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Kenya’s new northern transport corridor promises region $2.6bn
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.
The firm said oil and gas finds will become catalysts for investment in trade logistics facilities. Industries that will benefit from infrastructure developments include hydrocarbons, mining, agriculture and retail sector.
The Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) corridor, comprising a crude oil export pipeline, a refined products pipeline, railways and roads linked to Uganda, Ethiopia and South Sudan, will open a new corridor in Kenya that will contribute to reducing the cost of transport.
The Lamu and Bagamoyo ports are being built to expand the region’s capacity to handle goods. Bagamoyo port alone will have the capacity to handle 20 million twenty-foot equivalent unit (teu) per year.
“Global and local logistics service providers will need to develop flexible end-to-end solutions to service construction and exploration work prompted by new discoveries,” Frost & Sullivan’s research analyst Siphesihle Hlela said.
The public sector is investing heavily in major projects such as the $3.8 billion Mombasa-Nairobi standard gauge railway (SGR), which aims to connect Kenya, Uganda, Rwanda and South Sudan.
The SGR is expected to raise Kenya’s gross domestic product by 1.5 per cent while enabling landlocked countries to export coffee, tea, agricultural goods and minerals. SGR will also handle imports.
Mr Hlela said there is a race among global logistics providers to secure market share either through green investments or partnerships with local companies.
“These projects indicate a unique opportunity for global and local firms to partner and participate as a way to close the gaps in supply chain,” he said.
Transport costs in East Africa can account for up to 30 to 50 per cent of export value and up to 75 per cent for landlocked countries.
Delays add additional costs of $400 to $500 per trip for freight forwarders crossing borders.
Bureaucracy impedes logistics with non-tariff barriers (NTBs) such as Customs clearance, multiple weighbridges and checks along main routes like the Mombasa-Kampala-Kigali highway, leading to unexpected delays.
The Single Customs Territory regime introduced in 2014 has reduced the cost of doing business as it now takes three days to move cargo between Mombasa and Kampala, down from 18 days. Goods moving between Mombasa and Kigali take six days, from 18 days previously.
Hub of trade
Frost and Sullivan senior economic consultant Craig Parker said Kenya is ideally placed as the hub for trade and business interests with sufficient infrastructure development driving intra-regional trade in East Africa.
“Kenya is set to become the fastest growing hub for regional trade. The level of development in the country is evident in all urban areas. The country will secure significant foreign direct investment in the next five years,” he said.
The route between Mombasa and Nairobi has received particular attention in upgrades. This has led to the average cost of transporting a 40-foot container from Mombasa to Nairobi falling from $1,200 in 2012 to $1,050 in 2014.
An estimated $55.6 billion in investment in infrastructure development for Kenya is planned as of 2015, the majority of which will focus on telecommunications and power generation infrastructure.
Major road projects that are currently under way will alleviate the severe bottlenecks and traffic congestion. An estimated $5.14 billion has been dedicated to road projects in Kenya.
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Unlocking Africa’s trade potential
Africa’s rise challenges the imagination. During the last decade, Sub-Saharan Africa was home to six of the world’s ten fastest-growing economies. During the next five years, the region’s GDP is expected to grow 30% faster than that of the rest of the world. And, during the next 35 years, the continent will account for more than half of the world’s population growth, according to the United Nations.
These trends will give African countries a more prominent role on the world stage, and provide new opportunities for people to better their lives. As African countries assume their new role, they want meaningful economic partnerships that deliver the sustainable, inclusive growth they seek. As US President Barack Obama said during his visit to Ethiopia last month, “Real economic partnerships have to be a good deal for Africa. They have to create jobs and capacity for Africans.”
By those criteria, the African Growth and Opportunity Act (AGOA) has been tremendously effective since its enactment in 2000. By removing tariffs on exports to the United States from 39 Sub-Saharan countries, it has stimulated growth, encouraged economic integration, and created opportunity where it otherwise might not have existed. Earlier this summer, the US Congress, recognizing these gains and underscoring the strength of America’s commitment to Africa, overwhelmingly approved legislation to reauthorize AGOA for another ten years.
To make the most of this extension – the longest in the program’s history – the US and its African partners need to start working toward a more comprehensive partnership. That journey begins by acknowledging that tariffs are no longer the biggest constraint on trade in Africa. Today, the chief impediments are supply-side constraints, which require well-designed strategies and capacity-building efforts so that AGOA’s members can take full advantage of the program’s benefits.
Making the most of AGOA will also require improvement in the infrastructure – physical and institutional – necessary for promoting investment and facilitating trade. The issues that need to be addressed include the lack of reliable, affordable electricity, high transportation costs, and weak and inefficient trade-related facilities.
Consider the challenges faced by Brazzaville, in Congo, and Kinshasa, in the neighboring Democratic Republic of Congo. These two cities, separated by the Congo River, are expected to grow to a combined total of nearly 20 million residents by 2025. But, because of poor infrastructure and inefficient customs procedures, only 1.1% of Congo’s imports come from its neighbor.
According to the World Bank, getting a container across the Congo River costs almost $4,500, and the total can top $10,000 once the cost of inland transportation is added. By contrast, moving an identical container with the same cargo from Malaysia to Singapore costs less than $1,000.
Africa needs to build its capacity to trade competitively in today’s global economy. That is why the Office of the US Trade Representative, the Millennium Challenge Corporation (MCC), USAID, and other US government agencies are advancing programs like Trade Africa, Power Africa, and Feed the Future to help the continent develop sustainable infrastructure and increase regional integration.
Consider MCC’s work in Benin. As one of the US agencies leading efforts to build trade capacity in Africa, MCC committed more than $180 million to upgrade the Port of Cotonou, which serves as a gateway for trade not only to Benin, but also to the landlocked countries of Burkina Faso, Mali, and Niger. MCC’s investment, which leveraged public and private funds, aimed to alleviate chronic freight bottlenecks in the port by doubling its capacity to import and export cargo.
During President Obama’s visit to Africa, MCC made a further commitment of $52 million to support a series of similar public-private partnerships that are expected to generate $750 million in investments in Africa. MCC could do even more to increase trade capacity and cross-border engagement if it had the authority to pursue regional investments. By investing in cross-border roads or power transmission, for example, MCC could help increase economic activity and promote regional integration.
Such efforts would help African and American exporters alike, including the 120,000 Americans whose jobs are supported by US exports to sub-Saharan Africa. That is why leaders in Congress from both parties are working to give MCC this much-needed authority.
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.
As President Obama made clear at the US-Africa Leaders Summit in Washington, DC, a year ago, the US is not new to Africa. We have been engaged in Africa for decades, not as a colonial power, but as a partner. And that partnership is based not on extracting resources from the region, but on unlocking growth for all. As representatives from across Africa gather in Libreville, Gabon, this week for this year’s AGOA Forum, we have an opportunity and an obligation to take that partnership to the next level.
Michael Froman is the United States Trade Representative and is leading the U.S. delegation to the 2015 AGOA Forum in Gabon. Dana J. Hyde is CEO of the Millennium Challenge Corporation.
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Rising population should worry world leaders
When the world meets in New York next month to adopt a bold new vision for sustainable development, a key area of concern will be the globe’s burgeoning population, which is projected to reach 8.5 billion people by 2030 and 9.7 billion in 2050, from 7.3 billion people currently.
A new UN report, World Population Prospects: The 2015 Revision, notes that about half of this growth will be experienced in Africa, which, notably, has the highest rate of population growth already. High population growth rates present their own set of challenges.
This should worry world leaders because the final scorecard on the Millennium Development Goals, released recently, notes that the continent lags behind the other developing regions on most targets.
Even though the UN said remarkable gains have been made worldwide on the eight MDGs, its overall verdict is that “progress has been uneven across regions and countries, leaving significant gaps.”
This “unevenness” is among the setbacks that world leaders would be keen to overcome if the Sustainable Development Goals which take effect from January next year, are to be rated as successful.
“Understanding the demographic changes that are likely to unfold over the coming years, as well as the challenges and opportunities that they present for achieving sustainable development, is key to the design and implementation of the new development agenda,” said Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs.
In particular, the new UN report notes that the populations of 28 African countries are projected to more than double by 2050, and by 2100, 10 African countries including Uganda, Burundi and Tanzania are projected to increase by at least a factor of five. The others are Angola, the Democratic Republic of Congo, Malawi, Mali, Niger, Somalia and Zambia.
In fact, Tanzania and Uganda make it to the list of nine countries worldwide in which half of the world’s population growth is expected to be concentrated. The two countries take position six and nine respectively, in the size of their contribution to the total growth.
The first is India, then Nigeria, Pakistan, DRC and Ethiopia in that order. In seventh position is the US, followed by Indonesia.
Most of the projected increase in the world’s population is attributed to a short list of high fertility countries mainly in Africa, or those with already large populations.
“The concentration of population growth in the poorest countries presents its own set of challenges, making it more difficult to eradicate poverty and inequality, to combat hunger and malnutrition, and to expand educational enrolment and health systems, all of which are crucial to the success of the new sustainable development agenda,” said John Wilmoth, director of the population division in the UN’s Department of Economic and Social Affairs.
Africa is expected to play a central role in shaping the size and distribution of the world’s population over the coming decades because it has a large number of young people who will reach adulthood in the near future and who will start having children of their own.
But on the flip side, a young population is a positive thing because it creates an opportunity for countries to capture a demographic dividend.
In Africa, children under the age of 15 account for 41 per cent of the population and young persons aged 15 to 24 account for a further 19 per cent, UN estimates show.
“The children and young people are future workers and parents, who can help to build a brighter future for their countries” notes the UN report. “Providing them with health care, education and employment opportunities, particularly in the poorest countries and groups, will be a critical focus of the new sustainable development agenda.”
The three areas that need to be watched keenly because they will shape the worlds’ populations in coming decades are the slowing fertility rates, a growing and rapidly ageing population as well as higher life expectancy.
In recent years, fertility rates have declined in virtually all areas of the world, even in Africa where levels remain the highest of any major area. However, relatively small changes in fertility behaviour, when projected over decades, can generate large differences in total population, notes the report.
The slowdown in population growth, due to the overall reduction in fertility, causes the proportion of older persons to increase over time.
Globally, the number of persons aged 60 or above is expected to more than double by 2050 and more than triple by 2100.
While Africa has the youngest age distribution of any major area, it is also projected to age rapidly, with the population aged 60 years or over rising from 5 per cent today to 9 per cent by 2050.
Life expectancy at birth has also increased significantly in the least developed countries in recent years. The six-year average gain in life expectancy among the poorest countries, from 56 years in 2000-2005 to 62 years in 2010-2015, is about double the increase recorded for the rest of the world.
While significant differences in life expectancy across major areas and income groups are projected to continue, they are expected to diminish significantly by 2045-2050.
Progress in reducing under-five mortality, one of the MDG targets, has been significant and wide-reaching in recent years.
Between 2000-2005 and 2010-2015, the mortality fell by more than 30 per cent in 86 countries, of which 13 countries saw a decline of more than 50 per cent. In the same time period, the rate decreased by more than 20 per cent in 156 countries, notes the report.
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Tracking informal cross-border trade in eastern and southern Africa
A presentation by Juliet Wanjiku from the Regional Strategic Analysis and Knowledge Support System for East and Central Africa (ReSAKSS-ECA), shows that effective tracking of informal cross-border trade through accurate trade data collection and its management will enhance greater food security, and also lead to effective formulation and implementation of domestic and regional trade policies among the Eastern and southern Africa countries.
She was presenting on behalf of her co-authors, Maurice Juma Ogada and Paul Maina Guthiga at COMESA Research Forum in Entebbe, Uganda on ‘Tracking Informal Cross Border Trade in Eastern and Southern Africa’.
This annual research forum took place on 10-14th August, 2015. It aims to strengthen the participation of the government, leading policy research think tanks, academia and the private sector in regional integration agenda and specifically provide a COMESA forum for sharing and discussing regional integration research findings.
Informal cross-border trade (ICBT) is as a form of trade that is unrecorded in official statistics, and is conducted mainly by small businesses in the region. ICBT involves unrecorded trade transactions undertaken across the borders at both official and un-official route. In addition, ICBT includes under-reporting, false classification and under-invoicing of legal goods. In addition to seeking to evade taxes or fees imposed by governments, traders also try to avoid administrative formalities in areas such as health, agriculture, security and immigration, which are perceived as costly, complex and time consuming.
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.
She recommends that:
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Regional government to invest in informal trade data collection: complement tools used to collect trade data, harmonize data collection protocols and share data collected.
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Partnership between various agencies involved in data collection to be strengthened.
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ICBT be integrated into regional trade strategies
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The regional economic communities such as COMESA and EAC and member states to mainstream ICBT in national and regional economic policy dialogues.
