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Expanding social protection offers a faster track to ending hunger
Programmes proliferate but vast majority of rural poor remain uncovered by social protection
Social protection is emerging as a critical tool in the drive to eradicate hunger, yet the vast majority of the world’s rural poor are yet to be covered.
The State of Food and Agriculture 2015 published by FAO on 13 October finds that in poor countries, social protection schemes – such as cash transfers, school feeding and public works – offer an economical way to provide vulnerable people with opportunities to move out of extreme poverty and hunger and to improve their children’s health, education and life chances.
Such programmes currently benefit 2.1 billion people in developing countries in various ways – including keeping 150 million people out of extreme poverty.
Expanding such programs in rural areas and linking them to inclusive agricultural growth policies would rapidly reduce the number of poor people, the report says.
The report was released on the eve of World Food Day (16 October), whose focus is on social protection’s role in breaking the cycle of rural poverty.
“It is urgent that we act to support the most vulnerable people in order to free the world of hunger,” said FAO Director-General José Graziano da Silva.
“Social protection programs allow households to access more food – often by increasing what they grow themselves – and also make their diets more diverse and healthier. These programs can have positive impacts on infant and maternal nutrition, reduce child labor and raise school attendance, all of which increase productivity,” he said.
Breaking out of the hunger trap
Only about a third of the world’s poorest people are covered by any form of social protection. Coverage rates dip even lower in South Asia and sub-Saharan Africa, regions with the highest incidence of extreme poverty, the report said.
Without such assistance, many poor and vulnerable people will never have the opportunity to break out of the poverty trap – in which hunger, illness and lack of education perpetuate poverty for future generations, according to the report.
Most countries – even the poorest – can afford some kind of social protection program. FAO estimates that globally, some $67 billion a year in income supplements, mostly provided by social protection programs, would – along with other targeted pro-poor investments in agriculture – allow for the eradication of hunger by 2030. That is less than 0.10 percent of world GDP.
Understanding social protection
Currently many extremely poor households are forced to sell off productive assets, put children to work, over-exploit their small landholdings unsustainably, or settle for badly paid jobs.
Yet basic social transfer schemes offer the poor an opportunity to improve their own productive potential. They also have positive spillover effects on local economies, increasing business opportunities, raising rural wages, and allowing the poorest to acquire or invest in assets.
In Zambia for example, a pilot cash-grants program led recipient households to greatly increase livestock ownership as well as land under cultivation, input use and ownership of tools such as hoes, sickles and axes, leading to a 50 percent jump in the overall value of locally produced agricultural commodities.
Beneficiaries also spent more on food, clothing and health-and-hygiene – an amount 25 percent greater than the value of the initial transfer. The wider community also benefited through the increased demand for locally produced goods and services generated by the transfer-every dollar transferred generates an additional 79 cents in income, often for non-beneficiaries providing these goods and services.
At least 145 countries today provide one or more forms of social assistance, including unconditional cash transfers, meaning outright grants for eligible recipients, conditional cash transfers, usually linked to school attendance or health checkups and, public-works programs that offer guaranteed employment. Other forms include in-kind transfers, including food distribution and school feeding programs.
Cash means more than spending
The report stresses that the notion that social protection reduces people’s work effort is a myth. Rather, recipients often respond to social protection positively, including improving the nutrition and education of their children, relying more on home production rather than poorly paid wage work and also increasing their participation in existing networks such as funeral societies, a common form of risk management in many traditional communities.
Social protection schemes can also be transformative over time. One well-designed Bangladeshi programme gave poor rural women livestock and other productive assets, as well as a monthly stipend to cover the period until recipients were able to earn additional incomes.
The FAO report also cites other successful examples of social protection programs in Ethiopia, Ghana and Lesotho.
Such findings show how social protection is an investment, rather than a cost. It is also clearly illustrated by Brazil’s Bolsa Família, a well-integrated scheme that reaches a quarter of the country’s population and costs only 0.5 percent of GDP.
Still, the report stresses how social protection alone cannot sustainably eradicate hunger and rural poverty. It therefore underscores the importance of combining and coordinating public investment in social protection with public and private investments in the productive sectors of agriculture and rural development. Such actions will ensure inclusive economic growth as a sustainable way to break the cycle of rural poverty.
Key messages
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Social protection programmes reduce poverty and food insecurity. Effective targeting and adequate transfers are important determinants of success. Social protection contributes to higher incomes and food security not only by ensuring increases in consumption, but by enhancing a household’s ability to produce food and augment income. Programmes targeted at women have stronger food security and nutrition impacts. Programmes that are gender-sensitive, reduce women’s time constraints and strengthen their control over income enhance maternal and child welfare. This is especially important because maternal and child malnutrition perpetuate poverty from generation to generation.
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Programmes targeted at women have stronger food security and nutrition impacts. Programmes that are gender-sensitive, reduce women’s time constraints and strengthen their control over income enhance maternal and child welfare. This is especially important because maternal and child malnutrition perpetuate poverty from generation to generation.
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Social protection stimulates investment in agricultural production and other economic activities. Social protection enhances nutrition, health and education, with implications for future productivity, employability, incomes and well-being. Social protection programmes that provide regular and predictable transfers promote savings and investment in both farm and non-farm activities, and encourage households to engage in more ambitious activities offering higher returns.
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Social protection does not reduce work effort. But it does give beneficiaries greater choice, and many shift time previously dedicated to casual agricultural wage employment of last resort to ownfarm work or non-agricultural employment. Taken together with the increase in farm and non-farm production activities, social protection strengthens livelihoods instead of fostering dependency.
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Social protection has virtuous impacts on local communities and economies. Public works programmes can provide important infrastructure and community assets and, when designed and implemented properly, contribute directly to the local economy. Cash transfers increase the purchasing power of beneficiary households, who demand goods and services, many of which are produced or provided in the local economy by non-beneficiary households. Complementary programmes may be necessary to reduce production constraints to prevent inflation and maximize the real-income and production impacts of the programme.
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Social protection, by itself, is not enough to move people out of poverty. As poor households typically face multiple constraints and risks, joint, coordinated and/or aligned social protection and agricultural programmes are likely to be more effective in helping poor households move out of poverty in a sustainable manner.
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There are clear opportunities to leverage social protection and agriculture programmes to further rural development. Developing synergies is an opportunity and also a necessity because of constrained government budgets. It is imperative to help the poorest meet basic consumption needs, especially when they are unable to work. Such help can itself become a foundation for gradual improvement of the livelihoods of the poor. Given that the majority of the rural poor depend largely on agriculture, agricultural interventions are needed to overcome structural supply-side bottlenecks holding back growth. Leveraging public expenditures on agriculture and social protection programmes in support of each other not only furthers this transformation, but also serves to strengthen agricultural and rural development.
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A national vision is needed of how agriculture and social protection can gradually move people out of poverty and hunger. National vision and commitment, supported by permanent domestic resource mobilization, must support coordinated action at the national and subnational levels. Policy and planning frameworks for rural development, poverty reduction, food security and nutrition need to articulate the role of agriculture and social protection in moving people out of poverty and hunger, together with a broader set of interventions. The type of agricultural interventions combined with social assistance depends on the context and constraints, but must also consider issues such as local implementation capacities and available resources. In all cases, interventions must be designed to address a range of constraints to allow the poorest to transform their livelihood strategies to escape and remain out of poverty.
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Could Europe’s historical trade links offset China slump?
Fears that a slowing China will cause world trade to stagnate could be overstated, given European nations’ long-standing trade links with emerging markets (EMs) across Latin America, Asia and Africa, experts have told CNBC.
“It sometimes slips under the radar quite how important Europe is for EMs (emerging markets),” William Jackson, senior EM economist at Capital Economics, told CNBC.
The European Union (EU) group of 28 countries is the world’s largest trading bloc, the largest trader of manufactured goods and services and the top trading partner for 80 countries, according to the bloc’s official website, which says that the U.S. is the top trading partner for only around 20 countries.
“Fuels excluded, the EU imports more from developing countries than the USA, Canada, Japan and China put together,” the website says.
Jackson and other economists highlight that the EU remains the largest export market for both Sub-Saharan Africa and eastern Europe and is also among the largest trading partners for Latin America.
“While much attention has focused on the role of China in slowing world trade growth, the trajectory of world trade growth from here depends more on the ‘old world’ markets of the U.S. and Europe than standard trade data would suggest,” said Adam Slater, lead economist at Oxford Economics, in a report out last week.
The slowdown in China cut around 0.5 percentage points from year-on-year world trade growth in the first half of this year, Slater said. However, in his opinion, this importance of China is overstated by standard trade data, in part because the trade growth figures cannot account for all the goods flowing into and out of the country.
“We should arguably be a bit less concerned about the import slowdown in China, which has already happened, and more so about what happens next in the U.S. and Europe,” he added.
Colonial era ties
Many of the strong trade links between emerging markets and Europe date back to colonial times, when Britain and France led the way in a race to paint the world in their home colors.
In Africa, for instance, many former colonies maintain trade links with their ex-colonial power that are as strong or stronger than those with either neighboring countries or with the relatively newcomer of China – despite the decades that have passed since Britain and France relinquished their empires.
“Colonial links are very strong; it is incredibly how strong they still are given the years that have passed,” Ravi Bhatia, a director at Standard & Poor’s who specializes in Africa, told CNBC on Monday.
“If you compare the intra-Africa trade with the trade between former colonial powers and ex-colonies, it is very much at the same sort of level. Intra-Africa trade is picking up a lot now, but it has been pretty low in the past.”
France, for example, remains a major trading partner for many of its ex-colonies, such as Cote d’Ivoire, Gabon and Cameroon in sub-Saharan Africa and Morocco in North Africa.
Similarly, the British are “very comfortable” trading with former colonies like Kenya, Bhatia said, citing “common language, common culture, established trading links and knowledge of the market from both sides” when explaining why the ties between colonizers and colonized remained strong.
Trade between the EU and sub-Saharan Africa reached $205 billion in 2014, up from $66 billion in 2000, according to Standard Chartered Bank. It remains relatively concentrated in both directions, with the former colonial powers of Germany, France and the U.K. accounting for a little less than 45 percent of EU-sub-Saharan Africa trade.
By comparison, trade between China and sub-Saharan Africa topped $170 billion in 2013, up from negligible levels in 2000, according to the World Bank.
Trade leads to… investment
These trade ties also provide indirect benefits in the form of foreign direct investment (FDI) links, Jackson told CNBC.
“This is perhaps most notable in central and eastern Europe where, following the end of communism, manufacturers became integrated into German supply chains (supported by FDI flows from west to east). But the EU is also the single largest source of investment into Sub-Saharan Africa and a major investor into Latin America,” he said on Monday.
“The key point here is that this investment then supports transfers of technology (as well as intangible benefits such as transfers of knowledge, know-how, management techniques, et cetera), which raises productivity and allows for a sustainable rise in incomes and living standards.”
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Call for fast tracking integration of sub-regional Free Trade Areas
COMESA, EAC and ECOWAS sub-regions should work out ways of integrating their respective Free Trade Areas to fast track the realization of the Continental Free Trade Area (CFTA) in the First 10 Years of the Implementation of Africa’s Agenda 2063.
COMESA Secretary General Sindiso Ngwenya said the pragmatic approach, which has been accepted in principle by the African Union, is to build on what the different sub-regional economic communities have achieved.
He was addressing the Annual briefing of the African Regional Economic Communities to Member States of the United Nations and its entities that took place in New York on Monday, 12 October 2015.
The briefing centered on the Role of African Regional and Sub Regional Organizations in Achieving Regional Integration: The Continental Free Trade Area within the context of the first 10 year implementation plan of Agenda 2063.
He described the sub-regional economic communities as the vehicles that will deliver the Agenda 2063 owing to the critical and catalytic role they play its implementation.
“Without exception all sub regional economic communities in Africa are implementing programs for developmental integration that places priority to the development of support institutions for regional integration and productive capacities,” Mr Ngwenya told the assembly. “These are a sine quo non for the structural transformation and modernization of African economies.”
Silencing the Guns
The Secretary General also briefed the forum on the COMESA’s role in “silencing the guns” in the region by developing programmes that respond to the economic and structural factors of conflicts. These programmes include the establishment of a conflict early warning system, supporting the management and resolution of existing conflicts, post conflict reconstruction, democratic governance and addressing security.
He said the current multiplicity of actors and programmes involved in conflict management need to be channeled towards the goals of conflict prevention and economic development.
He told the delegates that since the commencement of formal structures to address peace and security in 1999, COMESA has developed the conflict early warning system (COMWARN), which is focused on structural vulnerability assessments and identification of structural drivers of conflict for respective countries.
In addition, the organization supports the management and resolution of existing conflicts through its Committee of Elders that are mandated to work with the Secretariat on preventive peacemaking assignments. In this initiative, COMESA normally plays a supportive role where other RECs take the lead.
“The support post conflict reconstruction involves exploiting the nexus between trade, development and conflict prevention with COMESA supporting border communities of the Great Lakes region to enhance cross border trade using the COMESA Simplified Regime,” Mr Ngwenya said.
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The centrality of the Continental Free Trade Area for the achievement of Africa’s transformation and development vision re-iterated as Africa Week 2015 kicks-off
Africa Week 2015 was launched at a high-level event which featured the participation of His Excellency Mr. Mogens Lykketoft, President of the 70th session of the General Assembly (PGA), the Secretary-General of the United Nations, His Excellency Mr. Ban Ki-moon, various high-level officials from African regional and subregional organizations as well as representatives of a number of key partners of the continent.
The PGA, among other things, welcomed Africa’s strong efforts towards regional integration. He noted that initiatives such as the CFTA are not about trade liberalisation but structural transformation for the well-being of everyday Africans.
For his part, the Secretary-General welcomed the recently established Tripartite Free Trade Area (comprised of 26 African states) as an important step for the CFTA process. He called for deeper ties and the harnessing of synergies between the United Nations and the African Union. Furthermore, the Secretary-General and the PGA both underlined that the 2030 Agenda for Sustainable development and Agenda 2063 provide a clear roadmap for aspirations that now need to be translated into action.
Various salient points emerged from the statements made by various speakers and the interactive discussions during the high-level event. These included Africa’s determination to launch the CFTA by the established deadline of 2017, dating back to the Treaty Establishing the African Economic Community (Abuja Treaty) in June 1991, which entered into force on 12 May 1994, including the vital enabling measures being taken in this regard by the African Union, its Regional Economic Communities (RECs), and various continental bodies including the Economic Commission for Africa, the African Development Bank and by Member States.
Some of the challenges presenting themselves for the process were discussed. These included the negative impact the Structural Adjustment Programmes implemented in the continent, and weaknesses in reporting economic indicators of the continent. The latter, it was noted, was due in large part to weak statistical capacities which do not fully capture data for the informal economy and to the increasing complexity of some sectors of the continent’s economy, such as the Information and Communication Technologies (ICTs) sector, thereby underestimating the continent’s progress and potential.
The centrality of the CFTA as well as infrastructure and energy development, education and skills-training and good governance for the achievement of Africa’s transformation and inclusive development vision were all re-iterated. The roles of the private sector, as well as the African Diaspora were also underscored.
Furthermore, various speakers also emphasized that the resources needed for regional integration, growth, industrialization and successful integration into the global value chains were abundantly available within Africa. In this context, the catalytic role of Overseas Development Assistance (ODA) was also highlighted as a means to help unlock these resources.
The meeting re-emphasized the critical importance of the political leadership and peace and security for sustainable development.
Background
About the Meeting
In the context of the African Union Agenda 2063 and its First Ten-Year implementation plan, the proposed meeting focused on highlighting progress made towards regional integration, challenges, and the role of the international community in supporting Africa’s integration efforts. The event particularly highlighted the 10 June 2015 launch of the Tripartite Free Trade Area as the first step towards the achievement of the Continental Free Trade Area envisaged by Agenda 2063 and its first 10-Year Implementation Plan. In addition to featured speakers, the event provided an opportunity for engaging with Permanent Representatives of UN Member States and other relevant stakeholders to share their views.
Organized by the United Nations Office of the Special Adviser on Africa (OSAA), with the African Union Permanent Observer Mission to the United Nations, the African Union Commission, the NEPAD Planning and Coordinating Agency (NPCA), the UN Economic Commission for Africa (ECA), and the United Nations Department of Public Information (DPI), the high-level event was co-chaired by H.E. Mr. Vandi Chidi Minah, Permanent Representative of the Republic of Sierra Leone to the United Nations and Chair of the African Group for the Month of October, and Mr. Maged Abdelaziz, Under-Secretary-General and Special Adviser on Africa.
About Regional Integration
Regional integration has been a core element of African countries’ development strategies. The genesis of a concerted effort to integrate the African continent economically can be traced directly to the Lagos Plan of Action (1980), and to the OAU Charter. This effort resulted in the adoption of the Treaty Establishing the African Economic Community (Abuja Treaty) in June 1991, which entered into force on 12 May 1994. The AEC was established as an integral part of the OAU with the primary aim of promoting the integration of African economies. The integration strategy adopted by the Abuja Treaty is based on the use of the Regional Economic Communities (RECs) as ‘building blocks’ for the eventual continental trade bloc. Though the Treaty provided for the creation of five RECs corresponding to the five regions recognised by the OAU, there are currently eight RECs that have been recognised as AEC building blocks.
The Abuja Treaty’s integration strategy sets out a programme that reflects what is commonly described as the market integration model. This programme is to be effected over a lengthy transitional phase which, however, is not to exceed a cumulative period of 40 years. The Abuja Treaty relies on the RECs to provide the foundation for the establishment of the Economic Community with the AEC playing a coordinating role. In January 2012, the African Union (AU) Summit adopted a decision and a declaration that reflected the strong political commitment of the African leaders to accelerate and deepen the continent’s market integration, and agreed on a roadmap for establishing the Continental Free Trade Area (CFTA) by the indicative date of 2017.
The “Declaration on boosting intra-African trade and the establishment of the CFTA” adopted on 30 January 2012 called on member states, RECs, and development partners to adopt the necessary measures toward the effective implementation of the AU Action Plan.
