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Barriers on agricultural produce killing African economies, says Foreign CS
A better agreement on agricultural exports will be Kenya’s priority when the world converges in Nairobi for the World Trade Organisation (WTO) summit this December.
In a meeting with Swedish investors on Tuesday, Kenya’s Foreign Affairs Cabinet Secretary Amina Mohamed argued that the world should adopt better agreements on agricultural produce to aid African economies that depend on it.
“African countries’ investments in agriculture have been sinking in a huge black hole, because these legitimate investments cannot compete with distorting subsidies derived from the current Agreement on Agriculture regime,” she said in Stockholm where she is on official visit, according to a statement.
She told the gathering that African countries were unable to lift their economies because of too many impediments placed on agricultural produce from the continent
But she hopes this can be rectified during the next WTO meeting. About 4,000 delegates from 160 countries are expected in Nairobi in December for the 10th WTO meeting (C10).
Formally known as the WTO Ministerial Conference, it is a biennial summit held since 1995 when the World Trade Organisation was established.
WTO is generally a forum where countries negotiate trade agreements and settle disputes resulting from international trade.
It officially has five functions of administering trade agreements, acting as a forum for trade negotiations, monitoring national trade policies, providing technical assistance to developing countries and acting as a link with other international organisations.
Despite its promise to level the trading field, critics have accused the Organisation of passing policies that favour developed countries.
For example, some critics have said rich countries within the WTO maintain high import duties on products thus discouraging exports from poor countries.
Then there are non-tariff barriers such as the insistence on age of goods as well as safety of agricultural products which poor countries are unable to meet.
Besides, there are agreements that limit how far poor countries can use certain technology.
On Tuesday, Ms Mohamed told Swedish investors that the gap can be bridged if they can invest in Kenya and other African countries.
“For us to benefit more from international trade, our exports must increasingly shift from raw materials to processed products through higher value addition,” she said after meeting with Ms Isabela Lövin, the Swedish Minister for International Development Cooperation.
In 2014, Kenya exported Sh2.8 billion worth of goods to Sweden.
These were mainly in the form of horticultural produce. Sweden on the other hand sold to Kenya goods worth Sh6.3 billion in the same year.
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Uhuru bid to revive L. Victoria transport seen boosting trade
Kisumu has received a major boost in its bid to become a regional transport hub after President Uhuru Kenyatta pledged to revive its port in fresh efforts to expand trade with East African neighbours.
President Kenyatta divulged the finer details of the plan to a section of the lakeside town’s leaders at the Kisumu State Lodge on August 14, the last day of the National Music Festival.
Governor Jack Ranguma, Kisumu Central MP Ken Obura and his Kisumu East counterpart Shakeel Shabbir attended the meeting with Mr Kenyatta.
Lake Victoria basin leaders have been pushing for re-routing of cross-border trade through the port as well as the dry dock formerly run by Kenya Railways.
Mr Kenyatta said Kenya was banking on the ease of transporting commodities through the port to grow GDP.
The move will reduce the cost of transporting goods by road. The President said that reviving Kisumu Port will be prioritised for Kenya to grow more business with its East African Community trade partners.
The port handles mainly Uganda-bound cargo. The plan to revive the facility comes in the wake of a sugar import deal with Uganda which has caused a political storm in Kenya. As part of the Kisumu Port revival plan, the government will prioritise reopening the collapsed Kisumu Cotton Mills and Miwani Sugar Factory.
Mr Kenyatta exuded confidence in the region as a destination for business tourism.
In this regard, he announced that the next Northern Corridor Summit will be held in Kisumu. The meeting will deliberate on how to make the lakeside town a commercial hub for EAC member states.
“Kisumu will be developed into commercial headquarters of the East African Community member states,” President Kenyatta said when he addressed residents on Oginga Odinga Street after closing the two-week music festival. He said Kisumu’s location was strategic for reaching markets in Rwanda, Uganda and Tanzania.
“The standard gauge railway will pass through Kisumu port to ease transport of goods to Uganda and beyond; this is an opportunity that you must prepare to reap from,” said Mr Kenyatta.
Governor Jack Ranguma told the Business Daily that the meeting focused on how to instal more enablers in Kisumu to facilitate trade and transform the economy of the region. He said that they also agreed to work towards attaining a charter for Kisumu City, which will raise its status as a tourism destination.
They agreed to work on a raft of issues to be addressed by the national government which will also boost devolution in the long run, he said.
“We want the president to bring a Cabinet meeting here as he had promised. We will use the opportunity to tackle development issues that need to be jointly executed by the national and county governments,” said Mr Ranguma.
The governor said that setting up water sports and ship cruises will transform Kisumu Port and attract more tourists.
He said that they had also asked for more ships to be introduced in the lake to connect Kisumu with neighbouring countries. The leaders also plan to revive dead industries as a means of dealing with unemployment. These undertakings will eventually raise investor confidence in Kisumu, he said.
“We have beautiful hills, an international airport and a lake port that can make us earn from the goldmine that Kisumu is. It is time to work towards growing this area for business,” MP Obura said.
Mr Shabbir said Kisumu will be an enviable trade destination if the issues discussed in the meeting are implemented.
“We must push for them to come to pass. Here are riches that have not been exploited while our youth wallow in poverty.” The leaders spoke even as the town has become increasingly popular as a host of national events.
Mr Amin Vipul, a transport consultant, said that once the standard gauge railway reaches Kisumu it will serve as a cheaper link of Kenya and its neighbours through Mwanza port in Tanzania and Jinja in Uganda.
“We laud the government for being keen on increasing trade volumes within EAC member states. Trade has been limited by the low carrying capacity of Kenyan roads. It is not too late to revive Lake Victoria routes and make them more active,” said Mr Vipul.
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tralac’s Daily News selection: 26 August 2015
The selection: Wednesday, 26 August
Opposites attract? Bringing the trade and regulatory communities together (ICTSD)
Where does all this take me? The WTO, its valiant efforts in the TBT/SPS context notwithstanding, has found it difficult to emerge as the forum for regulatory cooperation. The impossibility to conclude one agreement on this front following the enactment of the TBT and SPS Agreements is the best proof to this effect. Unless it does so though, it risks seeing its relevance diminished in a world where regulation (almost) exclusively nowadays segments markets. What could be done? Here is an inventory of proposals: [The author: Petros C. Mavroidis]
Africa’s inter-trade improving but digitalization of customs procedures lags behind (UNECA)
During his keynote address at the 1st African Union Forum on Trade Facilitation for Customs Experts that was held in Congo, Brazzaville on 19-21 August 2015, Mr. Luke reported on the findings of a 2015 ECA survey, highlighting that “while no evidence of resistance to the utilization of Information and Communications Technology was found, African countries are however prioritizing institutional reforms and putting physical infrastructure in place”. Mr Luke stressed that “Africa needs good trade facilitation policies and good operational measures”.
Monitoring for Environment and Security in Africa Forum (AU)
Kenya will host the first Monitoring for Environment and Security in Africa (MESA) Forum in Nairobi from 31st August – 4th September. The Forum will examine how Earth Observation data through the MESA Project supports policy, planning and decision making at the national, regional and continental level in Africa. Commissioner for Rural Economy and Agriculture of the African Union Commission, H.E. Tumusiime Rhoda Peace, said: “By enhancing access to and exploitation of relevant Earth Observation applications at continental, regional and national levels, the MESA Project (http://mesa.au.int) contributes to the increase of information management, decision-making and planning capacity of African institutions mandated for agriculture, environment, climate, fisheries, food security and related responsibilities. This is critical for African regional integration”
Presentations posted: training workshop on trade in services negotiations for African Union Continental Free Trade Area negotiators
Africa’s squandered commodity boom erodes US trade promise (Reuters)
A fresh US trade pact could provide relief to African economies buffeted by the commodities slump but a failure to reform during the boom years has left many countries unable to profit from tariff-free access to the world’s largest market. Those countries which aim to benefit from AGOA, such as Ethiopia and Kenya, are not dependent on oil or mining, giving them an incentive to diversify into areas such as footwear and textiles exports. Ethiopia is positioning itself to become a manufacturing hub, driven in part by investments from China and India as labour costs in their own backyards rise. By contrast, big resource producers from bauxite miner Guinea to oil-exporter Nigeria failed to channel vast capital flows into diversification.
Africa, spurning America, fled into China’s arms. Now US may hold 'cure' to the continent’s fast-dipping economy (M&G Africa)
Ernesto Zedillo: 'Africa at a fork in the road: taking off or disappointment once again?' (VOX)
Ethiopia: Industry ministry seeks new strategy for cotton development (Addis Fortune)
The UK government is funding a 15-year cotton strategy for Ethiopia with intent to have a new institutional arrangement for cotton development. This was announced by the Ministry of Industry in an international bid to hire consultants using money availed by the Department for International Development. The decision to develop a strategy followed an agreement that the Cotton Development Directorate at the Ethiopian Textile Industry Development Institute was no longer enough to administer cotton development, calling for a higher structure, according to Bante Kasse, director of CDD. The problems, which are said to be above the CDD, are, rising demand, complexity of the increasing number of textile industries and supply value chain. Currently, a total of 136 textile and garment factories, at medium and higher scale are fully operational, while 10 more factories expected to join the industry “in the first phase of the GTP II.”
Arkebe Oqubay: 'Industrial policy in Ethiopia' (OUPblog)
The Ethiopian experience shows that learning by doing is just as important in policymaking as in production. Ethiopia has been making bold experiments, based on looking at what works and what does not. With each experiment and experience, policymaking capacity gradually improves. There is no short-cut alternative to learning-by-doing. The key question for many countries is whether they can experiment in the absence of policy independence? [The author is a minister, special advisor to the Ethiopian prime minister]
Mzwandile Masina: 'Navigating slow demand with radical restructuring' (IOL)
The issue is the historic position of the South African economy in the global production network. It was integrated into the global production value chain as, like most colonial economies, a supplier of raw minerals without domestic beneficiation. This meant that our growth derived from fetching increasing market prices for our minerals. As soon as the global economy drifted towards a financial collapse in the US and Europe, demand for these minerals took a dip and thus began a process of growth and jobs haemorrhaging locally. It is this structural integration of the South African economy that defines our ‘victimisation’ by the global markets. [The author is South Africa’s Deputy Minister of Trade and Industry]
SA's Gross Domestic Product, 2nd Quarter (StatsSA)
AGOA: South Africa remains closed to US poultry, pork and beef imports (USDA)
Since last reported in GAIN, South Africa has not finalized issues related to its concerns over the trade measures that stop exports of U.S. poultry, beef, and pork. Since the June 4-5, 2015, Paris meetings that resulted in the draft agreement between the USSA poultry industries on a quota, USDA and DAFF have met three times and not yet resolved the sanitary issues.
First East African Manufacturing Business Summit: a preview (Arusha Times)
Angola’s Lobito Corridor: diversification and development, or “white elephants”? (CMI)
This report analyses progress in developing transport infrastructure in this Lobito Corridor. What has been achieved? What are the main remaining challenges? Will this corridor become an engine for economic diversification and social and economic development? Will these investments in transport also lead to development for poor and vulnerable people living in the corridor? Or will this new infrastructure end up as a “white elephant” that slowly degenerates as result of poor management and insufficient maintenance? [The authors: Ana Duarte, Fernando Pacheco, Regina Santos, Elling N. Tjønneland]
China Road ships in 10 locomotives for laying SGR track (Business Daily)
China Road and Bridge Corporation is set to ship in 10 locomotives next month to be used in laying the track of the Standard Gauge Railway. “So far, the earthworks for the SGR project have been completed by over 50%. The bridges are at about 48%,” Mr Li said. “By the middle of next year, the earthworks for the entire project will be fully competed.”