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UK’s Africa Policy: High Commissioner’s speech at Legon Center for International Affairs and Diplomacy, University of Ghana
A speech by the British High Commissioner on the subject of the UK’s Africa Policy
Good afternoon. It’s a pleasure to be here at the University of Ghana, for the first time in my case, though not, I hope, the last.
I have been asked to speak on the subject of the UK’s Africa Policy and to discuss how much Africa matters to us and why Africa has been, and will remain, central to Britain’s foreign policy objectives.
But let me say something first about recent global events – the wider context which has shaped current UK foreign policy.
The world is emerging from a very difficult period.
We have endured a global financial crisis so intense it shrank world trade by a tenth in a single year, and caused the entire world economy to contract.
In Britain we experienced our deepest recession since the Second World War, three times as deep as that of the 1990s. Only recently, earlier this year, did our economy again reach the size it was back before the crisis in 2008.
But we have taken tough decisions to deal with our deficit, to rebalance our economy and to kick-start growth, with the result that we now have the fastest rate of growth amongst the world’s major advanced economies.
On top of this economic challenge, we have lived through a very demanding decade and more in foreign policy. Perhaps the greatest challenge has been the perverted ideology that drives Islamist or jihadi extremism, defeating which is clearly a generational challenge.
Defeat it, we will. But for now, ISIS continues its brutal campaign of murder and repression across northern Iraq and Syria.
Growing insurgencies in Libya and Yemen threaten further instability. Boko Haram in Nigeria and its neighbours; Al Shabab in Somalia; and other extremist groups in the Sahel all threaten security, including ours and Ghana’s.
There are other serious threats too. On the borders of Europe, the situation in Eastern Ukraine remains a serious concern to us.
And across the world, we see threats from weapons proliferation, the relentless advance of cyber warfare, the behaviour of rogue states, and traditional military advantage being undermined by disruptive technologies.
Add to all that the challenges of climate change; international organised crime and trafficking of all kinds, including of people; refugee crises; trade protectionism; territorial rivalries in some of the world’s regions – and you can easily make the case that foreign policy is more important than it has ever been.
So what is Britain’s Foreign Policy?
You will all know that foreign policy is the “policy pursued by a nation in its dealings with other nations, designed to achieve national objectives”.
In concrete terms, we define the three main themes of UK Foreign Policy as:
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Firstly, safeguarding Britain’s national security by countering terrorism and weapons proliferation, and by working to reduce conflict around the globe. We do that in part by maintaining the UK’s global role, as an active permanent member of the UN Security Council, the EU, NATO, the G7, the G20 and the Commonwealth and other key parts of the international architecture.
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Secondly, building Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources and promoting sustainable growth, including by connecting our economy to the world’s fastest growing markets. The UK has always been an open economy that thrives on trade. So, we will prosper when we build strong relationships with other countries that are prospering.
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And thirdly, supporting British nationals around the world through modern and efficient Consular services. It is always worth recalling that the only reason the vast majority of citizens around the world might ever come into contact with a foreign ministry is when and if they find themselves in difficulty overseas. In our case, the British public are those who fund us, through their taxes. They have the right to expect good customer service from us when they legitimately need it.
Alongside these three main pillars of our foreign policy – which we brand under the headings of Security, Prosperity and Consular - lies our significant Overseas Development effort which has a major impact both on the Security and Prosperity strands. And here in Ghana, we continue to be one of your largest development partners, both bilaterally and by virtue of the fact that over 15% of the EU’s own budget comes from the UK.
In short, Britain is an internationally engaged country, a practical country that looks for pragmatic solutions, and a country of modern, tolerant values that celebrates peaceful difference. We live that mindset in our foreign policy.
And to implement that policy, we now have 267 diplomatic posts around the world to help us understand, engage and influence as effectively as we can.
But it is not just about what we do as a government that makes sure that the UK is an engaged, global citizen – a nation that with only 0.75% of the world’s population is the world’s 6th largest economy with the 5th largest defence budget.
We think that ‘soft power’ matters tremendously too and that the UK has a huge amount to offer there.
English is the global language; the UK is home to 29 of the top 200 word universities; the BBC is the world’s most trusted – and most retweeted – news source; we have a rich heritage that is popular worldwide, embodied in no better way than by our Royal Family.
And as you in Ghana know so well we have the best and most-watched football league in the world – one now graced by more Ghanaians than ever before.
So, the UK is a global player in so many regards.
How does Africa fit in?
Returning though to the purely governmental sphere, we believe that an active and activist UK foreign policy must have Africa at its heart. Many of the world’s fastest growing economies are in Africa. Africa has vast human and physical resources and enormous potential. At the same time, parts of Africa are still wracked by abject poverty and crushing conflict which we seek to make a contribution to solving – not least as we also have a historical and moral responsibility to this continent, given our colonial past.
That is why, for example, we came to the aid of Sierra Leone, both when its democracy was subverted in the 1990s and, recently, when it was ravaged by Ebola. That is why the UK has been the leading international player in combating sexual violence in conflict, Female Genital Mutilation, early and child marriage, and the disease of malaria which still kills each year so many multiples of those who have died from Ebola. All of these scourges affect Africa disproportionately and Britain wants to be a major player in addressing them – it is the right thing to do.
But more widely, our Africa policy means that we need genuine partnerships with African countries. Our shared history, family and cultural connections mean that we are committed to partnerships with African countries, through the good times and the bad. Africa is important to us because African communities are also part of the fabric of the UK and what happens here affects us.
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.
Africa is a continent of 54 countries, over 2000 languages with almost 150 million Arabic speakers. There are over 3000 tribes, ethnic groups and peoples. It has a population of over a billion... and growing.
In 2010, the combined population of sub-Saharan Africa was 800 million. By 2040 it will be 1.5 billion. By 2025 one quarter of the world’s population under the age of 25 will live in sub-Saharan Africa and by 2050 one in four people on the planet will be African.
And it is also a continent of mammoth proportions: the distance between Cairo and Cape Town is greater than that between London and Lahore in Pakistan.
Africa is a dynamic place of entrepreneurs, opportunities, an aspirant middle class and a vibrant youth culture. And this is the Africa the UK government has sought to engage.
So what are we actually doing?
The UK government believes that it is in our national interest to promote prosperity and security in Africa. We need our partners to be stable, prosperous and secure.
So we work to address the challenges and maximise the opportunities of each of our African partners. A key recent policy has been to re-position the UK’s relationship through:
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bilateral expansion, increasing our footprint in Africa, where we have opened or re-opened 6 new embassies over the last 5 years in Cote D’Ivoire, Madagascar, Mali, South Sudan, Somalia, and Liberia;
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Increasing our development spend on economic development, getting alongside private sector interest in Africa to drive sustainable and inclusive growth that will reduce poverty by creating jobs, and reduce dependency on aid;
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And championing financial inclusion. Through the Department for International Development, we promote and support the use of technology like mobile money and branchless banking to make it possible for people to overcome the barriers to access, as well as working with African governments to make the operating environment for business simpler, fairer and, crucially, more transparent.
At the same time, traditional aid programmes building health, education and sanitation services in developing countries remain vital. They make a real difference to millions of people.
But it goes without saying that development has most impact, and is most sustainable, when the governments of aid recipient countries enable the process through good governance and show a strong commitment to lifting their citizens out of poverty.
Tackling poverty overseas is about addressing the root causes of global challenges such as disease, migration, terrorism and climate change. Addressing these issues is firmly in Britain’s own national interest as well as Africa’s interest. And the UK is the first major economy to meet the UN’s 0.7% of Gross National Income target on development spending, a target now legally enshrined and therefore binding on future British governments too.
However, we must recognise that aid alone will not eliminate poverty in Africa. Addressing these challenges helps create the trading partners and markets of the future. So there is an element of self interest.
But while we understand that some countries in Africa still need aid, many more need investment, expertise and financial services to maximise commercial opportunities, abundant resources and huge economic potential. The World Bank estimates that the continent as a whole needs an extra $90bn capital investment a year for infrastructure alone.
We also believe that it is the private sector that will grow Africa out of poverty. This is because profitable businesses pay taxes. And tax revenue allows governments to invest in health, in education and in infrastructure. Tax revenues provide accountability between the government and the electorate.
So we seek to champion Africa as an investment and trade destination of choice. To this end, we have added 20 Foreign and Commonwealth Office diplomats to work as ‘prosperity officers’ to complement the work of our fourteen UK Trade and Investment offices on the continent. And we have created High Level Prosperity Partnerships with Ghana, Angola, Cote d’Ivoire, Mozambique and Tanzania – all very different countries of different heritages where we have built ambitious frameworks to encourage growth across a range of key economic sectors including education, agriculture, infrastructure, and extractives.
And what of Ghana?
Our common history means that Ghana is very familiar to the UK and the UK is very familiar to Ghana. We share similar values and standards.
We have a mutual interest in regional security and we need to promote regional solutions to instability in Mali, the Sahel, the Gulf of Guinea and wider transnational threats.
The UK’s strategic goal for Ghana is its continued economic development, supporting it in rising up through its current, and still relatively new, ranking as a Lower Middle Income country. For that, we think it is crucial to promote the growth of the private sector and trade, improve the use of revenues including those from oil, and promote sound macro-economic management.
We want to assist Ghana in its political development too – through stronger institutions; through strengthening citizens’ voices and the accountability of the governments they elect; and through the electoral cycle, which means more than just observing the elections on election day.
And socially, through the reduction of poverty and meeting of the Millennium Development Goals.
And in security terms, too, through effective common responses to existing and new threats including those posed by the drugs trade, human trafficking, piracy and other organised criminal activity.
In addition, cooperation in foreign policy is a key area as well. The UK supports Ghana as it seeks to influence positively its neighbours and the wider West African region, to spread democratic principles and adherence to the rule of law, to be a voice of reason in international fora, and to continue to promote and facilitate African-led solutions to African conflict.
As well as the clear benefits to Ghana of this approach, the UK will gain from supporting stability and growth in Ghana and the West African region, including through increased bilateral trade and a reduction in the harm posed to UK nationals.
So, the influence of Ghana over unstable neighbours to the west and north is vital in promoting a safe and secure environment within which UK interests can prosper.
We are – to repeat an earlier important point – a major donor and development partner: our bilateral aid and share of the EU and multilateral aid together amount to over £100m a year.
Our Department for International Development is focused on assisting the Government of Ghana in its management of critical areas such as providing basic services, the efficient and transparent management of public finances, fighting corruption (which incidentally so many Ghanaians tell us has been getting worse, not better), ensuring that oil and gas receipts benefit all Ghanaians, and that the macro-economy returns to a sustainable path of long-term growth.
In short, we aim to try and help Ghana onto a firmer, stable and successful long-term economic trajectory that cements its still relatively new middle income status.
On economic development, DFID is supporting the private sector to drive market reforms and boost investment, especially in the agricultural sector.
Ghana is a also significant commercial partner with bilateral trade volumes now over £1 bn a year. Ghana is amongst the UK’s largest export market in sub-Saharan Africa; and the UK is one of the largest foreign investors in Ghana itself.
In 2013 UK exports to Ghana totalled over £587m. We hope to see that figure rise markedly by the end of 2015. British businesses continue to see Ghana as a valuable long-term investment base in West Africa. Companies such as Tullow Oil, Vodaphone, Lonrho, Prudential and Standard Chartered Bank are amongst the biggest UK players here.
On Defence we seek to increase the levels of professionalism in Ghana’s Armed Forces – to maintain Ghana’s ability to act as a role model for regional stability and as an important contributor to UN peacekeeping around the world
In the financial year of 2014-2015, the UK spent over US$ 1 million on Defence engagement with Ghana. This year will be similar.
We support the continuous development of key Ghanaian Defence educational establishments in order to increase military professionalism and maintain their status as regional centres of excellence, thereby contributing to enhanced sub-regional military cooperation.
We support the development of the Ghana Navy so that Ghana can play a key regional security role in the maritime domain in order to assist and enable regional efforts to improve maritime security in the Gulf of Guinea.
And we support Ghana in its ambition to develop its Armed Forces as a leading contributor to UN and AU Peace Support Operations, in order to maintain Ghanaian commitment to current deployments and develop it as a model for others.
More generally, we seek to encourage and further develop Ghana’s leading role within ECOWAS in order to enhance the capacity of developing sub-regional security structures and improve sub-regional capability to respond to emerging security threats in the land and maritime space in an efficient, effective, and coordinated fashion.