Furthermore, the AU Assembly launched the CFTA negotiations, with an indicative plan to conclude them by December 2017. The creation of a single continental market for goods and services, with free movement of business people and investments, would help bring closer the continental customs union and African common market and turn the 54 single African economies into a more coherent large market. The larger, more viable economic space would allow African markets to function better and promote competition, as well as resolve the challenge of multiple and overlapping RECs, helping to boost inter-REC trade. Moreover, the CFTA could provide a more conducive environment for industrial diversification and regional complementarities than is currently viable under the existing individual country approach to development.
» Read more about the regional integration event in the concept note.
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Opportunities and challenges for expanding financial inclusion in Tunisia
Tunisia grabbed the world’s attention when it sparked the first revolution at the start of the Arab Spring in 2011. It has since made important transitions, adopting a new constitution and appointing a democratically elected government in late 2014. Its hard-fought political progress has been threatened, however, by ongoing economic stagnancy, high unemployment (15% for adults, 33% amongst youth), and domestic security issues.
The country’s Ministry of Finance is preparing a financial sector modernization plan for 2015-2020 that outlines more than 20 areas ripe for policy reform, including financial inclusion – defined as the access and use of financial services such as credit, savings, payment services and insurance by households and businesses.
In this regard, a recent analytical snapshot on financial inclusion, produced by the World Bank and Consultative Group to Assist the Poor (CGAP), provides important insights for Tunisian policy-makers.
Despite these assets, financial inclusion remains limited. The 2011 national microfinance strategy estimated that around 30% to 40% of the adult population (i.e. 2.5 to 3.5 million individuals), and more than half the enterprises in Tunisia (i.e. 245,000 to 425,000 registered businesses) remained unserved or underserved by the mainstream financial sector. Two recent market studies corroborate these figures: the 2015 study by the World Bank and the Center of Arab Woman for Training and Research (CAWTAR), found that two-thirds of adults are excluded from or underserved by the formal financial sector and the 2014 Findex study[1], in which only 27% of adults reported holding an account with a formal financial institution. In addition, extensive qualitative research shows that low-income people have active financial lives but have to resort to informal financial services that may be both risky and costly.
Existing supply has not adapted to existing demand, with many people using informal services for savings and credit. Banks have low portfolio quality: about 15% of loans are in arrears and the banks lend primarily to salaried workers; in 2013, there were about 16 billion TND (7,265 billion euros) in outstanding loans spread across 1.3 million borrowers, according to the Central Bank. About 338,000 businesses were financed in 2013.
The majority of financial institutions consider the very small, small, and medium enterprise (VSSME) segment of micro-financing, risky and opaque. A 2014 IFC survey found that people working in 29% of the VSSMEs it had examined had never attempted to open a bank account; 37% reported needing financing but never contacting a financial institution; 78% used cash to pay their suppliers, and 91% used cash to pay their employees
The postal savings account network is almost as extensive as that of the entire banking sector and far more evenly spread across Tunisia; in 2014, it had 1,051 branches. It is thus a key player when it comes to financial inclusion. But it has only 178 ATMs, and a quarter of its branches are not connected to a central server. They also have relatively limited opening hours and strict minimum payments, making the network difficult to use for micro-savings requiring regular withdrawals and very small deposits. Over 50% of the 5.5 million postal accounts are anyway inactive, with no transactions having been made for the past two years or longer.
In 2011, legal reform laid the foundation for the development of the microfinance sector, authorizing new actors as associations and limited liability companies, and creating a modern regulatory agency (the microfinance supervisory authority). In the past 12 months, authorizations have been granted to four newly-created companies (Taysir, Microcred Tunisia, Advans Tunisia, and the Entrepreneurship Financial Center). Given this sectoral expansion, Micro-Finance Institutions (MFIs) are set to play an important role in financial inclusion in Tunisia.
Other financial service providers, including leasing companies and insurance providers, comprise only a negligible part of Tunisia’s financial sector. Insurance company premiums represent less than 2% of the country’s GDP. Digital finance, the provision of financial services through electronic means, has seen some progress in recent years, with four services on the market. These products, however, offer limited services, lack inter-operability, and have seen limited uptake. Remarkably, less than 4% of Tunisians use mobile financial services.
Looking ahead, the opportunities for financial inclusion in Tunisia are significant. There remain, however, a number of structural and short-term challenges to overcome. Expanding beyond microcredit to develop savings, micro-insurance, and payment services would require:
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identifying a high-level advocate for financial inclusion;
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coordinating a national financial inclusion strategy;
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conducting a thorough market study to obtain nationally-representative and up-to-date data on market characteristics;
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clarifying the role of different public and private actors in the market (e.g., Tunisian Post, banks, microfinance institutions, mobile network operators, among others);
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and finally, developing a robust consumer protection framework to manage sectoral growth and address ongoing challenges.
Overall, financial inclusion can be an important mechanism to promote economic growth and provide a better future for low-income Tunisians. Progress will require public and private actors to work together beyond their narrow institutional interests to pursue reform through concerted action. But – given the recent reforms in the microfinance industry, the reach of the Tunisia postal savings system, and recent opportunities to expand digital finance – Tunisia has the opportunity to set the example for other countries in the region, providing much needed hope for micro-financing in Tunisia and beyond.
[1] The Findex survey, developed by the World Bank with financing from the Gates Foundation, is based on representative surveys of the population covering 148 countries and comprising a series of indicators on the use of financial services. Find out more here.
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tralac’s Daily News selection: 13 October 2015
The selection: Tuesday, 13 October
Later today in Geneva: launch of the Review of Maritime Transport 2015 (UNCTAD)
Today in Luanda: Angola/Botswana Business Forum (Angola Press)
GSDPP’s Building Bridges programme is hosting a workshop, 16-17 October Dakar: 'Culture, history and ideas: re-evaluating Pan-Africanism'
The Nordic-African business summit: Oslo, 29 October
Africa Week 2015 theme: The Continental Free Trade Area within the context of the First Ten-Year Implementation Plan of Agenda 2063. Africa week will culminate on Friday with a General Assembly debate on the 'Development of Africa'. Follow debate on twitter: #UNAfricaWeek
Kicking off ‘Africa Week’, Ban lauds steps taken for continent’s long-term development agenda (UN News Centre)
Africa Week 2015 kicked off at Headquarters with Secretary-General Ban Ki-moon commending African Member States of the United Nations for taking an “important step” this year toward the establishment of a Continental Free Trade Area envisioned in the African Union’s Agenda 2063. Mr. Ban also said “operationalizing the 2030 Agenda for Sustainable Development – and Agenda 2063 of the African Union – will be a key to our success in ensuring a life of dignity for all.” This event is the first is a series of high-level discussions and events this week held on the margins of the 193-member General Assembly’s annual consideration of the landmark New Partnership for Africa’s Development , and other vital issues concerning for the continent.
In his remarks, the President of the General Assembly said the events of 2015 offer an “unprecedented opportunity” for Africa to reduce poverty, foster sustainable and inclusive economic growth, and to integrate into the global economy. “These initiatives should not, however, be simply about trade liberalization between African countries,” Mogens Lykketoft cautioned. “Rather they should constitute an important pillar of the continent’s strategy for structural economic transformation. They should focus on harmonizing policies, enhancing infrastructure development and promoting public-private partnerships.”
Uhuru Kenyatta: 'We can draw a more accurate picture of the genuine narrative that is our Africa' (Daily Nation)
In large part, you members of the fourth estate draw our mental maps of Africa. Let us look at the pictures you drew this week. I glanced at a global newspaper: Its Africa headlines were on the coup in Burkina Faso, a bombing in Nigeria, crimes in Mali, and the latest news about Ebola. This came just after the UNDP report assessing Africa’s progress in meeting the Millennium Development Goals, which showed very encouraging progress: Child mortality rates fell by an average of 40 per cent in Africa as did poverty in most African countries while improving women’s access to political leadership faster than any other region on earth. Why exaggerate African failure? Why ignore African success? It is not surprising that foreigners get our story wrong.
To strengthen UN peace operations, General Assembly urges replacing 'template approaches' (UN News Centre)
The United Nations should be realistic about future challenges, and ambitious in its responses, speakers told the General Assembly today, as it took up the Secretary-General’s report on the future of the Organization’s peace operations.
Imbalance between core, non-core funding in UN development system a 'recurring theme' (UN News Centre)
David Hanif, director of Economic and Social Council Support and Coordination, Department of Economic and Social Affairs, introduced the Secretary-General’s report on the “Implementation of General Assembly resolution 67/226 on the quadrennial comprehensive policy review of operational activities for development of the United Nations system”. Highlighting key funding trends, he noted that the funding for operational activities for development of the United Nations system in 2013 had reached $26.4bn, representing an increase of 10.6% in real terms, compared to the previous year. Three-quarters of those operational activities were in the form of non-core resources. Turning to long-term trends, he added that over the past 15 years, contributions for operational activities for development had nearly doubled in real terms, mostly due to an increase in non-core contributions. Rapidly declining core funding rations continued to pose serious challenges.
Raymond Thulane Nyembe (South Africa), speaking on behalf of the “Group of 77” developing countries and China, said the 2030 Agenda would provide the international community with guidance in the work on development, particularly in addressing the quadrennial comprehensive policy review and South-South cooperation in an effective manner. His Group would be tabling two substantive resolutions to speak to those issues.
Nairobi MC10: new consultation process established on outcome document (WTO)
Director-General Azevedo announced that he was appointing Amb Gabriel Duque of Colombia, Amb Harald Neple of Norway and Amb Stephen Karau of Kenya (the host country of the 10th Ministerial Conference) as facilitators to consult with members. These ambassadors will be asking members for their views on three key issues: the structure of the potential Nairobi outcome document; the elements that the document might cover (which could include priorities for post-Nairobi work); and what subsequent process could be employed to develop a draft of the outcome document. Members agreed to engage in the process outlined by Director-General Azevedo.
WTO and UNCTAD commit to further help poor countries integrate into the global economy
The organizations plan to reinforce their cooperation on issues such as trade related-technical assistance, trade facilitation, trade and investment, debt and finance, global value chains, commodities, standards, non-tariff measures, and e-commerce, as well as the establishment of a Geneva Trade Statistics Hub.
Tanzania, Uganda, Kenya spend $1.2b to cushion falling currencies (The East African)
Kenya, Tanzania and Uganda have used more than $1.2 billion, so far, from their foreign currency reserves since the start of the year to cushion their falling currencies against the dollar. The declining foreign currency reserves have also seen Kenya ask the International Monetary Fund for more time to settle its debt obligations. The weakening of capital inflows, central bank interventions in the foreign exchange market, and a decline in tourism receipts contributed to the depreciation of the Kenya shilling.
Tanzania: Ndulu named Africa’s best central bank governor 2015 (The Citizen)
Zambia: Kwacha fall cuts small-scale suppliers’ profits by 50% (The Post)
Small-scale suppliers have had their profit margins swallowed up by over 50 per cent owing to the depreciating kwacha, according to the Goods and Services Suppliers Association of Zambia. The kwacha’s volatility on the foreign exchange market has continued, with the local currency enduring its worst performance in the last two weeks.
ZDA, DRC firm to seal inter-trade agreement (Daily Mail)
The Zambia Development Agency is considering signing a memorandum of understanding with the Katanga Federation du Enterprise of Congo to help grow the markets for the two countries. ZDA director general Patrick Chisanga said once the MoU is sealed, the two countries will enhance inter-trade and spur economic development. Mr Chisanga said this after the official opening of the Trade Mission and Exhibition to the Democratic Republic of Congo in Lubumbashi on Friday. [Zambia cuts 2015 copper output forecast up to 26%, Minister says (Bloomberg)]
Private sector position paper on business service (COMESA Business Council)
The objective of the assignment is to undertake a consultancy study on the performance of the private sector in professional services, and develop a common position paper on the constraints faced in the professional services industries. The consultant will undertake desk and field research to develop a report which includes an assessment of trade in professional services in COMESA and common private sector positions and recommendations to address constraints faced in business services - with a focus on professional services industries. Core sectors will include engineering, legal and accounting services.
$2.4bn trade exchange between Egypt, COMESA (Daily News)
The trade exchange between Egypt and the Common Market for Eastern and Southern Africa countries achieved a surplus of nearly $2.4bn in 2014, according to the Egypt-Africa Trade Relations report issued by N GAGE Consulting. The report said Egypt, prior to joining the COMESA, had a trade deficit of nearly $100m with its member states.
SA exporters miss out (Reuters)
South Africa's exporters have failed to take full advantage of the rand currency's nearly 15% drop this year, hamstrung by electricity constraints, labour tensions and an over-reliance on commodity trade with China. The export sector has emerged as a key driver of growth in Africa's most advanced economy as domestic demand wanes, with real net exports making the largest contribution to GDP in the second quarter at 6.1 percentage points. Although exports performed better in the first half of 2015 compared with last year, this was mainly off a low base after prolonged wage-related stoppages slashed output in the key mining and manufacturing sectors in 2014. The momentum is expected to have stalled in the third quarter, with stuttering growth in China, which accounts for 20% of South Africa's trade, taking its toll.
Madagascar: minutes of the Third Trade Policy Review (WTO)
The third Trade Policy Review of Madagascar was held on 14 and 16 July 2015. Madagascar had made significant progress in reforming its trade regime since its last Review in 2008, especially by further facilitating trade. It had established an Electronic Single Window and had moved towards full paperless customs clearance procedures. However, there was a need to upgrade the legislative and institutional framework on standards, technical regulations, and sanitary and phytosanitary measures, in order to ensure higher quality for local products and boost exports. Madagascar also needed to improve its overall business environment and make it conducive to investment as well.
Angola should 'rectify' excessive import tariffs, WTO says (MacauHub)
Angola should “rectify cases where customs duties and other taxes exceed the average level” of 10.9%, said the World Trade Organisation, which offered to provide “technical assistance” to help the Angolan authorities.
Relief for Govt, Zim companies as China unveils international payment system (The Herald)
Zimbabwe stands to benefit from China’s introduction of an International Payment System as it will cushion the country and Zimbabwean firms from the seizure of their revenue by the United States’ Office of Foreign Assets Control. The US Treasury Department has over the years intercepted payments running into millions of dollars due to local firms as part of its illegal economic sanctions regime under the Zimbabwe Transition to Democracy and Economic Recovery Act, formerly Zdera. But industrialists, economists and legal experts yesterday said the introduction of the China International Payment System would bring efficiency in trade between Harare and Beijing.
SADC, USAID review portfolio of programmes supported by USAID (SADC)
It was noted that USAID is embarking on the development of a new Regional Strategy for Southern Africa and that this offers an opportunity to further re-align the programme interventions towards the achievement of priority milestones under the Revised RISDP. In conclusion and way forward, the meeting agreed on alignment of activities with milestones with a view of facilitating adherence to approved priorities, effective monitoring, and to avoid duplication while enhancing national regional linkages.
Trade blocs are obsolete: why the Commonwealth is Britain’s future (City A.M)
Britain is correct to woo China early, but we should not put Britain’s future prosperity all on red. In personal investment, it is prudent to have a diverse portfolio, spread across numerous sectors. The same is true for a country’s trade and investment strategy. The modern Commonwealth is emerging as a key part of the new pattern. With all of the Commonwealth’s advantages and underpinnings, acknowledging the importance of this 53-nation network is not just an opportunity for Britain, but a matter of survival. [The authors: Lord Howell, Tim Hewish]
Brazilian investors beg FG to ease barriers on rice importation (Vanguard)
Brazilian investors have implored the Federal Government to ease barriers on rice importation, following their interests in food and agricultural technology transfer. Government had placed foreign exchange restrictions on rice importation to encourage local rice growers and promote made-in-Nigerian products. Brazilian Ambassador to Nigeria, Mr. Elvado Silva Junior, who led a delegation of 20 companies to the Nigerian Investment Promotion Commission, NIPC, in Abuja yesterday, said Brazil was keen on exporting its quality rice to Nigeria.
Nigeria, Brazil ready to strengthen trade ties (Daily Trust)
UK pledges support for Nigeria’s energy, prosperity and security (ThisDay)
Ghana: Government policies on trade to give preference to local companies (GBN)
Nigeria: Days of corruption in Customs over – CG Hameed Ali (Daily Post)
See ECOWAS region as your domestic market, EU ambassador advises Nigeria (ThisDay)
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Background note on Agenda 2063: The Africa We Want
The Foundation of Africa Union Agenda 2063
Fifty years after the first thirty-three (33) independent African states gathered in Addis Ababa to form the Organization of African Union, now the African Union, the continent is looking ahead towards the next fifty years. Thus, on the occasion of the Golden Jubilee of the OAU, Africa’s political leadership acknowledged past achievements and challenges and rededicated itself to the Pan African vision of “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.”
Agenda 2063, a plan for Africa’s structural transformation, was agreed upon by the African Union Golden Jubilee of May 2013. This is presented in three key documents listed below:
a) A Technical Document that contains the vision for 2063, a comprehensive situational analysis of key issues, the goals, priorities, targets and indicative strategies, as well as proposals on “Making it happen” dealing with implementation, monitoring and evaluation;
b) Agenda 2063 Popular Version – presenting the Agenda in simple terms to facilitate appropriation by the general public; and
c) First 10-year Implementation Plan (2013-2023) which lays out the immediate priorities and is designed to kick-start the journey towards 2063.
The Summit also pledged, through the following Solemn Declaration, to develop and pursue transformational Agenda:
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African Identity and Renaissance,
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The struggle against colonialism and the right to self-determination of people still under colonial rule,
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Integration Agenda,
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Agenda for Social and Economic Development,
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Agenda for Peace and Security,
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Democratic Governance,
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Determining Africa’s Destiny, and
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Africa’s place in the world.
This also builds on the AU Constitutive act, the Declarations, as well as, Regional frameworks. In addition, the process took into cognizance of and reviewed national, regional and existing and past continental frameworks such as PIDA, CAADP and MIP, including Monrovia Declaration, Lagos Plan of Action, Abuja Treaty among others.
Stakeholder Consultations
Preparation of agenda 2063 included an extensive review of the African development experiences, analysis of challenges and opportunities of today as well as a review of national plans, regional and continental frameworks and technical studies. It has been prepared through a consultative process involving a wide range of stakeholders including consultations with the following stakeholders, in addition to web-based:
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Private sector, Nairobi 12-14 September 2013;
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Academia, research institutions and think tanks, Nairobi 16-18 September.
