation experience. SADCAS has access to a sufficient number of well qualified, experienced and competent assessors and experts and that SADCAS has a well-established accreditation process which is applied consistently to the accreditation of its testing and calibration laboratories.
The team submitted a recommendation to the AFRAC MRA Committee and the ILAC AMC in October 2015. SADCAS achieved signatory status of its Testing and Calibration Laboratories Accreditation Programs in the AFRAC MRA as decided by the AFRAC MRA Council on 8 October 2015. The ILAC decision will be made on 4 November 2015.
Training of conformity assessments bodies in the mining sector
The effort to train testing laboratories management and staff on ISO/IEC 17025, the appropriate standard for testing laboratories, from both the private and public sector covering exploration, research and quality control in the mining and mineral processing sector in order to prepare them for accreditation is ongoing. This programme is expected to contribute to the strengthening of industrial capacities in the mining and minerals processing sector and enhance the competitiveness and integration into the world markets. The training is being conducted by SADCAS with funding via the SADC PTB Implementation Agreement.
Operationalization of the SADC Technical Barriers to Trade Stakeholders Committee
The SADC Technical Barriers to Trade Stakeholders Committee (SADCTBTSC), an arm of the SADC SQAM Programme on private sector engagement, held a workshop in 26-27 August 2015. A work plan for the next year was developed. The work plan among others includes; continued awareness raising efforts for stakeholders, technical assistance for SMEs to obtain product and system certification, technical assistance with training on labelling and packaging and Good Manufacturing Practice.
Stakeholders also requested for further roll out of the conformity assessment toolkit which had been developed by the SADC Cooperation on Accreditation (SADCA) and released in Kinshasa, DRC, in March 2015. The toolkit was developed to assist new conformity assessment bodies (CAB’s) to understand what is required to prepare for accreditation from an accreditation body. The toolkit explains the terminology that is used and describes the whole accreditation process. It also gives tips on how to prepare a management system.
Identification and harmonization of technical regulations hindering trade
On harmonization of technical regulations hindering trade, data gathering to identify technical regulations (TR) that are hindering trade and require harmonization. The questionnaire was administered at national level by national experts. A consolidated report from four Member States was considered on the 3-4 August 2015 during the meeting of the SADCTRLC workshop. The report identifies a total of fifteen (15) technical regulations that require harmonisation. This includes among others, biosafety regulations, second hand car regulations, importation of medicine, Standard Import Inspection Regulation, pre-packaged labelling regulations and Kimberly Process Regulations. While this list is not conclusive, texts of this regulations will be analysed further to determine their level of hindrance.
In order to guide Member States in the development of technical regulations by observing Good Regulatory Practice, Risk and Impact Assessment Guidelines have been developed. The guidelines will assist regulators and legislators in taking practical evidence based decisions regarding the need for introducing, amending or withdrawing technical regulations governing the import, manufacture and sale of products. Member States representatives will be trained on these guidelines in November 2015.
Development and implementation of an e-marking scheme for regulated pre-packed products in the SADC region
SADC Cooperation in Legal Metrology will be developing and implementing a legal metrology e-marking scheme for pre-packed products originating from any country in the SADC region, mutually recognized in all Member States, for ease of regulation, consumer protection and reduction of Technical Barriers to Trade (TBTs). The initial beneficiary of the project will be the Namibia Standards Institute (NSI). Key problems to be addressed include; capacity building of the LMA, Awareness and capacity building of industry role players, Gazetting of SADCMEL documents as legal metrology technical regulations for Namibia, development / adoption and implementation of Namibian Standard on e-marking, Inspections and auditing of packers and Accreditation by SADCAS of the NSI’s inspection services. The pilot phase of this effort covers only Namibia and the roll out to other Member States will follow once the pilot phase is completed.
The SADC region has a fairly developed legal metrology infrastructure, supported by Legal Metrology Authorities (LMAs), significantly supported by Governments. The responsibilities of the LMAs, among others, are to regulate pre-packed goods offered for sale. The SADC Cooperation in Legal Metrology (SADCMEL) has developed harmonised documents (SADCMEL documents 1 and SADCMEL Document 4) for the regulation of the labelling and permissible tolerances of pre-packed goods. The level of implementation of these harmonised documents has been varied across the region.
In spite of existing legal metrology harmonised documents whose implementation is meant to eliminate Technical Barriers to Trade (TBTs), prepacked products are still found to be noncompliant as they are being traded across the borders, prompting the responsible LMAs to ‘lock out’ such products. Those products that may comply to the harmonised SADCMEL documents, that are not easily identifiable as such, are subjected to unnecessary inspections by the recipient LMA, thereby posing as a technical barrier to trade, and hindrance to trade facilitation.
The majority of SADC Member States do not have the capacity to develop and implement a credible scheme that will ensure that, if implemented properly, products that comply with legal metrology legislation are easily identified and allowed entry easy into the marketplace of another economy. The National Regulator for Compulsory Specifications (NRCS) of South Africa is the only legal metrology authority in SADC that is implementing a successful e-marking scheme based on compliance with a South African Standard (SANS 1841). Products originating from South Africa easily find their way into the SADC regional marketplace.
Coordinating the harmonization of standards, measurement systems and conformity assessment procedures, for harmonization of technical regulations
Botswana, Mauritius, Namibia, Seychelles, Zambia and Zimbabwe have their facilities accredited under the scopes of Temperature and Mass. These facilities are being assisted in profiling their Calibration and Measurement Capabilities (CMCs) to the ultimate submission to the Key Comparison database (KCDB). A training workshop was held to train staff from these National Metrology Institutes (NMIs) in the preparation of Calibration and Measurement Capability (CMC) submissions, in the fields of Mass and Temperature, for publication in the BIPM Key Comparison Database (KCDB).
The International Committee for Weights and Measures Mutual Recognition Arrangement (CIPM MRA) is the framework through which National Metrology Institutes (NMIs) demonstrate the international equivalence of their measurement standards and the calibration and measurement certificates they issue. The outcomes of the Arrangement are the internationally recognized (peer-reviewed and approved) Calibration and Measurement Capabilities (CMCs) of the participating institutes. Approved CMCs and supporting technical data are publicly available from the CIPM MRA database (the KCDB).
Joint UNIDO-SADC Expert Group Meeting on “Quality infrastructure projects and initiatives in SADC: An outlook for cooperation”
In order to identify areas of cooperation and coordination and to learn from best practices, a joint UNIDO-SADC facilitated workshop on Quality Infrastructure projects and initiatives in the SADC region was organised in Gaborone, Botswana on 28 to 29 April 2015, Gaborone, Botswana. The workshop was attended by project beneficiary representatives from SADC Member States, representatives of International Development Partners and project executing agencies. Twenty two (22) delegates attended the meeting representing the SADC Member States, the SADC Secretariat, SADCAS, PTB, SATH and UNIDO. Representatives from the EU-funded ACP-TBT project were unable to attend due to prior engagements. However, information pertaining to current projects in this latter project was made available. Following a series of presentations made on the objectives and progress of each of the projects/programmes pertaining to quality infrastructure in SADC, gaps were identified and possible solutions suggested for the current projects on the development of Quality Infrastructure.
This is summarized in the table below and These possible solutions will be used to feed in to upcoming programmes.
Table 1: Gaps identified and possible solutions
Identified Gaps | Possible Solutions |
Accreditation | |
The importance of SADCAS and its services needs to be emphasized in Member States |
Optimization of accreditation services available |
Promote SADCAS as a cost effective, viable multi-economy solution to the region’s accreditation needs |
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There is need for SADC Member States to support SADCAS |
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Awareness Raising |
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Consumer and policy makers education is still lacking |
Consumer education should be included in awareness creation activities |
Support projects must emphasize on consumer awareness |
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Targeted awareness for policy makers also required |
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Capacity building | |
Lack of national Quality Infrastructure Experts at national level |
Organise exchange programmes or working visits to other National Standards and QI institutions to share experience and assist in building each other’s capacity in the region |
Leverage partnerships for training | |
Make better use of regional and local expertise and experiences in the region for project implementation |
|
Conformity Assessment Bodies (CABs) | |
CABs still need to be assisted with readiness for accreditation |
Support the operationalization of the Regional and National Laboratory Associations |
Accreditation of CABs is a priority and needs to be advanced |
Coaching of CABs in the key development sectors as identified in the SADC Industrialization Strategy and Roadmap. There is need for capacity building of Inspection Services |
Coordination and Governance | |
No project design without participation of beneficiaries |
Projects must be better coordinated for optimal utilization of limited resources |
Technical Assistance projects must be designed to meet beneficiary needs and not technical partner dictates |
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There should be consultation with regional level project implementers prior to finalization of national level project plans |
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Align national projects to regional agenda | |
Duplication of efforts exists in some areas |
SADC Secretariat should take the lead in coordination efforts. An activity matrix should be developed and managed by SADC Secretariat, e.g. put on the SADC Website |
Develop mechanisms to ensure avoidance of duplication |
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Cooperation in Monitoring and evaluation using common set of indicators |
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Projects must take into account existing structures and promote and strengthen them, e.g. SADCAS |
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Align current and future projects to the SADC Industrialization Strategy and Roadmap |
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Difference in development of Quality Infrastructure in Member states should indicate to development partners where to focus their support |
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Weak continuity of national projects |
UNIDO to consider how Member States without QI projects/programmes can be assisted |
QI is a very big area, focus interventions on limited aspects so as to achieve better results |
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Mechanisms to ensure continuity and sustainability of projects and programmes |
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Information Sharing Platform | |
No formal mechanism in place for information sharing about project activities taking place in the region |
Continue to organize information sharing platforms such as this one in a more sustainable manner: e.g. reports can be presented at SADC SQAM structures annual meetings |
Common challenges in the implementation of Quality Infrastructure instruments |
UNIDO should give direct feedback to National Standards Bodies on key challenges faced during project implementation |
Resolutions made during annual SQAM meetings not made available to current project coordinators |
The national TBTEG representative to be encouraged to share this information with executing agencies |
Private Sector Engagement | |
Stakeholder engagement and consultation needs to be emphasized |
Project design stage must take on board all stakeholders including the private sector |
More direct assistance to the private sector | |
Develop a harmonized approach to private sector engagement |
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Harmonization of curriculum development on QI and QA |
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Direct assistance towards private sector institutions for quicker results |
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QI development currently does not speak to value chains in priority sectors |
Link projects to private sector needs and value chains |
More structured assistance to SME needs | |
SME must be assisted with product development in order to produce high quality |
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Support of development of QI must go in parallel with support to enterprises and consumer s to utilize the QI Services |
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Standardization | |
Private standards continue to create challenges for producers | Deal with the issue of private standards |
There is a disconnect between QI institutions and Regulatory Agencies which needs to be bridged |
Solicit support for harmonization of Technical regulations |
Develop mechanisms to bridge the gap between QI and regulatory agencies |
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Guidelines for Quality Policy development in the region |
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SADC Annual Quality Awards | |
Limited of participation in SADC Annual Quality Awards |
Support for national and regional quality award competitions |
Member States to consider including National Quality Awards competitions as part of their project outputs |
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Involve the Private sector in running National Quality Awards competitions |
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Include a category specifically supportive of women in business in the national and regional quality awards |
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Technical Regulations | |
Lack of support for quality infrastructure related to the development |
In addition to the current scope of projects, propose new scope to include administration and enforcement of technical regulations |
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tralac’s Daily News selection
The selection: Monday, 1 February 2016
Today, in Gaborone: Botswana's 2016 Budget Speech. Twitter updates: @BWGovernment
Today, in Addis: the US-Africa Business Summit. Twitter updates: #AfricaBizSummit
Featured quote from the AU Summit: ‘Africa must not remain a continent in transition’, Macky Sall, Senegal's President & Chair NEPAD orientation committee
NEPAD Heads of State and Government meeting: input by AfDB's President Akinwumi Adesina, Zimbabwe’s President Mugabe
North-South Corridor: update by President Zuma (SABC)
‘This year we intend to undertake the following, with particular reference to the North-South corridor and international financing investment conference where we will open up the North-South corridor, fast tracked projects for investment and take off. A North-South corridor road show will be led by heads of state and ministers. A head of state gathering of the eight North-South corridors states will finalise the North-South corridor operational mechanisms.’
Note: the full set of outcomes from the Summit can be expected in about a week.