Those three areas I have described – of security, prosperity and development assistance – all go hand in hand. Without peace, we cannot have prosperity; without prosperity, security is impossible to maintain. The prosperity agenda advances long term security. Good governance and increasing societal wellbeing go hand in hand, as a virtuous cycle. But of course, in this increasingly interconnected and globalised world – where shocks on one side of the world are transmitted rapidly to the other – the bilateral relationship between our two countries is only half the story. As the global financial crisis, or the recent outbreak of Ebola, or the rise of Islamist extremism have demonstrated, national borders no longer act as barriers to the transmission of global threats. No country that is part of the global economy can isolate itself from, or be immune to, the global challenges or threats that we face together. But just as no country can be immune from the global challenges we face, nor does any single country have either the resources or the ability to tackle them alone. But every country can contribute to tackling them together. Whether it’s limiting the effects of climate change, tackling global terrorism, preventing the proliferation of nuclear weapons or securing cyberspace against the piracy and lawlessness which undermines investment confidence and economic growth – in every case we need to work in partnership with like-minded nations, who share the same self-interest in a stable, sustainable and rules-based world as a platform for growing prosperity for all of humanity.
The lesson we draw in our response to these global challenges is that, by acting together, in groupings of like-minded partners and allies, working through the multilateral mechanisms of the UN and the International Financial Institutions, we can tackle effectively even the most seemingly intractable threats to our stability, our security and our prosperity... and we can do so together, with the collective moral authority that comes from a rules-based international system mandating our vital work.
In the UK and throughout Europe, we have just finished marking the 70th anniversary of the end of World War II. The strategic rivalry that twice devastated Europe in the first half of the 20th Century is now inconceivable – relations between the nations of our own continent are now firmly based on friendship, confidence, trust and solid institutions. That is a model of broad cooperation that, I would submit, needs to be replicated everywhere.
I close by stating again that Ghana is at the core of our strategic foreign policy for Africa and will continue to be a key partner for us in this regard. The UK-Ghana relationship is as dynamic as ever and continues to grow. Our hope is that Ghana continues this positive trajectory of consolidating its democracy, continuing to develop economically, and, so, of being a positive image for others to emulate in the region.
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WTO is not just a trade forum, says Commerce Minister Nirmala Sitharaman
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.
On yuan devaluation, she said India was identifying sectors that would be immediately affected. On halting discussions on a free trade pact with the EU, she said some 700 generic drugs tested in India were taken off the shelves of member-countries.
‘WTO should work to the satisfaction of all members’
The WTO must use the interregnum between now and December, when its 10th Ministerial conference will be held in Nairobi, to attend to trade issues and fulfil its development agenda, the Union Minister of State for Commerce and Industries said.
Dr. Sitharaman, who spoke on a range of topics including the devaluation of the yuan, deferral of free trade talks with the European Union (EU) and matters of international trade, said the WTO could not just be a trade forum and it had to keep development in mind.
“It [the WTO] has to perform the role of speaking for all its members and ensure that certain [items on the] development agenda are also taken up and met with to the satisfaction of all its members,” Dr. Sitharaman said, adding that the time was especially significant for tackling issues related to LDCs (least developed countries) and development because the conference was being held for the first time in Africa.
The Doha Round of negotiations, launched in 2001, has been stalled for over seven years, because the advanced industrial countries and less developed countries have been unable to reach agreement on key issues, mainly related to agricultural subsidies.
In response to a question on what the proliferation of regional free trade agreements (FTAs) meant for India and the WTO, Dr. Sitharaman said the WTO was the best forum for negotiating and settling differences, adding, “India is committed to multilateralism. We wish and want the WTO, which is in its 20th year, to be a very relevant forum.”
Although the Doha Round came to a halt, countries have, with differing degrees of success, continued to push their trade goals via free trade agreements within smaller groups.
On the topic of India halting discussions on its free trade pact with the EU, Dr. Sitharaman said the present environment was not conducive to the talks, with some 700 generic drugs that were clinically tested by Hyderabad-based pharmaceutical company GVK Biosciences, being taken off the shelves of the 28 EU member countries on Friday.
The European Medicines Agency (EMA), the EU’s drug regulation body, recommended the banning of these drugs in January, saying the underlying clinical testing data had been manipulated.
“From my side, I’d been keen to start this [making progress on the trade pact], get on with it, and crack those contentious issues, so the FTA can be signed,” Dr. Sitharaman said.
On the devaluation of the yuan, which saw China’s currency drop 3 per cent against the US dollar last week, Dr. Sitharaman said the government was monitoring the situation carefully, adding, “Before the two devaluations that happened in quick succession, there was also a [Chinese] stock market crash. This is in the context of the trade deficit with China increasing and increasing worryingly.”
The government was carefully monitoring the situation to assess which sectors would be immediately affected, and where most of the adverse impact would be felt from a cheaper yuan.
‘To protect steel industry’
Responding to a question on whether the government would impose anti-dumping duties for iron and steel imports from China, which had become cheaper as a result of the yuan devaluation, Dr. Sitharaman said the government was currently engaged in a process of dynamically monitoring the situation and had to take into account the interests of the integrated steel producers of India, whose output competed with cheaper Chinese steel and small and medium-sized manufacturers, who benefited from cheap steel as a raw material. Both sides have made representations to the government.
“I want to protect the steel industry. I do not want the dumped goods coming in and making their lives difficult,” Dr. Sitharaman said.
Intellectual Property policy
With regard to the final draft of the national Intellectual Property (IP) policy, Dr. Sitharaman said the draft was the subject of an inter-ministerial dialogue and comments from that had been collected and collated. A note is currently being prepared for the Cabinet’s consideration.
Related News
tralac’s Daily News selection: 21 August 2015
The selection: Friday, 21 August
Today in Kigali: The African Democratic Developmental State symposium
Today in Zanzibar: Currency stability to dominate EAC central bank governors’ meeting
Northern Corridor Transit and Transport Coordination Authority: communiqué
During the Policy Organs meetings, the bureau was reconstituted whereby the Democratic Republic of Congo (DRC) took over the Chairmanship of the Authority for the next two years from the Republic of Burundi; the Vice Chair went to Republic of South Sudan and the Republic of Kenya took over as the 1st Rapporteur while the Republic of Rwanda became 2nd Rapporteur. Uganda and Burundi are members. The Policy Organs adopted a number of key resolutions on program activities related to transport policy harmonization, advocacy and planning, customs and trade facilitation, infrastructure development and management and private sector investment promotion, Northern Corridor Performance monitoring as well as the budget for the financial year 2015/16 and administrative matters. NCTTCA Policy Organs launched the upgraded Transport Observatory Portal monitoring the performance of the Corridor.
Crude oil pipeline top of Kenyan growth agenda, says Uhuru (Daily Nation)
The Hoima-Lokichar-Lamu crude oil pipeline is a priority project for the government as Kenya looks to tap the crude oil billions to accelerate development. Speaking on Thursday at State House, Nairobi when he hosted a Japanese business delegation, President Uhuru Kenyatta said the pipeline will open up northern Kenya and accelerate the entire East African regional development. The pipeline is key topic among discussions at the Northern Corridor Integration Projects Summit next week in Nairobi. It is expected to serve Kenya, Uganda and South Sudan when complete. Ethiopia could also benefit from the same.
Uganda defaults on Shs24b Igad fees (Daily Monitor)
Uganda has defaulted on membership fees for the regional bloc, the Intergovernmental Authority on Development , under which it plays key role in regional security. According to sources, the arrears have accumulated to $8 million (Shs24 billion) and government officials risk being blocked from attending Igad meetings. Other countries that have defaulted are Sudan with $2 million (about Shs7 billion), South Sudan with $1.5 million (about Shs5.3 billion), Kenya with $1 million (about Shs3.5 billion) and Ethiopia with $1.7 million (about Shs6 billion).
Cargo clearing at Dar port reduced to 0.9 of day, says Tancis (IPPMedia)
TRA’s deputy commissioner Customs Modernisation and Risk Management, Bellium Silaa, told ‘The Guardian’ in an exclusive interview on Tuesday that the number of days for clearance of goods has been reduced from 9 to 0.9 of a day which is almost one day. Silaa also said that businesspersons are now allowed to pay in advance for the clearance of their goods even before they arrive in the country.
Mombasa port dredging pays off as biggest ship ever arrives (Business Daily)
UAE closes Nairobi embassy amid falling trade (Business Daily)
The United Arab Emirates has closed its embassy in Nairobi indefinitely on undisclosed reasons as exports from the Middle East nation continue to shrink. The closure comes months after the emirate announced plans to upgrade its Nairobi mission to the largest in Africa. “They informed us of the closure about a month ago,” said Beldina Nyabochoa, an office administrator of Middle East division at the Ministry of Foreign Affairs. She declined to offer details behind the closure and the Business Daily was unable to reach UAE for comment.
Sugar imports from Uganda to come under COMESA rules (Business Daily)
Sugar imports from Uganda will only be allowed under the Common Market for Eastern and Southern Africa (Comesa) rules and not any other special arrangement, the government said Thursday. Acting Agriculture secretary Adan Mohamed said Uganda has been selling sugar to Kenya under the Comesa and the East African Community Customs Union rules, and that the agreement alluded to when President Uhuru Kenyatta recently visited the neighbouring country did not imply that this would change. “Being a member of Comesa, Uganda is entitled to access Kenyan market on Comesa treaty terms,” Mr Mohamed said at a press briefing Thursday.
Rwanda: Tourism stakeholders move to curb revenue leakages (New Times)
The growth of the tourism industry in the country has been characterised by an increase in foreign players and heavy reliance on imports of associated products and services. This has necessitated the introduction of measures to subsequent financial leakages, as well as ways to enhance local participation to increase the sector’s impact in the economy. It is against this backdrop that the Rwanda Development Board and United Nations Economic Commission for Africa have set out to intervene to enhance local participation. The two bodies began by commissioning a study of the value chain where it emerged that there are numerous opportunities that are not being exploited by local suppliers and producers.
Made in Africa? Why not? (Caixin Online)
In the search for competitive costs and acceptable quality, new actors continuously take center stage. There's always an unforeseen producer, an emerging country ready to offer more advantageous conditions to attract multinationals' investments. The combination is unchanging: low costs and favorable business climates. The affirmation of a few African countries in textile manufacturing is only the latest example of the sector's mobility. A recent study by McKinsey – drafted with the usual attention to data – finds that Ethiopia is one of the preferred destinations, No. 7 overall, for the first time. Giants like H&M, Primark and Tesco have already set up factories. Kenya is recording analogous growth, while smaller markets like Lesotho and Mauritius continue to improve their performance. [The author: Alberto Forchielli]
The Australian-Chinese Free Trade Agreement: implications for South Africa (tralac)
In the final analysis there are few implications for South Africa from ChAFTA. Australia gains some advantages in the Chinese resources market, but while these are important they are not massive. In general, the tariffs are low and there is limited South Africa-Australia head-to-head competition in most lines. Australia gains some advantages in agriculture, but these are mainly in commodities where South Africa does not compete – except for perhaps wine. [The author: Ron Sandrey]
SADC Financial Inclusion Indaba (FinMark Trust]
This report contains the deliberations and proceedings from the recently held SADC financial inclusion indaba. FinMark Trust, in partnership with the SADC Secretariat, South African National Treasury and the SADC Banking Association hosted the SADC Financial Inclusion Indaba from 23-24 July 2015, in Johannesburg, South Africa.
Out next week: 2015 Financial and Digital Inclusion Report and Scorecard (Brookings)
Mozambique: workshop on SADC Trade Related Facility (AIM)
Celio Nhachungue, the deputy director of international relations in the Ministry of Industry and Trade - the TFR focal point in Mozambique - underlined the importance of regional integration for the economic development of Mozambique. As explained by Dumisani Mahlinza from the TFR Facility Support Unit, €2.6 million (of a total of €32 million) could be allocated to Mozambique through the TFR mechanism. In order to be eligible, projects must be worth at least €250,000.
A look at how Zimbabwe can benefit from the TFTA (The Herald)
Zimbabwe has realised that in order to meaningfully participate in the regional and even global economy, she has to enhance her competitiveness, and this has necessitated the writing of the National Competitiveness Assessment Report, which is due to be published in the second half of 2015. In this regard, the Government has instituted the National Competitiveness commission to spearhead competitiveness issues in the country. [The author: Tafadzwa Bandama]
The status of agricultural subsidies in the SADC region: call for proposals (FinMark Trust)
FinMark Trust would like to commission a service provider who will conduct research on the status of agricultural subsidies in at least 4 countries in the SADC region and develop guidelines for the implementation of an agricultural subsidy scheme in the SADC region. The overall purpose of the project is to assist the Southern African Development Community- Food Agriculture and Natural Resources (SADC-(FANR) and its member states to make informed decisions regarding the payment of subsidies in their own countries by using the research findings. As such, it remains important to:
Malawi: consultancy for agro-processing special economic zone (AfDB)
MITC, a parastatal under the Ministry of Industry and Trade has planned to develop an Agro-Processing Special Economic Zone (AP-SEZ) in order to support the promotion of commercial farming for priority National Export Strategy (NES) crops. MITC hence intends to engage a Consulting Firm to conduct a feasibility study for the development of an AP-SEZ in Malawi.