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Planners and Development Specialists, Dakar 27-28 September
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Civil Society Organizations, Dakar 30 September – 2 October
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African Diaspora, New York 8-10 October
Valuable contributions were also received from:
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A High Level Conference of National Planning Bodies in Africa organized by the UNECA and the Institute for Development and Planning in Kigali, Rwanda on 1-2 September 2014;
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Consultation with African Faith Based Groups organized by the Commission on 5-7 November 2014 in Nairobi, Kenya.
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Consultation with Island States held in Victoria, Seychelles on 2-4 December 2014.
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Forum of former African Heads of States and Governments in Johannesburg 10-12 December 2014.
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Consultative and co-ordination meeting of AUC/AfDB/UNECA/NEPAD/RECs – 12 December.
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The Bahir-Dar ministerial follow up committee on the implementation of the Bahir-Dar ministerial retreat on Agenda 2063.
Member States Inputs
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In addition to the initial inputs received from 8 MSs prior to the Malabo Summit (Algeria, Ghana, Mauritius, Nigeria, South Africa, Tunisia, Zimbabwe, Zambia), inputs have been received from Ethiopia, Kenya, Egypt, Mozambique, Republic of Congo and the Seychelles, bringing the number of Member States who have made written contributions to 14.
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The Commission also took every available opportunity to make presentations on Agenda 2063 at regular technical and Ministerial Meetings organized by the various Departments.
List of Aspirations Identified
The converging voices of Africans of different backgrounds, including those in the Diaspora have painted a clear picture of what they desire for themselves and the continent in the future. From these converging voices, a common and a shared set of aspirations has emerged:
a) A prosperous Africa based on inclusive growth and sustainable development, where Africa.
b) An integrated continent, politically united, and based on the ideals of Pan Africanism.
c) An Africa of good governance, respect for human rights, justice and the rule of law
d) A peaceful and secure Africa.
e) An Africa with a strong cultural identity, Common Heritage, values and ethics.
f) An Africa whose development is people-driven, relying on the potential offered by African People, particularly its women and youth, with well cared for children.
g) Africa as a strong, united, resilient and influential global player and partner
List of Flagship Programs
Agenda 2063 implementation is being jump-started by key flagships identified by the Commission and approved by the AU Policy Organs:
a) Integrated High Speed Train Network;
b) Great Inga Dam;
c) Single African Aviation Market;
d) Outer Space;
e) The Pan African E-Network;
f) Creation of an Annual African Consultative Platform;
g) Establishment of the Virtual University;
h) Free Movement of Persons and the African Passport;
i) The Continental Free Trade Area;
j) Silencing the Guns by 2020;
k) Development of a Commodity Strategy; and
l) Establishment of the African Financial Institutions
Way Forward
Implementation Plan and Domestication
The underlying principles derived from consultations, review of national/regional plans and continental frameworks for the implementation, subsidiarity; accountability and transparency; participation/inclusion; integration; diversity; leveraging existing institutions and systems; and harmonisation of policies and systems.
Agenda 2063 will be implemented through Ten year plans over the 50 year horizon. These ten year plans which will be subsets of the 50 year transformation framework, covering the results framework – goals/priority areas/targets and indicative strategies for the national, regional and continental levels.
It also provides details of implementation, monitoring and evaluation arrangements, financing and partnerships, capacity development and communication strategies required to implement the ten year plan at the national, regional and continental levels.
To ensure wider acceptance and domestication by all concerned, the draft Ten year plan will be subjected to planning experts from RECs and Member States for validation.
Risk Management
Existing and new threats faced by the continent, include scrambles for its resources in the face of changing global demands and demographics; undue external influence in the affairs of the continent; Africa’s disproportionate burden of the impact of climate change; and the huge scale of illicit outflows of African resources and capital.
These threats and challenges can however, be mitigated and turned into opportunities through mounting collective strategies and effective public policy responses and actions to counter the most disruptive economic, social and environmental changes facing Africa. Overcoming risks and addressing fragilities entails two dimensions:
Capacity Building
The AU/NEPAD Capacity Development Strategic Framework (CDSF) provides a holistic African approach to capacity development based on the following key elements of a holistic approach: transformative leadership; citizen transformation; evidence based knowledge and innovation; using African potential skills and resources; capacity of capacity developer; and integrated planning and implementation for results.
Financing
Africa does not only needs funding, but also a more effective and inclusive means of channeling funds (including financial institutions and markets, financial instruments and financial services) to where they can be most effective and where there is market failure in the allocation of the needed resources. Hence, Agenda 2063 financing strategy will be articulated around three dimensions:
a) Domestic resource mobilization
b) Intermediation of resource into investment
c) Access to finance
Communication strategy
In order to ensure successful implementation of the Agenda 2063, a Communication Strategy has been developed. The Communication Strategy will generate sustained public awareness, involvement, support and ownership by the African population of the Agenda and its execution.
Monitoring and Evaluation
The objectives of monitoring and evaluation arrangements are to:
(i) Identify all key stakeholders and assign tasks to be performed by each;
(ii) Ensure that each stakeholder performs the task assigned on a timely basis; and
(iii) Provide the platform for collective execution/attainment of the goals entailed by Agenda 2063.
These stakeholders, guided by the principles of complementarity and subsidiarity, are at three levels: Continental, Regional and National.
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After Trans-Pacific Partnership deal reached in Atlanta, focus shifts to ratification
Ministers from 12 Pacific Rim countries concluded a sweeping trade pact this past Monday, following several days of frenzied negotiations in the US city of Atlanta to bring the agreement across the finish line. With the talks on the Trans-Pacific Partnership (TPP) now completed, participating countries are now gearing up to face their next big challenge: building public support and ratifying the pact’s terms in their domestic legislatures.
The Atlanta ministerial meeting, originally set for 30 September through 1 October following several days of chief negotiators’ discussions, was extended repeatedly as officials worked to reach the long-awaited deal, with the talks finally closing in the early morning hours on 5 October.
“After more than five years of intensive negotiations, we have come to an agreement that will support jobs, drive sustainable growth, foster inclusive development, and promote innovation across the Asia-Pacific region,” ministers for the TPP countries said on Monday morning.
The officials affirmed that the final agreement is one that is “ambitious, comprehensive, high standard, and balanced,” arguing that the terms will be a boon to their countries’ respective citizens, which in total number nearly 800 million people.
The 12 countries involved – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam – constitute nearly 40 percent of the global economy, making the sheer size of the agreement the largest of its kind outside the World Trade Organization.
The TPP will also set new rules for these 12 participants in areas ranging from environmental and labour protections to the treatment of state-owned enterprises and e-commerce. It is also set to provide significant market access openings, with the deal set to eliminate or reduce tariffs on approximately 18,000 tariff lines.
While much of the details of the outcome are now coming to light, the full terms of the agreement are not yet public, given that the document now must undergo a legal review, verification, and translation. Officials say that they hope to release the text in the near future, noting that the agreement will have to be public for several weeks or months – depending on the domestic requirements of different participating economies – before being considered for ratification.
Automobiles, biologics, agricultural market access
As the negotiations entered the home stretch in Atlanta, ministers were focused particularly on resolving disagreements on a handful of major issues, which had been blamed for stalling an earlier ministerial meet in the US state of Hawaii in July.
These issues specifically involved automotive rules of origin, sugar and dairy market access, and the data protection period for biologics, with the latter two being the main areas of contention in the final days and hours of negotiation.
The automobiles issue had involved Japan and the three members of the North American Free Trade Agreement (NAFTA), specifically the US, Canada, and Mexico. Part of the failure of the Hawaii meeting in July was attributed to disagreements on this topic, given that the bilateral terms that had been agreed between Tokyo and Washington prior to the gathering had not been approved by Ottawa or Mexico City.
The concern raised by Canada and Mexico had been that the new rules of origin under TPP could give them worse terms than that agreed under NAFTA regarding automobile manufacturing, which their respective industries had strongly warned against given the highly-integrated nature of the North American automobile industry.
The final outcome on rules of origin reportedly requires that 45 percent of imported automobiles and core parts be made in a TPP country to qualify for tariff-free treatment, with other automobile parts subject to a 40 percent requirement. Under NAFTA, these numbers are 62.5 and 60 percent respectively.
Regarding dairy market access, which had been a key issue for New Zealand – home to Fonterra, the major multinational dairy cooperative – the final outcome eliminates tariffs for some dairy products, but not others.
Canada had been one of the TPP members who had been pressed to provide greater market access in these products. This had proven to be a difficult task for the North American country, given its highly protected supply management system for dairy and poultry products.
According to Canadian Trade Minister Ed Fast, “[Ottawa has] been successful in protecting the three key pillars of supply management, being production controls, price controls, income controls.”
Market access for sugar had also been unresolved ahead of the Atlanta talks, with Australia being one of the main countries calling for better terms from its TPP partners – particularly of the US. Australian officials have now confirmed that the final TPP deal will provide their country with an additional quota of 65,000 tonnes base allocations, together with a 23 percent share of additional allocations in the American market.
Figures released by the office of the Australian trade minister confirmed that this would increase the country’s annual sugar exports from 107,000 tonnes to 207,421 tonnes, noting that the US offer “is the largest made to any FTA partner since NAFTA.” Furthermore, the ministry confirmed, the increased quota will put Australia’s access on par with Brazil, the global leader in sugar exports.
In the area of biologics, which are those drugs derived from a biological background rather than a chemical one, the US had been at odds with many of its TPP partners as to how long to keep in place data exclusivity protections on these particular pharmaceuticals. Examples of biologics can include vaccines, anti-toxins, blood or blood products for transfusion, gene therapies, and cellular therapies, according to the US Food and Drug Administration.
While promising in their potential to treat diseases ranging from cancer to rheumatoid arthritis, such drugs are significantly costly, with the Brookings Institution finding that these can cost up to 22 times the price of chemical drugs. Critics of long data exclusivity periods argue that making it easier to develop “biosimilars” – which are “follow-ons” to an original biologic – could substantially reduce such prices.
While US law currently provides for 12 years, various other TPP partners such as Australia and Chile had been pushing for that number to be much lower. Under American data exclusivity protections, according to Brookings’ analysis, biosimilars cannot be approved during the protected period if they rely on the data used for the original biologic, though the drug can be approved if the data was generated independently.
The final compromise will allow for a minimum standard of five years of data protection, together with the option of employing domestically some additional government measures, such as through regulatory and administrative policies or requirements for more clinical trials, which could add to this number of years.
Through the additional measures, US Trade Representative (USTR) Michael Froman noted, “it may take seven or eight years for the various biosimilars to be approved.” The final outcome on this subject, he said, is “strong and balanced” in a way that both incentivises drug development while facilitating access to medicines.
The US trade chief also noted that the TPP is “the first trade agreement in history to ensure a minimum period of protection for biologics,” telling reporters that this could provide a model for the rest of the region.
Parallel deal on currency forum
The issue of how and whether to address the issue of currency manipulation – a longstanding area of concern for some US lawmakers – had been another lingering question over the trade talks, particularly given concerns over the effects that monetary policy decisions by countries such as Japan could have on exchange rates and trade.
Currency had been a particularly hot topic earlier this year during the process of renewing and revising Trade Promotion Authority (TPA), the legislation which governs the way the US Congress approves or rejects negotiated trade deals.
The terms of TPA ultimately did not include an enforceable currency amendment, despite efforts by some lawmakers to attach such language. Officials such as US Treasury Secretary Jack Lew had warned at the time that including such language would both derail TPP and impose limitations on Washington in terms of its own ability to protect its economy.
Rather, the TPA text includes as a principal negotiating objective that US partners in trade deals must “avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain unfair competitive advantage.” Responses should this occur could include “enforceable rules, transparency, reporting, monitoring, cooperative mechanism, or other means to address exchange rate manipulation,” which Washington must work to establish.
In the context of the TPP talks, the US had reportedly put forward earlier this year a proposal for a parallel deal on currency that would bring together TPP members to examine exchange rate changes and related issues.
A joint statement released separately on Monday by TPP finance officials confirmed that the group’s participants “are working to strengthen macroeconomic cooperation, including on exchange rate issues, in appropriate fora.”
“The work to be undertaken reflects our common interest in strengthening cooperation on macroeconomic policies, and will help to further macroeconomic stability in the TPP region as well as help ensure that the benefits of TPP are realised. Keeping in mind the diverse circumstances of the TPP countries, we are currently undertaking a technical review,” the statement confirmed.
Ministers told reporters on Monday that this cooperation will fall under a parallel agreement on how to address currency issues between TPP members, specifically by establishing a forum for discussion on the subject.
According to Australian Trade Minister Andrew Robb, these discussions will involve a “set of principles,” which is what finance officials from TPP countries are currently looking to finalise, with the forum to bring together a “representative group from each country.”
International implications
The TPP deal has been dubbed by many of its proponents – as well as some of its detractors – as being “transformational” not just for the Asia-Pacific region, but also for the global economy.
“Long after the details of this negotiation on things like tons of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved today will be what remains,” said New Zealand Trade Minister Tim Groser on Monday, praising the result.
“It is inconceivable that the TPP bus will stop at Atlanta. The TPP bus will move on… Our industry structures will change in response to the opportunities of the agreement, and in future years, we can be absolutely certain that the depth of achievement we’ve been able to reach at this point in our collective history will be deepened and broadened and other people will joint this agreement,” Groser told reporters.
Others such as Australian Trade Minister Andrew Robb have also noted that this deal is the “most significant” since the Uruguay Round talks that established the WTO were finalised 20 years ago.
So-called mega-regional deals like the TPP have, however, also sparked the question over whether these agreements sap away energy needed for multilateral negotiations and potentially create overlapping, confusing systems of rules – or if these processes can instead be complementary to one another.
“A proliferation of different rules and standards could be a drag on business, so this is an important area of work,” said WTO Director-General Roberto Azevêdo last week in a speech at the Graduate Institute in Geneva, Switzerland, referring to major regional trade initiatives.
“But of course, we shouldn’t overstate the issue. The multilateral trading system has always coexisted with regional agreements – and proved to be mutually reinforcing,” the WTO chief said, noting also that some issues such as agricultural and fisheries subsidies can only be addressed successfully at the multilateral level.
Whether the afterglow from the TPP’s completion will help lift other major international trade initiatives – such as multilateral trade talks under the WTO, or the bilateral negotiations between the US and EU for a Transatlantic Trade and Investment Partnership (TTIP) – is now a key question from trade watchers and officials.
Azevêdo, for his part, issued a statement congratulating TPP ministers and negotiators on the result, suggesting that the success of the talks shows that “a diverse group of countries can strike a deal on a broad and complex trade agreement if the political will and determination are there.”
The WTO chief added that he hopes this result “will serve as an inspiration for WTO members as we seek to produce substantial outcomes by Nairobi,” referring to the global trade body’s upcoming ministerial conference in the Kenyan capital city.
Regarding the prospects for TTIP, USTR Froman told reporters on Monday that there is “intense engagement” between Washington and Brussels on the trans-Atlantic talks, highlighting the recent stocktaking meeting he held with European Trade Commissioner Cecilia Malmström.
Getting even an outline of a TTIP deal by the end of this year, as G-7 leaders urged in June, is expected to be a very big ask, and the talks overall are widely expected to carry through 2016 at the very least. The next round of TTIP talks are scheduled to be held in Miami, Florida, from 9-23 October.
Critics, proponents weigh in
Building public support is also set to be a major challenge in the coming months, as TPP member governments work to demonstrate the benefits from their negotiating trade-offs, along with quelling any concerns over the potential for job losses in some sectors or what impacts the deal’s new rules may have on domestic public policy objectives.
The TPP has been famously controversial since the negotiations began, drawing the scepticism – and, in some cases, ire – of a broad range of groups who question whether the terms of the deal are not sufficient to ensure environmental and labour protection.
“The TPP’s environment chapter might look nice on the surface but will be hollow on the inside, and history gives us no reason to believe that TPP rules on conservation challenges such as the illegal timber or wildlife trade will ever be enforced,” said Sierra Club Executive Director Michael Brune in response to the news of a deal.
Other environmental groups such as the World Wildlife Fund (WWF) have welcomed the TPP’s environment chapter as being one of the most forward-thinking seen in trade deals to date.
“No major trade agreement before this one has gone so far to address growing pressures on natural resources like overexploited fish, wildlife and forests. Now that the negotiations have closed, we expect to see a strong environment chapter that promotes and enforces both legal and sustainable trade,” said WWF US President and CEO Carter Roberts.
Roberts noted that fulfilling TPP’s potential in this area will depend partly on having the right implementation and compliance procedures in place.
The deals provisions on intellectual property have also come under the microscope from humanitarian groups, such as Médicins Sans Frontières’ (MSF) Access Campaign, who question how these rules may affect access to medicines in developing countries.
“MSF expresses its dismay that TPP countries have agreed to United States government and multinational drug company demands that will raise the price of medicines for millions by unnecessarily extending monopolies and further delaying price-lowering generic competition,” said Judit Rius Sanjan, US Manager and Legal Policy Adviser for the organisation.
Other questions have been raised as to the enforceability of the labour provisions in the pact, particularly regarding Brunei, Malaysia, and Vietnam. In the case of Malaysia, the issue of human trafficking is another one that has been raised by civil society groups.
Officials from all three of those countries affirmed on Monday that they are committed to addressing their labour rights problems, with all referring also to their respective memberships in the International Labour Organization as an indication of that commitment.
Froman, for his part, argued that the TPP will set up the “strongest labour standards of any trade agreement in history,” listing provisions such as right of association and collective bargaining, as well as minimum wages and maximum hours, safe working conditions, and prohibitions on forced and child labour.
“With [Vietnam, Malaysia, and Brunei], we have worked very closely and very collaboratively on specific actions to be taken that will help bring their systems into compliance with international labour standards, and including cooperative efforts around capacity building and other measures,” the US trade official said.
Ratification battles ahead
Though the negotiations may be done, the road ahead for TPP remains a difficult one, given that the deal must be ratified by countries’ domestic legislatures before entry into force.