CFTA: Experts to review draft free trade agreement (UNECA)
The meeting (2-3 February, Abidjan) is expected to generate: a proposed outline of the continental free trade agreement, a detailed plan and timeline for the development of a draft agreement, terms of reference for the preparation of sections of a draft agreement and an agreed division of responsibilities for preparing sections of a draft agreement.
Political economy analyses of the African Union and regional economic communities in Africa (ECDPM)
From July 2014 until December 2015, ECDPM and theIDLgroup partnered to produce a study on the drivers and obstacles to regional cooperation and integration in Africa on behalf of the Swedish Embassy in Nairobi. The final report and the AU and the five REC case studies are now available for download. Key findings: The findings of the studies are organised according to ten key statements, discussed in greater detail in the remainder of this synthesis report. These statements - and some of the illustrative findings - are as follows:
EABC calls for changes in regional NTBs Bill (The East African)
The regional business community has criticised the EAC Elimination of Non-Tariff Barriers to Trade Bill 2015, saying it needs extensive changes in order to be effective. The East African Business Council has pointed out that elimination of NTBs is strictly dependent on the political will of the concerned parties, with no consequence for non-elimination and no restitution for aggrieved parties. To address this, EABC trade economist Adrian Njau proposes that the NTBs Act be taken back to the East African Legislative Assembly for amendment. Mr Njau argues that the Bill should provide for an alternative dispute resolution mechanism, arbitration by the trade remedies committee and the ability to petition the East African Court of Justice.
Updates from the RECs:
IGAD Council of Ministers: communique
Ministerial Meeting of the Peace and Security Framework on the DRC and the Great Lakes Region: communique
SADC: Regional agro-processing stakeholders training in SPS and food safety standards
Southern African Development Community Accreditation Services: Pretoria training session
A reminder, from @rsezibera: the EAC continues to invite comments on its 2050 vision document
Conference on Small Middle-Income Countries in Sub-Saharan Africa: statement by Min Zhu, Governor Linah Mohohlo
Participants concluded that...: 'In particular, countries should focus on investment projects that generate wide benefits to other sectors of the economy in priority areas (e.g., energy infrastructure) and rationalizing regulations that hinder the development of the private sector, while adopting a “smart” growth strategy that could take advantage of and/or adequately address global megatrends in technology, climate change, and demographics.' [Note: The keynote presentation by Min Zhu, IMF Deputy Managing Director, has a range of interesting graphics for the 7 focus countries. Other conference presentations can be downloaded here]
Powering Africa Summit (USAID)
The Power Africa Roadmap outlines how it will add 30,000 MW by maximizing value from existing transactions, advancing new opportunities for deal flow, and increasing the efficiency of existing generation. It also highlights how Power Africa will add 60 million connections by scaling up grid roll-out programs and intensifying its Beyond the Grid efforts. Also launched, the Power Africa Tracking Tool (PATT) allows for easy, real-time tracking of transactions across the continent. The PATT provides previously unavailable data that will increase transparency and drive the competitiveness of African markets. [Elumelu urges US Congress to pass the Electrify Africa Act (Naija247)]
Africa on the threshold of connected future – Kagame (New Times)
President Paul Kagame has said that the African continent is in the process of having a connected future with the ongoing efforts of pooling efforts and resources. The President made the remarks, yesterday, while chairing the third Smart Africa board meeting on the sidelines of the African Union summit in Addis Ababa, Ethiopia. The meeting was attended by Presidents Macky Sall of Senegal, Ibrahim Boubakar Keita of Mali, Uhuru Kenyatta of Kenya, Ali Bongo Ondimba of Gabon, Rock Marc Kabore of Burkina Faso and Edward Ssekandi, vice-president of Uganda.
South Africa: trade statistics for December 2015 (SARS)
The R8.22 billion surplus is a 4.4% increase on the surplus recorded in December 2014 of R7.88bn. Exports of R88.77bn are 0.3% more than the exports recorded in December 2014 of R88.47bn. Imports of R80.55bn are 0.1% less than the imports recorded in December 2014 of R80.59bn. The cumulative deficit for 2015 of R48.63bn is 40.9% less than the deficit for the comparable period in 2014 of R82.27bn. The month of November 2015 trade balance surplus was revised downwards by R1.09bn from the previous month’s preliminary surplus of R1.77bn to a revised surplus of R0.68 billion.Africa trade surplus is R13 810 million – a 17.3% decrease. [Surprise trade surplus buoys the rand (IOL)]
Dianna Games: 'New Abuja route signals Nigeria is still an important partner' (Business Day)
SAA flies seven times a week to Lagos and the three remaining slots are being used for the Abuja flights. The new route forms part of SAA’s turnaround strategy, and there are early signs of success. The first return flight from Abuja to Johannesburg last week had a load factor of 67%. Airline executives believe the route will be profitable in a reasonably short time. There are many reasons why.
Lesotho: IMF concludes 2015 Article IV Consultation (IMF)
The rebound in SACU revenues contributed to Lesotho’s recovery from a severe fiscal crisis and supported the rebuilding of fiscal and external buffers, with official international reserves reaching 6.3 months of imports by end-March 2015. However, SACU revenues have fallen once again. After slipping to R6.6bn (about 26% of GDP) this year, Lesotho’s allocation will drop sharply to R4.5bn (about 16% of GDP) in 2016/17, with much of this decline expected to be long-lasting.
Botswana: Trade portal to improve cross-border trade (Daily News)
The trade portal also has an objective of making it easier for traders and investors to understand, navigate and comply with regulatory requirements associated with exporting and importing. This web-based tool was intended to helping Botswana to fully comply with its international obligations at the World Trade Organisation level.
Zimbabwe: Cross-border traders find new ways to evade duty (The Zimbabwe Independent)
A loquacious middle-aged woman immediately assumed the role of group leader and started collecting R20 or US$2 from every passenger on the bus before she handed it to the conductor who in turn gave the money to the Zimra officials before the bus was allowed to proceed. Such has become the norm on Zimbabwe’s highways as thousands of cross-border traders under-declare duty daily, prejudicing Treasury billions of dollars in potential revenues every year. Tax evasion by cross boarder traders heightened after government cut travelers rebate from US$300 to US$200 late 2015.
Zimbabwe, SA sign transport infrastructure MoU (The Chronicle)
The country’s transport sector is poised for major pickings after Government signed a Memorandum of Understanding for infrastructure development with South Africa on Friday to ease movement of traffic between the two countries. The MoU is a bilateral agreement on transport and development related matters which seeks make movement easier for people of the two countries by decongesting Beitbridge Border Post. Dr Gumbo said the MoU would allow the two countries to share expertise, infrastructure development and services as well as promote investments, industry and trade co-operation on equitable terms. [Govt installs CCTVs at Beitbridge Border Post (The Herald)]
Mauritius leads investment flows into Zimbabwe (The Herald)
According to the latest statistics (2009-2015) from the Zimbabwe Investment Authority, Mauritius is the largest source of investment flows accounting for $4,56bn while the British Virgin Islands is on sixth at $760,54m. China is the second largest source country at $2,81bn with the most significant amount of $1,09bn coming through in 2011. Other top source countries include South Africa at $1,54bn, US at $1,6bn, and Nigeria at $1,45bn. The bulk of the Nigerian investment were approved in 2015 for the Dangote Group whose strategist was in the country last week.
Angola chairs economic committee of African group in Brazil (Angola Press)
The Economic Committee of the African Ambassadors Group in Brazil, chaired by Angola, represented by ambassador Nelson Cosme, expressed its satisfaction at the mechanisms created by the Brazilian Government, through the APIEX Services ((Agency for Investment and Export Promotion) and BNDES (National Bank for Economic and Social Development), to facilitate trade and investment with African countries.
KRA widens port probe to stem tax leakage (Daily Nation)
Kenya Revenue Authority has launched investigations into operations of Container Freight Stations to stem tax evasion. KRA Commissioner General John Njiraini stated that the ongoing investigations are part of a wider campaign to enforce customs regulations and seal revenue leakages. The announcement comes after KRA confiscated 40 containers of contraband goods at Compact Freight Systems in Miritini Mombasa, last week.
Results-based budgeting comes to Zimbabwe (World Bank)
Nigeria seeks $3.5bn in loans from World Bank and AfDB (Bloomberg)
Malaysia’s long race to competitiveness (World Bank Blogs)
'World SME Forum': a global platform to support SME development, bridging Turkey B20 and China B20 (World Bank Blogs)
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Conference on Small Middle-Income Countries in Sub-Saharan Africa: Joint Statement
The Governor of the Bank of Botswana, Ms. Linah Mohohlo, and the Deputy Managing Director of the International Monetary Fund, Mr. Min Zhu, hosted on 29 January 2016 in Gaborone, Botswana, a regional conference entitled “Small Middle-Income Countries in Sub-Saharan Africa – Raising the Bar”.[1]
Delegates included senior officials from a number of countries representatives of the private sector, academia, the Executive Board of the IMF and IMF staff. At the end of the conference, the following statement was issued:
“We had a very productive set of discussions on the economic outlook and policy challenges facing small middle-income countries (SMICs) in sub-Saharan Africa. This group of countries has made significant progress in terms of maintaining macroeconomic stability and sustaining high growth over the past two decades. However, a number of challenges have recently emerged and, beyond the importance of maintaining their hard earned gains in terms of economic stability, there is scope to rethink their growth strategies and move forward with bold complementary reforms that could facilitate their transition to high-income status.
“For countries that depend heavily on commodity exports, the near-term environment has deteriorated as both global demand and prices have declined. And while some countries have previously built savings that can help them cushion the slowdown, other countries have seen their fiscal positions deteriorate rapidly at a time when external financing conditions have tightened. Notably, the slowdown of the South African economy could also adversely affect the countries in the region.
“Participants concluded that, beyond following prudent policies that will help preserve economic stability (a precondition for growth), SMICs should not lose sight of the need to build resilience, adopt more inclusive policies, and foster economic diversification. To this end, reforms should be comprehensive, yet carefully prioritized to unlock these countries’ productivity growth. In particular, countries should focus on investment projects that generate wide benefits to other sectors of the economy in priority areas (e.g., energy infrastructure) and rationalizing regulations that hinder the development of the private sector, while adopting a “smart” growth strategy that could take advantage of and/or adequately address global megatrends in technology, climate change, and demographics.
“Participants also agreed that, for countries to succeed, growth will have to be inclusive in terms of job creation and, in a number of cases, ensure policies that protect the most vulnerable segments of society. This will likely require courageous reforms to reduce skills mismatches in the labor force through cost-effective training programs, adopting reforms that can lower the cost of doing business and facilitate the hiring of highly-skilled workers, and enhancing the composition and efficiency of government spending.”
Ms. Mohohlo noted that: “This conference has touched on various policy challenges that SMICs have in common – on the one hand ensuring economic stability and sustaining growth while promoting inclusion and social equity, and on the other hand recalibrating the growth strategy to facilitate the transition to high-income status. We had an excellent opportunity to discuss the lessons and prospects of policies being implemented in several SMICs as well as on other countries that successfully tackled their developmental challenges and have now well-functioning and developed markets. The wide forum in which the conference took place and the related peer-to-peer learning strengthened the dialogue among SMICs and offered novel views on how to tackle these countries’ challenges.”
In closing, Mr. Zhu said: “The IMF remains closely engaged with SMICs in Sub-Saharan Africa through policy dialogue, technical assistance, and analytical work. The conference has also served as the launch of the book Africa on the Move: Unlocking the Potential of Small-Middle Income Countries, authored by IMF staff in collaboration with officials from SMICs in the region. Looking ahead, our teams will continue to collaborate closely with country authorities as they strengthen the analytical underpinnings of their policies and rethink their growth strategies. We look forward to continuing this dialogue at the time of the IMF Spring Meetings in April.”
1 The Small Middle-Income Countries in Sub-Saharan Africa comprise Botswana, Cabo Verde, Lesotho, Mauritius, Namibia, Seychelles and Swaziland.
Small Middle Income Countries: Raising the Bar
Remarks by the Deputy Managing Director Min Zhu, International Monetary Fund
On behalf of the International Monetary Fund, I would like to welcome you all to the 2016 High Level Conference for Small Middle Income Countries in sub-Saharan African, Raising the Bar.
This conference also coincides with the launch of the book “Africa on the move: Unlocking the potential of small middle-income states,” the result of a collaboration between IMF staff and officials from member countries.