Zimbabwe in port construction talks (The Herald)
Government is engaging potential developers of a multi-billion-dollar project which will link Zimbabwe to a port north of Beira in Mozambique in a bid to significantly reduce distance and cost of moving goods between the two countries. Transport and Infrastructure Development Minister Dr Obert Mpofu told The Herald Business in an interview that government is currently studying detailed proposals submitted by the potential developers and is “seriously engaging potential promoters of the project”.
Mozambique aims to establish special economic zones for agriculture (MacauHub)
Mozambique has identified 24 development poles with potential for the creation of special economic zones (SEZs) for agriculture, with a view to promoting investment and increasing farm production, the minister for Agriculture and Food Safety said. The 24 development poles are:
Namibia: Aquaculture master plan unveiled (New Era)
The Ministry of Fisheries and Marine Resources yesterday launched the National Aqua Culture Master Plan which aims to raise freshwater aquaculture output to 4 000 tonnes a year by 2023. The ministry is also striving to increase marine aquaculture production from 525 to 5 500 tonnes by 2023 and to ensure aquaculture provides food, income and employment for rural and urban communities.
Zimbabwe Special Permit briefing by Minister Gigaba (GCIS)
The ZSP process had ensured, since inception, in 2009, some degree of reduced pressure on the asylum system with Zimbabweans stay in the country regulated by way of these special permits. For us finding a viable option effectively to deal with ‘economic migrants’ will go a long way in enhancing South Africa’s management of international migration, in the national interest, and in keeping with the dictates of international law. It is this consideration informing further the ensuing review of our international migration policy. What SA needs is a modern, progressive and robust policy on international migration which will take into account the enormous current and potential contribution of immigrants to our society, and our connectedness with the rest of the world, while minimising associated risks and protecting our national interests.
Angola: IMF staff complete 2015 Article IV mission (IMF)
“The government’s timely reaction to the decline in oil prices by revising the 2015 budget will allow the central government deficit to fall to 3½ percent of GDP, compared to 6½% last year. Public debt, however, is projected to increase significantly to around 57% of GDP, of which 14% of GDP corresponds to Sonangol, by end-2015. The 2016 budget should be predicated on a conservative oil price assumption and be aimed at protecting expenditures on social assistance and critical infrastructure while preserving fiscal discipline given that a recovery in oil prices in the near term is unlikely. It will be critical to bring the public sector wage bill, as a share of GDP, more in line with the new revenue reality of the budget.
East Africa: TradeMark hires former WTO boss Lamy for logistics job (Business Daily)
The Nairobi-headquartered TradeMark East Africa has hired former World Trade Organisation secretary-general Pascal Lamy among high-profile individuals to deliver an ambitious logistics target for the region this year. Mr Lamy joins the new board of TMEA headed by board chairman of Infotech Investment Group (Tanzania) Ali Mufuruki with members that include Acumen Fund’s regional CEO Duncan Onyango, former Kenya Private Sector Alliance chairman Patrick Obath and President of the Federation of East African Freight Forwarders Association Merian Sebunya. Other new TMEA directors are Rosette Chantal Rugamba, Patricia Ithau, CEO of Econet Wireless (Burundi), Anthony Masozera, Earl Gast and Jacqueline Busingye Lutaya.
How EA port with best facilities will win race for regional hub status (Business Daily)
Economies of large scale translate to lower cost of transportation per container. The expected major beneficiary of the bigger ships calling East African ports will be the consumer. In the mainline trades Europe to Asia, depending on the season, container freight can sometimes be as low as $100 from Europe to Asia. Ports in East Africa should expect more cascades of the bigger container ships being handed down as they get displaced in their traditional routes. An adequate preparation to take full advantage of the effects of cascading is a wise port decision. [The author: Silvester Kututa]
Longest ship to dock at Dar port expected today (IPPMedia)
East African Legislative Assembly passes EAC Culture and Creative Industries Bill
EAC tops 2015 Brookings financial inclusion scorecard (New Times)
Jaindi Kisero: 'Privatisation of sugar firms not the answer; barons will gobble them up' (Daily Nation)
Carl Bildt: 'Development's digital divide' (New Times)
Senior UN climate change official envisages ‘good agreement’ at upcoming Pairs conference (UN News Centre)
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Africa’s inter-trade improving but digitalization of customs procedures lags behind
“Most African countries have made a great deal of progress in general trade facilitation reforms but overall progress in the area of digitalization or paperless trade facilitation is more limited,” said Mr. David Luke, the coordinator of the African Trade Policy Centre at the Economic Commission for Africa.
During his keynote address at the 1st African Union Forum on Trade Facilitation for Customs Experts that was held in Congo, Brazzaville on 19-21 August 2015, Mr. Luke reported on the findings of a 2015 ECA survey, highlighting that “while no evidence of resistance to the utilization of Information and Communications Technology (ICT) was found, African countries are however prioritizing institutional reforms and putting physical infrastructure in place”.
Mr. Luke stressed that “Africa needs good trade facilitation policies and good operational measures”. The survey identified a lack of infrastructure, such as risk-management technology and scanners, and the incapacity of authorized operators such as freight carriers for fulfilling various procedural requirements. It also categorised financing constraints for institutional support, equipment, as another challenge, followed by insufficient coordination between government agencies and effective political oversight.
This first ever trade facilitation forum for customs experts is very timely, considering that the negotiations for the Continental Free Trade Area (CFTA) were officially launched in June 2015. Mr. Luke pointed out that trade facilitation and the removal of non-tariff barriers will be critical for the success of the CFTA in boosting intra-African trade.
Despite encouraging progress in formalities such basic customs and other border facilitation reforms, there remains much to be done to enhance trade facilitation in Africa, reported Mr. Luke to the forum of customs experts from 30 African countries as well as officials from international agencies including the UN Conference on Trade and Development, World Trade Organization, World Customs Organization and the International Trade Centre.
African states are encouraged to improve procedures for cross-border trading because reforms to customs procedures deliver the most benefits in terms of reducing trade costs. Upgrading transport infrastructure was the next most effective reform, followed by other border agency reforms.
The ECA survey, distributed to African government officials including customs officials, regional economic institutions, transport corridor management agencies, private sector operatives, academia and development partners, also showed that some of the measures needed to fix the problems do not require much resources other than a systematic approach to institutional and procedural reform
To overcome some of the challenges, Mr. Luke indicated, “regular consultations with the private sector were found to help to maintain momentum for policy and institutional reform.” He reminded delegates that regional economic institutions and corridor management institutions have a key role to play in setting regional standards and best practices.
“Given that resource constraints are an important challenge to implementing trade facilitation measures, it seems important to focus scarce resources on implementing those trade facilitation measures that are likely to have the greatest impact. Trade facilitation and investments in infrastructure cannot be separated; improved investment in hard infrastructure is a prerequisite for trade facilitation to succeed.”
Another obstacle to the implementation of trade facilitation measures, such as harmonised documents and regulations, was a lack of coordination between agencies rendering an uneven implementation across countries.
Though infrastructure, customs and border procedures stand out as major challenges for African countries to fully realising their trade potential, progress has been made, said Mr. Luke.
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Africa’s squandered commodity boom erodes U.S. trade promise
A fresh U.S. trade pact could provide relief to African economies buffeted by the commodities slump but a failure to reform during the boom years has left many countries unable to profit from tariff-free access to the world’s largest market.
In an effort to boost trade under the African Growth and Opportunity Act (AGOA), renewed by Congress for a decade in June, representatives from 39 African countries will hold talks with U.S. officials in oil-rich Gabon this week.
Under the deal, first signed in 2000, African exports to the United States rose to $26.8 billion by 2013, but more than four-fifths of that was oil.
With U.S. demand for petroleum imports falling due to its shale revolution and commodities prices across the board hit by China’s slowdown, the blow to African economies has highlighted their failure to industrialize.
The World Bank forecasts GDP growth in sub-Saharan will slow this year to 4.2 percent, down from an average of 6.4 percent during 2002 to 2008.
Despite a decade of rapid growth, sub-Saharan Africa’s manufacturing sector remained weak. While exports from the region more than quadrupled to $457 billion in the decade to 2011, manufactured goods made up just $58 billion of that.
U.S. officials say that, even with tariff-free access, a range of problems are holding back African exports, from poor transport links to costly electricity, lack of bank credit, corruption and labyrinthine bureaucracy.
“When you look at a container of coffee or textiles coming out of Africa, it is substantially more expensive and less competitive than the same container coming out of parts of Latin America,” said U.S. trade representative Michael Froman.
“One of the lessons of the first 15 years of AGOA is that tariff preferences, while important, are still not enough.”
Those countries which aim to benefit from AGOA, such as Ethiopia and Kenya, are not dependent on oil or mining, giving them an incentive to diversify into areas such as footwear and textiles exports.
Ethiopia is positioning itself to become a manufacturing hub, driven in part by investments from China and India as labour costs in their own backyards rise.
By contrast, big resource producers from bauxite miner Guinea to oil-exporter Nigeria failed to channel vast capital flows into diversification. In many cases, currencies inflated by these flows made other exports less competitive – the so-called “Dutch Disease”.
“Every major economy in Africa that did well out of the extractive industries over the past decade has failed to industrialize,” said Ricardo Soares de Oliveira, who teaches African politics at Oxford University.
A tale of two special economic zones
Africa’s No. 2 crude producer Angola is a classic example of a “petro state” with no political will to diversify as elites profited from a deluge of oil revenues. A 2011 IMF report found $32 billion in government revenue could not be accounted for between 2007 and 2010.
Soares de Oliveira said that, while Angolan authorities paid lip service to diversification and set up a Special Economic Zone outside Luanda, the initiative was held back by a chronic lack of electricity, graft, and reliance on expensive foreign inputs.
“While it generated billions in contracts for insiders and their foreign partners, no meaningful industrialization occurred,” he said.
By contrast, Kenya’s plans to use Special Economic Zones to industrialize appear to be more successful as it focuses on cutting taxes and regulatory hurdles, according to Thalma Corbett, head of research at NKC African Economics.
According to NKC data, manufactured goods already accounted for around 20 percent of Kenyan exports in 2014.
Corbett said Kenya’s government was targeting labour -intensive, low-technology industries such as textiles and leather to take advantage of AGOA.
U.S. data shows that textiles and apparel sales from Kenya and Lesotho have already jumped under the scheme from $359 million in 2001 to $991 million in 2014.
Froman said that Kenya and its partners in the East African Community were pushing ahead with reforms to make exports more competitive, including simplifying and computerizing customs requirements in the five-nation bloc.
Too reliant on resources
Washington hopes that the 10-year renewal of AGOA, rather than the usual three, will give investors the clarity needed to make long-term investment decisions such as building factories. Froman expressed hope that cotton-exporting nations like Mali and Burkina Faso could become textile exporters.
The reduction in commodities exports and souring sentiment has led to sharp falls in most African currencies this year, with even South Africa’s rand hitting a record low of 14/dlr on Tuesday.