Passing trade deals in the US Congress, for example, has proven to be a notoriously difficult task, with the last three agreements approved by the legislature – those with South Korea, Colombia, and Panama – only passing after significant political haggling among American lawmakers and following a four-year lag between the completion of the trade deal negotiations and the actual ratification.
Notably, the deal with Seoul had to be partially renegotiated in 2010 in order for Washington to obtain better terms on automobiles and beef, after it became clear that the previous deal was not going to pass Congress.
Renewing and updating the terms of TPA earlier this year again demonstrated the deep-seated divides among US lawmakers and the public over the merits and potential risks of trade deals, with the debate focusing primarily on the Trans-Pacific Partnership.
USTR Froman pledged that his office will immediately begin work with congressional leadership to determine the best next steps in the ratification process, while acknowledging that under the timelines built into TPA, signing and possible congressional approval of the TPP agreement will not be until 2016.
Meanwhile, the response from key US lawmakers who work on trade, particularly in the Senate Finance and House Ways and Means Committees, has so far been mixed, or in some cases openly sceptical, indicating a tough road ahead.
For example, Orrin Hatch, the Utah Republican who chairs the Senate Finance Committee, said on Monday that the final TPP “appears to fall woefully short,” without specifying what elements of the agreement were sources of concern and acknowledging that not all details are available at this time.
Hatch, along with Democratic Senator Ron Wyden of Oregon and Republican Congressman Paul Ryan, was the architect behind the renewed version of Trade Promotion Authority, and had long advocated for the potential benefits that could come from a completed TPP depending on what is included in the final deal.
Ryan, who chairs the House Committee on Ways and Means, gave a more cautious response, saying that he would be “reserving judgement” on the TPP’s terms until the final text is available for review while stressing that only a “good agreement – and one that meets congressional guidelines in the newly enacted Trade Promotion Authority – will be able to pass the House.”
Wyden similarly confirmed that he would weigh in on the deal’s merits once the full details become available, while commending the news on the currency forum, labour rights obligations on countries such as Vietnam and Malaysia – including enforceable commitments by the latter to address human trafficking – as well as commitments on tackling illegal wildlife trade and conservation.
The Oregon senator also referred to the carve-out in the investor-state dispute settlement (ISDS) clause in TPP for tobacco, saying that it would “ensure that countries that are part of [this deal] can regulate tobacco without fearing intimidation and litigation by Big Tobacco.”
Sandy Levin, the top-ranked Democrat on the House Ways and Means Committee who has long raised concerns over the potential design of the trade pact, welcomed progress made in some TPP areas, including the tobacco ISDS carve-out and the labour rights obligations for certain countries, while arguing that the currency forum plan is “entirely unsatisfactory,” among other criticisms.
While the potential for dramatics in the US legislative process has drawn significant attention, passing the deal in other legislatures is also expected to prove difficult.
Canada, for example, will be holding its general election on 19 October, after which a new Parliament will need to take office. Current polling finds that Prime Minister Stephen Harper’s Conservative Party and the two main opposing parties are currently in a dead heat.
Tom Mulcair, the leader of the opposition New Democratic Party (NDP), has said that should his party win the election, they will not be bound by the terms of the TPP. Meanwhile, Liberal Leader Justin Trudeau has not given a formal position on the deal, citing the need to see its final contents.
Passing TPP through Japan’s parliament, known as the Diet, will also be an uphill battle, analysts say, particularly given the long-standing reticence to open up the country’s agricultural market. The Diet is not likely to begin its consideration for ratification until next year.
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Kicking off ‘Africa Week’ at UN, Ban lauds steps taken for continent’s long-term development agenda
Africa Week 2015 kicked off at Headquarters on Monday with Secretary-General Ban Ki-moon commending African Member States of the United Nations for taking an “important step” this year toward the establishment of a Continental Free Trade Area envisioned in the African Union’s Agenda 2063.
“The year 2015 is indeed a critical time for global action,” the UN chief told the High-level Event on the Role of African Regional and Sub-regional Organizations in Achieving Regional Integration.
“The United Nations system is committed to supporting the 10-Year Implementation Plan of the Agenda 2063, including the efforts of the Regional Economic Communities as they strive to further integration,” Mr. Ban said.
In his remarks to start off Africa Week 2015 at UN Headquarters, Mr. Ban also said “operationalizing the 2030 Agenda for Sustainable Development – and Agenda 2063 of the African Union – will be a key to our success in ensuring a life of dignity for all.” This event is the first is a series of high-level discussions and events this week held on the margins of the 193-member General Assembly’s annual consideration of the landmark New Partnership for Africa’s Development (NEPAD), and other vital issues concerning for the continent.
“You can also count on my Special Adviser on African issues, Mr. Maged Abdelaziz, for his continuing commitment working together with all Member States and myself also,” he added.
The UN chief also outlined ways in which he has been addressing peace and security challenges in Africa.
“I have recently convened, in close cooperation with the African Union and key sub-regional organizations, High-level Meetings on the situations in the Central African Republic, Congo, Libya, Mali, Somalia and South Sudan,” he said. “Let us also continue to work together to resolve the pressing refugee and migration crisis.”
In his remarks, the President of the General Assembly said the events of 2015 offer an “unprecedented opportunity” for Africa to reduce poverty, foster sustainable and inclusive economic growth, and to integrate into the global economy.
“These initiatives should not, however, be simply about trade liberalization between African countries,” Mogens Lykketoft cautioned. “Rather they should constitute an important pillar of the continent’s strategy for structural economic transformation. They should focus on harmonizing policies, enhancing infrastructure development and promoting public-private partnerships.”
Mr. Lykketoft said he encourages African leaders to sustain the political will and commitment needed for truly beneficial regional integration, adding that the UN must also assist the African Union and its Regional Economic Communities as they work to put in place policies that support regional integration.
He announced that he will hold a high level thematic debate next April to highlight early successes and to advance a coherent response to the agendas and agreements to which countries have committed.
The Week also aims to identify the kind of support the United Nations could further extend to African regional and sub-regional organizations in the implementation of Agenda 2063, in ways that ensure synergy with the 2030 Agenda for Sustainable Development.
Remarks to High-Level Event marking Africa Week
Secretary-General Ban Ki-moon, UN Headquarters, 12 October 2015
I am pleased to join with you in marking Africa Week 2015. I commend your theme of moving from aspirations to actions – and your focus on integration and unlocking the full potential of trade.
The year 2015 is indeed a critical time for global action.
Operationalizing the 2030 Agenda for Sustainable Development – and Agenda 2063 of the African Union – will be a key to our success in ensuring a life of dignity for all.
The vision and ambition reflected in these landmark and complementary efforts echo the aspirations of African countries and their peoples, and build on the robust economic growth that has been attained even during the global financial crisis.
Much of the potential of the economies of Africa remains untapped, both in terms of its diverse resources and its people.
They seek to build lives with quality education and health care, decent jobs, a clean environment and tolerant, inclusive and democratic societies.
They demand and deserve a future where guns are silenced throughout the continent and poverty and hunger have no place.
The United Nations system is committed to supporting the 10-Year Implementation Plan of the Agenda 2063, including the efforts of the Regional Economic Communities as they strive to further integration.
I salute African member states on the Tripartite Free Trade Area agreement signed in June this year. This is an important step towards the establishment of the Continental Free Trade Area envisioned in Agenda 2063.
Our shared 2030 Agenda for Sustainable Development further reinforces the importance of regional and sub-regional organizations in the planning, execution and review of the Sustainable Development Goals.
Agenda 2030 is a transformational agenda – and realizing it will require a transformation in the way we approach development and how we support countries on their own development path.
We have been working in silos for too long, but we know that no country or organization can achieve these goals alone.
Putting the SDGs into action is an opportunity to foster greater coordination among our international organizations, regional and sub-regional organizations, and governments.
By building on innovative solutions, such as the African Peer Review Mechanism to facilitate knowledge sharing, we can harness synergies.
Over time, the partnership between the United Nations and the African Union has grown ever stronger.
I believe it is absolutely critical to further deepen those ties.
Our joint cooperation is helping to deliver results in conflict prevention; peace-making, peace-keeping and peace-building; humanitarian assistance; the promotion of democracy, human rights, rule of law and good governance; and inclusive development and equitable growth.
For example, the United Nations has provided support to the African Union in the establishment of the African Peace and Security Architecture and the consolidation of the African Governance Architecture.
Through the Regional Coordination Mechanism for Africa, UN agencies are working to enhance our system-wide coordination at the regional and sub-regional levels in support of the African Union and its New Partnership for Africa’s Development programme.
To address peace and security challenges in Africa, I have recently convened, in close cooperation with the African Union and key sub-regional organizations, High-level Meetings on the situations in the Central African Republic, Congo, Libya, Mali, Somalia and South Sudan. Let us also continue to work together to resolve the pressing refugee and migration crisis.
I have full faith that we can transform challenges into opportunities when our toolkit is comprehensive, our approach is holistic and our partnership with the African Union and Regional Commissions is deep.
The UN’s Agenda 2030 and the AU’s Agenda 2063 have provided us with a strong continental and global consensus and a clear roadmap.
Now is the time to put these aspirations into action and to keep the momentum strong by securing an equally transformative climate change agreement in Paris in December.
You can count on me to keep working hand-in-hand with you to achieve peace, security, development and human rights for all Africans. And you can also count on Special Adviser on African issues, Mr. Maged Abdelaziz, for his continuing commitment working together with all Member States and myself also.
Together, let’s build a more sustainable and secure Africa and a better world for all.
Thank you.
» Presentations from the High level Panel Discussion on “Role of Regional and Sub-regional Organizations in achieving Regional Integration: the Continental Free Trade Area within the context of the first 10-year Implementation Plan of Agenda 2063” are available here.
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First African Maritime Conference resolves to request the AU to consider “A Single African Maritime Transport Market” among the Agenda 2063 flagship projects
Understanding the opportunities and challenges and making the African Maritime a reality is a must, if Africa aspires to a better and secured future in the context of Agenda 2063.
The African Shipowners Association (ASA) organised the First African Maritime Conference in Victoria Island, Lagos, Nigeria from 28th to 30th September 2015, under the theme: “African Cargo for African Shipowners”.
The main objectives were discussion about the opportunities and challenges of the sector, reflection on setting up a Pan African Fleet and consideration of a legal framework to regulate the sector.
The Conference gathered over 100 participants coming from various African countries that included Cameroon, Congo, Ghana, Kenya, Mozambique, Nigeria, Sierra Leone, South Africa and Tanzania. They were in addition to key partners such as the African Union that sent a powerful delegation of experts headed by Mr Samuel Kamé-Domguia, Coordinator of 2050 AIM Strategy Taskforce, and Mr Retsole Mabote (Coordinator of Agenda 2063 Technical Team); as well as the International Institute for the Unification of Private Law (UNIDROIT) among others.
In her goodwill message to the Conference, which was read on her behalf by Mr. Samuel Kamé-Domguia, Dr Nkosazana Dlamini Zuma, Chairperson of the African Union Commission who was attending the UN General Assembly in New York at the time, expressed her gratitude for the invitation extended to her and the AU in general. She commended ASA for organizing the meeting and appreciated the potential of the Africa Maritime Domain (AMD) and its eagerness to make it a reality in the near future.
“It is indeed befitting that this conference is convened under the theme: African Cargo for African Shipowners. Agenda 2063 states that Africa’s Blue/ocean economy, which is three times the size of its landmass, shall be a major contributor to continental transformation and growth, through knowledge on marine and aquatic biotechnology, the growth of an Africa-wide shipping industry, the development of sea, river and lake transport and fishing, and exploitation and beneficiation of deep sea mineral and other resources. It also commits us all to use and conserve this natural resource in a sustainable manner, as the heritage of current and future generations,” Dr Dlamini-Zuma added.
Indeed Africa is rich! Rich not only in its potential, but also its citizens and therefore the ADM deserves a closer management to get the best of it.
It is in this regard that during their 22nd Summit held from 30th to 31st January 2014 in Addis Ababa, Ethiopia, the Heads of State and of Government of African Union adopted the 2050 African Integrated Maritime Strategy (2050 AIM Strategy); and subsequently in January 2015 the Agenda 2063 Framework Document which provide a broad framework for the protection and sustainable exploitation of the AMD for wealth creation.
In that connection, and after participating in the launch of the Decade of African Seas and Oceans (2015-2025) and celebrations of the African Day of Seas and Oceans on 25 July 2015 in Addis Ababa, the African Shipowners Association organized this Conference in Lagos for a deeper discussion on how best to advance the AU strategies.
Appreciating the fact that Agenda 2063 allots a special place to the maritime domain and also to the private sector, the participants talked about the critical role they play in the AMD, their opportunities as well as their challenges and how they can contribute in reaching the goals of 2050 AIM Strategy and Agenda 2063.
During the opening ceremony, the background, opportunities and challenges facing the African maritime were presented by Mr Temisan Omatseye, President of the Shipowners Association.
Mrs Funmi Folorunso, Secretary General of the Association and the main coordinator of the event, introduced the theme of the Conference emphasizing why African cargo within African waters must be reserved for African Shipowners.
Following presentations, open discussions took place around African cargo for African shipowners, the legal framework for an African maritime cabotage, The African Maritime Transport Charter, the 2050 AIM Strategy as well as Agenda 2063 and their implementation; and finally the Cape Town Convention and the possible protocol on ships and maritime transport equipments.
The outcomes of the meeting spotlight the necessity for having: A Single African Maritime Transport Market to be adopted among the first-track projects under the First Ten-Year Implementation Plan of Agenda 2063 along the lines of the “Single African Air Transport Market”; an African fleet; an African Cabotage; a Legal framework for African Fleet; facilitating the financing of ships; building ships in Africa; job creation as well as education.
Closing the meeting, Mrs Caroline Masala, Vice President of the African Shipowners Association reiterated the need for Africa to share a part of the 2.5 Trillion USD of revenue being made in the shipping business every year.
The Conference came out with a Resolution intended to be sent to the AUC Leadership as contribution to the upcoming Summit on Africa Maritime.
Tanzania, Uganda, Kenya spend $1.2b to cushion falling currencies
Kenya, Tanzania and Uganda have used more than $1.2 billion, so far, from their foreign currency reserves since the start of the year to cushion their falling currencies against the dollar.
The declining foreign currency reserves have also seen Kenya ask the International Monetary Fund for more time to settle its debt obligations. The weakening of capital inflows, central bank interventions in the foreign exchange market, and a decline in tourism receipts contributed to the depreciation of the Kenya shilling.
In its latest review of the country, IMF said the government has requested the debt waivers on the basis that its net international reserves have declined, making the country unable to draw money to settle its arrears.
Kenya delayed in paying its external debts for the 2014/15 financial year, to the tune of $64 million. It has since cleared this debt, signalling that the latest reprieve it seeks is for debts accumulated between March and August.
“The external arrears reported between July 2014 and March this year show capacity constraints at the National Treasury’s debt management office and interagency co-ordination problems rather than an underlying inability to service external debt,” the IMF said in a statement.
In an August 31 letter to the IMF, Kenya’s Treasury Cabinet Secretary Henry Rotich asked for a modification of both the end of September and December targets for net international reserves, net domestic assets, and the primary budget balance of the central government.
“With the exception of temporary delays in the repayment of some external obligations, which we have settled, we met all quantitative performance criteria and indicative targets under the programme... we are therefore requesting waivers under both arrangements for this temporary non-observance,” Mr Rotich’s letter reads.
IMF deputy director and acting chair of the review team Min Zhu said that Kenya’s arrears were a result of co-ordination failure among government entities rather than an inability to pay.
“We are pleased that the authorities have adopted corrective measures by strengthening capacity at the National Treasury’s debt management office. We also feel that the introduction of the Treasury single account should be decisively implemented,” said Mr Zhu.
Kenya’s foreign reserves have declined to slightly below the statutory requirement of four months of import cover. As at the end of last week, the reserves stood at $6.18 billion, which is equivalent to 3.94 months of import cover.
By the end of August, the reserves were at $6.392 billion or 4.05 months of import cover, while in July, they stood at $7.43 billion or 4.85 months of import cover.
National Bureau of Statistics data shows that the balance of payments position worsened to a deficit of Ksh47 billion ($456 million) in the second quarter of the year from a surplus of Ksh166 billion ($1.6 billion) in the same quarter in 2014.
Kenya has so far spent $471.9 million of its foreign currency reserves trying to stabilise the shilling, while also spending $164.4 million towards interest payments on the $2.75 billion June 2014 sovereign bond. The country is expected to settle a total of $305.1 million in interest payments this year on its external debts from its reserves.
Uganda is also facing a foreign currency reserve crunch as it seeks to prop up its currency, but Bank of Uganda Deputy Governor Louis Kasekende is confident about the country’s level of foreign exchange reserves.
“The level of our foreign exchange reserves is $2.7 billion, which is equivalent to 4.2 months of future imports of goods and services. This is above the IMF recommended level of three months of import cover,” said Dr Kasekende.
The IMF requires central banks to have foreign exchange reserves that can cover three months of future imports of goods and services. Central banks in the region however have agreed to always have their reserves at above four months of import cover, which level Kenya is currently below.
BoU has so far spent more than $300 million in cushioning its currency. As at end of August, its reserves stood at $2.79 billion, down from $3.04 billion. The reserves have shrunk by 11.14 per cent to date.
Rwanda said that it has enough reserves to curb currency volatility and meet its financial obligations. The country said that as at the end of August, it had reserves worth 4.3 months of imports.
National Bank of Rwanda Governor John Rwangombwa said, “We are in discussions with the IMF to have a stabilising fund. However, we have enough reserves to protect us against any crisis and fight any volatility against the franc.”
The Bank of Tanzania’s monthly reports show that it has spent more than $532.1 million this year in trying to stabilise the Tanzanian shilling.
“The Bank of Tanzania participated in the market, selling $280.3 million in the second quarter of the year compared with $251.8 million in the first quarter, mostly for liquidity management,” the bank said in its latest quarterly report.
The county has also spent an additional $197.4 million in the two months after June from its reserves for currency stabilisation. The Tanzania shilling has fallen by more than 23 per cent against the dollar this year.
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Third Trade Policy Review of Madagascar: Minutes of the meeting
The third Trade Policy Review of Madagascar was held on 14 and 16 July 2015. It allowed for a better understanding of the evolution of its socio-economic, trade and investment policies since its last Review in 2008, and the challenges it is facing.