Economic zones in the ASEAN (UNIDO)
FMD threatens beef exports to Asia – Geingob (New Era)
President Hage Geingob yesterday said Namibia will collectively work with the Angolan government to address frequent outbreaks of foot-and-mouth disease (FMD), if it is to penetrate beef markets in China and Indonesia.
South Africa: Finding the missing jobs (IOL)
We often hear that the main way to accelerate job creation is a single-minded focus on growth, without directly dealing with the distortions left by apartheid. This approach has two core weaknesses. [The author: Neva Makgetla]
Key interventions did not shift economy – ANC (Fin24)
IMF, USAID strengthen cooperation on capacity development (IMF)
India: Cabinet clears tax data sharing with Seychelles (LiveMint)
Liberalizing Africa’s skies to accelerate integration and promote prosperity (AU)
Tanzania offers cockpit view into Africa's soaring low-cost airline industry (CNN)
Nigeria: We’ll provide conducive environment for investors, says Ambode (BusinessDay)
Duncan Green: 'Have the MDGs affected developing country policies and spending?' (Oxfam/ World Bank)
China’s flash factory PMI drops to lowest level since March 2009 (LiveMint)
Miguel Arias Cañete: briefing on the state of climate change negotiations (EU)
Tracking intended nationally determined contributions: what are the implications for greenhouse gas emissions in 2030? (Grantham Research Institute)
This week in the news
Catch up on tralac’s daily news selections for the past week:
The selection: Thursday, 20 August 2015
The selection: Wednesday, 19 August 2015
The selection: Tuesday, 18 August 2015
The selection: Monday, 17 August 2015
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Related News
Key interventions did not shift economy – ANC
A key constraint preventing the ANC from achieving the industrial growth it aims for is the national electricity shortage, according to a discussion document issued by the party ahead of its National General Council (NGC) taking place in October.
The document states that, despite a number of interventions by government, growth in SA remains too low and job creation insufficient. External demand also remains low, as growth in many of South Africa’s overseas trading partners remains weak, retarding investment.
Key interventions adopted by government in an attempt to stimulate inclusive growth and investment in the domestic economy were counter-cyclical fiscal policy, public infrastructure investment, industrial and trade policy measures and the acceleration of the Broad Based Black Economic Empowerment Act to transform ownership patterns.
“While these interventions have prevented job losses, they have not shifted the economy onto a new sustained inclusive growth path,” according to the document.
The counter-cyclical fiscal policy was aimed at maintaining aggregate demand through continuing planned levels of government expenditure despite a slowdown in tax revenues.
“Rising government debt and a wide current account deficit make South Africa vulnerable to global economic shocks,” states the document.
The ANC sees infrastructure as an essential pre-requisite for increased investment and employment, but says in the document that such infrastructure comes at a cost.
In addition to putting pressure on the fiscus, the document explains that it is also putting upward pressure on the cost of living and the cost of doing business, an effect that is particularly amplified in a low-growth environment.
As for industrial and trade policy measures aimed at stimulating investment in industrial activity and promoting South African exports, the document states that in many cases, the Industrial Policy Action Plan (Ipap) has not gained traction across the relevant implementing agencies or departments.
Regarding the Broad Based Black Economic Empowerment Act, the document says a recent review will close a number of loopholes and deal with firms who engage in “fronting”.
The ANC expects this to better align its B-BBEE imperatives with the need to promote industrialisation of the SA economy.
“To facilitate a more meaningful participation of black people in the mainstream economy government is now looking at various ways of developing and sustaining black industrialists, including a targeted incentive to support black entrepreneurs entering the industrial sector,” said the document.
The NGC takes place as the country marks the 60th anniversary of the adoption of the Freedom Charter, a seminal document of the mass democratic movement and our prime political programme of action. It further takes place two years after the adoption of the National Development Plan which is the visionary blueprint of our country, aimed at guiding and accelerating the development of South Africa to 2030 and beyond. The NDP has been translated into governments MTSF (Medium Term Strategic Framework) for the period 2014-2019 as the first five year programme for its implementation. The discussion documents are intended to guide deliberations and provide a critical assessment of the work done to date.
NGC Discussion Document: Economic Transformation for a National Democratic Society
At the core of the ANC’s economic mandate is the transformation of the economy for inclusive growth. At the heart of radical economic transformation is an effective state that is decisive in its pursuit of structural change.
In addition, transformation is about capability and action: the means and the end. Our policies must provide the most enabling conditions for the flourishing of the talents of all our people, to harness and develop their productive potential, to ensure that they play a leading role in the allocation of national resources and that they get their due in the country’s wealth.
The state must therefore play a key role in stimulating national development. This includes the infrastructure build programme, partnership with the private sector, targeted procurement and dealing with binding constraints such as weak energy supply.
Realising these ambitious goals of economic transformation requires moving forward in a number of areas such as ICT, transport, food and energy security, transforming ownership and control. These are the many interwoven dimensions of development.
MACRO-ECONOMIC OVERVIEW
The global economy remains mired in a low growth trajectory, and there is little evidence of a strong recovery despite the growth of 3.4% expected in 2015, which is still insufficient to reverse output and job losses in most economies. The fall in the oil price generates clear opportunities for oil importers like South Africa, but the combination of lower commodity prices, weaker global demand and higher interest rates could lead to weaker growth outcomes on the African continent.
A relatively subdued economic performance as reflected by the world GDP growth, is of concern as demand for South African produced goods and/or services could be adversely affected. Weak Eurozone demand for South African-manufactured exports and reduced demand for our mining and processed metal sector commodity exports from China’s slowing economy is expected to continue to impede South Africa’s economic growth.
The core structural weakness of South Africa’s economy is its continued incorporation into the global division of labour as producer and exporter of primary commodities, and importer of valueadded, manufactured products. This growth trajectory – typical of many colonised countries in Africa – constrains our ability to create jobs at an appropriate skill level and in sufficient numbers to address South Africa’s unemployment challenge, and bestows the benefits of local value-addition (jobs, company profits which can be re-invested in the economy, tax revenue and industrial deepening) on our trading partners.
Given the current and forecast subdued demand for South Africa’s key commodity exports and weak prices, our current growth trajectory cannot be sustained, nor has it proven to be supportive of inclusive growth. Very few countries have been able to achieve sustainable growth, job creation and declining inequality based on a commodity export growth path. It is consequently imperative that we act decisively to industrialise, add value to local and regionally available commodities, and grow the productive sectors of the economy.
The African continent has become a very important destination for locally manufactured products and its relative share is expected to expand further. Moreover, substantial investment in Africa’s infrastructure, rapid urbanisation, and a fast-growing and increasingly sophisticated consumer market all provide improved trade and investment opportunities for South African businesses.
It is therefore crucial for South Africa to improve the competitiveness of the domestic environment – including moderating administered price increases, reducing the anomalous port and freight subsidies for commodity exporters and better managing the level and volatility of the Rand – so as to grow the pool of industrialists exporting to their traditional markets while also finding alternative markets, primarily in the relatively faster growing African, Asian and Latin American economies. This improved growth outlook for Sub-Saharan Africa (over 5% in 2015) and the African continent should provide export opportunities for South Africa’s tradable goods and services. Continued infrastructure development, investor appetite for the region’s mineral and agricultural resource wealth, and strong domestic consumption spending should support these rates of expansion. Intra-African trade is unfortunately dismally low (around 10%) comparatively, with very slow progression and also quite imbalanced to the advantage of South Africa with no clear framework and firm commitment to enhance Intra-African trade.
State-led investment for industrialisation
The NDP envisages that over time annual public and private investment levels should be raised from the current 19% to 30% of GDP.
State-led economic transformation does not imply that the state can go it alone in driving development. Rather, successful state-led investment must serve as a catalyst for increased levels of private sector investment. Recently there have been claims of trust deficit between government and the business community. Such alleged trust deficit has to be closely scrutinised because the business community is not homogenous.
The state-led public investment programme provides a strong stimulus to growth and employment, but it can never be of sufficient magnitude to uplift the whole economy. At about 30% of total investment, public-sector investment, can only serve as a catalyst to facilitate, ‘crowd-in’ and increase private sector investment which contributes 70%.
Investment by state owned enterprises rose sharply from 2007 and continued to grow at a lower rate after 2008. General government investment (mainly construction of social infrastructre like hopsitals, schools and police stations) remained low during the recession, but is now growing strongly. However, private sector investment remains very weak.
The priority now is to identify and remove obstacles to increased levels of private sector investment, while sustaining the public sector’s contribution. Among others, the following items should be foremost on the agendas of public and private sector decision-makers aimed at increasing investment levels in South Africa:
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maximise localisation benefits from South Africa’s ongoing public infrastructure expansion, particularly in power and rail
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support black-owned industrial firms in particular to be part of South Africa’s infrastructure expansion
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leverage state rights (minerals, land, water, air, fisheries, etc.) to maximise economic growth and transformation
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leverage local demand to link into global market supply chains
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successfully implement the newly launched Special Economic Zones
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deepen trade and investment ties with other African countries and with other important growth regions
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raise mining investment, output and linkages into the economy
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unlock South Africa’s significant potential as an onshore and offshore gas producer, in an environmentally responsible manner
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accelerate land reform and grow the number of successful black farmers participating effectively in the agricultural economy
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improve telecommunication infrastructure and increase sector competition
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leverage our maritime position, including through ship-building and repairs, trans-shipment hubs and expanded ocean trade
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grow the tourism sector.
If consensus, and effective action, were to be achieved on issues such as those listed above, there is no doubt that investment levels in South Africa would rise towards the NDP’s investment target.
ECONOMIC SECTORS
In the 53rd Conference, we resolved to “ensure long term stability and sustainable growth and development that bolster the growth of domestic industrial capacity and in making policy trade-offs will select those that favour productive sectors of the economy”. This means we have prioritised re-industrialisation and we will employ a battery of tools within our policy space to privilege productive sectors. The 53rd Conference also emphasises the NGP and the IPAP make up “the industrial policy action plan which guides the reindustrialisation of the South African economy”.
AGRICULTURE, FORESTRY AND FISHERIES
Growing the agricultural and agri-processing sectors will improve national food security, increase agricultural income and support rural development. We have adopted policies that broaden and deepen linkages between agriculture and machinery and equipment industries, including:
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Food Security for all;
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Strategies to increase the contribution of Agriculture to economic growth; and
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Unlocking the sector’s ability to produce 1 million decent jobs by 2030.
One challenge here is that in recent times agricultural productivity has been linked to mechanisation whereas South Africa urgently needs the agricultural sector to be a source of employment as well.
A new Agricultural Policy known as the Integrated Growth and Development Policy (IGDP) with the Agricultural Policy Action Plan (APAP) serve as a programmatic response, identifying priority commodities with high growth potential, food security potential, and to contribute to GDP. The APAP could potentially become the IPAP for agriculture, a platform for sector organisations and other stakeholders to converge through joint planning.
RURAL DEVELOPMENT, LAND REFORM AND AGRARIAN TRANSFORMATION
In the 53rd Conference, we affirmed rural development and land reform as a priority. In giving expression to this urgency, we placed rural development as one of the five priorities in our 2014 Elections Manifesto.
Our Rural Development Framework is now firmly rooted in the approach to rural development we formulated in the 53rd Conference. It saw the introduction of the agrarian transformation system, which is comprehensive and inclusive in approach and defined as rapid and fundamental change in the relations (systems and patterns of ownership and control) of land, livestock, cropping and community. The strategic pillars of land reform (land redistribution, restitution, development and land tenure) continue to form part of this comprehensive and inclusive approach to rural development and land reform.
The next phase of this approach is the Rural Economy Transformation Model (RETM), firmly aligned to Vision 2030. Our strategy of ‘agrarian transformation’ promotes labour-intensive technology, relies on decentralised patterns of local control and takes seriously the input of ordinary citizens into decisionmaking processes, especially in areas dominated by communal landholdings and patrimonial authority
MINING AND MINERALS
In line with our 53rd conference resolutions, we need to elaborate concrete forms in which the state should maintain a strategic, interventionist role in key sectors, to ensure that all our natural resources are exploited to effectively maximise the growth and employment potential embedded in such assets, and not purely for profit. In this regard we subscribe to the aims of the AU “Africa Mining Vision” (AMV) and the Country Mining Vision (CMV) Guidelines:
“The ANCs policy as per the 53rd conference resolution is based on the following elements:
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Minerals for manufacturing: Steel (iron ore), polymers (coal or oil/gas), base metals (copper, zinc, nickel), Platinum group metals, chromium, vanadium, manganese, alumina-silicates.
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Minerals for energy: coal, uranium (also limestone for washing emissions), natural gas, including shale gas and coal-bed methane gas.