I wish to express my gratitude to the Government of Botswana for its warm hospitality and to the Bank of Botswana for co-hosting this conference. I am looking forward to interesting discussions from today’s panelists and all of you on how this group of middle-income countries can overcome current challenges and move to the next stage of development.
Today I would like to talk about three issues:
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The changing global economic landscape
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The successes and challenges for small middle-income countries
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How countries could rethink their growth strategies, and the possible policies that could help them graduate to the next stage of development and avoid the so-called middle-income trap.
Together, these issues form the nucleus that will shape how small middle-income countries graduate to their next level of development. Let me start with the global picture.
The changing global economic landscape
The global economic crisis left us with a bigger scar than initially anticipated that we are still struggling to overcome: lower output and potential output, investment, and trade. Going forward, potential global growth has also moderated, including in emerging markets.
In addition, commodity prices have declined in what could be a protracted period of depressed prices. This puts pressure on those countries whose exports are mainly commodities, worsening their balance of payments and fiscal positions. The effect of the decline in export prices on the terms of trade has been at least partly compensated by lower fuel import prices.
All this is taking place as U.S. interest rates begin to rise and financial markets are experiencing heightened volatility. The increase in financing costs and volatility raises the issue of fiscal sustainability. Setbacks in domestic economic management can deteriorate both access to and pricing of external funding, yielding a potentially significant adverse shock to fiscal and external positions, and to debt dynamics. This suggests that some of the factors that supported high growth in the region – strong external demand and high commodity prices, coupled with low cost access to financing – are no longer as conducive.
Let me now turn to three megatrends that affect us all: climate change, technology, and demographics.
Climate change, while a global phenomenon, will affect countries in a variety of ways. Countries in sub-Saharan Africa are among the most vulnerable to climate change. It increases the uncertainty associated with natural disasters as the incidence of droughts, floods and cyclones is likely to increase. Mauritius is among the most vulnerable countries in the world to cyclones. All islands are vulnerable to rising sea levels. Swaziland is vulnerable to droughts. The poor are most at risk from climate change, including disruptions to the supply of food. This highlights the importance of economic resilience and measures to fight against the impact of climate change.
Innovations and changes in technology impact all aspects of our lives. Countries will have to change the way they have traditionally done things. This forces them to integrate differently into the “global village”. The impact will be both creative and destructive. For example, financial technology will affect payments, deposits and lending, financial markets, investment management, and capital raising and insurance.
Demographics potentially are on Africa’s side. While the rest of the world is aging, Sub-Saharan Africa could become the main source of growth for the global labor force. This will provide both challenges and opportunities. Sub-Saharan Africa’s population, slightly over 800 million in 2010, is projected to more than quadruple to 3.7 billion by 2100. The region is expected to account for most of the projected 2 billion increase in the global labor force this century. This requires special emphasis on building human capital and support for job creation to mitigate the social risks associated with high unemployment. By putting in place many of the reforms we are discussing today, countries can be well placed to benefit from a “demographic dividend.”
Small middle-income countries have a much narrower window of opportunity since they are at a somewhat more advanced stage of their demographic and income transitions. Mauritius and the Seychelles are even facing an aging population and need to prepare for the associated growth and fiscal challenges. If countries are able to harness the demographic dividend, small middle-income countries will have new markets next door, with trade reducing the constraints associated with smallness and location.
Successes and challenges
Small middle-income countries represent a successful group that have experienced solid growth over the past 20 years and sustained increases in per capita GDP. Their incomes have converged to advanced and emerging economy levels, but have not progressed as quickly as desired, reflecting a moderation of growth in some cases.
Growth has moderated in a few countries in 2014-15; some of it can be attributed to global conditions, but domestic constraints may also be playing a role.
We see the following main challenges countries face at home: how to diversify economies; job creation; infrastructure; developing the human resources necessary for economies to grow; and making growth inclusive.
First, countries need to accelerate their progress in diversifying exports and put in place policies to ensure that growth is broad-based. There inevitably are more risks when you have all your eggs in one basket. An economy is more resilient if the growth comes from a variety of economic drivers and the quality of growth is higher. In small middle-income countries, the service sectors have grown fast, but the main economic driver in most countries has been government expansion.
The second key challenge is job creation. Unemployment is high in several countries and the recent rise in youth unemployment is a big concern. There is also the issue of under-employment arising from large informal sectors with low productivity levels.
What are the causes of unemployment? In some cases they are structural and are caused by a lack of diversification and a country’s inability to move up the global value chain. Also a mismatch of skills – between those available and those the economy needs – can prevail, which is often caused by a lack of education and job training.
The difficulties in dealing with the problem and the political and social pressures it creates often lead to short-term solutions that are unsustainable or undesirable in the longer term. Unemployment exacerbates pressure on governments as an “employer of last resort.” This inflates the public sector wage bill and crowds out other priority spending.
The third challenge is the infrastructure gap, which is a major issue throughout Sub-Saharan Africa. Infrastructure gaps affect countries’ connections to the rest of the world, and limits their competitiveness. Countries should add infrastructure, but also make better use of what is available. There is also significant scope to improve the efficiency of investment, as higher levels of spending do not necessarily translate into improved public infrastructure. The slowdown in public investment in most small middle-income countries contributes to stagnant or declining capital stocks in several cases.
With many countries facing binding budget constraints and significant investment needs, the importance of increasing the efficiency of existing infrastructure is more important than ever. This requires well-prioritized projects, with sound cost-benefit analysis and carefully weighted financing options, including public-private partnerships.
Fourth, while various dimensions of human development indices have shown improvements over the years, challenges remain in many of your countries. Life expectancy has been converging to advanced and emerging market levels in several countries, thanks to better health care, but further progress is needed in others. While primary education is near 100 percent in most countries, in most cases there is room for progress in secondary and university education.
We see similar patterns when we look at the evolution of other human development indicators. So there is plenty of room left to build human capital, especially considering its importance in helping to deal with high levels of youth unemployment in many countries.
Fifth is inclusive growth, which is one of the key challenges many nations face in the 21st century. While poverty rates have fallen over time among small middle-income countries in Sub-Saharan Africa, efforts are still needed to ensure convergence in this area. Also, inequality remains unacceptably high in several countries. If unchanged, this will lead to social pressures and hurt growth.
Policies for growth and development: the next level
I now want to turn to how countries can best deal with all these domestic and external challenges, adapt to the new global environment and move to the next level of development.
Reform needs vary according to the stage of economic development: what got you from low-income to middle-income will not necessarily take you to the next level.
Countries that have graduated from middle-income status to advanced economy status have some features in common:
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More effective governments, which is not necessarily positively correlated with government size
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Private sector participation, facilitated by the right policies, including investor protection and adequate credit availability
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More inclusive growth that leads to lower poverty and unemployment.
The earlier growth model for small middle-income countries based on factor accumulation that allowed them to graduate from low- to middle-income status may no longer be well suited, especially considering the megatrends I mentioned earlier. To deal with these headwinds and recapture the earlier growth momentum over the medium-term will require governments to rethink the possible sources of growth, along with new policies. Crucially, countries need to implement previously delayed structural reforms to enhance their competitiveness and resilience.
Reforms
In many cases, the reform priorities are country-specific and consistent with their stage of development. We have identified five areas of common interest: policies to reduce government debt and deficits; private sector development; inclusive growth; job creation; and strengthening pubic financial management.
Given multiple reform needs, countries need to prioritize and sequence reforms to maximize pay-offs. The pace of reform appears to matter for productivity growth as much as the type of reform. Similarly, there appear to be benefits in implementing certain reforms simultaneously or in “waves.” For instance, there are synergies between labor market and product market reforms.
Also, governments need to diversify growth from government-led to private sector-led. This requires addressing the high cost of doing business and creating an enabling environment for the private sector.
I want to leave you with the sense that progress and advancement are within reach. This will require policymakers to adapt and change to new circumstances while also sticking to their goals. And it will be a lot of work.
In the face of a changing and uncertain world, small middle-income countries have to carve out their own path to take their development to the next level, and the IMF will be there to assist our member countries achieve this goal.
Thank you.
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Political economy analyses of the African Union and regional economic communities in Africa
Why a political economy study of regional organisations in Africa?
Regional cooperation and regional integration are deemed vital to tackle development challenges that cannot be solved at the national level. In Africa, many such challenges affect poor people’s lives in areas ranging from human security and mobility to rural livelihoods, trade, infrastructure, food security, environment and climate change.
Regional cooperation and integration have long been high on the agenda of African countries, regions and regional organisations to address these issues. Burgeoning regional policies, strategies and protocols have been matched by widening ambitions and mandates in most regional organisations, often supported by donor-financed expansions in budgets, staff and programmes.
Yet policy-makers, member state representatives and non-state actors frequently express frustration with the gap between commitments and what takes place on the ground. The Chairperson of the African Union Commission (AUC), Nkosazana Zuma, herself has said: “I don’t think Africa is short of policies. We have to implement, that is where the problem is”.
The challenge is to understand the underlying political and economic factors that really drive and hinder progress on regional integration.
Synthesis Report
This report synthesises political economy studies on six African regional organisations. The studies cover the following sectors or policy areas for each regional organisation:
- AU – Peace and security, infrastructure, food security, climate change, gender
- COMESA – Trade, energy, gender
- EAC – Trade, transport and infrastructure, gender
- ECOWAS – Peace and security, food security, gender
- IGAD – Peace and security, transport and infrastructure, trade
- SADC – Gender, industrialisation, energy, conservation
Each study answers the following related questions: What are the actors and factors affecting the policy agenda of the regional organisation? And what are the drivers and blockers of implementation?
The studies use a ‘five-lens’ approach to systematise information on: the role of structural or foundational factors; the role of institutional factors, including both formal and informal ‘rules of the game’; the power and interests of different ‘actors’ and groups operating within these institutions; the sectoral characteristics that affect political economy considerations; and external factors and influences, not least donor finance.
The approach aims to uncover why the dynamics around each of the regional organisations unfold as they do, rather than judging how they ought to be according to ‘best practice’ or model trajectories. By systematically examining the different actors and factors that affect the way these six regional organisations work, the studies aim to increase understanding of what shapes incentives and therefore what is technically and politically feasible in a particular policy area and regional context.
Ten key findings
The findings of the studies are organised according to ten key statements, discussed in greater detail in the synthesis report. These statements – and some of the illustrative findings – are as follows:
1. Structural and foundational factors continue to shape the environment in which African regional organisations set and implement their agendas. Eight out of nineteen COMESA member states are landlocked, creating an underlying need for regional integration, while four of the nineteen are island states. This geographical diversity is a basic challenge to finding a common regional agenda. The emergence of the EAC Northern Corridor countries, dubbed the ‘coalition of the willing’, largely reflects Rwandan and Ugandan political interest in overcoming their landlockedness, that aligns with Kenyan business ambitions. Physical factors also impact on IGAD, with a strong logic for regional cooperation emanating from the common physical challenges of arid and semi-arid lands and three landlocked member states.
But these ‘push factors’ are largely offset by long-running tensions and conflicts stemming from colonial experiences. Their effects are clearly evidenced in all RECs. In West Africa, there is a variety of different administrative, bureaucratic and linguistic traditions resulting in the co-existence of a Francophone and an Anglophone REC with partly overlapping and/or competing mandates, for example in the area of peace and security. Low levels of economic complementarity also hinder greater integration.
2. While regional organisations adopt the institutional forms to foster regional integration, these institutions often do not serve their stated functions. All studies highlight a gap between the multiple institutional forms of regional organisations and the functions they fulfill. In fact, many of the key functions of planning, budgeting, monitoring transparency and accountability are weakly developed and not mutually reinforcing. This leads to inflated policy agendas with limited mechanisms to encourage implementation.
Most regional organisations discussed have planned and prepared protocols for free trade arrangements and customs unions, none of which are functioning as they should on paper, with little cost or sanction for non-implementation. More broadly still, despite complex decision-making organisational forms in most RECs, decisions are driven primarily by summits of Heads of State.
Peace and security in the AU, ECOWAS, and IGAD is an area where regional institutions do seem to fulfill clear functions. Another case is SADC’s contributions to Transfrontier Conservation Areas (TFCAs) in Southern Africa. In both cases there were pressures for performance by powerful stakeholders in member states or – as with TFCAs – by cross-country coalitions around solving problems of common interest.