Madagascar is slowly recovering from a six-year socio-political crisis that has further delayed its economic development. Its economic growth has been weak, despite increased exploitation of Madagascar's mining resources, and poverty has risen sharply. Rebuilding infrastructure, including energy and transport, would accelerate the recovery of the economy. In addition, further improvements in the investment approval process and the business environment through better enforcement of law, and facilitation of access to credit, to construction permits and to property would also help.
Members praised Madagascar for continued progress in Customs reforms. Its Electronic Single Window was operational, and paperless customs clearance procedures are very close to completion. Most border control institutions can now transmit their respective authorizations electronically to Customs. However, noting that the number of these institutions remains too high by international comparison, several Members encouraged Madagascar to restructure its border control, ratify the TFA, and take steps toward notification of its TFA commitment categories.
There is a need to upgrade the legislative and institutional framework on standards, technical regulations, and sanitary and phytosanitary measures, in order to ensure higher quality for local products and boost exports. Madagascar also needed to improve its overall business environment and make it conducive to investment as well.
Opening statement by the representative of Madagascar
H.E. Mr Henri Rabesahala
The very first words of the delegation I am leading today are words of thanks to all attending Members and all those who have shown an active interest in Madagascar and have expressed it through the written questions we have received. Madagascar will do its utmost to be transparent, sincere and responsible both during this review and subsequently, out of respect for this distinguished Organization and for all Members that support our partners in one way or another. Indeed, Madagascar is an Aid for Trade beneficiary and the official development assistance provided by a number of developed and developing WTO Members. Our country is a supplier of services and agricultural, textile and mining products and purchases manufactures, services, hydrocarbons and heavy machinery from most of the Members here today.
Our thanks also go to the WTO Secretariat for in view of the support that it provided us in preparing this review, we have no doubt that it intends to go beyond the establishment of rules governing trade and dispute settlement. We see technical assistance and capacity building as the knock on effects of this review.
In the wake of the Fifth Global Review of Aid for Trade, and on the eve of dramatic changes such as mega deals, the establishment of the Tripartite Free Trade Area, the forthcoming Ministerial Conference in Kenya, and, at the national level, the organization of a round table meeting of Madagascar’s trading partners, we are especially proud to be with you today in order to outline our road map, answer your questions and potentially address any ambiguous situations that might arise from them.
The progress made with the recommendations put to Madagascar at its previous review in 2008 may come as a surprise to some Members, because Madagascar has suffered an unprecedented crisis in terms of length as well as consequences for the economy. It took more than five years of transition, without any actual support from its partners, before constitutional order was restored in 2014. Hence, heavy public investment, in depth transformations and international commitments were simply impossible in light of the sanctions against Madagascar’s leaders during that period.
The 2009 crisis had devastating effects on Madagascar’s relations with its trading partners and its integration in regional and international markets. The country suffered, inter alia, the consequences of cancellation of Madagascar’s participation in several summits and meetings, the suspension of preferences under the AGOA, non-disbursement of the 10th European Development Fund, and postponement of the signing of a number of trade agreements.
The difficulties arising from the country’s situation, compounded by an unfavourable international environment, have had serious consequences for the overall trade environment. These include the low rate of industrial growth, the marked deterioration of infrastructure detracting from the country’s competitiveness, inadequate access to energy, and the effects of the combined introduction of the COMESA common external tariff or the Tripartite FTA along with tariff reductions under the EPAs, which, as regimes, were not always clearly defined and communicated to the private sector. Moreover, services imports have not helped the country to innovate and move back up in the value chain as anticipated, business law reforms are not keeping pace with the rapidly rising needs and expectations of operators, and lastly, trade facilitation has led to a proliferation of imports without any genuine substitution by domestic production, or any significant expansion of exports.
Added to these structural problems are difficulties ensuing from inadequate capacities among public and semi-public trade support bodies, continuing asymmetry of information penalizing the private sector, a relatively large informal sector, absence of innovation among SMEs, difficulties in obtaining access to finance, petty squabbling between various government services, lack of coordination in the provision of trade related technical and financial assistance, and failure to make proper use of trade preferences and flexibilities secured at the bilateral, regional and multilateral levels.
Guided by President Hery Rajaonarimampianina, the two successive Governments nonetheless adopted ambitious positions and took bold decisions on rules and policies. Reforms were initiated to strengthen the rule of law, improve governance in general and public finance management in particular, increase tax and customs revenue, promote market and product diversification, revise the texts regulating a number of sectors, including e commerce, consumer protection and guarantees and public private partnership, and enhance the business environment. A whole series of other reforms are under way.
More broadly, the National Development Plan (PND) focuses on achieving sustainable and inclusive economic revival, promoting social development, bolstering security, protecting the environment, and using diplomatic mechanisms as the lynchpin of trade, tourism and investment policy. Rapid and inclusive results based methods have been adopted under the Implementation Plan (PMO) carried out by the Government.
The crisis did not prevent Madagascar from fulfilling its WTO obligations, particularly in terms of notifications, contributions, and involvement in the WTO’s work. Among other things, it communicated to the WTO its matrix of priority needs with a view to building up national capacity in order to advance acceptance and implementation of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement), embarking on the process of establishing a national trade facilitation committee and categorizing the measures with support from the WTO and the World Bank, identifying non-tariff barriers to trade and taking concrete steps to remove them.
The customs administration has initiated a number of reforms over the past six years in partnership with the SGS and Gasynet, using tools such as ASYCUDA++, revising the Customs Code, and reviewing tariffs and procedures that presented inconsistencies in the past, whilst introducing far reaching changes in strategic human resource planning.
The adoption in 2013 of the Sectoral Programme for Agriculture, Livestock and Fisheries under the New Partnership for Africa’s Development (NEPAD) is a major step forward in the development of productive capacity to vigorously boost exports in these sectors, the aim being to achieve Madagascar’s ambition of becoming the “breadbasket” of the Indian Ocean region. Non-food agricultural products such as ethanol have also benefited from the establishment of an enabling legal framework and the introduction of incentives, in view of their potential for job creation, preserving biodiversity and generating revenue for the public purse. Lastly, the promotion of investment in the above sectors remains a priority in order to increase agricultural and industrial production and develop related trade in services.
At the political level and in the aftermath of five years of deep crisis, Madagascar is learning to preserve peace and consolidate stability, even though some information in circulation may at times give cause for concern to its partners and potential investors. The President’s Office, the National Assembly and the Government are operating normally despite the political and labour unrest typical of any country in a post crisis situation. The State is preparing for negotiations with its technical and financial partners, particularly with a view to a meeting with the IMF in September and a donors’ conference scheduled to take place in Paris this coming November.
Improvements have been made to infrastructure and the investment environment. New target markets have been identified in the tourism sector, and the private sector has invested in quality accommodation facilities. Progressive migration towards DTTV, the launching of 4G connection and optimized use of new development oriented technologies have been put in place. The restructuring of the national water and electricity company JIRAMA is moving ahead with support from Madagascar’s partners, and hydro agricultural production sites are awaiting expressions of interest on the part of investors. International technical cooperation is reaching cruising speed in areas which include enhancing the regulatory framework for public private partnerships (PPP), public private dialogue, raising Madagascar’s Doing Business score, regulating e commerce, improving trade in environmental goods, and promoting trade in services.
In order to find sustainable solutions to its various constraints, Madagascar has opted for more effective integration of trade in national development policy, using existing and future structures at the regional and international levels in support of targeted actions to enhance coordination between the actors involved, better domestic trade performance and visible competitiveness of Malagasy SMEs. Convinced as it is that trade facilitation can also benefit exports, Madagascar intends to make substantial advances in accepting the Protocol, notifying the categories, and developing areas of cooperation with other customs administrations throughout the world. Since it believes that non-tariff barriers have a more negative impact than the tariffs themselves, Madagascar attaches the utmost importance to the work of the SPS and TBT Committees and to domestic implementation of the resolutions, tools and provisions under both Agreements.
Trade extends well beyond the issue of rules, and it encompasses investment, the business climate, the ability of the country to cease being a supplier of raw materials alone or a large assembly plant and to become a major actor in global value chains, an innovative actor that places science and technology at the service of higher value added and the promotion of its services exports. Madagascar has thus decided to enlist the support of other regional and multilateral agencies and institutions in its endeavours to achieve greater wellbeing for its population. Its UNCTAD Investment Policy Review will take place this year. An agreement has been signed with the ITC with a view to implementing a business competitiveness building programme, and our traditional partners are continuing to support us in one or more trade related sectors. We are currently seeking ways to expand the list to other countries that are already lending us trade related technical assistance, so as to broaden this partnership. We thus encourage countries that are actively involved in other areas of cooperation to appear more prominently in Madagascar’s Aid for Trade matrix.
We extend our warmest thanks to all our past, current and future partners. Madagascar does not consider this review as an end in itself. Rather, it marks the beginning of a process of alignment of the actions of bilateral and multilateral partners, with the organization of a round table meeting including all of Madagascar’s resident or non-resident partners, in order to follow up on the review’s recommendations by pooling resources, with Madagascar taking ownership of the process, and harmonizing public policies at sectoral level.
Madagascar expects a positive outcome to the ongoing Doha Development Agenda negotiations. We are hoping for a wealth of results from the Tenth Ministerial Conference and a stronger development role for the WTO despite a few past disappointments. We are confident regarding the future of trade in the post 2015 system.
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WTO and UNCTAD sign declaration on increased cooperation on trade and development
A joint declaration on increased cooperation between the WTO and the United Nations Conference on Trade and Development (UNCTAD) in the area of trade and development was signed on 12 October 2015 by UNCTAD Secretary-General Mukhisa Kituyi and WTO Director-General Roberto Azevêdo at the WTO’s Headquarters in Geneva.
DG Azevêdo said: “Our organizations share a common goal of helping developing countries, and especially the least-developed countries, integrate into the global economy. This declaration reaffirms and strengthens the collaboration of our two organizations to keep on promoting trade as a tool for development.”
UNCTAD SG Kituyi said: “New momentum is needed if LDCs are to reach a 2% share of world trade by 2020, as called for in the Istanbul Programme of Action. Closer collaboration between UNCTAD and the WTO is an important step in that direction.”
The signing ceremony for the joint declaration took place just before the start of an event on trade and development organized in connection with the WTO's 20th anniversary.
At the event, entitled “Twenty years of supporting the integration of least developed countries into the multilateral trading system”, WTO members discussed what has been achieved so far to help integrate least developed countries (LDCs) into the multilateral trading system and what members can aim to deliver in the future.
In his opening remarks, DG Azevêdo said: “LDC integration into the multilateral trading system is a priority for the WTO – and a priority for me, personally… We need to go further, faster, to support the integration of LDCs into the trading system, and to boost their capacity to trade.”
Secretary-General Kituyi said: “As we celebrate twenty years of achievement, we recognize that many least developed countries are still commodity dependent, which therefore exposes them to the vulnerabilities of the boom and bust cycle.”
The event was chaired by Ambassador Roderick van Schreven (Netherlands), Chairman of the Sub-Committee on LDCs. The discussion took stock of the key developments and decisions taken in favour of LDCs, the institutional support provided to these countries and the trade capacity-building initiatives that have been put in place. The event also looked ahead to how the WTO and the international community can help LDCs overcome the remaining challenges in integrating into the multilateral trading system. This included a discussion of possible measures that could be considered for LDCs at the Tenth WTO Ministerial Conference, to be held in Nairobi in December this year.
There are at present 48 LDCs, as designated by the United Nations, out of which 34 are WTO members and another eight are in the process of acceding to the WTO. The LDC WTO members account for more than one-fifth of the WTO membership.
“20 years of supporting the integration of least-developed countries into the multilateral trading system”
Remarks by Director-General Roberto Azevêdo
Welcome to this special event on LDCs.
This is an important occasion to take stock of the evolution of LDCs in the multilateral trading system since the creation of the WTO 20 years ago.
And of course it is an occasion to look ahead, and consider what more needs to be done.
UNCTAD Joint Declaration
I am delighted to have UNCTAD’s Secretary General Mukhisa Kituyi with us this morning.
Our organizations share a common goal of helping developing countries, and especially the least-developed countries, integrate into the global economy.
And we have taken an important step towards that goal this morning.
Just a few minutes ago we signed a joint declaration between the WTO and UNCTAD.
This declaration reaffirms and strengthens the collaboration of our two secretariats to keep on promoting trade as a tool for development. The text will be available very shortly.
We want to improve the coherence and cooperation in some key areas of work because we are united in our desire to support development.
And of course, LDCs are a vital part of that discussion.
WTO and LDCs
LDC integration into the multilateral trading system is a priority for the WTO – and a priority for me, personally.
In the preamble to our founding agreement, signed in Marrakesh in 1994, members recognised the need for:
“… positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development.”
So now, after 20 years of the WTO, how have we performed against that mission statement?
I think there are significant areas of progress that we can highlight.
Since 1995, seven LDCs have joined the organization and soon we will welcome another LDC, as the terms of Liberia’s membership were agreed just last week.
That will bring the number of LDCs in the WTO to 35 – more than a fifth of our membership.
And increasingly this large, important and growing part of our membership is making its voice heard.
The LDC Group has been very active over the years, gradually enhancing their participation in our different bodies and committees.
This work is supported by a dedicated unit within the Secretariat which serves the LDC Group on a day-to-day basis.
And of course this support for LDCs is reflected in other areas.
WTO agreements and decisions adopted over the last 20 years contain flexibilities and special provisions that take the specific needs of LDCs into account.
Against this background, I think it’s no coincidence that the integration of LDCs into an open and rules-based trading system has been accompanied by higher trade growth in those countries.
Over the past twenty years, LDCs have experienced higher trade growth compared to the rest of the world.
Between 1995 and 2013, exports of goods and services from LDCs grew by an annual average of 12.6 per cent.
This is higher than the average growth for developing economies in the same period, which was of 11.3 per cent. And it is significantly higher than the global average of 7.5 per cent.
And so LDCs’ share of world trade has also been increasing.
In 1995, LDCs accounted for 0.5 per cent of world exports of goods and services.
Now, that share has more than doubled, reaching 1.17 per cent in 2013.
So this is progress.
But clearly it is not enough.
LDCs account for more than 12 per cent of the world’s population, but only for 1.8 per cent of world GDP.
We cannot lose sight of this.
So the WTO has been working hard to bridge these gaps.
Capacity Building
Providing practical support to LDCs to help them build capacity and trading skills is a key pillar of our work.
The WTO runs special training programmes suited to the needs of LDCs and LDC officials, so that they can successfully navigate the system.
In fact, LDCs are involved in about 45 per cent of our technical assistance activities each year.
Another way to help improve understanding of the system is the WTO’s internship programmes.
These programmes bring LDC officials to Geneva and offer on-the-job training. Many officials who have taken part in these schemes are now representing their countries in different WTO bodies, working for their respective missions and capitals.
And of course, we have the Aid for Trade initiative.
Through a wide range of programmes, Aid for Trade helps developing and least-developed countries improve their trading ability and tackle their infrastructure constraints.
This has had real impact on the ground. Research has found that one dollar invested in Aid for Trade results in nearly 8 dollars of exports from developing countries in general – and in 20 dollars of exports for the poorest countries.
Since the initiative was created, Aid-for-Trade commitments to LDCs have almost doubled, reaching 18 billion dollars in 2013.
Another major capacity building initiative – and one which is dedicated exclusively to LDCs – is the Enhanced Integrated Framework.
Since its creation, the EIF has reached out to over 50 beneficiary countries around the world, helping LDCs leverage trade as a tool for growth.
In July, I was pleased to participate in the launch of the programme’s second phase. And this December, the EIF will hold its Pledging Conference for Phase Two in Nairobi – in the margins of our 10th Ministerial Conference.
This will be an important moment in ensuring the success of the EIF’s new phase.
Indeed, as I said at the General Council last week, a successful pledging conference would be a significant outcome of the ministerial conference. So I have strongly urged all existing and potential donors to be ready to lend their support.
Implementing Bali
In addition to strengthening capacity building support, we must implement the decisions agreed in Bali and ensure that their benefits are delivered – especially for LDCs.
Bali was a milestone in WTO history. And it wouldn’t have happened without the LDCs.
The LDC Group played an absolutely pivotal role in the negotiations.
And the outcomes reflect the role that the LDCs played during the negotiations – particularly in the form of the LDC package that ministers agreed there.
The LDC package includes provisions to improve duty-free quota-free market access for LDC goods, advancing the progress made in Hong Kong in 2005.
And to facilitate the utilization of these preferential schemes by LDCs, ministers adopted for the first-time multilateral guidelines on rules of origin.
Bali also provided a potential boost to LDC services trade, through steps to operationalize the LDC Services Waiver.
To date, 15 members have indicated their intention to offer preferences in sectors and modes of supply of export interest to LDCs. So, again, this is progress – but we need to go further.
Cotton issues were also a part of Bali – and we are now seeing significant engagement.
I am now working hard, along with the LDC Coordinator and others, to advance each of these Bali decisions.
In addition, of course, Bali brought us the Trade Facilitation Agreement.
Estimates show that it could cut the cost of trade by up to 15 per cent in developing countries. So implementing the TFA could have a big impact for LDCs, which suffer the most from such prohibitive costs.
And the TFA was a real first. It foresees the provision of real, practical support to help in its implementation, including through the TFA Facility.
Now, the Agreement is pending ratification by members. I’m glad to note that two LDCs – Niger and Lao PDR – have already done so. This is very encouraging, but we need to increase the pace in order that LDCs can start realising the benefits.
Looking ahead
So that is a snapshot of the last 20 years and of where we are today.
Much has been accomplished – but there is also no doubt that we are yet to fully deliver on the promises made.
We need to go further, faster, to support the integration of LDCs into the trading system, and to boost their capacity to trade.
We should ask ourselves:
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How can we do more to support LDCs to trade, and to get the most out of the trading system?
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What further measures would make the most difference?
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And what issues can we deliver in the short term?
We all know that there is a major opportunity to tackle some of these questions this year.
In just a few weeks’ time the WTO will hold its 10th Ministerial Conference in Nairobi, where LDCs are a top priority.