Although it is the most industrialized economy on the continent, even in South Africa commodities accounted for about 57 percent of its exports last year.
Yet South Africa is one of AGOA’s success stories with automotive exports booming from $289 million in 2001 to $1.4 billion in 2014, and could benefit further from the exchange rate.
Other, less developed economies may struggle to do so. At a trade fair to promote the AGOA pact, the secretary general of the Gabonese employers confederation bemoaned the country’s lack of goods manufactured to U.S. standards.
“To be able to talk of trade, you need to produce,” said Roland Desire Aba’h. “I do not know of a single product presented at this exhibition which can compete in trade relations between the Gabon and the USA.”
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SA seek remedies for struggling steel sector
Business, government and labour have come together to discuss the hike of import duties on steel imports. These efforts are to protect the struggling steel sector.
Government had agreed to advance the process of tariff approval, showing its support for a local steel sector hit by cheap imports, muted local demand and stalled large-scale infrastructure projects. Major steel producers and labour unions revealed during a joint press briefing that the proposed tariff hike would, however, include a demand that the industry not raise the price of steel to “unaffordable” levels.
This emerged after Friday’s meeting which saw a government delegation led by Trade and Industry Minister Rob Davies and Economic Development Minister Ebrahim Patel who met with representatives from business and labour on challenges faced in the iron and domestic steel industry.
The meeting was attended by Solidarity, the National Union of Metalworkers of South Africa (Numsa), Uasa, the Metal and Electrical Workers Union of South Africa, steelmakers AMSA, Evraz Highveld Steel & Vanadium, Cape Gate, Scaw, Macsteel Coil Processing and industry body the Steel and Engineering Industries Federation of Southern Africa (Seifsa.)
Engineering News reported that several processes were currently under way, including several International Trade Administration Commission of South Africa (Itac) investigations that had been instituted following the submission of applications for protection on a range of steel products. It is understood that Itac deliberations on the first few applications are at an advanced stage and that a determination should be delivered soon to the relevant ministers for final approval.
Major steel players hardest hit by the depressed industry were Evraz Highveld Steel & Vanadium, which earlier this year filed for business rescue and had since warned of impending job cuts, as well as AMSA and Scaw, both of which were considering restructuring options that could result in the loss of jobs.
In particular, government has called on business to reduce job losses and on both parties to build strong workplace partnerships. Government also indicated its support for the designation of the local steel industry, agreeing to the establishment – through the Department of Public Enterprises – of a committee to investigate how State-owned companies could enhance their procurement support for the local sector. Steel companies Cape Gate and Scaw further committed to providing the DED with evidence of what they argue is Itac’s noncompliance with an agreement relating to the ban on the export of scrap metal.
The DED, in a statement, committed that measures would be taken to address the surge in the export of scrap metal, which it claimed undermined the domestic industry and “compromised national goals,” according to Engineering News.
The parties would, meanwhile continue to work together towards solutions aimed at avoiding sweeping retrenchments, with government indicating that it would investigate how the DTI’s Training Lay-off Scheme could be used more effectively to avoid “imminent” retrenchments.
Joint statement by Labour and Business on government outcomes
Last week Friday, 21 August 2015, a watershed meeting took place between labour; business and government behind closed doors in Pretoria.
Organised by Numsa, this meeting was a shared initiative of labour, business and the steel industry associations, an attempt to put the brakes on the looming job loss bloodbath in the primary steel and related industries.
The labour delegation was led by Numsa General Secretary Irvin Jim and included the leadership of Solidarity, Uasa – the Union and Mewusa. The business delegation was led by the CEO of ArcelorMittal (AMSA), Paul O’Flaherty and included the CEOs of Evraz Highveld Steel, Cape Gate, The Scaw Metals Group and Macsteel Coil Processing.
Seifsa’s President, Ufikile Khumalo, led the industry associations, while government’s delegation was led by Minister’s Rob Davies and Ebrahim Patel and included senior government officials from Public Enterprises; Trade and Industry; Transport and National Treasury. Transnet leadership was also in attendance.
The meeting was necessitated by a clear agenda of seeking government’s firm commitment to reassess their policies which are contributing to sweeping away jobs in the steel industry.
The meeting was significant in relation to the fact that we had approached government with one voice, irrespective of our differences.
Together, labour, business and the steel industry associations concluded a joint 10-page submission to government in which we sketched out our collective call for government to urgently address the current crisis in the steel industry, failing which we will be faced with a disastrous and devastating impact on our economy.
The effects of which will be acutely felt by workers employed within the industry, the families they support and the many communities who rely on the industry for their livelihoods.
Our submission provided carefully researched information on the significant role played by the steel industry in the South African economy in particular the industry’s’ contribution in sustaining other industries of which the top 5 (automotive, mining, construction, energy, and infrastructure) contributes 15% to our country’s GDP annually. We explained how the top 5 industries employ more than 8 million workers, contributing some R600 billion to our economy annually.
We pointed out that steelmaking accounts for approximately 190, 000 jobs directly and a further 100, 000 jobs through suppliers. We demonstrated that the steel industry is a core employer in Vanderbijlpark, Saldanha, Newcastle, Germiston, eMalahleni and Nkandla districts, with 75% of households in Vanderbijlpark and Newcastle and 25% of those in Saldanha being dependent on the local steel industry for their livelihood. Among these and many more facts on the centrality of steel to our economy, we emphasised that all of these were at stake in the next 6 months to a year if not urgently addressed.
While as labour and business we have our own issues and demands, we managed to agree on 10 core collective demands in our submission to government.
In brief these were:
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Immediate trade remedies for steel
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Designation of steel for local government infrastructure spend
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Urgent rollout of government’s infrastructure programmes
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Transparency of current State Owned Enterprises (SoEs) capital programmes
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Fair pricing for steel versus Import Price Parity (IPP)
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Monitoring of imports
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Urgent advancement of government’s beneficiation strategy
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Banning of steel scrap exports
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Delaying the implementation of Carbon Tax
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Establishing a steel crisis committee
The meeting with government afforded us the opportunity to share our submission on the key challenges facing this ailing sector, as well as our intervention proposals to save the industry from total collapse.
Government, through the Departments of Trade and Industry (DTI) and Economic Development (EDD) provided us with the work and initiatives underway on their end.
As government, business and labour we agreed that an urgent solution to the current crisis in the steel industry was required and further agreed that any solutions found should not negatively affect jobs in the downstream manufacturing industries.
While government recognised the challenges confronting the industry and indicated a clear willingness to support initiatives aimed at saving the industry, it pointed to the need to be mindful of ensuring that any interventions are not in breach of necessary regulations.
At the same time government expressed its recognition of the slow speed in processing remedies. To address this government committed to setting up a joint DTI and EDD committee to explore the expedition of legal, regulatory agreements required to protect the industry from job losses.
The representatives from government present also indicated that they could not speak to the demands impacting on government Ministries not represented at the meeting.
In express relation to our demands and through our engagements with government, we have delivered the following partial victories;
A. On trade remedies:
Government indicated that they are happy to proceed with our demands, specifically:
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The first application for tariffs at 10% of the WTO bound rate will be signed off next week with conditions which are not yet finalised, but which will include a demand for industry not to raise the price of steel to unaffordable levels.
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The rest of tariff applications will be pushed through ITAC without prejudicing the process.
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AMSA will submit their first of 5 anti-dumping applications by the end of August 2015 and the rest as soon as possible thereafter.
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AMSA will investigate with DTI and EDD what other avenues are available to fast track anti-dumping measures, e.g. “provisional” anti-dumping, safeguard duties etc.
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Further, government committed to looking at any other avenues to ensure protection of the industry.
B. On designation of steel, localisation and government infrastructure programmes:
Government indicated its commitment to support for the local steel industry through designation and localisation in this regard:
- A group will be set up through the Department of Public Enterprises to look at how localisation could be created with SoEs. Transnet committed to meet on their 1,000km p.a. rail upgrades.
C. On the banning of export of scrap metal:
- Cape Gate and Scaw Metals will provide EDD with evidence as to where ITAC is not following the agreed directive and is allowing export permits as part of working towards the ban on the export of scrap metals.
D. On the training lay-off scheme:
Government indicated that it would support processes more expeditiously if industry committed to alternatives, particularly training lay off schemes, rather than proceeding with retrenchments. In this regard:
- Government will facilitate the process of establishing a government, labour and business task team on the training lay off scheme, particularly to address the bureaucratic processes around the available scheme and to see how this could be used effectively for avoiding the imminent retrenchments.
E. On section 189 / retrenchments:
- Business and labour would continue to work for solutions regarding the S189s already issued and the impending ones. Processes being followed by individual companies to find solutions will continue.
F. Steel crisis committee
- While we would not set up a separate steel crisis committee the team that met on the 21 August will meet again in 3 to 4 weeks’ time to assess progress on agreements reached and plan further.
These partial gains we have secured will be shared with our individual constituencies, as we continue to navigate solutions to avert the imminent job loss bloodbath.
While working together, as labour, we will continue planning our campaign actions focusing on issues that we feel employers must do to avert retrenchments at all costs. We remain firm that no worker deserves to be retrenched, amidst the triple crisis of poverty, unemployment and inequality, ravaging working class and poor households in South Africa today.
We will continue to engage with employers in various levels to stop job losses in this sector. Where we feel that retrenchments are unjustifiable we will be forced to remain true to our trade union fighting approach of “what has not been won in the boardroom, shall be won on the streets”, through embarking on actions and demonstrations to exert much needed pressure from below.
Lastly, as labour, we want to thank the CEOs and SEIFSA, for embarking on this noble journey with us to save this strategic sector of our economy from collapse. This journey has called on all of us to take collective action to avoid jobs being shed. We hope business will go back and rethink their decisions in the interest of our members and society at large.
We too thank government for their commitments in this regard and hope that they act as expeditiously as committed to in our meeting on Friday.
Source: NUMSA
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Minister Davies arrives in Gabon for AGOA Forum
The Minister of Trade and Industry, Dr Rob Davies has arrived in Libreville‚ Gabon‚ to attend the 14th African Growth and Opportunity Act (AGOA) Forum that is taking place from 24-27 August 2015. The Forum is being held under the theme “AGOA at 15: Charting for a sustainable US-Africa Trade and Investment Partnership”.
The Forum is an annual event held on a rotating basis between the United States and Sub-Saharan African (SSA) countries. The 13th AGOA Forum was hosted by the US in Washington in 2014.
The African Growth and Opportunity Act (AGOA), is a unilateral preferential programme for about 6400 tariff lines including those provided by Generalised System of Preference (GSP) that the US offers to 38 African sub-Saharan countries. The current AGOA was going to expire at the end of September 2015 and the congress recently voted for the continuation of the programme for another 15 years with South Africa included as a beneficiary country. However, the new AGOA Act called for out-of-cycle review of the eligibility of South Africa to receive the benefits under AGOA.
Minister Davies says South Africa has made tremendous progress in addressing issues of concerns that were raised by the US and therefore our country continues to adhere to the AGOA eligibility requirements.
Various initiatives have been taken towards resolving market access issues relating to Beef, Pork and Poultry.
“On 24 June 2015, Cabinet took a decision to lift a trade restriction on cattle and products of bovine origin from countries that previously reported Bovine Spongiform Encephalopathy (BSE), including the US. Minister Zokwana has written to his US counterpart, Secretary Tom Vilsack on 06 August 2015, to announce that South Africa has lifted trade restrictions on cattle and products of bovine origin from the US,” says Minister Davies.