3. Member states face incentives to signal their support for regional policies and programmes even when implementation is not a domestic priority. There are numerous incentives, logics, and reasons for national leaders to signal their support for regional agendas without necessarily acting on it. One striking case relates to gender, with strong rhetorical support by national leaders at the level of AU and RECs; sometimes backed by donor support that arguably incentivises such signalling rather than action. In practice, the plethora of policy commitments to promoting gender equality have difficulty gaining traction over other national priority areas, particularly given limited costs to noncompliance by member states with regional decisions.
4. Implementation of regional initiatives takes place when in line with key ‘national interests’ as defined by the ruling elites. This may be the most influential of the findings in terms of its impact on other findings. The importance of national interests is part of the explanation for overlapping REC memberships: Kenyan membership of the EAC, COMESA and IGAD (currently) reflects Kenyan economic ambitions for EAC and COMESA, while interest in IGAD is seen to be more around security and dryland related issues.
One corollary of the dominance of national interests is the easier alignment of interests among smaller groups of countries. This is the case for the EAC sub-regional group of EAC Northern Corridor countries. It also emerges by comparing the Eastern Africa Power Pool (EAPP) under COMESA and the Southern African Power Pool (SAPP) under SADC. The importance of national interests partially explains greater progress on peace and security than trade in IGAD, for example. The ECOWAS study highlights the substantial differences in national interests between rice, seen as a key crop for national food sovereignty, and livestock, considered as part of regional value chains.
5. Much of the success or failure of regional processes depends on the ‘national interests’ of regional hegemons. By definition, hegemons are better able to instrumentalise regional dynamics for their own interests, or to block those that undermine their position. Progress in the EAPP as well as in IGAD regional policies are both affected by where Ethiopia sees its interest. This also goes for South Africa’s roles in SADC – as the cases of regional industrialisation and the regional energy market prove – as well as Nigeria’s role in ECOWAS on peace and security.
6. Individual personalities and leadership within regional organisations tend to shape – and can be decisive for – the implementation of regional agendas. Across AU and RECs, decision power lies largely in the hands of Heads of State, implying a concentration of influence in those individuals and in their relations with one another. The transition itself from the Organisation of African Union to the African Union was driven by powerful and visionary presidents working together to establish more effective pan-African institutions. Technical staff or bureaucratic leaders can also be instrumental in strengthening the functions of regional organisations, as was the case with the Southern African Power Pool, or was demonstrated by the AU Commission and the IGAD Secretariat in their trust and partnership building with donors.
7. The diversity of power and interests of non-state actors affects how business and civil society organisations engage at national and regional levels on regional processes. Non-state actors are involved in numerous regional processes. There are, however, but a few examples of effective civil society engagement with regional organisations. The Peace Parks Foundation played a strong brokerage role in launching Transfrontier Conservation Areas and in working with SADC. The SADC Gender Protocol emerged from the eponymous Alliance that lobbied for the rights of informal cross-border female traders. Despite the formal space for non-state actors to engage in policy dialogue with regional organisations, there is limited uptake by the latter, except in sectors such as peace and security where a few specialised non-governmental organisations cooperate in functional ways with regional organisations.
Looking at the private sector, Burkina Faso’s strong performance in implementing the regional CAADP in rice is largely down to the alignment of political concerns about food sovereignty and rice producer interests. Beyond these examples, the interests of civil society and the private sector have been too diverse and their voices little heard in regional policy debates.
8. The interests and incentives associated with regional cooperation on different sector or policy areas (security, infrastructure, energy, gender etc.) differ markedly according to the nature and characteristics of the sector, affecting implementation in these areas. This is particularly apparent in IGAD, ECOWAS and the AU where peace and security have more traction than other policy areas. The analysis suggests that this relates to the strong political appeal to national leaders to prevent or resolve violent conflicts and minimise negative cross-border externalities or spillovers from conflicts. There are visible costs to inaction and to instability for which national leaders may have to pay the price if left unresolved.
Integration around the trade, energy and gender agendas are far more aspirational, with ‘hoped for’ benefits in the future – and less politically salient features for ruling elites to solve immediately. The political economy features of the subsector of rice in ECOWAS are entirely different from those of livestock: in the rice sub-sector political incentives prioritise national level self-sufficiency, while the livestock subsector depends on extensive production chain and mobility of cattle across borders from North to South, creating entirely different political incentives for national and regional stakeholders.
9. The quantity and quality of donor support to regional organisations present opportunities but also challenges in terms of reducing the implementation gap. All regional organisations except ECOWAS depend heavily on donor funding. ECOWAS mobilises a substantial part of its regional budget through a common levy on imported goods. Donors have funded a range of important regional activities, not least those related to peace and security in all regions of Africa. Yet the combination of a strong donor dependency and poorly managed aid raise the risk of donors driving rather than supporting reforms.
Poorly managed and targeted aid is partly to blame for incentivising empty signalling of reforms by regional organisations, agenda inflation, reduced ownership, and missed opportunities to strengthen institutional functions that are pivotal for the governance of regional organisations.
10. Critical junctures such as natural disasters and political and other crises can trigger progress but also block regional organisations and dynamics. The initial relative success of the SAPP can be traced to a fortuitous combination of conditions in the mid-nineties related to drought, post-apartheid dynamics and surplus production by South Africa’s state-owned monopoly producer of electricity. The movement on the ECOWAS regional agriculture policy was triggered by the 2008 food price crisis. The IGAD study highlights the important role the Arab Spring played in changing Egyptian interests, with implications for the EAPP and IGAD.
Implications
One implication of these findings is that the vision of regional integration as a linear path is just that, a vision. This highlights the need for policy-makers to ‘think and work politically’ or ‘do development differently’; to build flexibility and adaptability into reforms and interventions or, in other words, to “plan for sailboats, not trains”.
Related News
Paris Agreement ‘decisive turning point’ on climate change, says new UN senior adviser
Less than two months after 196 parties to the United Nations Framework Convention on Climate Change (UNFCCC) adopted the Paris Agreement, the global community is already seeing signs of it being a decisive turning point, according to a senior UN official dealing with climate issues.
A month and a half since 196 parties to the United Nations Framework Convention on Climate Change (UNFCCC) adopted the Paris Agreement, the global community is already seeing signs of it being a decisive turning point, according to a senior UN official dealing with climate issues.
“Much has been happening since Paris – the World Meteorological Organization (WMO) confirmed that 2015 was the hottest year on record, not just by a little but by a lot,” Janos Pasztor, who was today appointed as Senior Adviser to the Secretary-General on Climate Change, told reporters at a briefing in New York.
For the past year, Mr. Pasztor had been leading the UN's climate change efforts as Assistant Secretary-General on Climate Change, working towards last December's 21st United Nations climate change conference (COP21).
Recalling that UN Secretary-General Ban Ki-moon has invited world leaders to a signing ceremony on 22 April – which coincides with International Mother Earth Day – the climate advisor noted that it will be the first day the Agreement is open for formal signatures.
He said Mr. Ban is urging countries to quickly ratify the agreement so it can enter into force as soon as possible, adding that the event will also be an opportunity to discuss efforts to implement national climate plans, known as INDCs, and to generally “maintain the momentum of the action agenda.”
Meanwhile, he underlined the Secretary-General's recent call for a doubling of investments in clean energy by 2020, which he said was greeted “very positively” by many investors.
“The pdf Paris Agreement (505 KB) sent a clear message to markets and investors that it's time to get serious about climate change. We're now seeing evidence that the signal has been received loud and clear,” Mr. Pasztor stressed.
Meanwhile, in a statement issued by the UN Spokesperson's Office, Mr. Ban expressed his deep gratitude for Mr. Pasztor's “dedicated service and leadership” over the past quarter of a century with the world body on the key global challenges of climate change, energy and sustainability.
“In his new role as Senior Adviser to the Secretary-General on Climate Change, Mr. Pasztor will support efforts of the Secretary-General to mobilize world leaders and all sectors of society to implement the landmark Paris Agreement,” the statement indicated.
Bringing the Paris Agreement into Force
Next Steps and National Climate Plans
On 12 December 2015, countries under the UN Framework Convention on Climate Change (UNFCCC) adopted the Paris Agreement.
The legal nature of this new, international agreement requires the following actions and steps to bring it into force. How the large number of national climate plans will be handled in relation to the agreement is also explained below.
In addition, the UNFCCC secretariat has prepared a legal version of these steps for readers who require the important, detailed formal wording and terminology that relates to this major international agreement.
The text of the Paris Agreement is found annexed to the decision that officially adopted the agreement at the UN Climate Change conference in Paris (COP 21) and is available in all six official UN languages.
Entry into Force
The Agreement shall enter into force on the 30th day after the date on which at least 55 Parties to the Convention accounting in total for at least an estimated 55 % of total global greenhouse gas emissions have deposited their instruments of ratification, acceptance, approval or accession with the Depositary. The Secretary-General of the United Nations will act as the Depositary of the Agreement.
To this end, the UNFCCC secretariat has made available information on the most up-to-date total and per cent of greenhouse gas emissions communicated by Parties to the Convention on the website on the date of adoption of the Agreement.
Next Steps
The authentic text of the Paris Agreement in Arabic, Chinese, English, French, Russian and Spanish, will be transmitted by the UNFCCC Executive Secretary to the Treaty Section of the Office of Legal Affairs of the United Nations in New York as soon as it becomes available.
Following this, certified true copies will be distributed to all Parties to the Convention and the Paris Agreement will open for signature at the United Nations Headquarters in New York from 22 April, 2016 to 21 April, 2017.
The UN Secretary-General is convening a high-level signature ceremony for the Paris Agreement on 22 April, 2016 and is inviting all Parties to the Convention to sign the agreement at this ceremony, or at their earliest opportunity.
National Climate Plans
Meanwhile, the agreement also includes a change in status of the intended national climate action plans which almost all countries submitted to the UN ahead of Paris. These intended nationally determined contributions (INDCs), which detail what each country intends to contribute towards reducing global emissions, are set to become nationally determined contributions (NDCs).
Parties to the agreement should communicate their first NDC no later than when the respective instrument of ratification, acceptance, approval or accession has been submitted.
If a country has already submitted its INDC before joining the agreement, then that INDC will be considered the country’s first NDC, unless it indicates otherwise.
Moreover, a country has the opportunity of submitting a more ambitious NDC, before it submits or when submitting its respective instrument of ratification, acceptance, approval or accession.
Related News
Zuma urges African leaders to focus on infrastructure
Head of the African Union (AU) Presidential Infrastructure Championing Initiative, President Jacob Zuma, says reliable roads, railways and airports will help spur Africa's economic potential.
African leaders are being urged to focus on infrastructure roll-outs on the continent despite depressed economic conditions.
Zuma was addressing an AU structure meeting in the Ethiopian capital, Addis Ababa.
He says, “This year we intend to undertake the following, with particular reference to the North-South corridor and international financing investment conference where we will open up the North-South corridor, fast tracked projects for investment and take off. A North-South corridor road show will be led by heads of state and ministers.
“A head of state gathering of the eight North-South corridors states will finalise the North-South corridor operational mechanisms.”
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South Africa Merchandise Trade Statistics for December 2015
The South African Revenue Service (SARS) has released trade statistics for December 2015 that recorded a trade surplus of R8.22 billion. This figure includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
Including trade data with BLNS
The R8.22 billion surplus for December 2015 is due to exports of R88.77 billion and imports of R80.55 billion. Exports decreased from November 2015 to December 2015 by R4.80 billion (5.1%) and imports decreased from November 2015 to December by R12.34 billion (13.3%).
The R8.22 billion surplus is a 4.4% increase on the surplus recorded in December 2014 of R7.88 billion.
Exports of R88.77 billion are 0.3% more than the exports recorded in December 2014 of R88.47 billion. Imports of R80.55 billion are 0.1% less than the imports recorded in December 2014 of R80.59 billion. The cumulative deficit for 2015 of R48.63 billion is 40.9% less than the deficit for the comparable period in 2014 of R82.27 billion.
The month of November 2015 trade balance surplus was revised downwards by R1.09 billion from the previous month’s preliminary surplus of R1.77 billion to a revised surplus of R0.68 billion.