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Minerals for agriculture: NPK – nitrogen (gas), phosphates, potassium, conditioners (sulphur, limestone).
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Minerals for Infrastructure: Steel (iron ore) cement (limestone, gypsum), copper.
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State intervention with a focus on beneficiation for industrialisation is urgently required. Instruments are required to support beneficiation and competitive pricing of these strategic resources include the use of targeted management of exports of minerals. In addition, SA’s share of some resources offers possible producer power which could be used to facilitate backward and forward mineral economic linkages.”
Government has completed downstream mineral value chain strategies on ferrous minerals (iron, manganese and chromium), the PGMs (platinum & palladium), polymers (from coal or gas) and titanium. These strategies have been incorporated into the 2014/5 IPAP.
The MPRDA Amendment Bill should cater for a minimum local content procurement spend, a minimum local STEM skills development spend and a minimum local RDI spend. The DTI is engaging with the DMR on this.
The DTI is engaging with both the DTI and the DST to rebuild national mining technology development (RDI) capabilities, since the demise of COMRO/Miningtek, to support the growth of the upstream minerals sector.
Strategic Minerals
The MCETR identifies key feedstocks into manufacturing, infrastructure, energy and agriculture as being “strategic” (steel, polymers, copper, cement, coal/gas, NPK, et al) and requiring state intervention on domestic pricing. The MCETR also identifies as strategic minerals that offer “producer power which could be used to facilitate backward and forward mineral economic linkages” (MCETR 2012).
The key interventions in this regard include:
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The MPRDA amendment bill to include a method for designating strategic mineral feedstocks and for their domestic developmental pricing.
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The MPRDA amendment bill to include state control over the marketing of select minerals to realise potential producer power to enhance their economic linkages in SA.
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The MPRDA amendment bill to include the public tender of all known unencumbered mineral assets, against the fulfilment of the state’s developmental goals (developmental pricing, local content, beneficiation, transformation, STEM skilling, technology development, et al)
Establishment of a Metals/Commodities Exchange Mechanism should be explored given that South Africa In its favour South Africa has a legal infrastructure that can support an exchange, well established and functioning credit systems, good financial regulation, sufficient financial resources and banking skills and, in the Rand Refinery, a world-class gold depository.
Further benefits include the enhancement of the host country’s financial infrastructure, better standards of financial regulation, knock-on benefits for the economy from both of these, a direct economic benefit from the exchange providing employment and investment, and, finally, prestige for the host country and city.
The prognosis for a South African commodity futures exchange has prospects of improving only once a cash or physical market for the commodities has evolved locally. While these commodities are exported to the exclusion of the local market, as is currently the case, a physical or cash market will have enough difficulty establishing itself let alone providing the grounding for the evolution of a viable futures market.
OIL AND GAS
Oil and gas resources are emerging as another potential game changer in South Africa. It is critical that the movement understands the political economy of the entire oil and gas industry, to ensure an appropriate political response is provided to shape its development in the interest of our people just as is aptly articulated in Norway’s “10 Oil Commandments” policy.
Acceleration of oil and gas exploration including shale gas exploration and coal-bed methane (CBM) can only be successful through a comprehensive approach the upstream sector in the oil and gas sector.
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Focus on optimal development of the oil and gas regulatory framework (including the free carry) to facilitate development, up- and downstream beneficiation particularly on offshore have to be attended as a matter of urgency.
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With regards to shale gas, over and above enabling supply of energy, there is potential of further developing petro-chemical industries, enabling industrial expansion and also ensure competitive supply of chemical feedstock for which currently Sasol is a dominant monopoly.
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We need to develop an enabling local content policy for the sector (upstream beneficiation), to which we will integrate other transformational industrialisation initiatives such as the development of Black industrialists. The DTI’s formulation of a Resources Capital Goods Development Plan (RCGDP), should optimise synergies with the upstream oil & gas sector;
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We also need to develop an enabling downstream beneficiation policy for the sector that ensures that strategic products such as fertilisers, polymers and energy are supplied to our domestic industries at developmental prices;
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Strong and public focused support on stateowned entities and companies such as PetroSA (particularly), Central Energy Fund, SANEDI, Strategic Fuel Funds whilst drawing lessons on successful models and experiences from other countries is essential, as they should form the basis of the States participation in the sector. We should draw lessons from the weaknesses in the mining industry where the interests being served are for foreign owners. It should be noted that we have borrowed, with minor tweaking, a structure and focus on the energy-related SOC’s, designed for objectives of an isolated South Africa during apartheid that are different to the developmental and industrial objectives of a South Africa with the international relations of today.
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In this instance, we should review of the organisation, focus and approach of the oil & gas-related SOC’s. This review to take account of the need for a strong energy group that will take responsibility for the State’s participation in upstream oil & gas (National Oil Company activities), pipelines for gas whether from shale gas developments or from offshore fields, catalyst & partner for petro-chemical developments, security of supply including strategic storage and participation in renewable energy. Our recommendations on Mining & Minerals (above) should be incorporated into our Oil & Gas policies, where appropriate.
It is intended that all the above issues will be addressed by revising all legislative instruments related to the oil and gas sector and incorporating these into a standalone Oil and Gas Act. This sector is currently regulated through the MPRDA, which deals with both onshore hard rock mining as well as onshore and offshore oil and gas.
TOURISM
Another sector which holds great potential for job creation, especially in rural areas, is tourism. However, barriers to entry into the value-chains of the sector that are faced by SMME’s, Black-owned enterprises, particularly the youth and co-operatives need attention. We need to draw lessons on how to improve the integration of Black people, women, the youth, SMME’s and co-operatives into the tourism valuechain.
Advancing transformation in the tourism sector is paramount. The National Department of Tourism must continue to invest in skills training and entrepreneurship development, support the development of catalytic infrastructure in communities (including through its EPWP projects and incentives programme), and further leverage the sector’s BBBEE codes of good practice.
In 2012, the tourism sector represented 3% of our GDP and over 617 000 jobs. In addition, the tourism sector has exceptionally strong linkages to the rest of the economy, for example food and beverage production, financial services, printing and publishing, security services, and many others. If we add up all the indirect impacts, tourism generated 9.7% of South Africa’s GDP in 2013 – and supports more than 1.4 million jobs in the country.
There is also potential to unlock greater value by investing more in nurturing a culture of domestic tourism. By increasing government investment in tourism marketing, we could create meaningful new job opportunities and economic growth. Tourism represents a labour-intensive sector with a supply chain that cascades deep into the broader economy, and the multiplier for its contribution to GDP and job creation outstrips that of most other economic sectors.
TECHNOLOGY AND RESEARCH, DEVELOPMENT AND INNOVATION (RDI)
Building an economy requires quality and accessible research development and innovation (RDI) and persistent technological advancement, as well as appropriate support institutions. RDI has the potential to enable the economy to leapfrog over certain development hurdles in line with the spirit of Operation Phakisa.
In line with our historical resolutions, there is a need for assertiveness to ensure that government attains the target RDI expenditure of 1.5% of GDP. This requires better systems for allocating public funds for RDI. That includes a realistic assessment of which R&D activities are likely to produce economic benefits, rather than expending resources on increasing all possible categories of ‘research’. Focusing on a carefully selected high-impact areas that align with our industrialisation, beneficiation and modernisation policies, strategies and programmes. The lease of all state assets (e.g. minerals, EM spectrum, et al) should stipulate a minimum domestic annual RDI spend of at least 3% of value added. Likewise all major state procurement contracts should seek to strengthen our national RDI system.
South Africa needs to build new centres of excellence in RDI and enhance existing ones with the objective of producing original and potentially ground-breaking research and facilitating a growing community of scientists, engineers, technologists and industry experts, contributing to our Economic Transformation goals. Such development in RDI must be synergised with priority sectors of the economy.
The state should also upscale its support for RDI, and build partnerships with firms which have significant capacity to conduct in-house research and development of new technologies. This will require a review of existing institutions that make up the national innovation system, an assessment of the extent to which they are complementary, and an evaluation of their contribution towards supporting our development strategies under the NDP, the NGP and the IPAP.
SMMEs AND COOPERATIVES
We must continue to encourage the creation of new businesses, cooperatives and the expansion of small business, by reducing the costs of compliance with government regulations, making it easier for companies to ‘do business’ with government, making sure that government pays its invoices on time and strengthening the role of our development finance institutions.
Small and medium enterprises and co-operatives have a potential to create more job opportunities, particularly for the youth. The best way of taking investment opportunities to poor communities is by supporting SMME’s and Cooperatives in those communities. Once these SMME’s and cooperatives thrive, larger firms, such as banks, begin to open up services and economic activity improves. The strategy should be to promote SMME’s and Cooperatives in poor communities.
Greater empowerment and focused support to small business development and Cooperatives. In line with our commitment to place the economy at the centre stage and the deliberate decision to focus on small business and Cooperatives, government must unlock economic opportunities that will ensure inclusive economic growth and the creation of sustainable employment, particularly for women, youth and people with people with disabilities.
Our approach includes measures to reduce monopoly pricing and prevent collusion by dominant players in key product markets. Emphasis must be placed on easing regulatory burdens, support mechanisms which include; strengthening partnerships with stakeholders; access to finance, improving training and capacity building programmes, market access, and simplifying business registration processes. State procurement budgets will be leveraged to develop competitive local suppliers to ensure localisation.
A range of options may be considered, including non-procurement related policy tools that affect SMME’s and Cooperatives in more direct and transparent ways, to promote sustained growth and competitiveness. These include, for example, increased access to credit markets, input subsidies and/or technical and marketing support for finished products.
A big opportunity to make co-operatives work is for the state to adapt the procurement guidelines. The Preferential Procurement Policy Framework Policy (PPPFA) must be used and adapted to leverage the existing and future governmental spending, and support the development of local industries. Developing alternative value-chains that link cooperatives to school nutrition programme, hospitals, SOE’s and agencies should be amongst our flagship projects for empowering SMME’s and Cooperatives.
OCEAN ECONOMY
Our ocean is a national asset. We are determined to ensure that this asset becomes a key component of sustainable growth, generating benefits for all our citizens.
Recognising the enormous potential of the ocean in contributing to economic growth, creating jobs and reducing poverty, key Government departments must cooperate in enhancing the ocean economy in four new growth focus areas, namely marine transport and manufacturing, offshore oil and gas exploration, aquaculture and marine protection services and ocean governance.
The ANC will support and monitor the implementation of the initiatives within the four focus areas of the ocean economy. We need to urgently develop governance and a funding regime, in order to promote the implementation of ports infrastructure that will enable growth in support of marine manufacturing, offshore oil and gas industry in particular to take advantage of job opportunities for boat building, ship repairs and maintenance of oil rigs.
We need to provide support and direction in the development of ocean legislation, including protection of ocean resources and marine spatial planning in order to designate special economic use zones.
MONOPOLIES AND COMPETITION POLICY
The South African economy continues to be dominated by monopolies and oligopolies in strategic value-chains. Monopoly and cartel pricing directly undermines the growth of the economy by increasing prices of key products for downstream industry and those that are essential for low income consumers. In addition, tight knit insiders raise barriers to entry for new participants including black owned and managed firms, and lobby to protect their position through rules and regulations that favour incumbents. These have served to stifle the development of downstream, labour-intensive industries, small and medium-sized enterprises, cooperatives and Black-owned firms.
The genesis of the corruption that has become so endemic in our society in both public and private sectors presents itself in many forms including anticompetitive behaviour and collusion. Our people continue to suffer under the burden of high prices and our economy fails to adequately ensure equitable and broad based access to economic opportunities as a result of this anti-competitive and unscrupulous behaviour.
The competition authorities have identified such conduct but have not been equipped with enough powers to remedy such behaviour. Stronger steps need to be taken to address anti-competitive behaviour through competition enforcement, regulation and complementary policy measures. Regulators need to work much more closely with the competition authorities and consideration should be given to merging these institutions to increase their capacity as well as their powers.
In addition, other policy levers must be applied simultaneously to address excessive pricing by oligopolies supplying key industrial inputs.
PROCUREMENT AND STATE CONCESSIONS/LEASES
Government should intensify the use of public procurement and state concessions as a policy tool for economic development. In this regard, the state needs to incorporate procurement (local content) targets/ conditions, skills formation targets, BBBEE, SMME and Co-operatives targets/preferences, technology development targets and value addition targets into all public procurement and leases (concessions) of public assets or rights such as: mineral rights, fishing rights, electro-magnetic (EM) spectrum (ICT) rights, state land rights, water rights, national conservancies and heritage sites (tourism leases), energy generation rights (IPPs), air (aviation) rights, maritime rights, exclusive marine economic zones, etc.