On pork issue, the Minister says the Animal Health Authorities of both governments have been undertaking the necessary technical work to ensure safe trade from at least three diseases, namely, Trichinella, Porcine Reproductive & Respiratory Syndrome (PRRS) and Aujesky.
“The two countries made good progress on certificates on pork destined for unrestricted sale and for further processing. South Africa agreed that a significant number of recognizable pork cuts were categorized as low risk and were now accepted for unrestricted sale conditions. In short, South Africa has made significant progress, and continues to make progress on addressing the market access interests and regulatory concerns of the US on beef, chicken and pork through an agreed framework and existing channels of communication with the United States,” states Minister Davies.
Davies will also have bilateral meetings with the United States Trade Representative Ambassador Michael Froman, US Congressional delegations, and the Under Secretary for Economic Growth, Energy and the Environment Cathy Novelli.
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Industry Ministry seeks new strategy for cotton dev’t
Though the industry is expanding 45,000qt of cotton was imported last fiscal year
The UK government is funding a 15-year cotton strategy for Ethiopia with intent to have a new institutional arrangement for cotton development.
This was announced by the Ministry of Industry in an international bid to hire consultants using money availed by the Department for International Development (DfID).
The decision to develop a strategy followed an agreement that the Cotton Development Directorate (CDD) at the Ethiopian Textile Industry Development Institute (ETIDI) was no longer enough to administer cotton development, calling for a higher structure, according to Bante Kasse, director of CDD. The problems, which are said to be above the CDD, are, rising demand, complexity of the increasing number of textile industries and supply value chain.
Currently, a total of 136 textile and garment factories, at medium and higher scale are fully operational, while 10 more factories expected to join the industry “in the first phase of the GTP II.”
The winning consultant for the strategy will recommend an “institutional arrangement that can best drive the highly anticipated cotton sector”.
DfID will allocate all the money that will be required at the final awarding of the contract on September 4, 2015, said Ahmed Nuru, director of Policy & Programme Studies, Monitoring & Evaluation at MoI. The closing date for offers from bidders was August 21, 2015 and the final strategy document is expected to be ready by January 2016.
CDD, which could be closed by the recommendation of the strategy yet to be developed, is itself a very young entity, established in 2014 within ministry of agriculture (MoA). It was later re-established as part of the ETIDI.
In 2013/14 Ethiopia produced 35,000tn of cotton on 60,000ha of land. A year later, 60,000tn was produced on 100,000ha, although the increased national demand had varied from 90,000tn to 100,000tn a year.
The expectation for 2015/16 was around 100,000tn, although the rainfall delay and shortage has now cast doubt on the attainment of that target, Bante said. The CDD will send a team this week to make an assessment in the north and south western parts of Ethiopia, based on which it will re-estimate the expected harvest.
In terms of filling gaps in demand and supply the country has been importing cotton; in the last fiscal year only, 45,000qt of cotton was imported by Ethiopian Industrial Inputs Development Enterprise (EIIDE).
The new strategy will make recommendations for increased domestic production that will reduce and eliminate reliance on imports, Ahmed says.
It will set new standards for cotton and is expected to devise a way out to overcome price fluctuation on the global market and its unforeseen impact on Ethiopian cotton growers said Ahmed.
According to the Terms of Reference for the consultants, the winning candidate is expected to assess the experiences of other African countries with genetically modified cotton and opportunities for its production.
During the first Growth and Transformation Plan (GTP I), implemented from 2009/10 to 2014/15, Ethiopia collected 456 million dollars in revenue from the textile industry. That was way below the planned one billion dollar target, as indicated in the GTP I performance report. Problems in quality and quantity of inputs [cotton], as well as gaps in the value chain of input production, were listed as causes of the aforementioned under performance.
MoI is currently receiving bids from international consultants, which will be evaluated by a technical committee from MoA, MoI, the textile institute and the directorate. Technical and financial proposals will be evaluated on the basis of 70pc to 30pc, respectively.
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Africa, spurning America, fled into China’s arms. Now US may hold ‘cure’ to the continent’s fast-dipping economy
The pointed talking-up of China as an alternative to the West has been trendy in an Africa dazzled by Beijing’s flashing overtures, reminiscent of a man planning to abandon his wife of donkey’s years for a new found love.
It has been a whirlwind relationship – bilateral trade has exploded in the last decade to an estimated $222 billion last year (thrice that with the US), while more than a quarter of sub-Saharan Africa’s exports head for the belly of the dragon.
The US has in recent years sought to remind Africa of when the vows mattered, with its first ever US-Africa leaders’ summit last year leading to the “homecoming” of president Barack Obama last month.
And as the markets have shown this year, sometimes it pays not to spurn completely, with the US poised to send a signal to traders which could have a significant impact on a broader African economy reeling from events largely outside its control.
China’s sudden devaluation of its currency this month spooked investors, causing a global market rout that also seen the value of African assets plunge following a sharply reduced appetite for emerging market risk.
African currencies are taking a pummelling, with half of the world’s worst performing currencies on Monday coming from the region, according to financial data company Bloomberg. This builds on a losing streak that has left central banks around the continent to watch gloomily the weak outcome of their aggressive monetary policy tightening actions.
There have been a few contrarians – Botswana early this month reduced its benchmark lending rate, but the southern African country also simultaneously pared back economic growth forecasts for this year by nearly half.
South Africa’s currency this week reached a record low against the US dollar, joining countries like Zambia, Nigeria, Ghana and Angola that have seen their local units depreciate to uncharted lows.
As investors flee for safety anywhere they can find it, yields on Eurobonds have soared to record highs, a compete turn in direction from just months ago when they were healthily oversubscribed by investors enthused by the prospect of handsome returns.
Bourses have not been spared either – Nigeria’s main stock market index shed nearly 9% in July, while South Africa’s and Mauritius’ remained largely flat, according to data from the African Securities Exchanges Association.
With commodities at a 16-year low, Africa exporters have borne the brunt, but the currency losses have seen even importers like Uganda and Kenya see hoped for gains evaporate.
“The oil importing countries should have at least been resilient,” Samir Gadio, head of Africa strategy at UK-headquartered Standard Chartered Plc, said. “But it seems that everything is selling off.”
With seemingly no end in sight to the volatility, emerging markets have been driven almost to despair, highlighting just how integrated financial markets are, and leaving smaller players like Africa at their mercy. But help may come from unlikely quarters, or if you think about it, one that has always been there.
Analysts say African markets could rally again if the US Federal Reserve delays a much-anticipated decision to raise its funds rate for the first time in years, a move that could come as early as next month. But given the market storms raging all around, the US regulator could decide to stay its hand, as it seeks to keep its finger on the global market pulse. It could be much like a stay of execution for developing countries because risk-weary investors may not penalise them just yet.
But the signs that it would be a tough year for Africa have been apparent for months, as a Chinese economy running out of steam cut back on its previously voracious demands for the continent’s raw materials. This has led to the increasingly frantic attempts by Beijing to jumpstart its economy.
In addition to devaluing its currency, the country’s central bank on Tuesday reduced its one-year lending rate for the fifth time in less than a year, in addition to cutting the amount on money it expects Chinese banks to set aside for the third time this year, helping to momentarily stem the week-long global market haemorrhage.
The turmoil has caught up with African economies, which are now queuing up to cut previously bullish forecasts on economic growth. It will not be surprising if the International Monetary Fund (IMF) further cuts growth forecasts for the region from the current 4.5%, from last year’s projection of 5%. The World Bank in June cut the region’s growth forecast to 4.2%.
Uganda has this week said its economic growth in the year to June 2016 could fall to 5% from an initial 5.8% forecast, after its central bank raised interest rates to combat a weaker currency. Four increases of the country’s main interest rate this year have failed to prop up the shilling, which has fallen by a quarter against the dollar this year.
The country follows in the path of Botswana which last week cut its 2015 growth forecast by nearly half, as demand for its mainstay diamonds weakened. It now expects to see expansion at 2.6%, from a February projection of 4.9%, the finance minister said. Diamonds account for more than 70% of Botswana’s export revenue.
The country also expects to post a budget deficit of 4 billion pula ($394 million), compared to an earlier expected surplus of 1.2 billion, as civil service sector wages rose, and a drought continues to ravage the region.
In South Africa, data released on Tuesday showed that the economy had pulled back in the third quarter, on the back of a steeply-falling currency, crippling load shedding, and slumping commodity prices, fuelling fears of a recession.
Nigeria’s second quarter growth has come in at 2.35%, down from 3.96% last year, as the oil price crash hit home, one of a raft of bad news for Africa’s largest economy.
Struggling Zimbabwe has also halved growth forecasts from 3.2% to 1.5%, with Finance minister Patrick Chinamasa last month blaming drought and a slowdown in its key mining industry. But the crunch has been enough for president Robert Mugabe to wave the white flag, admitting that western re-engagement in his country’s economy after 15 years in which the veteran daily denounced the west, was vital.
In June, Zambia Finance minister Alexander Chikwanda cut his country’s growth forecast for this year to 5.8% from a projected 7%, as its fiscal deficit ballooned from the targeted 8.5 billion kwacha to reach 20 billion kwacha ($2.5 billion) last month.
It could get even worse for the southern African nation, as drought continues to bite – levels at its Lake Kariba dam are down to their lowest levels in decades, hurting electricity production and mining, a sector that the slow-growing China is a major player in.
Neighbouring Democratic Republic of Congo, Africa’s largest producer of copper and cobalt, has also revised down its growth projections to 9.2% from 10.3% last month, blaming falling metal prices and power shortages.
Sierra Leone’s recent trimming of revenue target is linked to lowered production of iron ore, mainly as investors fled over an outbreak of Ebola, though it would still have struggled to get good prices for the ore in a depressed commodities market.
It expects its economy to contract 2% this year, from growth of 4% last year. In 2013, the post-conflict country had clocked in as sub-Saharan Africa’s fastest growing economy.
Tanzania has also reported depressed first quarter growth – 6.5% compared to 8.5% last year, as mining, a key contributor of foreign exchange, fell 18 percentage points to 0.6% in the three-month period to March. The IMF has also trimmed growth forecasts for Kenya from 6.9% to a still-healthy 6.5%, but did not offer explicit reasons.
With the real prospect that its economy, which has been riding on a tailwind of Chinese trade and investment, could decrease if the Asian economy does not pick up, it may be time for Africa to reassure old partners that it did not really mean to remove the fly on its forehead by using a machete.
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Senior UN climate change official envisages ‘good agreement’ at upcoming Pairs conference
The climate change agreement world leaders are expected to sign in December “has to take us to a less than 2 degree global warming path because that is the ultimate test of the whole package that will come out of Paris,” according to Janos Pasztor, a senior United Nations official dealing with the issue.
“Our expectation is that there will be a good agreement signed,” Mr. Pasztor said in an interview with the UN News Service ahead of Secretary-General Ban Ki-moon's meeting today in Paris with French President François Hollande to discuss the latest developments in the lead up to the Conference of States Parties to the UN Framework Convention on Climate Change, known as COP-21, as well as the next steps to be taken to ensure an ambitious outcome.
The UN official elaborated on the expected outcome in Paris by saying that “there has to be something that is there for the long term so that there is a clear signal that is provided to the market and to other actors that we are going in a certain direction of increasingly low carbon development.”