Trade highlights by category
The month-on-month export movements (R’ million):
Section: | Including BLNS: | |
Vehicle & Transport Equipment | - R3 595 | - 27.6% |
Machinery & Electronics | - R1 338 | - 14.4% |
Precious Metals & Stones | - R 921 | - 4.9% |
Mineral Products | - R 227 | - 1.3% |
Vegetable Products | + R 1 463 | + 49.6% |
The month-on-month import movements (R’ million):
Section: | Including BLNS: | |
Machinery & Electronics | - R 3 897 | - 15.9% |
Equipment Components | - R1 632 | - 34.7% |
Base Metals | - R1 194 | - 22.3% |
Textiles | - R1 163 | - 29.8% |
Vehicle & Transport Equipment | + R1 246 | + 14.5% |
Trade highlights by world zone
The world zone results from November 2015 to December 2015 are given below.
Africa:
Trade surplus: R13 810 million – This is a 17.3% decrease in comparison to the R16 696 million surplus recorded in November 2015.
America:
Trade deficit: R1 903 million – This is a deterioration in comparison to the R3 million surplus recorded in November 2015.
Asia:
Trade deficit: R6 416 million – This is a 62.2% decrease in comparison to the R16 952 million deficit recorded in November 2015.
Europe:
Trade deficit: R5 271 million – This is a 40.1% decrease in comparison to the R8 796 million deficit recorded in November 2015.
Oceania:
Trade surplus: R 36 million – This is an improvement in comparison to the R 53 million deficit recorded in November 2015.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for December 2015 recorded a trade deficit of R0.04 billion. This is a result of exports of R78.30 billion and imports of R78.34 billion.
Exports decreased from November 2015 to December 2015 by R2.96 billion (3.6%) and imports decreased from November 2015 to December 2015 by R11.42 billion (12.7%).
The cumulative deficit for 2015 is R154.40 billion compared to R185.82 billion in 2014.
Trade highlights by category
The month-on-month export movements (R’ million):
Section: | Excluding BLNS: | |
Vehicle & Transport Equipment | - R3 104 | - 27.1% |
Precious Metals & Stones | - R 910 | - 4.8% |
Machinery & Electronics | - R 823 | - 11.1% |
Mineral Products | - R 456 | - 2.9% |
Vegetable Products | + R1 422 | + 61.1% |
The month-on-month import movements (R’ million):
Section: | Excluding BLNS: | |
Machinery & Electronics | - R3 694 | - 15.2% |
Equipment Components | - R1 632 | - 34.7% |
Base Metals | - R1 197 | - 22.6% |
Plastics & Rubber | - R 971 | - 23.8% |
Vehicles & Transport Equipment | + R1 257 | + 14.7% |
Trade highlights by world zone
The world zone results other than Africa from November 2015 to December 2015 are given above.
Africa:
Trade surplus: R5 549 million – This is a 26.1% decrease in comparison to the R7 507 million surplus recorded in November 2015.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for December 2015 recorded a trade surplus of R8.26 billion. This is a result of exports of R10.47 billion and imports of R2.21 billion.
Exports decreased from November 2015 to December 2015 by R1.85 billion (15.0%) and imports decreased from November 2015 to December 2015 by R0.92 billion (29.4%).
The cumulative surplus for 2015 is R105.77 billion compared to R103.54 billion in 2014.
Trade highlights by category
The month-on-month export movements (R’ million):
Section: | BLNS: | |
Machinery & Electronics | - R 515 | - 27.3% |
Vehicles & Transport Equipment | - R 491 | - 31.6% |
Base Metals | - R 286 | - 32.6% |
Plastics and Rubber | - R 191 | - 29.6% |
Mineral Products | + R229 | + 14.1% |
The month-on-month import movements (R’ million):
Section: | BLNS: | |
Textiles | - R 247 | - 43.8% |
Chemical Products | - R 207 | - 22.6% |
Machinery & Electronics | - R 203 | - 66.0% |
Prepared Foodstuff | - R 59 | - 12.0% |
Precious Metals & Stones | + R 5 | + 15.2% |
Related News
EABC calls for changes in regional NTBs Bill
The regional business community has criticised the EAC Elimination of Non-Tariff Barriers to Trade Bill 2015, saying it needs extensive changes in order to be effective.
The East African Business Council (EABC) has pointed out that elimination of NTBs is strictly dependent on the political will of the concerned parties, with no consequence for non-elimination and no restitution for aggrieved parties.
To address this, EABC trade economist Adrian Njau proposes that the NTBs Act be taken back to the East African Legislative Assembly for amendment.
Mr Njau argues that the Bill should provide for an alternative dispute resolution mechanism, arbitration by the trade remedies committee and the ability to petition the East African Court of Justice.
The Bill insists merely restates the existing mechanisms to resolve disputes on non-tariff barriers in the region such as mutual agreement of the concerned partner states; implementation of the EAC time bound programme for elimination of identified NTBs; and regulations, directives, decisions or recommendations of the council as provided for under Article 9 on elimination of NTBs despite its failure to resolve disputes for several years now.
However, the extension in 2015 of the jurisdiction of the EACJ, to cover issues related to trade and commerce, provides another opportunity for arbitration of NTBs in the region.
“The EAC NTBs Bill, 2015, should be taken back to EALA for amendments,” EABC acting executive director, Lilian Awinja told The EastAfrican.
Tanzania is said to have already assented to the Bill, meaning that it has formally committed itself to a binding legislation to eliminate NTBs to trade among EAC partner states.
Sources said that the former Tanzania’s President, Jakaya Kikwete assented to the Bill, before he left the office.
The crucial Bill as it touted, is expected to spur intra-EAC trade NTBs are partly to blame for the still limited intra-EAC trade estimated at 22 per cent in 2014.
The EAC secretary general, Dr Richard Sezibera said EAC partner states have in the past three years, grown their trade volumes by nearly 22 per cent, up from 13 per cent during the early years of integration.
This is still comparatively low and ranks among the smallest levels of intra-regional trade globally. For instance, 70 per cent of the European Union’s trade takes place within the region.
Experts say that NTBs often limit market access, changing the quantities of goods traded, or increasing the prices of goods.
They come in various forms such as restrictive sanitary and environmental protection measures, import or export restrictions, price controls, arbitrary application of rules of origin and other trade-restrictive measures.
Related News
Power Africa launches roadmap to 60 million connections and 30,000 MW by 2030
On Thursday, 28 January 2016 at the Powering Africa Summit, Power Africa partners launched a roadmap to meet President Obama’s goals of adding 30,000 megawatts and 60 million connections across sub-Saharan Africa by 2030.
The U.S. Government committed an initial $7 billion that has leveraged nearly $43 billion in commitments from over 120 public and private sector partners. The Power Africa Roadmap outlines how it will add 30,000 MW by maximizing value from existing transactions, advancing new opportunities for deal flow, and increasing the efficiency of existing generation. It also highlights how Power Africa will add 60 million connections by scaling up grid roll-out programs and intensifying its Beyond the Grid efforts.
“With a robust financial foundation in place and an expanding group of partners committed to producing results, Power Africa is breaking the logjam on energy infrastructure and keeping eager capital flowing to worthy projects,” said U.S. Agency for International Development Administrator Gayle Smith.
“Building on our progress so far, this Roadmap lays out a clear path to achieving President Obama’s ambitious vision of bringing electricity to 60 million African homes and businesses. And the Power Africa Tracking Tool offers unprecedented insight into the actual deals that will facilitate that success.”
“Sub-Saharan Africa is rich in renewable energy sources-solar, hydropower, geothermal-yet only one in three people has access to power. For those who have electricity, the supply is often unreliable; sub-Saharan Africa loses 2.1 percent of gross domestic product from blackouts alone,” said World Bank President Jim Yong Kim.
“We must find solutions-in our partnerships with African governments and the Power Africa initiative-that will give millions of African people the opportunity for a better life with something most of us take for granted: access to electricity.”
“Africa is tired of being in the dark. Lack of electricity puts a break on Africa’s economic growth and development. I applaud President Obama’s leadership and bold Power Africa Initiative,” said African Development Bank President, Dr. Akinwumi Adesina, who recently launched the Bank’s New Deal on Energy for Africa, which aligns with the Power Africa Roadmap, last week at the World Economic Forum.
“To accelerate universal access to electricity in Africa by 2025, the African Development Bank developed the New Deal on Energy for Africa and launched the Transformative Partnership on Energy for Africa. Working together with Power Africa, private sector, development partners and African governments, we will light up and power Africa.”
Also launched on Thursday, the Power Africa Tracking Tool (PATT) allows for easy, real-time tracking of transactions across the continent. The PATT provides previously unavailable data that will increase transparency and drive the competitiveness of African markets. The iPhone app and web portal allow for easily accessible information on 45,000 MW in power transactions from stakeholders on the ground. A release of the Android app is planned for February 2016.
President Obama launched Power Africa in 2013 – a partnership to help double access to electricity in sub-Saharan Africa, working with African governments, the private sector, and bilateral and multilateral development partners.
Since its launch in 2013, Power Africa has helped projects expected to generate over 4,300 MW of new, cleaner electricity reach financial close and is actively supporting an additional 25,000 MW of projects. Over three-quarters of these projects involve clean, renewable technology. From wind parks in Kenya, to solar arrays in Rwanda, and geothermal generation in Ethiopia, Power Africa is putting the continent’s vast renewable resources to work. Power Africa’s aim is to help African governments build cleaner, more climate-resilient power sectors that serve all people.
Power Africa partners discussed the Roadmap and Tracking Tool in greater detail at EnergyNet’s Powering Africa Summit in Washington, D.C. The Summit convened energy sector leaders from around the world to identify new opportunities for partnership on projects across Africa.
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tralac’s Daily News selection
The selection: Friday, 29 January 2016
Later today, from Pretoria: South Africa's December trade data figures will be released
Call for papers: COMESA-ACBF capacity building project in economic and trade policy analysis and research
The objective of this call is to seek for empirical or policy oriented research papers to address the issues of COMESA regional integration in the context of inclusive and sustainable industrialization in COMESA Member States. The research theme is 'Trade in services and trade facilitation for inclusive and sustainable industrialisation in the COMESA region'. Successful papers will be presented at the Research Forum in August 2016 and selected papers will be published in the 'Key issues for regional integration, Volume V' in 2016.
Highlights from the Tripartite Private Sector Platform workshop: 'Regional blocs urged to harmonise rules of origin' (New Times)
Lilian Awinja, the EABC executive director, said the objective of developing rules of origin should be to avoid trade deflection and encourage intra regional trade. “We must ensure that the final rules are not trade-restrictive but simplified and more general rather than product specific except in minor cases where it is necessary,” Awinja said. Ideally, tariff liberalisation under preferential arrangement should be accompanied by simple and flexible rules– which will make it easy businesses to access the market and take advantage of preferential treatment, she added.
Nigeria-Kenya trade updates:
Kenya-Nigeria seek to establish duty free trade zone (The Standard)
Kenya and Nigeria are seeking to establish a duty-free trade zone between the two countries. This comes following trade talks between Nigerian President Muhammadu Buhari and his Kenyan counterpart Uhuru Kenyatta. In Kenya, the unit will be housed under the KNCCI’s Nigeria-Kenya business council and chaired by Equity Bank CEO James Mwangi while in Nigeria it will be chaired by Sani Dangote, brother of Africa’s richest man Aliko Dangote and vice president of the Dangote Group.
Kenya-Nigeria Business Forum: speech by President Uhuru Kenyatta
Our relations and engagements have been growing over the last few years following the two state visits to Nairobi and to Nigeria in 2013 and 2014 respectively. The two visits yielded a number of agreements including the Bilateral Trade Agreement and the Memorandum of Understanding between the Kenyan and Nigerian Private sectors. I am reliably informed that Kenya and Nigeria have agreed to establish the Joint Trade Committee, which will address issues affecting our trade relations. I believe once the committee is in place it will clear some of the hurdles our business persons are experiencing in order to enhance our trade volumes. With the Bilateral Trade Agreement in place, I believe our experts will be able to discuss ways of dismantling any impediments to increasing trade between the two countries.
Related: Brookside plans for West Africa exports get Buhari visit boost (Business Daily), @gina_din: To get a container from China to Nigeria it takes a month. To get a container from Kenya to Nigeria it takes 3 months, @AdanMohamedCS: Kenya recognizes the important role Nigeria plays in influencing foreign trade in the continent
Tanzania trade deficit widens in 5 years - report (The Citizen)
Tanzania has continued to experience a negative trade balance in the last five years, a comprehensive review of a five-year development plan has revealed. The report, which was unveiled to MPs on Monday during a workshop, says that between 2011/12 and 2015/16 the country witnessed a significant widening of trade deficit due to a decline exports. The situation was caused by a fall in gold and traditional exports. Poor exports have also contributed to volatile exchange rates, according to economists.