INFRASTRUCTURE SECTORS
Energy: South Africa is confronted by a growing economy that is in need of ever more energy inputs. The need for investment in additional capacity to provide appropriate energy resources compels the exploration of various ways to secure the security of supply.
Transport: Transport systems are closely related to socioeconomic changes. The mobility of people and freight and levels of territorial accessibility are at the core of this relationship. Economic opportunities are likely to arise where transportation infrastructures are able to answer mobility needs and ensure access to markets and resources.
Information and Communications Technology: The world has become more connected, networked, and interdependent. At the centre of this interconnection is ICT. This sector is a key enabler of innovation and is a fundamental resource for a developing economy. It can open many avenues for growth and employment. There is a need for a comprehensive national approach to the deployment of the ICTs to modernize government, the economy and service delivery within the context of a national e-strategy and an integrated e-government policy. This approach must entail mobilizing all sectors of the South African society and in particular providing broad-based training to those segments of the population that require empowerment to connect to the new ICT environments.
TRADE AND REGIONAL INTEGRATION
Our trade strategy must integrate economic diplomacy through advancing the African Agenda, expanding regional and bilateral relations and creating opportunities for South-South Cooperation, leveraging our significant global diplomatic stature and coverage. There is immense reciprocity and symbiosis between trade and the political aspects of diplomatic relations, with latter contributing towards the strategic approach.
Our economic development is dependent on achieving equitable regional integration and the creation of a regional economic market. The SADC market has grown substantially over the last decade and regional GGP is now over $1trillion. The challenges include:
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Natural tendency of unregulated capitalist development which polarises growth in favour of larger more powerful countries, regions and vested sectoral interests.
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Poor and inefficient logistics infrastructure.
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Lack of integrated and mutually beneficial industrial, agricultural and infrastructure strategies.
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Failure to leverage public and private procurement expenditure to maximise intra-regional production and job creation. Government should focus its engagement in SACU, SADC and in other bilateral and regional fora to address these challenges and to realise the advantages of equitable regional economic integration.
INCOME INEQUALITY
Widening disparities in income, wealth, and opportunities have risen to the top of our concerns. We have focused on confronting inequality of opportunity, focusing on access to education and health and inequality in human capital, however much still needs to be done. Inequality of income is also a function of the distribution of economic assets and their rates of return.
Private wealth is not dislocated from the success of the economic system as a whole, the economy should not be seen as an abstract experience that distributes rewards to a few. The extent to which private wealth accumulation is viewed as not linked to socioeconomic context is problematic and poses challenges of sustainability and long-term stability.
The role of economic policy should therefore be to serve broader needs, including the need to redistribute and empower. Thus, economic interventions should be appraised in terms of how functional they are in relation to our goals of lifting up communities from poverty. We must place our human goals at the centre of our thinking in terms of the decisions we make daily, including our drive to deliver goods and services to our communities.
CONCLUSION
The overview of economic programmes and policies outlined in this report gives a clear indication of the extent and vibrancy of the interventions of the ANC-led government, informed by its vision of building a democratic developmental state in South Africa.
Much is being done, yet much remains to be done, and much can be done better, smarter and more effectively. It is through a constant review of our various programmes and our interventions that the ANC will most effectively calibrate its economic programme and will achieve its goal of radical economic transformation, a transformation that will have the effect of improving the lives of ordinary South Africans. The upcoming organisational discussions in the build up to the NGC, and at the NGC meeting itself, offer the ANC an important opportunity for reflection and renewal.
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Minister spells out rules for sugar imports
Sugar imports from Uganda will only be allowed under the Common Market for Eastern and Southern Africa (Comesa) rules and not any other special arrangement, the government said Thursday.
Acting Agriculture secretary Adan Mohamed said Uganda has been selling sugar to Kenya under the Comesa and the East African Community (EAC) Customs Union rules, and that the agreement alluded to when President Uhuru Kenyatta recently visited the neighbouring country did not imply that this would change.
“Being a member of Comesa, Uganda is entitled to access Kenyan market on Comesa treaty terms,” Mr Mohamed said at a press briefing Thursday.
Under the Comesa rules, member states are allowed to export their surplus sugar to supply-deficient member as per pre-set quotas.
Mr Mohamed said that Uganda has remained Kenya’s key business partner in the region, with trading interests in banking, insurance and commodities such as maize.
The government statement came in the wake of a heated debate involving government officials and Members of Parliament from the western Kenya sugar-growing belt who have accused the State of signing a trade deal that would see excess sugar from Uganda access the local market.
Such imports, the MPs have argued, could depress local prices making it impossible to revive struggling millers such as Mumias. Mr Mohamed said that he was issuing official communication to the country that no trade deal on sugar was reached during the three-day State visit by Mr Kenyatta to Uganda.
Addressing a news conference Thursday, Mr Mohamed said Kenya has been receiving the bulk of its sugar imports from other Comesa states, with Zambia accounting for 70 per cent of the supplies.
The Cabinet Secretary said that given Kenya’s sugar-deficit situation, the commodity is first sourced from the EAC countries, while the balance comes from Comesa states before imports are allowed from overseas markets.
Sugar factories in the country are undergoing operational difficulties that have seen some operate at 30 per cent of their installed capacity.
The stocks of sugar held by millers have fallen below the country’s optimum level, with most factories milling below their required capacities due to inefficiencies.
As at Wednesday, the volume of sugar in all the 11 factories had dropped to 5,000 tonnes, way below the required stocks of 9,000 tonnes that should be held by the millers at any given time.
But the acting agriculture minister expressed optimism that the production levels will rise in the coming days when Mumias, which is on maintenance now, resumes operations in the next two weeks.
Kenya depends on states in the region to bridge the shortage by allowing importation of 200,000 metric tonnes to meet the difference. Kenya produces about 600,000 tonnes annually against the requirement of 800,000 tonnes.
Comesa has given Kenya a one-year extension on sugar import safeguards from the regional states, limiting the entry of sweetener into the country.
These conditions for the Comesa safeguards included privatising State-owned mills, researching new early-maturing and high sucrose content sugarcane varieties and adopting them, and paying farmers on the basis of sucrose content instead of weight.
Other Comesa member states outside the EAC where Kenya acquires its sugar are Egypt, Zimbabwe and Swaziland.
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Northern Corridor Member States committed to work jointly in developing Transport Infrastructure Projects and Trade Facilitation
From 10th to 13th August 2015, the 40th meeting of the Executive Committee and the 27th Council of Ministers meeting, two Policy Organs of the Northern Corridor Transit and Transport Coordination Authority, took place at Kempinsiki Hotel Fleuve Congo, in Kinshasa, Democratic Republic of Congo. The theme of the meetings was: “Towards enhanced Synergies in Regional Trade and Integration”.
During the Policy Organs meetings, the bureau was reconstituted whereby the Democratic Republic of Congo (DRC) took over the Chairmanship of the Authority for the next two years from the Republic of Burundi; the Vice Chair went to Republic of South Sudan and the Republic of Kenya took over as the 1st Rapporteur while the Republic of Rwanda became 2nd Rapporteur. Uganda and Burundi are members.
The Policy Organs adopted a number of key resolutions on program activities related to transport policy harmonization, advocacy and planning, customs and trade facilitation, infrastructure development and management and private sector investment promotion, Northern Corridor Performance monitoring as well as the budget for the financial year 2015/16 and administrative matters.
NCTTCA Policy Organs launched the upgraded Transport Observatory Portal monitoring the performance of the Corridor, accessible at http://top.ttcanc.org.
The Northern Corridor Policy Organs lauded the efforts and the progress made by Member States in developing and improving regional transport infrastructure projects such as the Standard Gauge Railway and oil pipeline.
They commended the Democratic Republic of Congo’s political will to join the Northern Corridor Integration Projects (NCIP) initiative championed by the Heads of States and its commitment to promote the Standard Gauge Railway as part of its Transport infrastructure programs.
The Policy Organs directed the Northern Corridor Secretariat to expeditiously roll out the Road Side Stations and setting up National Multi-Sectoral Task Forces in collaboration with all the Member States. Additionally, the Secretariat was directed to fast track the signing of the Bilateral Agreement on One Stop Border Posts (OSBP) and the implementation of the Road Map.
In attendance of the 27th Council of Ministers meeting, held on 13th August 2015 in Kinshasa, were representatives of some of the intergovernmental organisations and development partners namely; Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), International Conference on the Great Lakes Region (ICGLR), European Union, Commission Internationale du Basin Congo-Oubangui Sangha (CICOS), United Nations Organisations Stabilization Mission in DRC (MONUSCO) and African Development Bank (AfDB).
The 40th meeting of the Northern Corridor Executive Committee decided that the 41st meeting will take place from 9th to 11th December 2015, in Juba, Republic of South Sudan, while the 27th Council of Ministers resolved also to hold the 28th Council of Ministers in June 2016 in Juba, Republic of South Sudan.
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East Africa women business owners sharpen skills
Women entrepreneurs are meeting in Nairobi to explore strategies that would see them step up their participation in business across East Africa.
“This conference on women provides a platform for engagement to address the challenges and opportunities for accelerating inclusion of women in entrepreneurship,” said East African Affairs, Commerce and Tourism CS, Ms Phylis Kandie, on Thursday.
She was speaking to hundreds of female entrepreneurs from the region who are meeting at the KICC in this year’s second East African Community (EAC) Conference on the role of women in socio-economic development.
MARKET ACCESS
“At the EAC level, we are keen on increasing market access for women in business through the removal of barriers to trade, reduction of the time to market, market access, and enhancing competitiveness of our products.”
The two-day event is set to encourage women to capitalise on the recent EAC single customs territory, regional strategy for promoting women in socio-economic development, financial access for women, as well as mentorship opportunities.
The women are set to achieve the milestones through training on product development, creating networks, as well as leveraging on technology to boost their enterprises regionally.
The forum brings together the private sector, non-governmental organisations, women entrepreneurship associations, among other entities with a view to sharpen women skills on leadership and business.
SMART ECONOMICS
“Empowering women is not philanthropy, it is not charity. It simply is smart politics and smart economics,” said Dr Richard Sezibera, the EAC Secretary-General.
Dr Sezibera said that it is impossible to implement effective programmes for socio-economic development without allowing the full participation of women.
“We are free to show the rest of the world that we can do it on our own, and in doing so, we shall achieve long-term, sustainable change and attract passionate women and men in the global marketplace,” said the Deputy Speaker, National Assembly, Dr Joyce Laboso.
Dr Laboso urged partner states to adopt policies that seek to empower women in business such as 30 per cent access to government tenders, the Women Enterprise Fund, as well as Uwezo Fund among others in Kenya.
EQUAL OPPORTUNITIES
“Achieving gender equality is more than 50-50 representation. It also about recognising and respecting the rights of women, offering them equal opportunities to participate in the socio-economic and political development of their countries,” Dr Laboso said.
The EAC delegation at the conference included Ms Dorothy Tuma, chair East African Women in Business, Ms Lilian Awinja, the acting Executive Director, East African Business Council, as well as Ms Mary Makoffu, EAC Secretariat.
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Made in Africa? Why not?
New countries are making the case they can be good homes for manufacturers, a change that China will have to adapt to
In the search for competitive costs and acceptable quality, new actors continuously take center stage. There's always an unforeseen producer, an emerging country ready to offer more advantageous conditions to attract multinationals' investments.
The combination is unchanging: low costs and favorable business climates. The affirmation of a few African countries in textile manufacturing is only the latest example of the sector's mobility.
A recent study by McKinsey – drafted with the usual attention to data – finds that Ethiopia is one of the preferred destinations, No. 7 overall, for the first time. Giants like H&M, Primark and Tesco have already set up factories. Kenya is recording analogous growth, while smaller markets like Lesotho and Mauritius continue to improve their performance. These nations were the first to take advantage of the African Growth and Opportunity Act, which offers sub-Saharan countries the possibility to export clothing products to the United States without incurring tariff barriers. Now, this agreement is directing its benefits toward bigger countries in the process of gearing up: Ethiopia, Kenya, Tanzania and Uganda. East Africa has interesting potential: available labor, hydroelectric power and a wealth of raw materials, especially for sophisticated consumers demanding organic cotton for their pants and T-shirts.
In any case, it's still too early to verify new equilibriums. Bangladesh remains a top destination, but it has suffered terrible work accidents with heavy losses of human life. The attraction of Vietnam, Myanmar, Turkey and India remain important. After these countries, only China surpasses Ethiopia as far as investment expectations. After decades of work, China can still dominate production, but that position is no longer unassailable. Its output has been diminishing since 2010, thanks to its unprecedented delocalization. It is actually Chinese investors who are heading to nearby countries or Africa. There, labor costs are lower and any barrier imposed by the United States can be avoided because the goods are officially "made in Africa."