“It also has to have dimension of solidarity – solidarity with those who are more vulnerable, and those who are less capable of taken action on their own without financial and technological support,” he said.
“It also has to be credible – credible in terms of what we measure of what countries are doing but also credible in terms of what is being proposed such as financial support,” Mr. Pasztor said.
“And finally, what is perhaps most important, it has to take us to a less than 2 degree global warming path because that is the ultimate test of the whole package that will come out of Paris,” he said.
In this regard, Secretary-General Ban and President Hollande in Paris noted the importance of, and different ways of engaging Heads of State and Governments on climate change, including on the margins of the 70th session of the UN General Assembly in New York in September as well as at other meetings involving global leaders.
They also agreed on the importance of generating signals about the climate finance package for COP-21 as early as possible, such as at the meeting of Finance Ministers in Lima in October. In addition, the two men agreed on the importance of operationalizing the Green Climate Fund, and of reaching out to all Member States to further accelerate momentum in the coming months.
In his interview, the senior official said he had been up in the Arctic with the Secretary-General recently “where already they are measuring 2 degree warming over the baseline which is twice the global average.”
Mr. Pasztor said “you see the impact” everywhere, but he also drew attention to “a lot of incredible solutions especially when it comes to renewable energy.”
“If you see what has happened in Denmark and Germany and China, in different parts of the world, it just really amazing,” he said.
On another positive note, Mr. Pasztor said that “everybody has a role to play” to combat climate change.
“Everybody can do something,” he said, adding “If everybody in the world does something we would have solved the climate change problem.”
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tralac’s Daily News selection: 25 August 2015
The selection: Tuesday, 25 August
Call for removal of NTBs as COMESA embarks on the 2016-2020 MTSP (COMESA)
Assistant Secretary General Dr Kipyego Cheluget says the regional organization has made remarkable progress in regional integration over the years by developing innovative trade facilitation technologies. However, daunting challenges exist especially in implementing the protocol on free movement of people. He was speaking at COMESA Secretariat in Lusaka today when he officially opened the regional workshop to validate the draft COMESA 2016-2020 Medium Term Strategic Plan. The 2016-2020 Strategic Plan, to be adopted this year by the Council of Ministers, is expected to contribute to structural transformation of the economies of the COMESA Member States so as to foster the overall economic development of the Member States through trade and investment.
COMESA Research Forum: postgraduate programme in regional integration
The modalities on the establishment of a COMESA Virtual University was one of the key issues addressed during the first Annual COMESA Research Forum held on 10-14 August 2015 in Entebbe, Uganda. The programme would commence with 13 universities that were represented at the forum and those COMESA would consider through its selection criteria. This would be operationalized through a collaborative framework with one Host University and other collaborating ones. The program will provide practical skills to students to support trade negotiations, as well as enhance the process of regional integration.
Free movement of legal practice within ECOWAS states (The Nation)
EAC funding under threat as donors object to Nkurunziza's third term (The EastAfrican)
The EAC faces a funding crisis that could see many of its projects stall as donors call for the isolation of Burundi. Sources within the EAC Secretariat and the East Africa Legislative Assembly (EALA) in Arusha confirmed to The EastAfrican that GIZ, a leading German global development agency, has asked the bloc to exclude Burundi from all programmes that the agency funds on regional integration.
35th SADC Summit Brochure: Advancing the regional integration agenda (SARDC)
This publication, prepared by SARDC for the 35th SADC Summit in Botswana on 17-18 August 2015, provides a public record of SADC activities and achievements in the past year, including adoption of the industrialization strategy and the regional development plan, and launch of the Tripartite Free Trade Area with EAC and COMESA.
Regional integration in Africa: can the Tripartite FTA be a stepping stone toward a Continental FTA? (Brookings)
To transform the political will into reality, regional policymakers and negotiators need to address the following question: “How can we ensure that the TFTA is indeed a stepping stone and not a stumbling block towards the Continental FTA?" This is not a trivial question, and the answer is probably not straightforward. Whatever it is, it will definitely require more vigorous stakeholder (private sector, consumers, labour organizations, and CSOs) mobilization or consultation at the national level. In the predominantly mercantilist mindset that currently guides trade policymaking in many countries, the benefit accruing to the consumers in the form of reduced prices and increased product variety is unfortunately often ignored. Systematic awareness-raising activities regarding these types of benefits, accompanied by specific measures to compensate potential losers, could help broaden support for a gradual expansion of the TFTA toward the CFTA. [The author: Soamiely Andriamananjara]
Malawi discovers new mineral deposits (New Vision)
Impoverished Malawi announced that new mineral deposits had been discovered in a $30-million geophysical survey sponsored by the World Bank and the European Union. Natural resources and mining minister Bright Msaka did not specify the minerals, but other officials said they were phosphate, copper, coal, kimberlite, nobium and uranium. No details were given of the size or value of the deposits, nor any indication of whether they could transform Malawi's agriculture-based economy.
Magufuli: We'll transform economy (IPPmedia)
CCM presidential candidate Dr John Magufuli yesterday outlined his priorities, in line with the party’s 2015 Election Manifesto, underscoring the need to transform Tanzania’s economy through an industrial revolution. He said the government he would form if he wins the October 25 Presidential Election would invest heavily in the development of communication and other infrastructure, “with special emphasis on the industrial sector – such fisheries – which has been on the rocks for many years”.
Kandie: Our trade deal with Uganda (Daily Nation)
Addressing journalists at the Teleposta Towers in Nairobi, the CS said there were existing protocols protecting trade between East African Community partners, adding that there was no need for new “deals” to facilitate sugar imports from Uganda. The CS waded into the ongoing debate regarding an agreement to allow sugar from Uganda into Kenya, saying there was no such deal. “As long as the protocols still stand there is no need for any other agreement. The two heads of state made a decision to increase trade between the two countries. The discussions were on how to eliminate the trade barriers,” she said.
Turning Namibia into SADC's logistics hub (New Era)
Ondangwa Airport has undergone a major facelift and upgrade and now boasts a modern building and new terminal, constructed at a cost of N$84m. “Government has a clear intention to turn Namibia into the logistics hub of SADC and thus become a symbol of efficient service delivery to our neighbours, President Hage Geingob said at the inauguration of the new terminal. Most of the former military airports in the country are about to be transformed into civilian and commercial airports. The Namibia Airports Company has earmarked Walvis Bay and Hosea Kutako international airports for major upgrades and expansion after Ondangwa.
Swaziland needs 26km canal across Mozambique to be able to build US$3bn shipping port (Club of Mocambique)
The plan is to build a 26-kilometre canal from the Mozambican sea to Mlawula, where the port will be constructed on 15 to 20 hectares of land. Media in Swaziland report it will cost an estimated E30 billion (US$3 billion). The Times of Swaziland, the only independent daily newspaper in the kingdom where most news media are censored, reported the plan was confirmed by Minister of Commerce, Industry and Trade Gideon Dlamini.
Zimbabwe: ‘7 926 cars imported through Beitbridge’ (The Herald)
The Zimbabwe Revenue Authority) says it has handled a total of 7 926 imports of second-hand vehicles through Beitbridge Border Post between April and June this year. This brings to 13 904 the total number of cars imported through the same border post between January and June with a 5 978 vehicles coming in the first quarter of 2015.
CZI identifies strategies to help ailing economy (NewsDay)
Single Window clearance of cargo to make Kenya competitive in global trade (Business Daily)
Based on the present volume of goods imported and transit through Kenya, it is estimated that the streamlined procedures would result in savings to the economy ranging between $150 million (Sh15 billion) and $250 million (Sh25 billion) annually during the first three years. This is expected to increase to between $300 million (Sh21 billion) and $450 million (Sh31.5 billion) annually in subsequent years. The success of the Single Window system will be fully realised when the government strictly enforces the 24/7 economy through legislation that will allow 24-hour port operations as well as shippers fulfilling their obligations, including paying duties, providing documents on time, making accurate declaration, improving their systems (logistics audit) and employing best practices. [The author, Gilbert Langat, is chief executive of Shippers Council for Eastern Africa]
Regulatory frameworks on logistics regulations are often opaque, especially in developing countries, because of the complex nature of logistics services. World Bank client countries have faced difficulty finding the issues that hinder them from improving logistics competence. This note suggests that the regulatory framework should take into consideration national recognition of freight forwarding business, an institutional arrangement with clear division of responsibility among stakeholders, and streamlined but flexible regulations adapted to the country context. This note reviewed 14 countries: Brazil, China, Germany, Kenya, Japan, Nepal, Netherland, Pakistan, Philippines, Singapore, South Africa, Sudan, Thailand, and the United States.
The 2015 Brookings Financial and Digital Inclusion Project Report
The FDIP employs 33 indicators to comparatively evaluate access to and usage of affordable financial services among people excluded from formal financial services across 21 countries: Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, the Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia. These countries were selected because they have all made recent commitments to financial inclusion and reflect political, economic, and geographic diversity. FDIP measures progress over time and explores:
Mineral policy and contract negotiations (UNECA)
The overarching objective of the course (24 August - 4 September) is to contribute to the development of a critical mass of highly skilled middle and senior policy officials and decision makers who will be suitably or better equipped to design and manage mining policy for the development of their countries, sub-regions and the continent.
South Africa - Japan: remarks by Deputy President Ramaphosa to Japanese Captains of Industry (GCIS)
However, it is important to note that although South Africa has been enjoying a trade surplus with Japan over the last 5 years, the composition of the trade basket needs to be addressed. Upon further reflection, we note that the top 10 South African exports to Japan were moreover commodity based consisting of amongst others, platinum, unwrought or in semi-manufactured forms; iron ore and iron pyrites. Analysis reveals that these top 10 exports accounted for 90% of total exports to Japan hence implying that exports are moreover concentrated in a few sectors. As Captains of Japanese Industries the onus is upon you to ensure that these trade imbalances are rectified in favour of a more diversified trade basket.
Ambassador upbeat over AGOA review (Business Day)
Despite a potentially contentious out-of-cycle review of the African Growth and Opportunity Act being under way in Washington, SA’s ambassador to the US, Mninwa Mahlangu, remains upbeat that the country will continue to benefit from the trade concessions provided in the arrangement. Mr Mahlangu said SA had made progress in addressing the red flags raised by the US.
SA to participate in AGOA Forum (iafrica)
SA-AGOA: Patent policy will only hobble health (Business Day)
Ministers Rob Davies and Ebrahim Patel meet domestic steel industry to discuss challenges (GCIS)
Western Cape: an investment utopia in risky SA (Business Day)
Bringing the state back in: India’s 2015 model BIT (CCSI)
India’s new model BIT reflects a shift toward governing the conduct of foreign investors, and away from mere protection. The author considers how changes in the 2015 Model serve to reinforce the role of the state, and notes key challenges that may arise in practice. [The author: Srividya Jandhyala] [Model text of the Indian Bilateral Investment Treaty]
India: Ease of doing business ranking out on 31 August (LiveMint)
African survey data point to robust growth (Financial Times)
Cement is the new oil as Africa’s richest man takes on Lafarge (Bloomberg)
Nigeria gets World Bank guarantee for 450 megawatt power plant (Bloomberg)
Citizen participation necessary for economic growth, Meles Zenawi symposium hears (AfDB)
Liberia’s accession to WTO sealed (FrontPageAfrica)
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Turning Namibia into SADC’s logistics hub
Ondangwa Airport has undergone a major facelift and upgrade and now boasts a modern building and new terminal, constructed at a cost of N$84 million.