US-Africa trade and investment policy updates:
'Beyond AGOA': remarks by Ambassador Michael Froman (USTR)
The question now is not whether AGOA is an important tool – it has been and, for many countries, will continue to be vital for the near future. The question is whether we also need to develop new trade policies for the new Africa, given the broad spectrum of countries that now make it up and the changing global trading system of which it is part. This is a question that is also on Congress’ mind, with the AGOA extension legislation passed last summer asking us to assess the prospects of putting us on a path to more permanent, reciprocal trade arrangements.
Drawing on the expertise of this diverse and distinguished group, we’ve been working to develop a better understanding of the challenges and opportunities for trade and investment between the U.S. and Africa, and how we can harness the full potential of the US-Africa trade and investment relationship. This input is critical as we prepare a public report, for delivery to Congress in June of this year that will lay out a set of options and roadmaps for advancing the US-Africa trade and investment agenda.
To build upon AGOA’s successes, the US government and its African partners launched the Trade Africa initiative with the East African Community in 2013, signing a multifaceted Cooperation Agreement in 2015 focused on compliance with WTO standards on trade facilitation, sanitary and phytosanitary measures, and technical barriers to trade. The US is currently working to expand the Trade Africa Initiative to involve new partners, including Cote d’Ivoire, Ghana, Mozambique, Senegal, and Zambia.
US Secretary of Commerce Penny Pritzker: statement on Rwanda visit
Rwanda and the East African Community have a lot to offer US investors. East Africa is the most integrated and fastest-growing regional economic community in Africa. The PAC-DBIA members, as representatives of the American business community, have had the opportunity to share their perspective on policies that can foster deeper economic and trade ties between the EAC and the United States. As part of this visit, our delegation today met with President Kagame for a roundtable discussion on the opportunities presented by regional integration. While we continue to deepen our commercial relationships, our delegation arrived at a challenging moment. The United States has expressed its disappointment that President Kagame has chosen to run for a third term in 2017.
EAC to benefit from USAID Regional Strategic Plan 2016-2022 (EAC)
The visit constituted of a presentation of the draft USAID Regional Strategic Plan 2016-2022 to the Secretary General, and dialogue on ways in which the two organizations can align their key priorities for the next five years. USAID’s five-year strategic plan will focus on increased trade, investment and food security; health services and systems for marginalized and vulnerable populations; increased security of populations vulnerable to regional threats and strengthening East African institutions’ leadership and learning.
Electrify Africa Act: update (Atlanta Black Star)
In the next week, the U.S. House of Representatives is expected to vote on the Electrify Africa Act, passed by the Senate under unanimous consent late last year. This bill directs the President to establish a multiyear strategy to assist countries in sub-Saharan Africa, implement national power strategies and develop an appropriate mix of power solutions, including renewable energy, to provide access to reliable, affordable, and sustainable power in order to reduce poverty and drive economic growth. On behalf of the African Energy Leaders Group, a high-level public-private partnership launched last year, we welcome the leadership of the US Congress on this issue.
Mining and oil deals drop by half in East Africa (Business Daily)
The annual financial review by Burbidge Capital shows that the number of deals in the mining, oil and gas sectors halved due to the poor market. “2015 was a low year for the natural resources sector in East Africa as investor interest decreased, with around half the number of deals announced compared to 2014. The number of deals reduced to 23 in 2015 with Kenya accounting for almost 50% of the total deals recorded in the sector,” said the report. [Download]
East Africa: Regional states sign joint cargo tracking agreement (Daily Monitor)
The tracking system comprises satellites, a central monitoring centre and special electronic seals fitted on cargo containers and trucks, which give the precise location of goods in real time. The system triggers an alarm whenever there is diversion from the designated route, an unusually long stopover or when someone attempts to open a container. Besides curbing theft of cargo, the system also helps to seal loopholes that cause the country losses in revenue through suspected under-declaration of the value of exports or theft of cargo.
Busia town loses out as cross-border trade favours ‘cheaper’ Uganda economy (Business Daily)
Seamless trade is seen to have thrived more on Kenya and Uganda sides compared to Tanzania. Entering Tanzania from Isebania border in Migori, a Kenyan is subjected to checks and one cannot allowed to pass without a passport and yellow fever immunisation card. Use of national IDs at the exit/entry points by the citizens of Kenya, Uganda and Rwanda started two years ago. In Burundi and Tanzania, Kenyans cannot use national IDs to cross borders. Busia and Malaba are now like towns in the same country, save for difference in business environment. Kenya’s Luhya community speak Luganda language and vice-versa. But as businesses favour Uganda, Busia county government is seeking ways to woo back consumers. Following devolution, Busia town started attracting many entrepreneurs, but some are now eyeing the other side of the border.
Tweet by @UKenyatta: The dream of our continent will be achieved when our people are free to move without border restrictions
EALA: ‘Let us streamline acquisition of work and residence permits’ (EAC)
The Assembly is calling on the Partner States to commence the process of uniformly abolishing work and residence permit fees as well as in the facilitation of portability of social benefits. In the same vein, the Assembly is set to work jointly with regional advocacy bodies to engage in sensitization and popularization of the Common Market Protocol among other related issues. Late yesterday, the Assembly debated and adopted the Report of the Committee on General Purpose on the petition to EALA regarding work/residence permits in the EAC for the citizens of the Partner States.
Lesotho-South Africa Special Permit initiative: update (GCIS)
The thinking behind the Lesotho Special Permit initiative we explained in detail, in November 2015. This was after discussions between our two countries – the Kingdom of Lesotho and the Republic of South Africa. The SA Cabinet approved implementation in October, last year. In a nutshell, the purpose of the LSP is to regularise the stay of Lesotho nationals currently residing in South Africa illegally. It is meant to document Lesotho nationals who are working, studying or running businesses in South Africa, without appropriate documentation.
International Customs Day 2016: MRA launches National Single Window and Taxpayers’ portal (Government of Mauritius)
The Mauritius Trade link will act as a single web-based online portal for the submission and processing of import/export permits and respective clearance from Government agencies. Various benefits will be derived from the National Single Window project by the business communities in general such as reduction in dwell time for import/export permits processing and clearance; reduced cost of doing business; 24/7 access to the portal via internet; and facilities for traders to track the progress of their applications/declarations in real time among others. [Setting up of a commodities exchange (Government of Mauritius)]
Local Sourcing for Partnerships: project update (Comesa Business Council)
As a strategic response, the LSP project aims to increase local sourcing by large corporate companies in the COMESA region from small growth enterprise within the hospitality and agro-industry sector, focusing mainly on food and beverages. The project is being piloted in six COMESA states namely Ethiopia, Kenya, Malawi, Rwanda, Uganda and Zambia. In Zambia, the Zambia Association of Manufactures is the implementing partner for the project. A number of Multinationals often decide to source outside the region due to various reasons such as: the majority of local suppliers fail to meet the international quality standard requirements demanded for food and beverages suppliers, and most Multinationals have limited credible information on local suppliers. Additionally, local sourcing partnerships are viewed as difficult, unstable processes due to the inconsistence of supplying as well as their small production units and quantities.
WTO releases new statistical profiles on global value chains
Trans-Kalahari railway dream still an office job (The Namibian)
No investor has yet been selected to fund the project, as no tendering or calling for proposals to invest in the project has been done at this stage. Although the project was estimated to cost about N$100 billion in 2014, it is estimated to be nearly double that figure with today's exchange rate. Asked if there were major challenges that could hamper the development, Kalomoh said that at this stage none “that cannot be mitigated” could be foreseen. “Those saying the project is off are merely spreading unfounded rumours,” Kalomoh said.
India-Africa Partnership: a civil society perspective (Voluntary Action Network India)
The objective of the meeting was to reflect on the expectations and promises of the outcome documents of the IAFS and discuss civil societies’ possible contribution to upholding the spirit of India-Africa partnership and achieving the transformational change it envisions. In addition, the meeting provided a forum for bringing the national NGO platforms of Africa and India together to have a dialogue on current challenges and opportunities, and share their learnings and experiences.
China-Africa Trends & 2015 FOCAC: policy brief from the China-Africa Research Initiative (Johns Hopkins)
Namibia: Banks gear up for Chinese clients (The Namibian)
How the internationalisation of China’s currency could offset the global trade slowdown (ODI)
Agribusiness rules lag in agriculture dependent countries (World Bank)
Countries where agriculture is a major economic activity have greater room for improving key regulations that govern the agribusiness sector, a new World Bank report finds. In contrast, countries where agriculture accounts for less than 25 percent of GDP have better regulatory systems that foster agribusiness and ensure quality control and safety of food production, says the first edition of Enabling the Business of Agriculture 2016: Comparing regulatory good practices. The report, released today, examines regulations that affect private enterprise in agribusiness in 40 countries around the world. [Downloads available]
Zim moves to draft GM labelling laws (Southern Times Africa)
Kaberuka named head of AU Peace Fund (New Times)
The volume woes of Indian goods export (Livemint)
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Related News
Mining and oil deals drop by half in East Africa
Deal making in East Africa’s natural resources sector slumped in 2015 due to the falling price of commodities in the international market.
The annual financial review by Burbidge Capital shows that the number of deals in the mining, oil and gas sectors halved due to the poor market.
“2015 was a low year for the natural resources sector in East Africa as investor interest decreased, with around half the number of deals announced compared to 2014. The number of deals reduced to 23 in 2015 with Kenya accounting for almost 50 per cent of the total deals recorded in the sector,” said the report.
The number of deals in the oil and gas sector reduced to nine in 2015 from 14 a year earlier while in mining the deals stood at seven from 14 deals reported in the previous year. The energy sector was the most vibrant driven by interest from private equity and venture capital firms.
“M-Kopa secured a total of $31.5 million (Sh3.2 billion) in form of debt and equity from a consortium of PE and VC investors in two separate transactions. The petroleum sector recorded the least number of transactions compared to all the natural resource sub-sectors although a notable development was Ethiopia and Djibouti’s agreement to construct a 550km refined petroleum products pipeline estimated to cost $ 1.55 billion (Sh155 billion) linking the two countries,” said the report.
There has been some capital raising too for the energy sector since the beginning of the year.
Powerhive, a California-based company with offices in Kenya and the Philippines, announced that it had raised Sh2 billion to invest in solar mini-grids in Kenya and other African countries.
Related News
Agribusiness rules lag in agriculture dependent countries
Countries where agriculture is a major economic activity have greater room for improving key regulations that govern the agribusiness sector, a new World Bank report finds.
In contrast, countries where agriculture accounts for less than 25 percent of GDP have better regulatory systems that foster agribusiness and ensure quality control and safety of food production, says the first edition of Enabling the Business of Agriculture 2016: Comparing regulatory good practices. The report, released on 28 January 2016, examines regulations that affect private enterprise in agribusiness in 40 countries around the world.
Global population is estimated to grow to 9 billion by 2050, from the current 7.3 billion people, and food demand is projected to rise by 20 percent over the next 15 years. The largest increases are expected in Sub-Saharan Africa, South Asia and East Asia. As countries accelerate their efforts to achieve the new Sustainable Development Goals (SDGs), ending poverty and hunger will require well-performing agriculture and food sectors that can cater to the rising demand, which in turn depends on smart regulations that enable agribusinesses to thrive.
“Well-designed agribusiness laws and regulations are the bedrock of national and global efforts to address these daunting challenges. By focusing on key elements of the food production and distribution value chain, Enabling the Business of Agriculture hopes to promote regulatory systems that enable sustainable and inclusive agribusinesses to take root and thrive,” said Preeti Ahuja, Manager in the World Bank’s Agriculture Global Practice, which produced the report jointly with the Global Indicators Group in the Development Economics Vice Presidency.
The current edition presents country-level results on six topics: Seed; Fertilizer; Machinery; Finance; Transport; and Markets. Four additional topics – Information and Communication Technology (ICT); Land; Water; and Livestock – are under development and will be included in next year’s report. Two overarching themes – environmental sustainability and women’s participation – are embedded in the indicators developed under each topic.
The report finds that urbanized countries have on average smarter regulations in the topic areas measured by the report than countries where agriculture accounts for a larger role. Of the 40 countries surveyed, the urbanized economies of Colombia, Denmark, Greece, Poland and Spain perform above average on the measured areas.