I have spoken to the widest possible range of members, in all formats – here in Geneva and in capitals around the world – and I have a clear sense that everyone wants to deliver for LDCs in Nairobi.
But we have our work cut out. There is little time left, and a lot of hard work still to do.
I hope that we can capitalise on the goodwill towards LDCs and deliver some important outcomes in Nairobi. This means getting some textual proposals on the table as soon as possible, so that detailed negotiations can begin.
I know the LDCs are working hard in that direction – and I want to help this effort in any way I can.
Let’s build on the achievements of the last 20 years, and move forward with real impetus and momentum.
I think that the contributions, ideas and arguments we will hear today will be very important. So let me extend my appreciation to our speakers today.
I wish you a very productive event.
With that, I will give the floor to our friend Mukhisa Kituyi.
Thank you.
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Mauritius plans derivatives platform in bid for African business: minister
Mauritius plans to launch a trading platform to hedge African currencies against the U.S. dollar, part of a bid to expand its role as a financial hub for the continent, the financial services minister said.
The Indian Ocean island is also in talks to boost ties with stock exchanges in Johannesburg and Nairobi to encourage cross-listing of shares and other areas of cooperation, Sudarshan Bhadain told Reuters in an interview.
The international financial services sector in Mauritius has relied heavily on dealings with India, helped by a double taxation avoidance treaty that made the island the biggest route for foreign investment into India.
But that could be hit if talks with India lead to treaty changes, encouraging a shift in focus to Africa where officials see a chance to offer a broader range of financial services and shake off criticism that Mauritius is little more than a “tax haven”.
“I do believe that Mauritius cannot remain a tax-centric jurisdiction,” the minister said at his office in the island’s financial district of Ebene.
“Mauritius has to move to the next level which is bringing real investments which are creating jobs in Mauritius... and for us to be the platform for Africa for the right reasons.”
He said Mauritius had signed a memorandum of understanding with National Stock Exchange of India, aimed at encouraging cross-listing of Indian firms and helping the island become a route for investment to Africa from India and elsewhere.
“One of the aspects is for the creation of a new currency derivatives platform, where African currencies can be hedged against the U.S. dollar,” he said, adding that the launch was expected in 2016. He did not give further details.
REGIONAL HUB
Mauritius was working with South Africa on encouraging cross-listings and was holding talks on the same issue with Kenya, the minister said. He said he had also signed a memorandum with Dubai financial markets to help develop markets in Mauritius.
“In terms of global business, one of the things we are doing is moving more towards front-office activity and regional headquartering,” he said, adding that insurance firms were among those interested in using Mauritius as a base.
Mauritius had held talks with firms such as Axa and Prudential, he said, adding he wanted companies that would put managers in Mauritius and hire staff there rather than firms simply registering operations and having limited presence.
To benefit from the double tax avoidance treaties Mauritius has with African states, companies have to meet a range of requirements, such as having at least two resident directors and using Mauritius accounts for related banking transactions.
But critics say such firms, known as Global Business Company 1s (GBC1s), should face tougher demands to benefit from the treaties, so they can show more clearly that they are not using Mauritius solely to avoid higher taxes elsewhere. GBC1s pay a maximum 3 percent corporate tax and no capital gains tax.
Bhadain said tax treaties had spurred growth in the global business sector in the past 15 years but it was time for a shift. “That has served Mauritius well, but we don’t see that as being the vision for Mauritius for the next 10 to 15 years.”
Some regulations related to the sector could be changed, possibly by the end of the year, he said, although he added that he was working closely with the 138 or so management firms that handle the roughly 10,000 GBC1s registered on the island.
“We see the focus has to change in terms of more tangible, real investments which are taking place in Mauritius,” he said.
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tralac’s Daily News selection: 12 October 2015
The selection: Monday, 12 October
Africa’s trade relations: Old friends, good friends and new friends
This collection of studies, prepared as part of the ongoing collaboration between the Trade Law Centre and the National Agricultural Marketing Council, includes special focus on agricultural trade relationships and related issues such as climate change. Previous books have covered trade matters ranging from South Africa’s trade relationship with the Americas, Asia, as well as African countries. This book looks at all South Africa’s trading partners: new friends, old friends and good friends. [Various downloads available]
Deepening South Africa-India private sector relations (ISS)
The trade sector between India and South Africa needs to be broadened and diversified, and small and medium-sized enterprises can play a greater role to this end. It is important for the Indian and African governments to consider and consult with business on the underlying reasons for not investing in certain instances – despite facilitation measures such as reduced trade barriers. There need to be frank discussions in this area. India’s duty-free, quota-free system, for example, allows 90% of goods to be exported duty-free and quota-free yet not many African countries take advantage of this exemption. Why is this the case? [The authors: Amanda Lucey and Catherine Grant]
States get a seat at Africa table (The Telegraph)
The Narendra Modi government is inviting states to directly lobby with 54 African nations for business opportunities at a week-long conclave this month, the first time that New Delhi has involved state administrations in an international summit. New Delhi has not involved state administrations in an international summit before.
Regional investment policy framework on the cards (Southern Times)
A regional investment policy framework for southern Africa is expected to be finalized by the end of the year. The Trade, Industry, Finance and Investment Directorate at the SADC Secretariat said in its annual report that significant progress has been made to develop a regional investment policy framework. The regional programme on investment has the objective of strengthening the investment environment in southern Africa.
SACU making significant strides (Southern Times)
Speaking at the same event, Namibia’s Finance Minister, Calle Schlettwein said although the SACU countries are generally improving in the World Bank Logistics Performance Index , there is a need for this to be accelerated to improve SACU countries’ rankings by fully endorsing more of the standards and practices of the World Customs Organisation Revised Kyoto Convention (RKC 1999), which are embedded in the just adopted 2013 Bali Trade Facilitation Agreement package.
“For this to happen, in Namibia, we need to strengthen our collaboration with the private sector and our neighbours in the SACU region to develop initiatives that respond to business needs. In fact, we need to jointly as Customs-to-Customs, Customs and other Government Agencies and Customs and Business to robustly push this agenda, even if it calls for additional resources. One such initiative, developed and implemented in collaboration with the private sector and launched in July 2015, is the Namibia Trade Information Portal,” he said.
Now available: Joint outcomes statement by the Commissioners General Forum for Southern Africa (SARS)
EALA enacts EAC Electronic Transactions Bill (EAC)
The Electronic Transaction Bill, 2014 seeks to meet the need of exploiting electronic transactions in the modern day business transactions. The Bill further wants to promote technology neutrality in applying legislation to electronic communications and transactions and to develop a safe, secure and effective environment for the consumer, business and the Governments of the Partner States to conduct and use electronic transactions.
COMESA August inflation at 6,3% (The Herald)
The year on year inflation rate for the COMESA region stood at 6,3% for the month of August 2015 compared to 15,4% recorded during the same period last year. According to the latest Common Market for Eastern and Southern Africa Consumer Price Index, the month on month inflation rate for the region stood at 0,4% in August, down from 0,8% registered in July 2015. It was 1,4 percent in August 2014. [Uganda: High import costs push price index up by 10% (Daily Monitor)]
IGAD Strategy 2016-2020: validation workshop (IGAD)
This five-day workshop is the final touch to the process of the Formulation of the IGAD Regional strategy and Implementation Plan 2016-2010 that started 13 months ago with baseline studies at national level on IGAD priority sectors, according to IGAD Planning and Coordination Programme Manager, Mr. Ahmed Y. Habbane. After looking into in-country situations around thematic areas or priority sectors such as Agriculture, Natural Resources and Environment; Regional Cooperation and Integration; Peace and Security; Social Development; Gender Affairs, “we started with national-level reports by priority sector that we then compressed into a regional document by sector” he continued.
Featured tweet: @FrankMatsaert: Excited to be working with @jonashelth & @DutchMFA in Abuja this week: @TradeMarkEastA giving support to work on West Africa trade corridors
Non-tariff barriers frustrating South African agricultural exports (tralac)
Due to the distance (and associated increasing transportation costs) and increase in private standards in many traditional markets numerous South African agricultural exporters have expressed interest in increasing their footprint into African markets. However, the proliferation of NTBs are frustrating exporters; reducing their competitiveness and making it too costly to enter these markets and/or retain market share. In the majority of African markets standards regimes are characterized by an over-reliance on mandatory inspections and certifications, unique national standards and testing, overlapping responsibilities for regulation and the discriminatory application of technical regulations and standards for imports. NTBs which are most problematic for South African agricultural and food product exports to African markets include: [The author: Willemien Viljoen]
ZRA warns clearing agencies against disrupting the flow of traffic at borders (Lusaka Times)
The Zambia Revenue Authority will not hesitate to institute sanctions against erring clearing agencies found guilty of harassing and disrupting the flow of traffic at entry points. ZRA Commissioner General Berlin Msisika said the Authority was aware of complaints of alleged harassment of members of other clearing agents’ organisations who had no intent of participating in illegal demonstrations or strikes and were being victimised at Nakonde border. The clearing agents at Nakonde border post last week withdrew labour demanding the lift of the suspension slapped on their companies by the ZRA.
Zambia: Cabinet approves Bill to end casualisation in all industries - Shamenda (Lusaka Times)
Zim spends $18 billion on imports in 5yrs (The Chronicle)
Zimbabwe's import bill has risen to about $18bn over the last five years as the influx of cheap foreign-made products continues. The Confederation of Zimbabwe Industries says robust measures are needed to reverse the trend, which threatens the viability of local firms and widens the country’s trade deficit. Since dollarisation in 2009, Zimbabwe has been a net importer of finished clothing, food and automobile products mainly from South Africa, Botswana, Zambia and countries in the Far East. Liquidity constraints amid low domestic industrial capacity utilisation, has worsened the situation.
SA to keep US trade status (Bloomberg)
South Africa will probably retain duty-free access for exports to the US worth as much as $1.7 billion a year under the Africa Growth and Opportunity Act, Trade and Industry Minister, Rob Davies said in an interview, citing a letter he received from the US trade representative. “I am confident that we are on track to keep us in AGOA,” Davies said on Saturday. [ANC sticks to guns on private security (IOL)]
Nigeria’s pan-African aspirations bode well for local market (Business Day)
If GZ Industries succeeds in SA, it may be a catalyst for other Nigerian companies to put a toe in this market in the same way MTN’s success in Nigeria lured other South Africans to that market. It is early days, but hopefully this is a first small step towards changing the often negative SA-Nigeria narrative. [The author: Diana Games]
Dangote’s investments stimulating African economy, say Tanzanian, Nigerian presidents (ThisDay)
The latest inaugurated cement plant is part of the ongoing African expansion drive of the Pan-African conglomerate. Earlier, the company has opened its plants in Cameroon, Zambia and Ethiopia. The inauguration of the Senegal Plant and South Africa plants would follow suit according to the company’s president
Kenya to roll out special trade zones in first quarter of 2016 (Business Daily)
The government plans to roll out Special Economic Zones which will enjoy lower taxes to boost Kenya’s investment profile. Enterprises at the SEZs will enjoy several tax incentives under a tightly monitored set-up to avoid losses of government revenue. The preferential tax terms will include value added tax (VAT) exemption on all supplies of goods and services to enterprises, reduction in corporate tax to 10 per cent from 30 per cent for a period of 10 years of operation and 15 per cent for the next 10 years. The government plans to freeze new investments within its Export Processing Zones before the end of this year as it takes up the SEZs model.
Private investment in Angola has new regulations (MacauHub)
The new regulations for carrying out private investment in Angola stipulates the creation of a “fast lane” to speed up procedures and technical support units in each ministry, according to a presidential order.
Namibia urged to learn from Turkey to boost manufacturing (New Era)
One of the challenges faced by many SME manufacturers in Namibia is having access to intermediate inputs for production. As evident in the trade analysis, Namibia’s imports from Turkey include mostly intermediate inputs for some manufacturing sub-sectors such as the pasta industry, inputs for steel/wire manufacturing and industrial machinery. Therefore, it is beneficial for Namibia to leverage on this trade relationship in order to boost our manufacturing sector. [The author: Maria Lisa Immanuel, senior policy analyst at the Namibia Trade Forum]
Uganda: Dealing with fake agricultural inputs (The IGC)
Technology adoption in African agriculture is very low, holding back productivity and rural income. This study was motivated by common anecdotes about farmers’ bad experiences with fertiliser and seeds. Investing in these items should yield a manifold return, but few farmers incur the expense. Several agriculture sector donors were aware of the issue, but none had tested how widespread it is. The key finding was that the vast majority of fertiliser samples were substandard. Additionally, very few of the allegedly improved seeds showed much success in producing large crops. In short, the agricultural inputs sold at retail level in Uganda are often fake or have at least deteriorated to the point that they seem so.
WTO effect: India may halt export subsidies for raw sugar (The Hindu)
Buckling under pressure from countries such as Australia and Brazil at the WTO, India is considering discontinuing direct export subsidies for raw sugar which are banned under the multilateral trade rules. It may instead give incentives that are compatible with the regime.
At IMF/World Bank meeting, Emefiele canvasses regional integration (ThisDay)
Making a case for the appointment of Africans to top position in the IMF, Emefiele said: “We are concerned that the 2014 diversity targets were not met particularly, the recruitment and promotion of African nationals at senior and managerial positions in the Fund. While we welcome the new diversity benchmarks for 2020, we note that they are short of addressing the representation of the region. We urge the Fund management to expedite action including identifying key milestones to ensure effective implementation of these targets.” [Full text of statement]
Development Committee: communiqué (World Bank/IMF)
We stress the importance of strengthening data quality and coverage, and its availability for policy making and for monitoring and implementing the SDGs. We call on the WBG and the IMF to increase their support to developing countries in building national data capacity and investing in evidence. [Download]
UN, World Bank to launch refugee and reconstruction bonds (Reuters)
China-backed trade pact playing catch-up after U.S.-led TPP deal (Reuters)
Left outside the US-backed Trans-Pacific Partnership trade pact struck last week, China and India approach this week's talks for a huge Asia-wide equivalent with fresh urgency, lest competitor nations steal a march on export access. Beijing is a key driver of the Regional Comprehensive Economic Partnership (RCEP), a proposed 16-nation free-trade area that would be the world's biggest such bloc, encompassing 3.4 billion people.
Peter Drysdale: 'Can China make it to the top of the ladder?' (East Asia Forum)
Vivek Dehejia: 'Trade and national interest' (LiveMint)
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Harold Wolpe Memorial Lecture 2015: ‘Diagnosing African Politics’ by Carlos Lopes
Johannesburg, October 9th 2015
This lecture honoring Harold Wolpe comes at a time when his contribution is more appreciated than ever before. Although his focus was South Africa his provocative contributions surpassed the country. Wolpe was one of the admired conceptualizers of his generation. By inventing a new radicalism he marked South African scholarship, introduced new approaches to the race question and infuriated enough to be classified by some as a pariah. Academics that are activists always walk that path and indulge in their independence of thought.
I am pleased to be invited to deliver this lecture, following on the footsteps of an impressive list of personalities.
When I was ten I saw a telephone for the first time. It was in my native Guinea Bissau where innovations of life took time to say hi. My uncle, who lived in the same street as my family behind the only Hotel in town, called the Grand Hotel, although it only had 20 rooms, was a privileged fellow. He worked at the central post office as a senior staff and therefore could easily justify why he was one of the first to have a telephone. At those times a telephone was one of those bulky thermo-plastic type of machines, with a rotary circle to dial. It had the nine digits but in fact only zero worked. It served to call the operator that make the connection manually.
I was marveled that one could talk without seeing and be heard far way without shouting across. In my innocence I could not relate that instrument with anything but pure joy. However soon after my father was put in jail by the Portuguese Intelligence police; because of his links with terrorism as I was told. These were disturbing news. I still remember that telephone was indeed associated with pure joy, because much later it was through it that we were told he was doing fine, but not much more could be said.
The telephone revolution, in fact the communication revolution is closely associated with politics. I have in one generation move from one level and device to another with a speed that does not have the equivalent in all the previous generations. And this revolution is happening in Africa, in comparative terms, faster, than any other region in the world.
Discussing voice, identity, expression of will to exercise of power is now completely different from ever before, thanks to the fact that the 6 billion cell phones are making us, one big family. Families have good and bad behavior, they enshrine the complexity of the human fabric with its contradictions, assumptions and conquests. Families aspire to have harmony, but by no means automatically get it. That is why they manage their behavior with beliefs, protocols and acquired habits, in one word they regulate.
It is said that the most sophisticated form of regulation is democracy. Let us assess the African record in this regard. The trend towards democratic politics in Africa, as elsewhere in the World, has become ubiquitous. Democracy, however imperfect it may be, has assumed the game in town, defining the basis of politics and power, and a means of allocating scarce values in political communities. African politics in both its historical and contemporary dimensions as Naomi Chazan et al (1999: 6) rightly noted, “constitute the microcosm of political forms and contents, experiences and patterns, trends and prospects”.
In their genealogy, countries differing experiences and encounters have marked their democratic footprint. Political regimes ranging from multi-party system to military dictatorships, one-party rule, political monarchies, and sometimes outright political autocracy and tyranny, are familiar to contemporary Africa.
Countries records have differed in form and content. The configuration of class and social context, coalition building, alignment and re-alignment of political actors, agencies, and political outcomes, contribute to defy any strict characterization of African politics. Indeed, some argue that in terms of politics, we should talk about “Africas” and not “Africa” in a monolithic sense.
There is no doubt that comprehending African politics in its historical and contemporary dimensions has kept African scholars busy. They have created narratives, conceptual and theoretical constructions, deconstructions and reconstructions, polemical and ideological debates, and intellectual projections and advocacy that are vast and sometimes overwhelming. The range of the discourses include dissecting the colonial encounter and its political economy, post-colonial nation building, state-civil society relations, political transitions, social movements in the political process, gender and politics, parties and other political institutions, and more recently, the interface between democracy and development or markets.
Allow me to capture and analyze some of the paradigms and perspectives articulated in diagnosing African politics.
In diagnosing African politics, perspectives and paradigms have been adopted in different historical contexts. Serious intellectual debates were generated amongst African scholars and between them and the Africanists. Three of these paradigms can be teased out in broad categories. The first is what we refer to as the social identity paradigm, the second is the political economy paradigm, and the third is the social movement paradigm.