The upgrading of the Ondangwa airport into a regional airport is just one step in the quest to transform Namibia into a key logistical hub of the Southern Africa Development Community (SADC).
“Government has a clear intention to turn Namibia into the logistics hub of SADC and thus become a symbol of efficient service delivery to our neighbours, President Hage Geingob said at the inauguration of the new terminal.
“Through improving our existing infrastructure and creating new ones, we are moving closer to realising this ambition and tapping into the huge purchasing power and business potential that exists within neighbouring countries,” he said.
Most of the former military airports in the country are about to be transformed into civilian and commercial airports. The Namibia Airports Company (NAC) has earmarked Walvis Bay and Hosea Kutako international airports for major upgrades and expansion after Ondangwa.
“This airport terminal building is the beginning of the transformation of all our airports to meet world-class standards,” NAC Chief Executive Officer Tamer El-Kallawi said.
He told President Geingob that the company has a three-year turnaround strategy to ensure that Namibia becomes a leader in regional aviation, with world-class infrastructure.
Upon completion of the ongoing rehabilitation and upgrade of the runway at Ondangwa, the airport will be able to process 75 000 passengers per annum, while the cargo capacity will expand to 2 400 tonnes by 2017.
“Everywhere I’ve travelled in Africa, countries are improving and upgrading their airports. This is because all over the continent people understand that for a country to attract tourists and retain corporations with national and global ties, efficient and functional airports are increasingly crucial.
“It is high time that Namibia follows suit by developing better airports. I hope that this development at Ondangwa Airport marks the beginning of a national drive to improve the standard of our airports,” the president said.
Geingob further noted that improving existing infrastructure and creating new ones is a sign that Namibia is drawing closer to tapping into the huge purchasing power and business potential of its neighbouring countries.
“Earlier this year, I visited both Angola and South Africa and when I spoke with my counterparts, president [José Eduardo] dos Santos and president [Jacob] Zuma, one of the key topics of discussion was the need for greater economic cooperation regarding investment and trade.
“Furthermore, we discussed how best to take advantage of our transport corridors, such as the Angola-Namibia-South Africa (ANSA) Corridor, in order to accelerate industrialisation and bring economic development to our countries.
“I hope this development at Ondangwa Airport marks the beginning of a national drive to improve the standard of our airports,” he said.
Also speaking at the inauguration, the Minister of Works and Transport, Alpheus !Naruseb, said the completion of the terminal would complement national development, as well as contribute to economic growth in the country.
He added that the airport would also create business opportunities and implored local people to make use of the available services.
Minister !Naruseb also urged Namibians to guard against vandalism at the terminal, while at the same time imploring the NAC to fast-track the completion of the new runway.
The construction of the new airport terminal at Ondangwa started in 2012.
35th SADC Summit Brochure: Advancing the regional integration agenda
This publication, prepared by SARDC for the 35th SADC Summit in Botswana on 17-18 August 2015, provides a public record of SADC activities and achievements in the past year, including adoption of the industrialization strategy and the regional development plan, and launch of the Tripartite Free Trade Area with EAC and COMESA.
Foreword
The 35th Ordinary Summit of SADC Heads of State and Government in Gaborone, Botswana, comes after a momentous year in which the region scored a number of major successes. The regional integration agenda has advanced significantly since the last Summit held in August 2014 in Victoria Falls, Zimbabwe. This shows the growing commitment by our leaders to achieve the long-term vision of a Common Future, within a regional community that will ensure economic wellbeing, improvement of the standards of living and quality of life, freedom and social justice, and peace and security for the people of Southern Africa.
Two key developments during the past year were the approval of the SADC Industrialisation Strategy and Roadmap, and the finalisation of the Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020. The strategy and roadmap are expected to unlock doors within and beyond the region, presenting opportunities for the socio-economic transformation of our countries and immensely contribute to growth and development. The development, and ultimate approval, of the industrialisation strategy and roadmap shows the wisdom of SADC leaders to ensure that the region benefits from its vast natural resources endowment.
The Revised RISDP 2015-2020 was another major milestone during the year. Approved by the Extra-Ordinary Summit held in April 2015, the Revised RISDP recalibrates the SADC regional integration agenda, prioritizing, among others, industrial development. The revised blueprint provides a guiding framework for the last phase of the RISDP. The scope and purpose of the Revised RISDP remain unchanged from those of the original document, except that emphasis has been placed on re-aligning existing priorities with resources allocation in terms of their relative importance and greater impact on regional integration. It defines specific results and timeframes in the various areas of cooperation and integration in order to facilitate monitoring and evaluation. The purpose of the Revised RISDP is to deepen regional integration in SADC and it provides SADC Member States with a consistent and comprehensive programme of medium-term economic and social policies. It also provides the Secretariat and other SADC institutions with a clear view of SADC’s approved economic and social policies and priorities.
These two major developments are described in greater detail in this Brochure, which also presents my progress report on Achievements/Milestones since the last Summit in Victoria Falls. In addition, there is a section devoted to summaries of the key activities and programmes undertaken by the various SADC Secretariat directorates and units during the past year. This allows stakeholders to understand the sector-specific vision and mandate of SADC, as well as track implementation of the programme of action.
In line with the African Union declaration of 2015 as the “Year of Women’s Empowerment and Development Towards Agenda 2063”, the Brochure dedicates a section to this continental theme, highlighting efforts by SADC in this area. SADC is an important building bloc of the envisaged African Economic Community and will play its part in advancing the AU Agenda 2063.
The Summit Brochure also dedicates a full section to the Republic of Botswana, as the Host Nation of the 35th SADC Summit of Heads of State and Government.
Each year the SADC Media Awards recognise members of the media who raise awareness about the SADC regional integration agenda. The main objective of the annual SADC Media Awards is to promote regional integration through information dissemination as well as to promote journalism excellence in the region. An important part of the success of our programmes and activities depends on the media to raise visibility and to communicate with the people of the region. Equally important are the winners of the Secondary Schools Essay Competition who will be honoured during the 35th SADC Summit.
We appreciate the achievements we have made in the past year with the President of the Republic of Zimbabwe, His Excellency Robert Mugabe, in the Chair, and I want to express our sincere gratitude to him and to the Chairperson of the Organ on Politics, Defence and Security Cooperation, the President of the Republic of South Africa, His Excellency Jacob Zuma, for their guidance and exemplary leadership during the year.
We look forward to Botswana’s stewardship in guiding the regional integration agenda for the coming year under the leadership of His Excellency President Seretse Khama Ian Khama.
It is my hope therefore that you will find this publication very useful. I am pleased to share with you the 35th SADC Summit Brochure, and I wish to express my very special gratitude to our knowledge partner, the Southern African Research and Documentation Centre (SARDC), for their dedicated work in preparing this important publication.
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The 2015 Brookings Financial and Digital Inclusion Project Report
The 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard evaluates access to and usage of affordable financial services across 21 geographically and economically diverse countries.
The FDIP employs 33 indicators to comparatively evaluate access to and usage of affordable financial services among people excluded from formal financial services across 21 countries: Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, the Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia. These countries were selected because they have all made recent commitments to financial inclusion and reflect political, economic, and geographic diversity.
FDIP measures progress over time and explores:
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Do country commitments make a difference in progress toward financial inclusion?
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To what extent do mobile and other digital technologies advance financial inclusion?
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What legal, policy, and regulatory approaches promote financial inclusion?
The Scorecard assesses each country using 33 indicators across four dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of selected basic traditional and digital financial services, including payments and savings. Countries have both an overall score and a score for each of the four dimensions.
The 2015 FDIP Report and Scorecard is the first installment of a series of analysis aimed at comparatively evaluating and analyzing financial inclusion across a diverse set of countries. In addition to scores and rankings, the report includes a snapshot and profile for each country.
The authors’ analysis provides several takeaways about how to best expand financial inclusion across the world:
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Country commitment is fundamental.
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The movement toward digital financial services will accelerate financial inclusion.
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Geography generally matters less than policy, legal, and regulatory changes, although some regional trends in terms of financial services provision are evident.
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Central banks, ministries of finance, ministries of communications, banks, nonbank financial providers, and mobile network operators play major roles in achieving greater financial inclusion.
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Full financial inclusion cannot be achieved without addressing the financial inclusion gender gap.
We hope that this research will provide policymakers, private sector representatives, non-governmental organizations, and other thought leaders with resources that can help improve financial inclusion in the 21 FDIP countries and beyond.
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Call to remove trade barriers as COMESA embarks on the 2016-2020 MTSP
Full regional integration and the quest to have a seamless flow of goods and services will be achieved in the COMESA region once the Members states commit themselves to eliminate outstanding tariff and non-tariff barriers.
Assistant Secretary General Dr Kipyego Cheluget says the regional organization has made remarkable progress in regional integration over the years by developing innovative trade facilitation technologies. However, daunting challenges exist especially in implementing the protocol on free movement of people.
He was speaking at COMESA Secretariat in Lusaka today when he officially opened the regional workshop to validate the draft COMESA 2016-2020 Medium Term Strategic Plan (MTSP).
The 2016-2020 Strategic Plan, to be adopted this year by the Council of Ministers, is expected to contribute to structural transformation of the economies of the COMESA Member States so as to foster the overall economic development of the Member States through trade and investment.
“The free movement of business people and capital is the biggest impediment to improving the levels of intra-regional trade,” Dr Cheluget said. “Subsequently, the intra-regional trade is low compared to external trade with other countries globally.”
He observed transaction costs high as business people and ordinary people cannot move around without visas. Goods and capital investments he said also faced restrictions.
Dr Cheluget urged COMESA Member States to promote economic growth through industrialization and investment in the energy production. He also called upon the Member States to come up with innovative ways of funding regional integration programmes to reduce dependence on cooperating partners.
“As we think of our strategy of moving forward, we must look at what we have achieved and challenge ourselves if we are doing enough for regional integration or we need to hasten the pace,” Dr Cheluget observed. He noted that security concerns by members States especially on immigration inhibited the free movement of people.
“Owing to these barriers, intra-regional trade among Member States is low compared to trade with other countries outside the region.”
The three-day regional workshop will discuss the proposed Medium term Strategic Plan which will take effect from 2016. The new strategy is aimed at creating an enabling trade and investment environment, with a focus on market integration, infrastructure development, industrialization (including small and medium enterprise development and regional industrial clusters), institutional and regulatory policies, capacity development as well as resource mobilization.
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Liberia’s accession to World Trade Organization (WTO) sealed
A high level team visiting Liberia from the World Trade Organization says Liberia accession to WTO will greatly benefit small businesses and consumers who are unable to lobby or negotiate on their behalf.
The Deputy Secretary General of the WTO Joakim Reiter said the WTO package to Liberia will improve economic growth, adding that it will reduce trade barrier and lower the costs of imports. Reiter said Liberia like any other country joining the WTO enjoys the benefit granted to all members.
“Small countries can participate fully in the multilateral trading system as decisions are made by consensus and each member has an equal right to challenge other member’s practice in the WTO dispute settlement procedures,” Reiter said. The Deputy Secretary General said, Liberia’s membership to the WTO can be used to stimulate policy changes in favor of increase trade investment, indicating that it can spur economic growth and development.