But in most countries, performance is mixed and challenges remain. Bosnia and Herzegovina, an urbanized economy, has good regulations for plant protection and fertilizer but faces challenges in regulating credit unions and e-money. Morocco (urbanized) and Mozambique (where agriculture accounts for over 50 percent of GDP) have smart regulations in place for registration, certification and development of new seed varieties but need to strengthen regulations in agricultural finance. Vietnam, where agriculture accounts for around 20 percent of GDP, has strong regulations for fertilizer quality control and plant protection, but can improve safety standards for farm machinery.
The indicators presented in this report look at whether national regulatory systems enable agribusiness start-ups and operations; have provisions for plant protection, safety standards for agricultural machinery and quality control for seeds and fertilizers; and facilitate trade of agricultural inputs and products.
“Improved knowledge and understanding of the environment in which agribusinesses operate can lead to better national strategies and policies that not only optimize sustainable food production and distribution but also achieve maximum development impact to end poverty and boost shared prosperity,” said Federica Saliola, Program Manager at the World Bank’s Global Indicators Group.
In terms of regions, the regulatory quality and efficiency of OECD high-income countries stand out in areas measured by EBA, followed by Latin America and the Caribbean, and Europe and Central Asia.
South Asia and Sub-Saharan Africa show levels of regulatory strength that are generally lower than the global average across the areas measured.
» Download the full Enabling the Business of Agriculture 2016 report (PDF, 6.25 MB) or select individual chapters below.
About Enabling the Business of Agriculture
The Enabling the Business of Agriculture (EBA) project focuses on identifying and monitoring regulations that affect agriculture and agribusiness markets. EBA aims to inform and encourage policy decisions that support inclusive participation in agricultural value chains and foster an environment that is conducive to local and regional businesses in agriculture. The project is supported by several donors, namely United Kingdom’s Department for International Development (DFID), the Government of Denmark, the Government of the Netherlands, Bill and Melinda Gates Foundation, and the United States Agency for International Development (USAID).
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Regional blocs urged to harmonise rules of origin
Experts have called on Africa’s three trade blocs of COMESA, EAC and SADC to expedite the harmonisation of rules of origin to boost industrialisation and intra-regional trade on the continent.
According to the experts, harmonising rules of origin will encourage competitiveness for the African private sector, and accelerate regional integration.
Rules of origin are the criteria needed to determine the national source of a product.
The importance is derived from the fact that duties and restrictions in several cases depend on the source of imports.
And according to the experts, stakeholders should move fast and have the rules harmonised to help avoid trade deflection on the continent.
The desire to merge Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern Africa Development Cooperation (SADC), was first mooted in 2008.
In June 2015, the Heads of State and Governments of the, EAC and SADC officially launched the COMESA-EAC-SADC Free Trade Area (FTA), commonly known as the Tripartite FTA.
Sandra Uwera, the Chief Executive Officer, COMESA Business Council and secretary general of the Tripartite Private Sector Regional Dialogue, said the way the rules of origin are designed and implemented on the continent will have profound implications on trade flows and the extent of regional integration.
It is, therefore, very imperative to put in place more effective and simplified transparent rules of origin that will boost the continent’s private sector to tap into a market share of more than 625 million consumers.
“Having rules harmonised in such a market comes with economies of scale on which the private sector can leverage to boost intra-regional trade,” said Uwera.
Uwera was speaking during the first tripartite private sector regional dialogue organised by Private Sector Federation in Kigali, yesterday.
The two-day dialogue brought together more than 21 countries and more than 200 business leaders from COMSESA, EABC and the Association of SADC Chambers of Commerce and Industry (ASCCI).
She added that producers on the continent will be able to produce massively for export markets once the rules have been harmonised.
“Even as we look towards the advantages of the Tripartite FTA, one cannot ignore the challenges faced in this ambitious agenda of harmonising a preferential trade regime for 26 countries. Key among these are long distances and geographical locations among states which is further complicated by the poor infrastructure, inefficient logistics and cumbersome customs procedures,” Uwera noted.
To live up to its potential, the Tripartite FTA needs to effectively enhance the connectivity and linkages among member states.
Lilian Awinja, the EABC executive director, said the objective of developing rules of 0rigin should be to avoid trade deflection and encourage intra regional trade.
“We must ensure that the final rules are not trade-restrictive but simplified and more general rather than product specific except in minor cases where it is necessary,” Awinja said.
Ideally, tariff liberalisation under preferential arrangement should be accompanied by simple and flexible rules– which will make it easy businesses to access the market and take advantage of preferential treatment, she added.
Oswell Binha, the vice president of the Association of SADC Chambers of Commerce and Industry, said harmonising the rules has the potential to transform regional trade through market integration and product diversification.
“It will also allow us regional accumulation, enhanced trade cooperation, and reduced cost of doing business on the continent.”
Renewed commitment
According to Emmanuel Hategeka, the permanent secretary at Ministry for Trade and Industry, rules of origin have become increasingly important to match the rise in regional and global value chain trade.
“Intra African trade remains low at about 12 per cent because of various constraints which includes unharmonised rules of origin,” Hategeka, said.
It’s therefore, high time the private sector leaders started reflecting on how to get trade rules that will contribute to policies that will enhance trade on the African continent.
“Commitment at the political level should be matched with a sense of urgency when it comes to harmonising rules of origin; we also need not to forget that increasing connectivity and industrialisation on the African continent requires among other things harmonised rules of origin,” added Hategeka.
The rules of origin should be administered in a consistent, uniform, impartial, transparent and reasonable manner, he warned.
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Beyond AGOA Hearing: Remarks by Ambassador Michael Froman
On behalf of USTR, I would like to welcome our distinguished guests and friends participating in today’s hearing on policy recommendations for deepening the U.S.-Africa trade and investment relationship. Today’s hearing is meant to look to the future, but let’s look also at the road we’ve travelled.
In 1998, President Clinton called for “Americans to put a new Africa on our map.” “A new century is coming into view, old patterns are fading away,” he said. Two years later, Congress answered the call by passing the African Growth and Opportunity Act (AGOA) to expand America’s economic ties to Africa.
Today, sixteen years into the “new century,” Africa is not simply emerging. It is “on the move,” as President Obama said in Ethiopia last year. And our ties – which run deep – must evolve to keep pace with changes both within and outside Africa.
Over the next five years, sub-Saharan Africa’s GDP is forecast to grow 30 percent faster than the rest of the world. Looking further ahead, sub-Saharan Africa is home to 413 million children under the age of 15. In 2030, they will make up almost a quarter of the world’s workforce and almost a quarter of its consumers. These trends signal clearly how central Africa’s next decades will be to the entire world economy and to the United States.
Deeper trade and investment ties with Africa will mean growing markets for U.S. exports – just as they can serve our security interests by preventing conflicts, our development interests by alleviating poverty, and our values through policies that encourage democratic governance, broad-based growth, and strengthened labor and environmental standards.
For Africa, deepening trade and investment ties with the United States will be increasingly critical in the face of the sudden economic headwinds the continent is encountering. With commodity prices falling and China transitioning toward lower growth, China’s imports from Africa appear to have fallen by half in a single year, from above $110 billion in 2014 to barely $50 billion in 2015. Africa’s next decade of sustainable growth will require new sources of demand – in agricultural and manufacturing trade, internal integration, and in capitalizing on the continent’s boom in Internet access and mobile use, rather than the resource boom of the last ten years.
America needs Africa. And Africa needs America. But how do we go forward from here?
Clearly, we have a strong foundation. Over the last 15 years, AGOA has helped sub-Saharan countries sharply increase their exports, including a nearly fourfold increase in non-oil exports to the United States, and U.S. direct investment in sub-Saharan countries has nearly quadrupled. AGOA has supported hundreds of thousands of jobs in sub-Saharan Africa. And the United States has benefited as well, with significant increases in exports since 2000.
To build upon AGOA’s successes, the U.S. government and its African partners launched the Trade Africa initiative with the East African Community (EAC) in 2013, signing a multifaceted Cooperation Agreement in 2015 focused on compliance with WTO standards on trade facilitation, sanitary and phytosanitary measures, and technical barriers to trade. The U.S. is currently working to expand the Trade Africa Initiative to involve new partners, including Cote d’Ivoire, Ghana, Mozambique, Senegal, and Zambia.
And, last June, Congress reviewed this record and extended AGOA by ten years, the longest extension in the program’s history, providing African partners a unique opportunity to maximize their gains under the program and creating the greater certainty and predictability that enable businesses to make long-term investments and develop supply chains.
The question now is not whether AGOA is an important tool – it has been and, for many countries, will continue to be vital for the near future. The question is whether we also need to develop new trade policies for the new Africa, given the broad spectrum of countries that now make it up and the changing global trading system of which it is part. This is a question that is also on Congress’ mind, with the AGOA extension legislation passed last summer asking us to assess the prospects of putting us on a path to more permanent, reciprocal trade arrangements.
There are potentially many paths toward that outcome. It is not necessarily the case that one size fits all. And we are truly open-minded about where this discussion leads. We go into this process without preconceptions or prejudice about what it should produce. Today’s hearing is designed to gather views to help inform this effort.
What we do know is that certainly, new winds are blowing. Countries – including in Africa – are increasingly moving towards more stable, permanent, and mutually reciprocal arrangements. The United States has FTAs with 20 countries today, compared to 3 in 2000; though none with sub-Saharan Africa. African countries are themselves advancing regional integration through regional economic communities and the Tripartite and African Continental Free Trade Area initiatives. They have also signed onto reciprocal Economic Partnership Agreements (EPA’s) with the EU. And trading partners like Canada and the EU are increasingly refocusing the scope of their preference programs on the poorest countries.
And, we know – after a year-long review of AGOA – that tariff preferences standing alone are often not sufficient to generate significant new trade and investment. The policy environment matters. A company may choose not to invest in a country if prohibitive duties or policies are applied to inputs for products, if intellectual property is not protected, if the market for supportive services is closed, if standards aren’t consistent with international norms, or workers’ rights or the environment are not protected. Developing regional markets and consistent regional policies are important. And capacity constraints – such as thick borders and poor infrastructure – can have a dramatic effect.
Any new policy must take these factors into account. We and our interagency partners have been speaking extensively with African partners, with industry and civil society, with academia and the investor community, with foundations in the U.S. and Africa, and many friends here today about the path forward. Drawing on the expertise of this diverse and distinguished group, we’ve been working to develop a better understanding of the challenges and opportunities for trade and investment between the U.S. and Africa, and how we can harness the full potential of the U.S.-Africa trade and investment relationship. This input is critical as we prepare a public report, for delivery to Congress in June of this year that will lay out a set of options and roadmaps for advancing the U.S.-Africa trade and investment agenda.
Let me thank everyone again for your participation in today’s hearing in support of this exciting and important work. We look forward to a vibrant discussion. With that, I’d like to turn to Senators Isakson and Coons – two of the greatest champions of the U.S.-Africa relationship – to share some remarks on this important topic.
28 January 2016
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India-Africa Partnership: A Civil Society Perspective
India and Africa share close political and cultural linkages forged by a long history of trade relations and colonialism. In recent years, India and Africa have cooperated closely on the international stage, establishing common positions on challenges such as piracy, terrorism and climate change, and calling for a more equitable and fair global political economy.
A defining aspect of the renewed India-Africa relationship is bilateral development cooperation, which has been expanding both in volume and scope; facilitated by India’s unprecedented economic growth and Africa’s promising resurgence.
The India-Africa Forum Summit was established in 2008 with the aim of institutionalising this partnership and providing a platform where the governments of India and African countries could identify new areas of cooperation and outline their priorities. It has thus, emerged as one of the key drivers of India-Africa engagement.
The third India-Africa Forum Summit (IAFS III) was held on October 26-29, 2015 in New Delhi. The summit was larger in scale and intention than the previous two summits and reaffirmed India and Africa’s commitment towards a future of shared prosperity based on the values of South-South Cooperation. The Summit outcomes were closely aligned to the aspirations articulated in Africa’s Agenda 2063 as well as India’s development goals.
As a follow up to this government led process, VANI organised an International Meeting to formulate a Civil Society Response to the Summit on December 07-08, 2015 in New Delhi. The seminar was organised in collaboration with Research and Information System for Developing Countries (RIS) and Forum for Indian Development Cooperation (FIDC) and brought together civil society representatives of India and Africa from various nongovernmental organisations, universities and think tanks.