The collateral effect is evident: China could be breeding its competition. Economic history demonstrates that textile/clothing is one of the first sectors directing a country toward industrialization. Italian textile machinery – among the best in the world – has contributed to the emergence of many markets. Now, it's Africa's chance. Foreign companies need to control product quality and respect labor standards. Governments need to ensure transparency, acumen and visions for the future. These seem like relatively easy tasks, but can prove problematic. If this cycle turns out to be virtuous, the theater of emerging markets will be enriched with new players, and China will need to negotiate the change while controlling it via its investments.
Alberto Forchielli is the managing director of Mandarin Capital Partners and founder and president of Osservatorio Asia
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Liberalizing Africa’s skies to accelerate integration and promote prosperity
The Chairperson of the African Union Commission, Dr. Nkosazana Dlamini Zuma, and the Chairperson of the African Airlines Association (AFRAA), Mrs. Fatima Beyina-Moussa, discussed challenges and opportunities facing African carriers on the continent. They also talked about the move towards achieving African open skies, when they met for the first time, on Wednesday 19 August 2015, at the AU Headquarters in Addis Ababa, Ethiopia.
Mrs. Beyina-Moussa, who is also the Chief Executive Officer of Equatorial Congo Airlines, (ECAir), expressed AFRAA’s concerns that Africa’s skies are not fully liberalised, and the urgent need to implement the Yamoussoukro Decision. “Right now it is difficult to travel within Africa. African airlines did not understand before the importance of Yamoussoukro but now are committed to the liberalisation of Africa’s skies,” she noted the positive progress. Since the African Union Summit in January 2015, 11 Member States have already agreed to open their skies.
The AU Commission Chairperson commends the progress made and sees it as a motivation for others to follow suit. “The 11 countries should go ahead to show that it is possible, and the others will come around when they are ready. Opening our skies only to non-African airlines will only lead to the disappearance of African airlines,” Dr. Dlamini Zuma stressed.
African carriers still face a number of challenges especially fuel and services cost, inadequate infrastructure, lack of human resources and competition from non-African airlines. However, the prospects and benefits from open skies in Africa are great – it will create more jobs especially for the youth and improve the movement of people and goods within the continent, hence, enhancing intra-Africa trade.
AFRAA has 30 African airlines and serves as a continental body to promote and protect their common interests. The AU works closely with AFRAA to lobby Member States to promote the liberalisation of African skies.
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tralac’s Daily News selection: 20 August 2015
The selection: Thursday, 20 August
SADC Industrialisation Strategy and Roadmap (SADC)
The SADC Industrialization Strategy and Roadmap, 2015-2063, was approved by the Extra-Ordinary Summit in Harare, Zimbabwe, in April 2015. The Strategy is premised on the conviction that regional integration will promote industrialization. It recognizes that industrial policy and implementation will be largely undertaken at the national level and that its success depends on forging a compact for industry consisting of the government, the private sector, civil society, labour and the development partners.
Industrial policy must be crafted within the context of a country’s competitive advantage, including future or nascent advantage. The essence of transformation is diversification via upgrading and climbing the technology ladder. Successful industrialization will be achieved not just by doing things better – though that is a key factor – but also by doing different things, implying industrialization is achieved through diversification. [Download]
Greece knocks monetary union off SADC's agenda (ISS)
There was a telling moment of candour at this week’s annual SADC summit when South Africa’s Trade and Industry Minister Rob Davies acknowledged that the organisation had put the goal of a single regional currency by 2018 on the backburner because of developments in Greece. The organisation’s ambitious economic integration strategy had once envisaged a customs union by 2010, monetary union by 2016 and a single currency by 2018. But SADC’s current Regional Indicative Strategic Development Plan emphasises industrialisation instead. Davies told the African News Agency that ‘monetary union is something for the longer term and not now.’
‘The experience of the EU and Greece was about constructing a monetary union among countries with very divergent development, and not all with the same value in currency,’ he said. ‘You can see it is becoming unstuck in Europe and it is only being held together in Europe under very difficult conditions. People are getting bailouts, and who is going to do that in southern Africa where its levels of diversification are even higher?’ he asked. [The author: Peter Fabricius]
What approaches and modalities should be followed for the establishment of the Continental FTA? (tralac)
A more workable approach that identifies key priorities to address the most pressing challenges to Africa’s integration and development is imperative in order to avoid getting stuck on sensitive market access negotiations. A practical sector-by-sector or issue-by-issue approach in which fundamental principles and minimum common points are outlined in an early agreement could provide the basis for continuous adaption and improvement in each identified area. Such agreements should be anchored in an overarching legal framework that sets out the new pathway for Africa’s integration and in line with the vision provided of Agenda 2063. This could offer a more sensible approach for the establishment of the CFTA. [The author: JB Cronje]
Competition looms as Nigeria gears up for continental free trade (BusinessDay)
What does the TFTA really mean for regional integration in Africa? (SAIIA)
Given the history and current nature of regional integration on the continent, the private sector will ultimately have to be the champion of regional integration in Africa. Whether the TFTA will be successful or not will depend on whether industrialists and entrepreneurs take advantage of the provisions of the agreement to invest in regional value chains across the continent. It is unfortunate that the TFTA does not make much mention of co-operation on FDI issues as foreign investors will hopefully see Africa as a more attractive investment destination due to the creation of a larger market, and there is scope for African countries to co-operate on FDI regulation. The creation of a regional FDI policy would makes Africa’s regional economic communities more appealing and provide impetus for investors to build cross-border operations. [The author: Mark Schoeman]
Building Bridges: East Africa regional workshop (Tanzania Daily News)
A renowned policy drafter and Kenya Senator, Prof Peter Nyong'o said that he feels that legislation harmonisation is paramount for economic integration to be complete. Prof Nyong'o said that regional integration has for many years been an exclusively inter-state affair and that there were no logical or economic imperatives for businesses to lobby for regional integration as well as no strong national business interests in individual member states to push for regional integration. He said that today the liberalisation of the economy has brought to the forefront the private sector in both policy and economy and that there is recognition of the potential of the role of the private sector in both regional trade and investment scheme projects.
South Africa’s agricultural trading relationship with Botswana, Lesotho, Namibia and Swaziland (tralac)
The objective of this paper is to analyse the Southern African Customs Union’s agricultural trading relationship with particular focus on South Africa’s dominant trading position vis-à-vis the rest of SACU member states, namely Botswana, Lesotho, Namibia and Swaziland. Intra-BLNS agricultural trade is extremely limited. Namibia exports some beer to both Botswana and Lesotho and imports some beef from Botswana. Lesotho has virtually zero exports to the other BLNS partners but imports cotton from Botswana. Botswana imports various products in minor amounts from Namibia, while Swaziland is not actively involved with the BLNS partners. [Download]
Internal barriers in India will limit deal with SACU (Business Day)
Barriers to trade in India and the sensitivity of some of the products it has proposed for preferential treatment are the main stumbling blocks to concluding a trade agreement, MPs heard on Tuesday. "We are now looking at an early conclusion of the negotiations but at a reduced level of ambition," Ms Kruger said.
Kenya: Cargo handled at Mombasa up 14% to 13.2m tonnes (Daily Nation)
Infrastructure imports and mineral exports have boosted activity at the Port of Mombasa in the first half of the year. The Kenya Ports Authority has posted 11.2% increase in performance. The port handled a total of 13.21 million tonnes compared with 11.88 million tonnes handled in a similar period in 2014. Container traffic increased by 14.2% to 529,000 this half of the year from 464,000 in the same period in 2014. Kenya Ports Authority Managing Director Gichiri Ndua said imports for the regional integration, improved economic performances, project cargoes and infrastructural developments, especially the standard gauge railway, helped KPA's performance record an uptick.
Kenya’s foreign direct investments to hit over Sh200bn (Daily Nation)
Kenya projects that foreign direct investment will surge to over Sh200 billion this year riding on renewed investor interest and confidence in the country’s business climate. Speaking at the Kenya-Japan investment forum in Nairobi on Wednesday, Kenya Investment Authority (KIA) managing director Moses Ikiara said the improving business environment coupled with planned, high profile investment forums continue to attract investors from across the world.
Kenya’s exports to Dar drop 30% in first half of the year (Business Daily)
Data from the Kenya National Bureau of Statistics (KNBS) shows that the country sold goods worth Sh12.2 billion to Tanzania in the six months to June, down from Sh17.7 billion in a similar period last year. “Tanzania has been investing in industries and it was obvious that our goods would not be going there in perpetuity,” said Joseph Kosure, a consultant in the external trade section at the Ministry of Foreign Affairs. Data from the Export Promotion Council shows that the balance of trade between the two countries has been deteriorating due to an increase of Kenya’s imports from Tanzania. Last year Kenya imported goods worth Sh18.3 billion from Tanzania, an increase from the previous year’s Sh11.6 billion, thereby narrowing the positive balance of trade to Sh24.3 billion from Sh28.8 billion.
Forget Uganda’s 1pc imports, our State protectionism policy killing sugar industry (Business Daily)
Role of the state in business, agriculture in Mozambique (SPEED)
Against this background, the private sector umbrella organization, CTA in collaboration with the USAID Support Program for Economic and Enterprise Development (SPEED), have commissioned this study to contribute to the discourse and generate a basis from which further understanding can follow on the state’s engagement in business. The state engages in the business environment as a policy maker, regulator, promoter and facilitator as well as an owner of state owned enterprises. The focus of this report is the state’s role as an owner of enterprises. The report investigates the historical, regulatory and institutional framework and the trends of state ownership in Mozambique; and it provides a comparative perspective on state owned enterprises in resource rich countries. [Downloads are available]
Agribusiness on rise in north Uganda region where rebels fought (Reuters)
Nigeria: second quarter trade report (Bureau of Statistics)
The total value of Nigeria’s merchandise trade during Q2, 2015, was recorded at ₦4,372.4bn. This was 0.5% less than the value of ₦4,392.7bn recorded in the preceding quarter. In comparison with the corresponding quarter of 2014, the value of the total merchandise trade decreased by ₦2,287.0bn, or 34.3%. Imports from Africa stood at ₦97.8bn, or 6.5% of total imports, while imports from ECOWAS amounted to ₦39.0bn, 39.9% of total African imports. Nigeria exported goods valued at ₦554.3bn, or 19.3% to the continent of Africa while exports to the ECOWAS region totalled ₦171.1bn, 30.9% of all exports to Africa. [Download]
How China's slowdown is affecting Africa (DW)
Over the past decades, Africa's resource-rich nations have attracted massive investments from fuel-hungry China. But its recent slowdown has left Africa vulnerable, as Fathom Consulting economist Oliver White explains.
Egypt to host Africa 2015 Business Forum (Graphic)
Zambia: Panic buying, speculation 'chokes' Kwacha (Daily Mail)
EAC Women in Business Conference (EAC)
Buhari leads Nigerian delegation to Commonwealth Business Forum (BusinessDay)
Tito Mboweni: 'BRICS bank to balance global order' (Business Day)
Donald Mackay: 'SA shouldn't kowtow to China on trade' (RDM)
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SADC Industrialisation Strategy and Roadmap
The SADC Industrialization Strategy and Roadmap, 2015-2063, was approved by the Extra-Ordinary Summit in Harare, Zimbabwe, in April 2015. The Strategy is premised on the conviction that regional integration will promote industrialization. It recognizes that industrial policy and implementation will be largely undertaken at the national level and that its success depends on forging a compact for industry consisting of the government, the private sector, civil society, labour and the development partners.
The SADC Industrialization Strategy and Roadmap seeks to engender a major economic and technological transformation at the national and regional levels within the context of deeper regional integration. It also aims at accelerating the growth momentum and enhancing the comparative and competitive advantage of the economies of the region.
This entails the pursuit of a focused programme for the accumulation and deployment of knowledge, modern physical assets and human capital, particularly the youth as well as other capabilities. A transformed economy has greater promise for substantially raising living standards, generating employment, alleviating poverty and mitigating external shocks.
In the 21st century, SADC economies can no longer rely on rich resources or low-cost labour as a platform for industrialization and modernization. The strategic thrust must shift from factor accumulation growth – employing more labour and investing more capital – to total factor productivity, which is the efficiency with which resources are deployed in the production process. Catching up is dependent on narrowing productivity gaps both between sectors within SADC economies and with more advanced economies, necessitating a focus on advanced skills and state-of-the-art technologies. The fact that 60 per cent of world trade is in intermediate products strengthens the case for value-addition in SADC economies and value-chain participation.
The Strategy is designed as a modernization scheme, and is predicated on maximum exploitation of comparative advantage and creating enduring conditions for competitive advantage at enterprise level. The latter thrust requires earnest efforts aimed at enhancing technological setups and readiness, changes in the way of doing business, scaling-up productive capacity and enhancing economic interlinkages to unlock regional potential in general. Sustainability of the process would thus require turning the economies into knowledge-based and competitive structures. Such efforts, while requiring quality changes in a wide range of policies and actions, indeed recognize, and build on, the efforts already made nationally and regionally.