“The major benefit of the WTO accession process itself is that it provides an acceding government with a power instrument for domestic reforms to accelerate growth, modernize, strengthen institutional capacity and enshrine the rule of law.” Reiter said, WTO commitments help improve investor confidence and the domestic environment for doing business.
Services are essential for development. Telecommunications are essential for producing and distributing goods and services. Transport services contribute to the efficient distribution of goods within a country and are particularly important. The Director of Accession Division Dr. Cheidu Osakwe said, the accession is about the betterment of the Liberian people through private sector investment. Osakwe said the WTO package will provide better economic governance and atmosphere for investment. He said by December WTO gathering in Nairobi will make a determination in accepting Liberia as a member.
“We are going to have technical meeting in October, by December in Nairobi for Liberia to be a member, it will go to the legislature,” Osakwe said. The WTO official added, the delegation is impressed with level work been done in Liberia. Osakwe said the important of the package is to create a platform to reform to international market. Osakwe noted that reducing tariff and ensuring that transaction at ports is transparent and effective will help boost economic growth.
Minister Axel Addy said Liberia becoming a member of the WTO will not affect the Liberianazation policy. “The WTO package does not affect the Liberianazation policy. It is meant for a level playing field for everybody,” Addy said. The visit is a part of the standard protocol of accessions to the WTO for acceding countries that have reached a critical period in the process and are close to concluding their accession.
The team during the visit met with President Sirleaf and the heads of the legislative branch and the private sector. Liberia submitted its application in 2007 under the leadership of former commerce and Industry Minister Olubanke King Akerele. The process gathered momentum under the leadership of Minister Miatta Beyslow, Minister Axel Addy, Liberia’s current Minister of Commerce and Industry inherited the portfolio and has since been facilitating the process and leading the negotiations.
After seven years of work with technicians across several ministries and agencies with several studies and stakeholder engagements, in May of 2014 President Sirleaf in a letter to the Director General of WTO, Roberto Azevedo, expressed Liberia need of assistance to fast track its accession process in time for MC10.
President Sirleaf appointed the Minister of Commerce as the chief negotiator. The first of several critical meetings that will lead to the conclusion on bilateral negotiation and the drafting of the factual summary and draft working party report is currently underway in Geneva with the Liberian delegation.
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Governors of Nigeria’s states can locally implement UN sustainable development goals, says Ban
United Nations Secretary-General Ban Ki-moon travelled over the weekend to Abuja, Nigeria, where he met state Governors who, he said, can play a “fundamental role” in shaping the future of their country by implementing the sustainable development agenda Members States will adopt in a month in New York.
“You have the resources and the power to help the people of Nigeria realize the tremendous promise of this great country – on education, on health care, on women’s empowerment, on climate change, on governance, institution-building, security and on rights across the board,” stated Mr. Ban in his remarks.
Stressing that he was speaking at a time of great challenges – including the rise of extremism and the lack of equal opportunity – he acknowledged that the Governors of the Northeast, in particular Borno state, Mr. Ban assured that this was also a “time of hope,” as the peaceful democratic transition of power in Nigeria showed.
Reminding Governors that, over the past few weeks, UN Member States agreed on a new financing for development plan and on the 2030 Agenda for Sustainable Development, he pointed out that the latter would be adopted be formally adopted by world leaders in New York in September, while governments will meet in Paris in December to agree on a new far-reaching climate change agreement.
“Together, these three processes provide an opportunity to put the world on a sustainable pathway fostering human prosperity while protecting our planet,” the Secretary-General continued.
In that regard, local governments have an important role to play in the implementation of the Sustainable Development Goals, he added, emphasizing five essential ways for Nigeria to “build on your advances and sustain that momentum.”
First, the universal framework will have to be tailored to national circumstances to live up to its promise to be an agenda “of the people, for the people, and by the people” that leaves no one behind. Sub-national and local governments, he assured, will play a major role in the national tailoring process and in ensuring that this process is participatory and inclusive.
“Second, we need to work together to establish a revitalized global partnership for development. Each of you is crucial for engaging local civil society organizations and the private sector in the implementation of the goals at local level.”
Third, the UN top official explained, sub-national and local governments can help ensure that the limited available funds are targeted at the most vulnerable and marginalized who are often hard to reach, in particular ensuring health, education, empowerment and equality for women and girls.
“That leads to my fourth point – institutionalizing gender mainstreaming across all government ministries and bodies responsible for implementing agenda 2030, with effective means of implementation and capacities for monitoring progress.”
Fifth, he noted, Governors can support the follow-up and review process by “feeding inputs” directly into the review and by helping to ensure the quality of data by investing in institutions and using big data to inform better planning and decision making.
“Accurate data will also allow us to better respond to new and unforeseen challenges,” Mr. Ban observed.
“This is a crucial moment for Nigeria. You face many serious challenges, but you have also taken a hugely important step to move forward in a way that can respond to the aspirations of the country’s people. I am eager to hear your views on how you think you can best achieve this universal and ambitious agenda,” he concluded.
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Regional integration in Africa: Can the Tripartite FTA be a stepping stone toward a Continental FTA?
The official statements are clear: Regional leaders and policymakers want to make the 26-member Tripartite Free Trade Area (TFTA) the main stepping stone towards the gradual establishment of the Continental FTA (CFTA) comprising the 54 members of the African Union.
Indeed, during the June 2015 African Union Summit in Johannesburg leaders ambitiously insisted that the negotiations on goods and services for the establishment of the CFTA be concluded by 2017. High-level political will seems to be strong. The challenge, now, is to convert this political will into something more than a paper agreement.
The importance of stakeholder involvement
The real effectiveness any trade agreement (or the expansion of an existing one) ultimately depends on the support and the involvement of the key stakeholders – most importantly the private sector – in the design and the implementation. Surprisingly, the regional private sector has not been vocal about its support for either the TFTA or the CFTA. The absence of vigorous national debates about the pros and cons of these agreements has been quite notable. In many countries, the prevailing attitude of the business community ranges from a cautious optimism to a wait-and-see approach. Perhaps this lack of interest is due to a lack of mobilization or consultation at the local level. Or it could be due to a lack of understanding regarding the stakes and potential benefits from what many consider a top-down process.
These stakeholders will ultimately put pressure on governments to pursue or reject steps to the CFTA. Thus, in order to comprehend how the conclusion of the TFTA negotiations may affect the prospects for the planned CFTA negotiations, it is helpful to have a clear grasp of what these agreements mean for the different stakeholders. In particular, it is useful to understand how the establishment of the TFTA affects the willingness of new members (e.g., the Economic Community of West African States (ECOWAS) or the Economic Community of Central African States (ECCAS) economies) to join or to merge. And how might the TFTA business community react to the inclusions of those new members.
The “coincidence of wants” requirement
The expansion of the TFTA requires a “coincidence of wants” among all the interested parties – members and non-members. Non-members must want to join the TFTA, while, at the same time, the members must be willing to negotiate with potential new members to expand the TFTA. It is therefore important to examine the incentives of the existing TFTA members to expand the existing FTA, in addition to those of the non-members to join it.
Incentives of new members to join (or other blocs to merge with) the TFTA
From the perspective of non-members, the domestic support for joining an existing FTA is driven by the relative strength of the import-competing lobby and the export one. A country that considers participating in the TFTA faces a trade-off between (i) the costs of opening up its own market to the other FTA members, and (ii) the gains from obtaining better (and preferential) access to the FTA’s market. In general, the gains from the latter (i.e., preferential access) increase faster than the losses from the former (i.e., increased competition) as the size of the free trade area rises. It is then very possible that even countries that initially had no interest in participating may become interested when the FTA size becomes large enough. Following that logic, the TFTA would keep expanding until all the 54 countries belong to one super-FTA – the Continental FTA.
Incentives of existing members to expand the TFTA
When deciding whether to expand the size of the FTA, a representative TFTA member compares (i) the market enlargement effect (the gains from getting preferential access to the new member’s market); and (ii) the preference dilution effect (the losses of having to share its original TFTA preferential market with the new member). Think of the analogy of a pie getting larger, but at the same time being shared by more people. If the bloc size is small enough, the gains from the enlargement of the preferential market may be large enough to offset the losses from the dilution of preferences – enough that current members are willing to accept new members. When bloc membership reaches a critical size, however, the current members’ incentives for further expansion may be reduced and could eventually go to zero before the FTA encompasses the entire continent. In other words, a gradual expansion of the TFTA may not automatically lead to the CFTA.
If Egyptian firms, for instance, can already secure preferential access to the dynamic and lucrative South African and Kenyan markets under the TFTA, what are the guarantees that they will still be supportive of further expansion of the FTA – which means having to share that preferential access with the likes of Nigeria? Would their gain from better access to the Nigerian or the Cameroonian markets be enough to compensate their losses from having to share the South African and the Kenyan markets with Nigerian or Cameroonian firms? At some point, some of the TFTA members could start to say, “Our market is big enough.” Including ECOWAS or ECCAS members into the mix could just dilute the trade preferences that they are getting in the SADC (Southern African Development Community), COMESA (Common Market for Eastern and Southern Africa), and EAC (East African Community) markets. The business lobbies in those countries will then resist, or at the very least stop supporting, the move toward the Continental FTA.
The key question
To transform the political will into reality, regional policymakers and negotiators need to address the following question: “How can we ensure that the TFTA is indeed a stepping stone and not a stumbling block towards the Continental FTA?” This is not a trivial question, and the answer is probably not straightforward. Whatever it is, it will definitely require more vigorous stakeholder (private sector, consumers, labor organizations, and CSOs) mobilization or consultation at the national level. In the predominantly mercantilist mindset that currently guides trade policymaking in many countries, the benefit accruing to the consumers in the form of reduced prices and increased product variety is unfortunately often ignored. Systematic awareness-raising activities regarding these types of benefits, accompanied by specific measures to compensate potential losers, could help broaden support for a gradual expansion of the TFTA toward the CFTA.
Soamiely Andriamananjara is a Lecturer in the Department of Economics, George Washington University. This blog reflects the views of the author only and does not reflect the views of the Africa Growth Initiative.
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Citizen participation necessary for economic growth, Meles Zenawi symposium hears
Trade, regional integration and governance were some of the key subjects that took centre stage at the Meles Zenawi Foundation’s inaugural symposium on Friday, August 21 in Kigali, Rwanda.
During a panel on The Developmental State in a Globalised World, Donald Kaberuka, President of the African Develop-ment Bank (AfDB), said trade barriers between nations were inhibiting growth and development on the continent. “Tariffs are an issue; free movement of people and goods is an issue, yet these are the low-hanging fruits,” he said.
These barriers have led to low level intra-African trade, which stands at around 10 percent, compared to 60 percent, 40 percent and 30 percent intra-regional trade achieved by Europe, North America and the Association of Southeast Asian Nations, respectively, according to the African Union.
Similarly, regional integration should be considered as a critical ingredient for Africa’s economic growth, said Jendayi Frazer, former United States Assistant Secretary of State for African Affairs. However, the slow pace at which integration is taking place is an issue of concern. “The continent is not experiencing the scale and speed of integration that is necessary for global competition, and African countries are going to have a hard time to compete globally without regional integration,” she warned.
The continent is also challenged with conflict, which has an impact on efforts to achieve inclusive growth. The failure to address conflict is a “huge drop in the peace across Africa”. Frazer pointed out that the conflicts in South Sudan, Central African Republic, Burundi have created a negative narrative that is affecting neighbouring economies.