The first paradigm has different strands. Perhaps, a good starting point is the theory of the two publics articulated by Peter Ekeh (1975), which focuses on how the colonial encounter shaped the nature of politics in Africa, through the bifurcation of individual identities, personalities and public spaces. Colonialism in Ekeh’s view was an ‘epochal event whose supra-individual consequences have lingered in fundamental ways, long after actual colonization and the colonial situation have ceased to exist. Colonialism is to Africa what the industrial revolution and French revolution were to Europe’ (Osaghae, 2003: 3). As such, ‘it is to the colonial experience that any valid conceptualization of the unique nature of African politics must look’ (Ekeh, 1975: 93). According to Ekeh, the problem of corruption, mismanagement, personalization of power, and political autocracy cannot be understood except through a sociological analysis of how the colonial experience reshaped social values through the kind of structures and institutions created, of which the conditions and realities subsist till present.
Colonialism created dual public spaces and dual identities, what Ekeh referred to as the civic and the primordial publics. The civic public is an arena of political amoralism, while the primordial public is the space for public morality and decency. Given the brutality and arbitrariness of colonial governance, the civic public space lacks legitimacy and public support; hence an arena viewed by many with suspicion, antipathy and, possibly, plunder. The primordial space is that of traditional affection – where the people find comfort, acceptance and belonging, hence confers legitimacy and moral values. A bit like a family. As the state remains ‘alien’, people’s perceptions and attitude towards it, including of those who manage state power, remains one of distrust, poor support and often times, vandalism. The crisis of the state and politics in Africa is therefore located in this dualism of public spaces and political construction of legitimacy.
The ethnic dimension of politics is an important strand of African politics. Prominent scholars including Onigu Otite, Okwudiba Nnoli, Eghosa Osaghae Mahmood Mamdani and Archie Mafeje, dwell on this issue extensively. Archie Mafeje (1971, 1991) provides a useful deconstruction of tribalism which hitherto was used by western anthropological researchers in their study of Africa, its politics and society.
The pejorative notion of tribalism which is often used in the study of the ‘other’ or the ‘natives’ by anthropological Africanists distorts Africa’s political and social realities and reinforces stereotypes of inferiority and social backwardness. Tribalism denotes “self-contained, autonomous communities, practicing subsistence economy with no, or limited, external trade” (Mafeje, 1971: 257). More recently ethnicity and ethnic relations replaced the notion of tribal communities in the discourse. Ethnic groups according to Onigu Otite (1990: 17) are categories of people characterized by cultural criteria of symbols including language, value systems and normative behavior and whose members are anchored in a particular territory. They are neither autarkic groups nor are they excluded from constant interactions and reconfiguration. The thrust of the ethnic interpretations of politics in Africa is that the colonial policy of divide and rule – based on the ethnic principle cemented ethnic identities – deepened inter-ethnic competition and exacerbated ethnic conflicts in Africa. Indeed, access to the state and its resources either at the local or national level can be based on ethnic arithmetic, hence the size, social positioning, and political leverage exercised by ethnic groups becoming a driving force of power dynamics in Africa. There is a cesspool of struggles by ethnic identities to capture the state, or at least gain control of its instrumentalities.
Mahmood Mamdani offers a very insightful analysis of social identity politics and the character of the state in his seminal book – Citizens and Subjects. With the concept of decentralized despotism, Mamdani sought to deconstruct the structure and mechanics of the colonial state and how it shaped inter-group relations in Africa. Premised on the logic of indirect rule, the colonial state was a bifurcated state, which existed at two levels – the central state and local state. The local state was the domain of the native authorities and that was where the natives were to be containerized and governed. Ethnic identities and rigidities were the hallmark of the native authority system; every native was defined within the context of a native authority. While civil law governed the central state, customary law was the legal framework for the native authority system. The former was the domain of rights and racialized; the latter was one of tradition and customs and ethicized. But custom in this case, as Mamdani (1996:22) noted, was the language of force, masking the uncustomary powers of the native authorities.
The way this reality permeated the independent states is the subject of many research contributions, but no major controversy. Basically it is admitted that at independence, the bifurcated colonial state was de-racialized, but not democratized. Democratization at independence became synonymous to de-racialization of civil power, rather than detribalization of customary power.
Another important body of contributions to diagnose African politics is the mostly Marxian political economy approach. Scholars like Samir Amin, Walter Rodney, Claude Ake, Bade Onimode, Nzongola-Ntalaja, Peter Anyang’ N’yongo, and Dani Nabudere adopted this approach. For them, the global economic system is the driving force in shaping the context and dynamics of politics in peripheral countries in general, and Africa in particular. Some of these scholars focus on what they term the logic of imperialism, while others put emphasis on internal class formation and its power consequences. Samir Amin for example underscores the fact that we need to understand the nature of accumulation on a world scale within the global capitalist system and its inherent contradictions, before we can unravel the nature of politics in a specific country. African countries are not marginalized in terms of integration into the global capitalist system; rather the pattern of their integration, which he calls ‘mal-integration’, is the prominent issue.
Finally another group of scholars focused on the issue of social movements, and popular forces, including civil society movements. This approach seeks to understand politics and power from ‘below’ and the struggles of the people for improved governance. This approach has been used both in understanding the decolonization process and the recent wave of democratization that swept the continent in late 1980s and 1990s.
The above perspectives and paradigms offer alternative analytical lenses, which are historical, nuanced and rigorous. These approaches are in contradiction to the mainstream perspectives, notably the neo-patrimonial school, which celebrates the pathologies of African politics. It describes African politics as a haven of patron-client relations characterized by corruption, cronyism, informalization of political life and disorderly rules and procedure. Indeed, Africa is seen to work through an inverse logic of political disorder and chaos (Chabal and Daloz, 1999). Its political elites are believed to be capricious and perverse, inclined towards a ‘politics of the belly’ (Bayart, 1993), a euphemism for lawlessness and corruption. In its very extreme, neo-patrimonial theory creates a parallel between African cultural traits and the decadence of African politics. African culture and traditions are viewed as regressive and permissive of immoral political behavior or conduct.
As Thandika Mkandawire (2013:5) notes the neo-patrimonial theory, while describing the styles of the exercise of authority, the mannerisms of certain colorful political leaders or the social practices associated with some states, and the individuals occupying different positions within them, it fails in analytical content, explanatory capacity or predictive value. It does not advance our knowledge or understanding of the nature of politics, economy and society in Africa.
Analyzing African politics is a contested issue. African countries are marked by their diversity. The plurality affects how politics evolve. Ethnic, religious, linguistic, spatial, gender and class dimensions all contribute to a complex picture. For example, the continent has about 2,110 living languages constituting about 30% of the World’s total. With forced amalgamation, there was the indiscriminate drawing of political boundaries by the colonial authorities lumping non-identical groups and communities together in the newly created states. Constructing nation-states and promoting cohesive national politics by groups and communities without identical social and political history, cultural affinity or social contiguity has been a major challenge.
Politics have been fractured, disempowering for the majority, non-inclusive and, at times, violent. Civil society organizations for example, in many instances were ruthlessly suppressed, and dissent regarded as treason.
The trend of politics and political regimes that unfolded on the continent since independence is obviously not monolithic. Some countries kept faith with multi-party democratic politics, although with a mostly dominant one-party-system, while others had it official. After independence many reclined into a cycle of military coups and political dictatorships.
There were two major global and national currents that influenced the nature of politics in African countries: the cold war and the imperative of nation-building. The politics of the cold war promoted ideological proxies and satellite states, especially in Africa. What mattered in those proxy countries was not so much the internal configuration of power and the desires of the polity but external allegiances. Political accountability and citizens’ voices in domestic politics were discounted. The imperative of the nation-building, on the other hand, sought expression in the unitary systems of government, as a means of containing and managing diversity. One-party rule leaders were convinced that in order to contain the fissiparous tendencies of Africa’s plural societies, political unison in a one-party state will be the magic wand. However, this was never to be.
There was a concentration and centralization of power around political leaders or oligarchs. In many countries, political power was highly centralized and managed both institutionally and operationally. Ethnic identity was also well entrenched. While civil society continues to grow exponentially, paradoxically, the political space shrank remarkably.
The struggle for space that could allow political dissent or identity expression to flourish mostly finds one way of venting: ethnicity.
The changes that took place since the late 1980s, with the eclipse of the cold war, soon gained momentum in Africa. Authoritarian regimes gradually gave way to nascent democratic attempts, shifting the nature of the political debate. Elections, political parties, contestation, rights, institutional checks, and governance accountability are now common currencies in Africa. A rich literature has emerged on the democratization process in the continent, both from theoretical and empirical dimensions, comparing regional experiences and country case-studies.
Claude Ake (2000: 9-11) provided a refreshing theoretical interrogation of the liberal democracy paradigm that dominated the views outside but also in Africa. Ake argues that liberal democracy is markedly different from democracy even though it tends to have affinities with it with features like consent of the governed, formal political equality, inalienable human rights, accountability of power to the governed and rule of law. However, they are not one and the same. Indeed, liberal democracy is a negation of the whole concept of democracy. Instead of sovereignty of the people, liberal democracy offers sovereignty of the law (Ake, 2000: 10).
Adebayo Olukoshi (1998: 14) takes a different perspective from Claude Ake and argues that it is possible to see democracy and capitalism as different projects in the history of the modern world without necessarily having any automatic or organic correlation. Persuasively, he contends that “it is not capitalism that is inherently democratic; the hidden and open, sometimes bitter, struggles against repressive tendencies and instincts have been central to the production of some of the reforms that are today the hallmark of liberal democracy”. In other words, liberal democracy arose not necessarily because but in spite of capitalism, and the possibility of its reproduction in other societies including African countries with less developed capitalist system is therefore possible and desirable.
On the interface between democracy and development in Africa, a very robust polemical debate arose in CODESRIA intellectual circles in the 1990s especially between Thandika Mkandawire and Peter Anyang’ Nyong’o. The latter argued that democracy is a sine qua non for development. Citing the experiences of Mauritius and Botswana that achieved some relative economic progress under supposed democratic regimes, Anyang’ Nyong’o tasks African scholars and policy makers to take liberal democracy very seriously as it constitutes a fundamental basis for promoting development. Contrarily, Mkandawire contends that democracy is a worthwhile social value in itself which all countries must aspire to, given the freedom and opportunities that it confers; it should not be conceptually merged with development. Democracy may or may not produce development, and the experience of the Asian tigers which were essentially authoritarian regimes with unprecedented record of economic transformation indicates that development is possible without a full democracy. While democracy is good in itself, it must link concretely to the lives of the citizenry.
The progress recorded in democratic politics in Africa in recent times is not without its challenges and constraints. Relish and legacy of authoritarian practices loom large in many countries. Executive dominance, though in decline, remains ubiquitous as the use of discretionary power threatens the growth of democratic dispensations. Limited institutional growth and restraint also poses a challenge to political accountability. Parliaments, judiciary and opposition political parties – three important democratic institutions – remain suborned in many countries, with little capacity, resources and autonomous space. Institutions of horizontal accountability like the anti-corruption and human rights bodies, or audit departments, do not have the vitality or the capacity for effective controls. Political impunity is still rampant.
Politics is still perceived as a ‘do or die’ affair in which politicians and political parties stake virtually everything in the accumulation and retention of power. This makes elections a discounted value in promoting meaningful change in governance. Often the winner takes all syndrome prevails. Negotiation of political power is associated to access to public resources. However, the rise and flourishing of civil society portends a good omen for democratic politics in Africa. The possibility of accountability from below is increasing by the day as citizens’ demand for rights and opportunities. Civil society claims and agitations, if consistent and sustained, may begin to reshape not only the character of politics but also the nature and essence of the state.
Often African states are more attentive to the criticism they receive from international media or external public opinion than they do with their own constituents. To understand how African states mediate multiple levels of political obligations to their own national agendas, to their regional/continental obligations and the global community especially where there are obvious and sometimes not so obvious conflicts of interest, I will delve into the source of international law which defines such obligations.
Transformations in the domains of war, war crimes, human rights, democratic participation, as well as the environment, have substantially shifted the classical regime of sovereignty towards a more eroded interpretation of sovereignty.
Classic regime of sovereignty refers to a state-centric conception of sovereignty where international law is questioned as a law and considers any legal obligations outside the national realm as entirely optional. Tenants of this view contend that most international “law” that exists today is a compilation of international conventions and treaty agreements mutually convenient to the signatory nations or imposed upon them by more powerful nations (Piaff, 2000). This classical conception of sovereignty apprehends international law as horizontal and voluntary and domestic law as hierarchical and compulsory.
On the other hand, the new mainstreamed views on sovereignty entrench powers and constraints, rights and duties, in international law that – albeit ultimately formulated by states – go beyond the traditional conception of the proper scope and boundaries of states, and can come into conflict, and sometimes contradiction, with national laws. In this perspective, international law is to be regarded as a law not because of some higher moral code or by sovereign command but because states freely consented to abide by it. In absence of supranational authority, it goes without saying that agreements and norms obtained from consent rather than ultimate authority can be withdrawn should the agreed-upon norm longer fit the national interest. As matter of realpolitik the classic perception of sovereignty supersedes the liberal one when strategic interests and national pride are at stake. The extent to which states exercise their sovereignty is contingent to their overall influence at the global scale.
Even in the areas of human rights, where tremendous progress has been made in enforcing the rule of law, the resurgence of the state-centric conception of sovereignty is very present. For instance some African states have been selective in collaborating with the ICC or international bodies on presumed war crimes, crimes against humanity and ethnic cleansing. The African Union has also voiced the protection of the dignity, sovereignty and integrity of the continent when prosecutions pose a real threat to peace and stability.
International environmental treaties, regimes, and organizations have placed in question elements of state sovereignty, but have not yet locked the drive for national self-determination and its related “reasons of state” into a transparent, effective, and accountable global framework (Held, 2003). Here again, national interest determines the extent to which states ratify and abide to international obligations, as illustrated in the case of climate change or trade negotiations. Commitments from ill-negotiated agreements result, often times, in reversals, especially when explicit sanctions are not defined. In absence of a supranational enforcement mechanism, it goes without saying that agreements and norms obtained from consent rather than ultimate authority can be withdrawn or violated. Beyond one country’s interests, compliance with international obligations is contingent upon a successful dynamic wherein countries assume both regional and global obligations, while internalizing them into domestic law. Such process leads to a reconstruction of national interests and eventually national identities (Koh, 1997).
Let me conclude.
On the quality and content of the democratic process in Africa, while progress is limited and uneven (UNECA, 2009; UNECA ad UNDP, 2013), there is some consensus that the nature of politics is changing in Africa. Citizens’ political participation is on the increase, there is better observance of the rule of law, political freedom is widening, conflicts have largely receded, and with increasing political stability and predictable political environment, steady economic growth has been posted. Executive arrogation of power, which hitherto was a dominant culture of public life is being redefined as other institutions of democracy like the parliament, the judiciary, media and civil society are gradually checking power excesses. Let us agree that Africa’s democracy remains fragile and tenuous and the possibility of many reversals lurks. The Mo Ibrahim Index on African Governance released one week ago says it all: we have progressed until recently but now we are stalling.
Africa remains a continent in transition. A continent in which both domestic and external forces are impacting on the nature of its politics and economy. Diagnosing African politics in its complexity and variety requires therefore social analytical approaches and methodological tools that take cognizance of history, social structure and context, political agency and the institutional framework of political action and policy.
How could I have imagined that a telephone would teach me so much? My latest generation smartphone does not inspire me like the bulky instrument I discovered when I was ten, but it is a giant reminder that politics will never be the same. In Africa, or anywhere else.
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Action urged on climate change, growth slowdown
One week ago, the World Bank Group announced that the number of people living in extreme poverty was projected to dip below 10% of the world’s population in 2015 for the first time.
But as the 2015 Annual Meetings of the World Bank Group and International Monetary Fund came to a close in Lima, Peru, the focus shifted to the obstacles to ending extreme poverty and boosting shared prosperity: climate change, weak global growth, and ongoing crises in fragile states.
In its communiqué, the 25-member Development Committee of the Bank Group and Fund said economic risks have risen for 2015 and 2016. “Prospects of tighter financing conditions, slowing trade, and renewed weakness in commodity prices are weighing on confidence in many developing countries,” it said. The committee called on the Bank Group and IMF to monitor economic risks and vulnerabilities and “enhance their assistance” to countries.
In a speech to the full membership of the Bank Group and Fund, Kim acknowledged the challenging conditions.
“While we remain confident of ending extreme poverty, the final stretch will be extremely difficult because we are in the midst of a period of slow global growth, the end of the commodity super-cycle, pending interest rate hikes, and continued flight of capital out of emerging markets,” said Kim.
“To spur growth, every dollar of public spending should be scrutinized for impact. Every effort must be made to improve productivity,” he said. “And in a period when banks are de-risking, we have to ensure that capital is accessible – especially for small business owners and entrepreneurs who will create jobs.”
The Annual Meetings – the first to be held in Latin America since 1967 – dealt with a wide variety of global issues, as well as some focused on the host region. A series of livestreamed events discussed inequality, the economic slowdown, renewable energy, climate change, and the Bank’s twin goals of ending extreme poverty by 2030 and boosting shared prosperity. The events featured government ministers, development experts, CEOs, and celebrities. The Bank also released economic updates during the week for Latin America and the Caribbean, East Asia and Pacific, Africa, and South Asia.
One pressing global issue that drew particular attention was the global crisis surrounding refugees and migrants. The Development Committee, in the communiqué, said the crisis requires “targeted support” for “countries and regions in turmoil, especially in the Middle East and North Africa, but also in other fragile and conflict states.”
Kim, earlier in the week, agreed: “For all involved, the refugee crisis is an immensely difficult challenge,” he said. “The World Bank Group has been assisting the host communities of the refugees in Lebanon and Jordan for the past few years, and now we’re exploring new ways to increase our help for Syria’s neighbors.”
On Oct. 10, the United Nations, the World Bank Group, and the Islamic Development Bank Group announced a joint initiative to scale up financing in the Middle East and North Africa to help countries hosting significant refugee populations, countries impacted by conflict, as well as countries that have significant investment needs to achieve economic recovery.