The objective of the meeting was to reflect on the expectations and promises of the outcome documents of the IAFS and discuss civil societies’ possible contribution to upholding the spirit of India-Africa partnership and achieving the transformational change it envisions. In addition, the meeting provided a forum for bringing the national NGO platforms of Africa and India together to have a dialogue on current challenges and opportunities, and share their learnings and experiences.
The present publication provides an overview of the enriching deliberations and significant outcomes of the meeting. It also includes submissions by representatives of African civil society which provide invaluable insights and ideas for charting future strategies for civil society engagement.
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WTO releases new statistical profiles on global value chains
The WTO has released new statistical profiles on global value chains (GVCs) for 61 economies. These profiles, available on the WTO website, bring together a set of indicators on trade taking place within GVCs.
Using data from the OECD-WTO Trade in Value-Added database (TiVA), these profiles provide insights into the actual contribution of foreign trade to an economy (the value-added content of exports), the interconnection between economies within GVCs and the role of the services industry in exports. Other indicators related to GVCs include trade in intermediate goods, trade facilitation and foreign direct investment.
Explanatory notes contain definitions and additional information for the interpretation and use of the indicators. The number of profiles available as well as the partners and industries shown in the tables reflect the current coverage of the TiVA database, which will be progressively extended in the future.
Measuring Trade in Value Added: An OECD-WTO joint initiative
What is Trade in Value-Added?
Trade in value-added describes a statistical approach used to estimate the sources of value (by country and industry) that is added in producing goods and services for export (and import). It recognises that expanding GVCs mean that a country’s exports increasingly rely on significant intermediate imports i.e. value added by industries in upstream countries.
For example, a motor vehicle exported by country A may require significant parts, such as engines and seats, produced in other countries. In turn, these countries will use intermediate inputs imported from other countries, such as steel and rubber, to produce the parts exported to A. The trade in value added approach traces the value added by each industry and country in the production chain and allocates the value added to source industries and countries.
Why is it important?
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To reveal the underlying economic significance of exports and to reveal the importance of imports in producing exports: Traditional measures of trade record gross flows of goods and services each and every time they cross borders. This ‘multiple counting’ of trade may overstate the importance of exports to GDP. Moreover because, in an accounting sense, imports are treated as a negative item for GDP, gross statistics for imports can paint a misleading picture of their importance to economic growth and competitiveness. They do not for example reveal the role played by imports as inputs for exports. Equally they are not able to reveal the extent of a country’s own value added that is returned in its imports.
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To better reflect who trades with who and the nature of interrelationships between emerging and developed economies: In the same way, conventional bilateral trade statistics do not typically reflect the full scale of GVCs. A reporting country will record the partner country for its exports on the basis of where the goods and services are directly exported. These exports will in turn be further processed by the importing country before, often, being exported again to another country, either as final goods or as further intermediate goods. Countries towards the beginning of value-chains (upstream) will have direct bilateral trade relationships with countries one step further down the value-chain (downstream) but may have little direct bilateral trade relationships with foreign consumers who purchase the final goods and services. Therefore conventional measures of trade are not able to reveal how changing demand by households, governments and investment in one country impact on value added generation in other countries. Typically, this means that conventional measures of trade do not reflect the full interdependence of markets and the interdependencies of emerging and more developed economies.
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To provide more meaningful measures of bilateral trade balances: This different perspective on bilateral trade relationships also has an impact on bilateral trade balances. Countries, for example, at the end of value-chains, may record lower surpluses with their direct export markets and lower deficits with their major sources of imports; reflecting the fact that a country at the end of a value chain acts as an ‘intermediary’ for value-added generated elsewhere in producing intermediate goods and services.
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To better reflect the contribution made by services: Goods dominate ‘traditional’ international trade statistics (accounting for about 80% in current prices). But this masks the important role played by services in creating goods. For example, returning to the motor vehicle example, significant intermediate inputs are provided by country A’s domestic service providers such as finance, insurance, research and development, accounting and other business services. Trade in value added estimates reveal the important contribution made by the services sector (domestic and foreign) in producing goods for export, and so provide better measures of the sources of international competitiveness.
What is value added?
Value added reflects the value that is added by industries in producing goods and services. It follows the definition of value-added (in basic prices) used in the 1993 System of National Accounts (SNA93) and is equivalent to the difference between its output (in basic prices) and the sum of its intermediate inputs (in purchasers prices) of goods and services. It is equivalent to the compensation for labour (Compensation of Employees) and compensation for capital (Operating Surplus), and also includes a component for ‘Other taxes on Production’. Definitions of Basic Prices, Purchasers Prices, Compensation of Employees, Operating Surplus, and Other Taxes on Production also follow the definitions in the SNA93.
How is trade in value added measured?
The approach relies on the construction of annual input-output tables for the world. These are based on official national input-output tables (IOTs) and national supply and use tables (SUTs). National IOTs reflect the interrelationships between domestic industries and also between industries and final demand categories (households, government, investment and exports as well as changes in inventories). They also reflect how intermediate imports are used in producing goods and services and how imports of final goods are consumed.
However, national IOTs are not able to reflect how the intermediate consumption of an industry in one country drives output in another. Using bilateral trade statistics it is possible to estimate these flows. The global tables produced by the OECD, the Inter-Country Input-Output (ICIO) database, includes national IOTs for 61 countries. The Rest of the World component is estimated using information on world GDP and input-output relationships observed in a selection of developing economies. The industry level of detail used covers 34 industries.
Dealing with asymmetries in official bilateral trade statistics
It is well-known that international trade statistics produced by national authorities are not globally consistent: total global gross exports do not equal total global gross imports. Inconsistencies are greater when bilateral trade flows in goods and services are considered and larger still when such flows are compared at a detailed product level. Even if total gross exports reported by country A to country B match reported imports from country A by country B, there may still be differences when these flows are looked at on a product by product level.
The construction of the OECD ICIO tables used to produce TiVA indicators, by necessity, attempts to resolve these inconsistencies under the constraints of SNA total trade in goods and services (adjusted for re-exports and purchases by non-residents) and drawing on available estimates of exports and imports in national IOTs and SUTs.
The efforts in balancing trade data has informed dialogue with national statistics institutions as part of on-going international efforts to reconcile international trade statistics; particularly in the area of trade in services where official statistics on bilateral trade data are notoriously weak. The balancing does not introduce any directional or structural bias but, clearly, the quality of TIVA results will be significantly improved as global inconsistencies reduce. This is not expected to have a significant impact on overall foreign content estimates broken down by industry but bilateral trade in value-added estimates may be affected.
What are the plans going forward?
The intention of this initiative is to mainstream the production of Trade in Value-Added estimates and make their production a permanent feature of the international statistics system. Work will continue to improve the coverage of countries, industries and years as well as increase the range of indicators available for policy analyses. In addition, work is already underway to improve the quality of the results, via a number of initiatives including: on-going efforts with international and national partners to improve bilateral trade in services statistics and, via OECD Working Parties and networks of official statistics, efforts to better account for the heterogeneity of firms (e.g. exporters versus non-exporters) within input-output tables.
In addition the OECD is developing estimates of “Trade in jobs” – reflecting what type of jobs (skills) and how many are affected by international trade and foreign final demand – and, developing an accounting framework to measure “Trade in Income” in recognition that knowledge based assets play an increasingly important role in value added creation. Where knowledge is ‘owned’ by foreign affiliate firms, the value added will be recorded in the country where the knowledge resides but profits will often be repatriated elsewhere. Measuring these flows will form an important part of the research programme in coming years.
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How the internationalisation of China’s currency could offset the global trade slowdown
The start of 2016 has seen a tumultuous start for the global financial system. Oil prices have descended below $30 a barrel and economic developments in China have brought episodes of volatility – trading in the Shanghai Composite Index was halted twice in the first week of the year due to sharp selling.
While the slowdown in China has understandably made the markets nervous, it’s worth pointing out that with an estimated $4 trillion in foreign exchange reserves, the opening up of the Chinese financial system and the internationalisation of the renminbi (RMB) are likely to have a significant impact on the global economy.
Of course this impact may not all be for the best. Leaders in Davos will be well aware that China’s liberalisation is likely to produce further financial market volatility. Without proper management, this process is risky given foreign capital flows will introduce new competition for less profitable banks and non-financial corporations.
This however needs to be viewed in context. The increases in trade and investment after full RMB internationalisation could in fact offset the global trade and investment slowdown. Meanwhile, rebalancing China’s economy could also see a decline in US dollar dependence for developing countries, as transactional RMB usage rises.
These influences are important for emerging and oil-dependent developing economies. The latter two stand to counterbalance the trend of rising US interest rates, a stronger US dollar, and lower oil and commodity prices.
Risks need to be managed when pursuing China’s objective of taking a full part in a globalised economy. At 10%, its share of world trade is still relatively small. However, it has increased by five-fold since the mid-1990s, according to the OECD.
At this pace of growth, the Chinese contribution to world trade and investment could help mitigate emerging and developing economies’ ‘triple crises’ of higher US interest rates, lower oil and commodity prices and China’s growth transition.
Increased outbound foreign direct investment (OFDI) would be a boon for sub-Saharan Africa. Its oil-exporting countries derive more than 50 percent of government revenues from oil related activities and gross oil exports alone account for nearly 25 percent of their GDP, according to the International Monetary Fund.
Institutionally, the internationalisation of the RMB has only just begun. Currently, China’s offshore financial centres comprise only a fraction of China’s domestic deposit balance of CNY999.3 trillion. Increased RMB bond issuance, greater inclusion in trade and greater OFDI will boost global liquidity, trade and investment.
China is the world’s second largest economy, but its financial system is no where near as open as its developed country counterparts. Intermittent fear in financial markets comes from the historical experience of liberalisations – more often than not, generating currency crises.
Moving beyond the ‘impossible trinity’ of a fixed exchange rate, an independent monetary policy and opening an economy is difficult to manage, as witnessed in some of the Southeast Asian economies during the Asian financial crisis of 1997. Liberalising the RMB needs to be managed amid volatility in global capital flows. It is therefore expected that China’s policymakers will reform at a slow and steady pace.
As it took over the G20 leadership, China’s presidency highlighted the need for better global economic governance. One way of meeting this need would be to bolster its contribution to the BRICS’ shock facility, drawing in part from its significant reserves. This would be game-changing in the light of the current global financial risks.
Phyllis Papadavid is Team Leader in International Macroeconomics at the Overseas Development Institute.
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A boost to transparency in international tax matters: 31 countries sign tax co-operation agreement to enable automatic sharing of country by country information
As part of continuing efforts to boost transparency by multinational enterprises (MNEs), 31 countries* signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country reports on 27 January 2016. The signing ceremony marks an important milestone towards implementation of the OECD/G20 BEPS Project and a significant increase in cross-border cooperation on tax matters.
The MCAA will enable consistent and swift implementation of new transfer pricing reporting standards developed under Action 13 of the BEPS Action Plan.
It will ensure that tax administrations obtain a complete understanding of the way MNEs structure their operations, while also ensuring that the confidentiality of such information is safeguarded.
“Country-by-Country Reporting will have an immediate impact in boosting international co-operation on tax issues, by enhancing the transparency of multinational enterprises’ operations,” said OECD Secretary-General Angel Gurría. “Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on the key indicators of multinational businesses. This is a much-needed tool towards the goal of ensuring that companies pay their fair share of tax, and would not have been possible without the BEPS Project.”
The OECD/G20 BEPS Project set out 15 key actions to reform the international tax framework and ensure that profits are reported where economic activities are carried out and value created. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from MNEs.
G20 Leaders endorsed a wide-ranging BEPS package in November 2015 that marks an historic opportunity for improving the effectiveness of the international tax system. The package was the result of more than two years of discussion involving all OECD and G20 countries, as well as more than a dozen developing countries. Following endorsement of the BEPS measures, the focus has shifted to designing and putting in place an inclusive framework for monitoring BEPS and supporting implementation of the measures, with all interested countries and jurisdictions invited to participate on an equal footing.
With Country-by-Country reporting tax administrations where a company operates will get aggregate information annually, starting with 2016 accounts, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements as signed today. First exchanges will start in 2017-2018 on 2016 information. In case information fails to be exchanged, the Action 13 report on transfer pricing documentation provides for alternative filing so that the playing field is levelled.
* Australia, Austria, Belgium, Chile, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, Mexico, Netherlands, Nigeria, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland and United Kingdom.