“Countries that are doing well, but are bordered by countries at war, have to spend their time and resources trying to bring about peace, while these resources could have been used to deliver development,” said Frazer. She singled out Kenya, which for years has been involved in peace processes for neighbouring South Sudan and Somalia.
Participants of the symposium heard that a good number of countries in conflict are those that engage in rent-seeking, and most of them are rich in resources including oil, gas, among others. They are the most unequal countries on the continent, according to President Kaberuka. “In South Sudan it is not about ethnic conflict,” he said. “It is fundamentally about who controls the rent. Rent-seekers are fighting without caring about the citizens.”
The greatest issue in such cases is the lack of transparency to populations, said AfDB’s Acting Chief Economist and Vice-President, Steve Kayizzi-Mugerwa, who moderated the panel. Kayizzi-Mugerwa underscored the need for deliberate policies to address inequalities and promote social inclusion; policies that enhance democracy and accountable governments.
This was also emphasised by Olufemi Mimiko, former Vice-Chancellor of Adekunle Ajasin University in Nigeria, who observed that deep democracy involved bringing in citizens to be part of the process of economic development. “Even though Africa has achieved economic growth over the years, the growth is not percolating. There is no impact and improved quality of life. Populations want to access basic services, they want to see development that creates jobs,” he said.
» Welcome remarks by President Paul Kagame, 1st Meles Zenawi Symposium on Development
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tralac’s Daily News selection: 24 August 2015
The selection: Monday, 24 August
The African Democratic Developmental State symposium: selected updates
Replacing role of the state with externally funded NGOs left Africa in poverty – Kagame (Ghana Business News), Welcome remarks: President Kagame (AfDB), Rwanda and Ethiopia inventing a new Africa (KT Press), Self-financing is the way to develop Africa: Ghana Vice President (Egypt Daily News), Meles Zenawi: Why we must remember this intellectual giant of our times (New Times), Veep calls for new dev paradigm in Africa (Ghana News), Democracy and development not mutually exclusive (editorial comment, New Times)
Building the African Continental Free Trade Area: some suggestions on the way forward (Unctad)
Based on these studies, as well as discussions among a group of experts (UNCTAD, UNECA, AUC and consultants) on 2 April 2015 (Geneva), and other available analyses, this policy paper - with suggestions on the way forward in building the CFTA - was prepared with the aim of submitting it for the consideration of the AU Trade Ministers at their meetings on the CFTA, including the meeting scheduled to take place in Addis Ababa on 8-15 May, 2015. It would also feed into the subsequent policy process at the highest level, namely the forthcoming AU Summit of Heads of State and Government in June 2015, where a decision on the way forward in the CFTA process is expected to be made. [Download]
Is the latest FTA another booby prize for Africa? (The Namibian)
Ostensibly, we are moving to negotiate a continental free trade area which will finally begin the process of fulfilling of Nkrumah's dream of a united Africa. But instead, what we have is Cecil John Rhodes's dream of a market from Cape to Cairo - almost; no deepening of the African economic relationship into a customs union; just a widening to the north and west. Free trade areas are a nice step forward but they normally require no real sacrifice of economic interests. [The author: Roman Grynberg]
Unlocking Africa's trade potential (Project Syndicate)
Even as we consider how to make the most of AGOA’s historic renewal, we need to look beyond 2025 and imagine what a deeper, more mature economic partnership might entail. Of course, we will need to account for emerging economic realities both within and outside of Africa. Already, many African countries are forging more permanent, reciprocal relationships with other developed-country trading partners. At the same time, the US is moving forward with next-generation trade agreements – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership – that will raise standards across both the Asia-Pacific region and the Atlantic and will have positive spillover effects in Africa. For example, the TPP will help combat illegal wildlife trafficking, including illegal trade in ivory from Africa. In other areas, including labor rights, these agreements could help make higher standards the global norm. [The authors: Michael Froman, Dana J Hyde]
This week, in Libreville: the 2015 African Growth and Opportunity Act Forum
Risks of TTIP and TPP (D+C)
The negotiations on the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership are changing the system of world trade. It is important to discuss the negative impacts they may have on many developing countries. [The authors: Clara Weinhardt, Fabian Bohnenberger]
Egypt: Regional or bust? (Zawya)
Can Egypt and other similar economies survive mega-regional trade agreements? Egypt will have to push for such African mega-regional trade agreements to come to fruition, as otherwise its trading prospects will look bleak. In addition, Egypt will have to become more competitive in order to earn its rightful place in this new African mega-regional agreement. As for the Arab region, which continues to lag behind on regional cooperation, it has no alternative apart from getting its act together and reaching out to others, if only with a view to the partial integration of those countries that can afford to do so. The institutions are all in place. They just need to be activated for the Greater Arab Free Trade Area (GAFTA) process to resume in earnest. [The author: Magda Shahin]
WTO is not just a trade forum, says Commerce Minister Nirmala Sitharaman (The Hindu)
The WTO could not just be a trade forum and it had to keep development in mind, Union Minister of State for Commerce and Industries Nirmala Sitharaman said in an exclusive interview with The Hindu on Friday. She was speaking about its 10th Ministerial meet in Nairobi in December.
ACP group submits contribution for dealing with remaining DDA issues at Nairobi (ICTSD)
Obliterating Africa’s trade bottlenecks (Mmegi)
In the last five years of operation, the USAID-funded Southern Africa Trade Hub invested $50 million in eight Southern African countries. BusinessWeek Staff Writer Pauline Dikuelo spoke to USAID/Southern Africa senior outreach and communications officer, Kevin O’Loughlin to gain insight into their achievements since inception.
SADC integration vital for growth (Times of Zambia)
I was recently part of a delegation that toured Katima Mulilo border and the Katima Mulilo Bridge across the River Zambezi in commemoration of the Southern African Development Community by Zambia and Namibia. Ten years down the line, trade between Zambia and Namibia had increased by 200 percent, according to Namibian Ministry of Finance, deputy director for customs Wilbroad Poniso. This now has propelled Namibia to move towards approving the establishment of a one stop border service at the Katima Mulilo border post which separates the two countries. The legislation would be tabled in the next session of Parliament and thereafter take effect as the final piece of the jigsaw as Zambia is ready to execute the plan on all fronts.
SADC @ 35: success stories (Vol 1, SADC)
Wanted - gender equality in grand industrialisation plans (Gender Links)
COMESA Research Forum: Tracking informal cross border trade in Eastern and Southern Africa
Informal cross-border trade constitutes approximately 60% of the regional trade and it is improving the livelihoods of many populations through job creation as well as combating food insecurity in the region. Despite its enormous benefits, this trade is a threat in the region. It may offer unfair competitive advantage to informal sector traders over formal businesses. It also leads to loss of revenue through evasion of taxes by traders and affects the health of the populations in the region because many of the traders avoid safety checks on their commodities at the border. While the available data is incomplete to provide a precise indication of the magnitude of this trade, as well as hinder effective formulation of domestic and regional policies that enhance trading and development in the region. This study found that ICBT has increased steadily from 2010-2014 in the region. [The authors: Juliet Wanjiku, Maurice Juma Ogada, Paul Maina Guthiga]
Kenya’s new northern transport corridor promises region $2.6bn (The East African)
East Africa stands to make about $2.6 billion annually from Kenya’s northern transport corridor, new sea ports and other mega infrastructure facilities upon completion, global consulting firm Frost & Sullivan has said.
Determination required for African integration (Business Day)
Contradicting his reputation as a brash former general, Nigeria’s Obasanjo came across as wise, witty and adept at using first-hand experiences to illustrate his points. He called for a core group of African leaders to drive regional integration in Africa, much as Nigeria, SA, Algeria and Senegal had done in creating the New Partnership for Africa’s Development. He pushed for the abolition of visas to facilitate the free movement of Africa’s 1-billion citizens, criticised African leaders for talking regional integration while planning on a national basis, and condemned the negative role external actors such as France have played in sabotaging integration efforts. [The author: Adekeye Adebajo]
Botswana: Diamond slump halves economic growth forecast (Mmegi)
A 2016-2017 Budget Strategy Paper released by the finance ministry this [last] week, estimates the economy to grow by 2.6% while the budget balance is now seen posting a deficit of P4.03bn, or 2.6% of GDP. In February, finance minister Kenneth Matambo announced a growth target of 4.9% for 2015 while the budget was seen posting a surplus of P1.23bn, or 0.8% of GDP.
All set for Harare-Beitbridge road dualisation (The Herald)
Dualisation of the Harare-Masvingo-Beitbridge highway could soon kick off after Government last Friday invited consulting engineering firms to submit bids for the key road link between Zimbabwe and its major trading partner in the region, South Africa.
Kenya: Trade deficit up by Sh21bn in first half (Business Daily)
Kenya’s trade deficit widened by Sh21.3 billion in the first half of the year compared to a similar period in 2014, driven by a rising appetite for industrial inputs.
Kenya warned off economic war with Uganda (StarAfrica)
Legislators of the East African Legislative Assembly have called on Kenyan politicians to refrain from an economic war with Uganda, warning that this might negatively affect integration. The legislators were Friday reacting to the current standoff in Kenya over a bilateral agreement signed last week allowing Uganda to export sugar to the Kenyan market. They say the row mainly perpetrated by Kenyan opposition could create unnecessary tension and impact on trade between the two countries.
Environmental and Social Framework: consultations (World Bank)
The World Bank launched the 3rd round of consultations on the proposed Environmental and Social Framework, focusing on implementation and on an indicative list of complex issues that require further discussion. Consultation meetings will kick off at a meeting of African Finance Ministers in Angola at the end of August. This reform touches on complex development matters, including Human Rights, climate change, and a number of social issues.
UK’s Africa Policy (StarAfrica)
There are over 40,000 UK nationals living in Nigeria; 10,000 here in Ghana, 4,000 in Sierra Leone. 500,000 Nigerians and 90,000 Ghanaians live in the UK, though the respective Diasporas are much larger when you factor in the second and third generation populations who are now UK citizens. We think that there are over a quarter of a million British citizens who claim Ghanaian heritage. But we also know that this continent's very diversity means that there can be no one single Africa narrative, including in our foreign policy. [The author: UK High Commissioner to Ghana]
Lessons for Japanese foreign aid from research on aid’s impact (UNU-WIDER)
As Japan looks to the future, what insights can be found in the research literature on aid? How might this contribute to Japan’s new aid strategy? This is the focus of our paper. Ultimately, every donor’s aid policy must strike a balance between competing goals. The final allocation of aid (across sectors, countries, and modalities) reflects the overarching framework of foreign policy as well as past experience. These define what the donor sees as its particular comparative advantage. Accordingly, in this paper we try to avoid being over-prescriptive, while endeavoring to draw attention to what Japan might find useful in the literature on aid and its impact. [The authors: Tony Addison, Finn Tarp]
Ramaphosa on official visit to Japan (IOL)
Kenya: US embassy to issue five-year visas from September (Business Daily)
Mauritius tourism earnings down 3,5% in first half (The Namibian)
Global Witness response to US conflict minerals court case decision
As EU’s sledgehammer falls on Nigeria’s food export… (ThisDay)
Nigeria: Shoprite arrives A’Ibom, to employ 600 residents (ThisDay)
India-Egypt trade stands at $4.76b (Gulf News)
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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)