“Climate change and natural disasters put hard-earned development gains at risk, particularly for the poor and vulnerable,” said the Development Committee. It asked the Bank Group to help countries assess climate risk, build resilience and “scale up its technical and financial support and mobilize resources.”
Finance ministers of the “Vulnerable Twenty” (V20) countries most at risk from climate change, representing close to 700 million people, said this week that an average of more than 50,000 deaths a year were attributable to climate change, with the number expected to rise exponentially by 2030.
On Oct. 9, following the Climate Ministerial meeting hosted by Peru and France, the Bank Group pledged to boost climate-related financing by as much as a third, to as high as $29 billion annually, with the support of the Bank Group’s member countries.
“The World Bank Group stands ready to scale up its support to meet increasing demand from countries,” Kim said in a press conference Oct. 8.
For their part, countries must “show real ambition” at the climate change conference in Paris in December, he said.
“Political will for urgent action is critical. We believe there are politically credible pathways to deliver $100 billion a year in climate financing for developing countries by 2020,” he said.
“If world leaders do not find a path to low-carbon growth that will keep global warming below an increase of 2 degrees Celsius, there is little hope of ending extreme poverty − and even more broadly, there is little hope of preserving the Earth as we know it for our children and grandchildren,” said Kim.
The Development Committee also addressed a number of other important issues:
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It endorsed the World Bank Group’s role in coordinating with governments, multilateral organizations, the private sector and civil society to mobilize funding for the Sustainable Development Goals (SDGs) – a set of global goals to be achieved by 2030. They were approved last month at the United Nations General Assembly.
“We stress the need to focus on inclusive growth, jobs, infrastructure, human development, and health systems, and to deepen the World Bank Group’s engagement in fragile and conflict states,” said the committee. It also called on the International Finance Corporation and the Multilateral Investment Guarantee Agency to “play a more catalytic role to mobilize private sector investment and finance for development.”
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It urged the Bank Group and IMF to help countries stem “illicit finance and the underlying activities, including tax evasion, corruption, criminal activities, and collusion,” that deprive developing countries of vital resources they need.
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It praised the Global Monitoring Report for tracking the progress of the Millennium Development Goals, which will be replaced by the SDGs. The latest report, released during the Meetings, “shows that changes in global demography will profoundly affect the trajectory of global development during the 2030 Agenda period. With the right policies, demographic change can help growth, both in developing and developed economies.”
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And it stressed the importance of strengthening data quality and coverage in developing countries – and the availability of data for policy-making and for monitoring and implementing the SDGs. It called on the Bank Group and IMF to increase support to developing countries to help them build data capacity and invest in evidence.
Development Committee Communiqué
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The Development Committee met today, October 10, 2015, in Lima.
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Global growth remains weak, and the downside risks for the second half of 2015 and 2016 have risen. A moderate recovery in high-income countries is still continuing, but prospects of tighter financing conditions, slowing trade, and renewed weakness in commodity prices are weighing on confidence in many developing countries. We call on the World Bank Group (WBG) and the International Monetary Fund (IMF) to monitor risks and vulnerabilities closely, to enhance their assistance to countries to support growth and build resilience, and to play their countercyclical role when needed.
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Given the scale of the current refugee and migrant crisis, we call for targeted support, in collaboration with the UN and other partners, in addressing the challenges for countries and regions in turmoil, especially in the Middle East and North Africa, but also in other fragile and conflict states.
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The Sustainable Development Goals (SDGs) chart a new course for development for the next 15 years. The SDGs are universal, integrated, and align with the WBG’s corporate goals. Building on the Billions to Trillions discussion at the last Spring Meetings we endorse the WBG’s role and support for the 2030 Agenda for Sustainable Development. This will involve convening, connecting and coordinating with governments, IMF, MDBs, and the WTO, private sector and civil society to mobilize the financing needed; deliver development solutions at country, regional, and global levels, including through South-South cooperation. We stress the need to focus on inclusive growth, jobs, infrastructure, human development and health systems, and to deepen the WBG’s engagement in fragile and conflict states. Private sector development is crucial to achieving the SDGs. We call on the IFC and MIGA to play a more catalytic role to mobilize private sector investment and finance for development. We welcome the steps the WBG has taken to enhance its effectiveness and delivery to respond to strong demand, through operational reforms and optimizing the use of its balance sheets and external resources. We recognize that the WBG must remain adequately resourced to meet its goals and to contribute to the SDGs and climate agendas.
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IDA remains a critical tool to achieve the WBG’s goals and the SDGs and we look forward to continued strong IDA replenishments and further consideration of options to generate additional IDA financial capacity while ensuring continued focus on the poorest countries.
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We welcome the IMF’s support for the 2030 Agenda, including its decision to increase access to concessional lending facilities, and its work to boost economic resilience and sustain global economic and financial stability.
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We urge the WBG and the IMF to scale up their support to developing countries to improve domestic resource mobilization, public financial management and to curb illicit finance. Illicit finance and the underlying activities, including tax evasion, corruption, criminal activities, collusion, represent a major drain on the resources of developing countries. We welcome their plans to work jointly to build capacity for developing countries, including on international tax issues.
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Climate change and natural disasters put hard-earned development gains at risk, particularly for the poor and vulnerable. Smart policy and investment choices can help transition to economic growth paths that reduce poverty while preserving the environment. We urge the WBG to scale up its technical and financial support and mobilize resources to assist countries in assessing climate risks and opportunities, to address the drivers of climate change, and to build resilience. We look forward to an updated report on Disaster Risk Management in Spring 2016. We call on the WBG to enhance its support for small states in building resilience against and mitigating the impact of natural disasters and climate change, which are among the greatest challenges faced by these countries. We look forward to a successful COP21 meeting in Paris.
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We reaffirm our commitment to gender equality, critical to ending poverty, boosting shared prosperity, and building more inclusive societies. We look forward to the implementation of a new WBG gender strategy aimed at closing persistent gender gaps.
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The Global Monitoring Report has proven its value in tracking progress in achieving the MDGs and we are confident it will play a similar role for the SDGs. The latest GMR shows that changes in global demography will profoundly affect the trajectory of global development during the 2030 Agenda period. With the right policies, demographic change can help growth both in developing and developed economies. We urge the WBG to take demographic challenges into account in its work to support development policies.
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We stress the importance of strengthening data quality and coverage, and its availability for policy making and for monitoring and implementing the SDGs. We call on the WBG and the IMF to increase their support to developing countries in building national data capacity and investing in evidence.
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We welcome the Report of the 2015 Shareholding Review and agree to the shareholding review principles and the Roadmap for its implementation, including further consideration of the WBG’s long term role. We commit to implementing the Roadmap, including agreement on a dynamic formula by the 2016 Annual Meetings, based on the guidance set out in the report. We stress the critical importance of wider reforms to strengthen WBG responsiveness to its members and their voice and representation in its governance. We will continue to promote diversity and inclusion to reflect better the global nature of the WBG.
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Delivering transformative development solutions requires a focus on results, support for implementation, and fiduciary and safeguards policies to manage risks. This will ensure responsiveness to client needs and deliver sustainable development outcomes. We welcome the new procurement framework approved in July 2015 and look forward to successful completion of the review and update of the World Bank’s environmental and social framework.
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The Committee expressed its appreciation to the Government of the Republic of Peru for hosting the Annual Meetings. We thanked Mr. Marek Belka, President of the National Bank of Poland, for his valuable and outstanding leadership and guidance as Chairman of the Committee during the past four years, and welcomed his successor, Mr. Bambang Brodjonegoro, Minister of Finance of Indonesia.
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The next meeting of the Development Committee is scheduled for April 16, 2016, in Washington, D.C.
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South Africa ‘on track’ to keep duty-free export access to U.S.
South Africa will probably retain duty-free access for exports to the U.S. worth as much as $1.7 billion a year under the Africa Growth and Opportunity Act, Trade and Industry Minister, Rob Davies said in an interview, citing a letter he received from the U.S. trade representative.
“I am confident that we are on track to keep us in AGOA,” Davies said on Saturday. “The issues that are going to be central to their decisions on the outer-cycle review are related to the three meats. These were about the importation of 65,000 tons of poultry, the regulations on pork and on beef.”
The U.S. is reviewing South Africa’s status as a full beneficiary of a preferential trade pact that eliminates import levies on more than 7,000 products ranging from textiles to manufactured items. AGOA, as the accord is known, was renewed in June for another 10 years, benefiting 39 African nations.
To remain a beneficiary of AGOA, countries are required to, among other things, eliminate barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.
U.S. trade officials have threatened to withdraw support for South African funding applications to the International Monetary Fund and World Bank if certain clauses outlined in a proposed security industry regulation bill aren’t reviewed.
“The security bill was not mentioned in that context in the letter from the U.S. trade representative,” Davies said.
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IMFC Statement by Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria
Statement by Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria, at the Thirty-Second Meeting of the International Monetary and Financial Committee, 9-10 October 2015*
Global Economy
We note that global growth continues to be moderate but uneven, while risks remain elevated. The robust economic activity in the USA, return to positive growth trajectory in Japan, and strengthening recovery in the euro area are good news in driving growth prospects in the advanced economies. However, the growth prospects in the medium term will likely be subdued, reflecting lower investment, unfavorable demographics, and weak productivity growth.
Emerging markets and developing countries continue to grow above the global average. We observe that the decline in GDP growth for EMDCs experienced over the past five years reflects general weaknesses in global growth and heightened uncertainties from lower commodity prices and slower growth in China, as well as domestic structural factors. In addition, the global environment is compounded by the geopolitical tensions in parts of Eastern Europe and the Middle East, which could further escalate the risks and increase disruptions in global trade and financial conditions.
The sub-Saharan Africa region continues to show resilience on the back of on-going policy reforms. However, growth is expected to slow reflecting the repercussions of declining commodity prices as well as lower demand from China its largest single trading partner, and the tightening global financial conditions especially for the frontier markets. In particular, oil exporters are expected to experience lower revenues, while countries that leverage, international capital market are expected to have lower infrastructure investments. Policymakers need to find appropriate balance between macroeconomic stability and strong inclusive growth. These include preserving fiscal sustainability, reprioritizing spending and identifying tax policy reforms as well as expand fiscal space to address infrastructure gaps and social spending, allowing exchange rate flexibility to smoothen the adjustment to less favorable external conditions and implementing structural reforms to increase private sector activity and boost confidence.
Supporting growth in sub-Saharan Africa
The prevailing shocks have seen a persistent near-term weakening of sub-Saharan Africa economic growth. Rebuilding policy buffers while maintaining growth-friendly policies is a priority to boost resilience to exogenous shocks. In the medium term, diversification of exports and domestic production are important in sustaining strong inclusive growth. While urging continued support to strengthen regional integration in collaboration with other development partners, it is pertinent for the Fund to support policies for revenue mobilization and structural reforms along country specific needs. In addition, scaling up public investment to close existing infrastructure gaps is a priority and we urge the Fund to continue supporting capacity building to improve public investment efficiency and the quality of public finance statistics.
Fund Surveillance
Boosting surveillance activity is critical in maintaining traction of the Fund’s policy advice. The effort to achieve full implementation of the 2014 Triennial Surveillance Review is encouraging and we expect that it would continue to remain a priority. We welcome the effort to integrate and deepen analysis of risks and spillovers, and observe that the mapping of these items is critical to the revival of the balance sheet analysis. In welcoming more of these efforts, Fund support in closing existing data gaps remains critical. We appreciate the proposed new enhanced General Data Dissemination System (e-GDDS) aimed at addressing the transition to Special Data Dissemination System (SDDS), and urge the Fund to scale up technical assistance to facilitate the attainment of the benchmarks set for the subscribers. On our part, we will endeavor to create more awareness and build capacity to improve data quality.
Structural reforms should continue to be a priority for unleashing growth potential, and we appreciate the ongoing groundwork to strengthen surveillance of structural issues. Efforts to strengthen capacity to drive priority structural reforms are critical in facilitating a successful implementation of the economic diversification and transformation agenda and request the support of the Fund in this regard.
We appreciate the on-going pilot work on macro-financial analysis and look forward to supporting country teams in quantifying financial linkages and identifying build up of systemic risks.
Fund’s Lending
We welcome the recent initiative to enhance the financial safety nets for developing countries as part of the IMF contribution to support development. We also welcome the increased access to PRGT and rebalancing of the concessional and non-concessional financing aimed at boosting access of the poorest and most vulnerable countries to concessional resources. While appreciating the increased access, we urge that the reduction of access limit and norms as a percentage of quotas should be separated from the implementation of the 14th General Review of Quotas. We note the continued application of the PRGT-eligibility as a transparent and rulebased framework to facilitate steady graduation of LICs. However, we urge the Fund to support the transitioning members and middle-income countries with appropriate programs. While urging that low income countries get appropriate programs, the Fund is encouraged to strengthen efforts to increase PRGT resources.
Financing for Development
Achieving the sustainable development goals (SDGs) in developing countries is inextricably tied to adequate financial resources. We welcome the commitments of the international community, including the Fund to the SDGs and funding sustainable development, at the Third International Conference on Financing for Development and look forward to a successful implementation of the Addis Ababa Action Agenda. While supporting the Fund’s initiatives to scale up assistance for national capacity building in areas of domestic revenue mobilization, stemming illicit financial flows, expanding infrastructure investments, strengthening debt management capacity, financial market development, and data dissemination, we look forward to the Fund supporting the remaining HIPC-eligible countries to complete the debt relief process. Further assistance is needed in the review of the debt sustainability framework, and continued strengthening of analytical tools for sovereign debt management.
Diversity and Inclusion
We are concerned that the 2014 diversity targets were not met particularly, the recruitment and promotion of African nationals at senior and managerial positions in the Fund. While we welcome the new diversity benchmarks for 2020, we note that they are short of addressing the representation of the region. We urge the Fund management to expedite action including identifying key milestones to ensure effective implementation of these targets. In addition, we reaffirm our call to make every effort to expand the pool of institutions to include universities in Africa, and urge that this translates into actual hiring of African nationals. It is our position that diversity of views and experiences will go a long way in enriching the Fund’s delivery of services to its membership.
Quota and Voice
We regret the protracted slow progress with the 14th General Review of Quotas and Governance Reforms noting its importance in strengthening legitimacy, credibility and the effectiveness of the Fund. In light of the increasing uncertainty in the global environment, the
Fund must stand ready to deliver necessary financial assistance to its members. We remain committed to a quota-based institution, and therefore the completion of the 2010 reforms is a priority. These reforms represent a viable option to addressing the concerns of emerging markets and developing countries in terms of voice and representation. Against this background, we urge the IMF Executive Board to speed up work on interim steps to make meaningful progress towards the achievement of the 2010 reform agenda and look forward to the completion of the interim work by December 2015.
Conclusion
Rebuilding the momentum of global economic growth within a policy framework that accommodates country specific needs remains a priority. We will continue to strengthen our engagement with the Fund in improving capacity for macroeconomic management, and building firm foundations for sustainable and strong inclusive growth.
* On behalf of Angola, Botswana, Burundi, Eritrea, Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia, Nigeria, Sierra Leone, Somalia, South Africa, Republic of South Sudan, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe.
» Communiqué: Thirty-Second Meeting of the International Monetary and Financial Committee (IMFC)
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Region set to realize e-business as EALA enacts EAC Electronic Transactions Bill
EALA on 8 October 2015 passed the EAC Electronic Transactions Bill 2014 paving way for the business and corporate world to transact business using digital means.
Debater after debater supported the Bill saying it would grow the economies of Partner States and the region. The Bill had a number of clauses revised and or inserted to reflect relevancy and consistency.
The Electronic Transaction Bill, 2014 seeks to meet the need of exploiting electronic transactions in the modern day business transactions. The Bill further wants to promote technology neutrality in applying legislation to electronic communications and transactions and to develop a safe, secure and effective environment for the consumer, business and the Governments of the Partner States to conduct and use electronic transactions.
Debate on the Bill was adjourned at the 1st Meeting of the 4th Session of the 3rd Assembly held in August 2015 in Kampala, Uganda to pave way for stakeholders to make additional input.
The adjournment came after a request for deferment of the debate by the Chair of Council of Ministers, Hon Dr. Abdallah Saadaala was approved. The Chair of Council of Ministers reiterated total support of the Bill but added there was need for more time for the consolidation of further inputs and comments by stakeholders.
At the same time, consultations have been called to allow for enrichment of the Report of the Committee of Communication, Trade and Investment.
In his ruling then, Speaker, Rt Hon Daniel F Kidega directed that the Bill whose initiator is Hon Dr James Ndahiro, be brought back to the Order paper during the Nairobi Sitting.
On Wednesday this week, the debate was adjourned a second time to avail the Committee time to look through the comments received from the Monetary Affairs Committee (MAC). When debate resumed on 8 October, several members rose up in support of the Bill. Hon. Nancy Abisai, Hon. Fredrick Ngezebuhoro, Hon. Mike Sebalu, Hon. Shyrose Bhanji, Hon. Zein Abubakar and Hon. Susan Nakawuki gave a firm nod to the Bill.
Others were Hon. Patricia Hajabakiga, Hon. Martin Ngoga, Hon. Sarah Bonaya, Hon. Leonce Ndarubagiye, Hon. Valerie Nyirahabineza and Hon. Adam Kimbisa. Also supporting the Bill were Hon. Joseph Kiangoi, Hon. Twaha Issa Taslima, Hon. Abdullah Mwinyi, Hon. AbuBakr Ogle, Hon. Bernard Mulengani, Hon Peter Mathuki and Hon. Chris Opoka.
The Members urged Partner States to embrace the Electronic Transactions Bill and harmonize their laws to the regional law to create a proper environment for all possible users and beneficiaries of ICT in the region and beyond.
The debate was preceded by tabling of the revised report of the Committee on Communication, Trade and Industry on the public hearings of the Electronic Transactions Bill, 2014 by the chairperson, Hon Mukasa Mbidde.
The Chair of Council of Ministers, Hon Dr. Abdulla Saadaala reiterated the support of the Bill, saying all Partner States were of the same frame of mind when it comes to the tangible benefits of electronic transactions.
» Download: East African Community Electronic Transaction Bill, 2014 (PDF, 5.96 MB)