Industrial policy must be crafted within the context of a country’s competitive advantage, including future or nascent advantage. The essence of transformation is diversification via upgrading and climbing the technology ladder. Successful industrialization will be achieved not just by doing things better – though that is a key factor – but also by doing different things, implying industrialization is achieved through diversification.
The SADC Industrialization Strategy and Roadmap 2015-2063 has a long term perspective, and is aligned to national, regional, continental and international dimensions. The Regional Strategy is driven by national development strategies, visions and plans and primarily by the SADC Treaty, the RISDP, SADC protocols and specifically by the Industrial Development Policy Framework (IDPF). It is also informed by African Union’s Accelerated Industrial Development of Africa and Agenda 2063. The Strategy recognizes that for trade liberalization to contribute to sustainable and equitable development, and thus to poverty reduction, it must be complimented by the requisite capacities to produce, and to trade effectively and efficiently.
The primary orientation of the Strategy is the importance of technological and economic transformation of the SADC region through industrialization, modernization, skills development, science and technology, financial strengthening and deeper regional integration. Industrialization should be seen as a long-term process of structural transformation and enhanced competitiveness of the entire SADC region. The SADC region is in catch-up mode and needs to run faster than other emerging economies to converge with upper middle-income and high-income countries.
The Strategy is anchored on three pillars namely; industrialization as champion of economic and technological transformation; competitiveness as an active process to move from comparative advantage to competitive advantage; and regional integration and geography as the context for industrial development and economic prosperity.
The Strategy’s long term vision is aligned to the African Union Agenda 2063, covering the period 2015-2063. During this period, SADC economies seek to overcome their development constraints, and progressively move from factor-driven; to investment-driven, then to efficiency-driven; and ultimately to the high growth trajectory driven by knowledge, innovation and business sophistication. It is envisioned that by 2063, the SADC region will be fully transformed and will be an important player in the continental and global landscape, premised on the three growth phases:
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Phase I: covers 2015 to 2020. This period constitutes a period of active frontloading of the Industrial Development and Market Integration and related infrastructure and services support to industrialization, with interventions to strengthen integration and competitiveness. During this phase, SADC countries should target per capita income growth of about 6 percent annually to achieve the lower income band of the factor-driven stage of US$ 2000.
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Phase II: covers the period 2021 to 2050, will focus on diversification and enhancement of productivity and competitiveness. During this period, SADC aims to achieve the targeted GDP per capita of US$ 9000 by 2050 and a per capita growth rate of 8 per cent annually from 2020 onwards.
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Phase III: covers 2051 to 2063, during which SADC economies would move into the innovation-driven stage, characterized by advanced technologies and increased business sophistication. To achieve that status, GDP per capita would need to rise from US$ 9000 in 2050 to US$ 17000 by 2063, with an annual income growth of about 5 per cent.
» Visit the SADC Legal Texts and Policy Documents page for additional regional resources.
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Nigeria’s merchandise trade declines in Q2, 2015
China and India emerged as Nigeria’s biggest trade partners in the second quarter of 2015, as the country’s total foreign trade value declined by about 0.5 percent, the Foreign Trade Statistics Report of the Nigerian Bureau of Statistics (NBS) has revealed.
The total value of Nigeria’s merchandise trade during Q2, 2015, was recorded at ₦4,372.4 billion. This was 0.5% less than the value of ₦4,392.7 billion recorded in the preceding quarter. In comparison with the corresponding quarter of 2014, the value of the total merchandise trade decreased by ₦2,287.0 billion or 34.3%.
Relative to the preceding quarter, a rise of ₦214.1 billion or 8.0%, in the value of exports combined with a decline of ₦234.4 billion or 13.6%, in the value of imports improved the country’s trade balance, which increased by 47.9% or ₦448.6 billion during the quarter. Year on year, the country’s trade balance declined by 48.8% as imports declined by 24.5% whilst exports declined even further by 38.5%.
Imports Classified by Standard International Trade Classification and Origin
The value of Nigeria’s imports stood at ₦1,493.2 billion during Q2, 2015, a decrease of 13.6% from the value of ₦1,727.7 billion recorded in the preceding quarter. Year-on-year analysis showed that import trade was lower by ₦484.0 billion or 24.5%.
When classified by Section, the structure of Nigeria’s import trade was dominated by the import of “Boilers, machinery and appliances; parts thereof” which accounted for N356.0 billion or 23.8% of the total value of imports in Q2, 2015. Other commodities which contributed significantly to the value of imports in the review period were “Mineral products” at N173.9 billion or 11.6%, “Products of the chemical and allied industries” at N155.2 billion or 10.4%, “Vehicles, aircraft and parts thereof; vessels etc.” at N152.9 billion or 10.2%, and “Base metals and articles of base metals” at N132.8 billion or 8.9% of the total quarterly imports respectively. Imports classified by Broad Economic Category revealed that “Industrial Supplies (nec)” ranked first with an import value of ₦433.6billion or 29.0% of the Q2 total. This was followed by “Capital Goods and parts of”, with the value of ₦342.2 billion or 22.9%, and “Food and Beverage” with ₦290.4billion or 19.4% of total imports. Motor spirit remained the product with the greatest import value, at ₦140.5 billion*, or 9.4% of the total Q2 2015 bill.
Nigeria imported goods mostly from China, United States, India, Belgium and Netherlands, which respectively accounted for ₦336.5 billion or 22.5%, ₦143.6billion or 9.6%, ₦115.4billion or 7.7%, ₦83.4billion or 5.6% and ₦ 80.9billion or 5.4% of the total value of goods imported during the quarter.
By Continent, Nigeria consumed goods largely from Asia, with an import value of ₦665.7 billion or 44.6% of the quarterly total. The country also imported goods valued at ₦502.3 billion or 33.6% of the total from Europe, and ₦210.1 billion or 14.1% of the total from The Americas. Imports from Africa stood at ₦97.8 billion or 6.5% of total imports, while imports from the region of ECOWAS amounted to ₦39.0 billion, 39.9% of total African imports.
Exports Classified by Standard International Trade Classification and Destination
The value of Nigeria’s exports totalled ₦2,879.2billion in Q2, 2015, an increase of ₦214.1billion or 8.0% over the value recorded in the preceding quarter, yet a decline of ₦1,803.0 million or 38.5% year on year. The structure of the exports is still dominated by Crude Oil exports, which contributed ₦2,121.4 billion or 73.7% to the value of total domestic exports in Q2 of 2015*. Natural Liquefied Gas was the product with the second greatest export value, recording ₦260.7 billion or 9.1% of the total export value during the period under review.
Exports classified by section revealed that Nigeria exported mainly “Mineral Products”, which accounted for ₦2,514.7 billion or 87.3% of the total export value in Q2 of 2015. Other products exported by Nigeria include “Vehicles, aircraft and parts thereof; vessels etc.” at ₦250.6 billion or 8.7%, “Vegetable Products” at ₦36.7 billion or 1.3%, and “Prepared foodstuffs; beverages, spirits and vinegar; tobacco” at ₦24.6 billion or 0.9% of the totals respectively.
Nigeria exported goods mainly to India, Spain, Netherlands, South Africa and Brazil in the quarter of review, whose values stood at ₦406.1 billion or 14.1%, ₦297.4 billion or 10.3%, ₦296.3 billion or 10.3%, ₦240.9 billion or 8.4% and ₦147.8 billion or 5.1% of the total exports respectively. By continent, Nigeria exported goods mainly to Europe and Asia, which accounted for ₦1,063.0billion or 36.9% and ₦823.8 billion or 28.6% of the total export value respectively during the period under review. Nigeria exported goods valued at ₦554.3 billion or 19.3% to the continent of Africa while export to the ECOWAS region totalled ₦171.1 billion, 30.9% of all exports to Africa.
* Crude oil and Petroleum motor spirit figures for this quarter are estimated and should be treated as provisional.
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New AGOA deal offers Nigeria, others $8b export target
New measure to promote standards
In what might be a major boost to Africa’s economies, the United States (U.S.) has revalidated the African Growth and Opportunity Act (AGOA) by 10 years, to elongate the flagship trade deal with the continent till September 30, 2025.
The new window may have re-opened vista for Nigeria and other countries in the region to grow their present $4.8 billion worth of non-oil exports to the U.S. to over $8 billion within the next 10 years, under the extended trade deal.
Essentially, under the programme’s extended regime, African countries would be engaged in the rules of origin to engender value-addition of raw materials as they could now include the cost of direct processing, as they share production from one country to another on their way to the U.S. market.
Furthermore, African countries exporting to the U.S. can also use the programme across borders, thereby stimulating intra-African trade in regional markets, where value may be further added to export products.
Hitherto, processed cassava grains, popularly called “garri” is processed in Nigeria but packaged in Ghana for acceptability. Under the new regime, exporters of such products can enjoy the cost of direct processing with the rules of origin.
Similarly, the reviewed scheme equally renews focus on the ability of Africans to meet food safety standards in the U.S. and other industrial standards that have been identified for export products.
Specifically, sanitary and phytosanitary requirements for which many export goods originating from Nigeria have been rejected would be enforced and capacity of exporters built, to reduce the amount of rejection.
With the termination of crude oil export from Nigeria and others to the U.S. following the latter’s shale evolution, the need to diversify the Nigerian economy has been intensified through exploitation of opportunities in the non-oil sector.
At a yearly average of $369 million between 2001 when the AGOA scheme commenced and 2013 when it was subjected to review, AGOA non-oil imports were $4.8 billion, thus providing an opportunity for improved trade to reach over $3.69 billion within the next 10 years of the scheme’s extension.
Though several non-oil sectors experienced sizable increases during the 13-year period, including apparel, footwear, vehicles and parts, and fruits and nuts, South Africa remains the largest non-oil AGOA beneficiary.
The European Union (EU) recently suspended some agricultural food exports from Nigeria.
The food items banned from Europe till June 2016 are beans, sesame seeds, melon seeds, dried fish and meat, peanut chips and palm oil.
This further affirms a recent World Bank report which estimated that developing countries will lose about $6.9 billion by 2015 to rejection of their exported food items.
According to the Federal Government, Nigeria has continued to record the highest number of product rejection in the continent’s export profile to developed countries.
Former Minister of Industry, Trade and Investment, Dr Olusegun Aganga, had said the country’s image has been dented due to huge amount of rejects, maintaining that Nigeria, the giant of Africa, still has to depend on Ghana to export its products to the world.
According to him, the number of rejects in major foreign markets between 2012 and 2013 revealed that Benin Republic had two rejects; Egypt had 95, Ethiopia got three, Zambia recorded five, and South Africa 56 while Nigeria recorded 102.
Giving an insight into the programme, Assistant U.S. Trade Representative, Florie Liser explained that the renewal reaffirms the strong support in the U.S for closer commercial ties with its sub-Saharan African partners.
She said: “The 10-year extension – the longest in the programme’s history – will also provide certainty for African producers and U.S. buyers regarding access to the U.S. market under the AGOA programme and create a stable environment that encourages increased investment in sub-Saharan Africa.
“The AGOA Forum will provide also an opportunity for the top trade officials from both Africa and the U.S. to discuss how best to take advantage of the opportunities presented by the extension of the programme, including through developing AGOA utilisation plans that are included as a part of the new AGOA legislation. And now that we are no longer worrying about AGOA expiring in the near term, the AGOA Forum will provide an opportunity for us to begin a more strategic conversation about the future of our trade and investment relationship with Africa,” she added.
Acknowledging the challenges with the programme, Liser said: “We also know that there is still much work to be done to take full advantage of AGOA. So we in the U.S. are providing trade capacity building and other technical assistance, and we really look forward to engaging with our African partners.”
On the success of the scheme, she explained that U.S. has “used the AGOA eligibility criteria over the years to really work with our African partners in putting in place, a number of situations there that really promote trade and investment, having rule of law, respecting commercial relationships between U.S. businesses and African businesses that are partners in taking advantage of AGOA.
She added: “All of these things have not only led to the Africans being able to export more to the U.S. but also to the U.S. having greater relationships with increasing exports with our African partners. So we do believe that the great feat of AGOA over the past 15 years of the programme is not only the trade, but the relationships that have been put in place and the kind of trade and investment promoting environment that has been established in partnership with our African AGOA partners.”
In order to ensure proper harnessing of the scheme, Liser emphasised the need for a partnership between not just the U.S. Government and African governments, but also a partnership with the entrepreneurs and private sectors on both sides.
According to her, African entrepreneurs do need to make sure that they have all the information about AGOA, how it works, and about the opportunities that are present in the U.S. market for their products here.
Similarly, Assistant Secretary for African Affairs, Linda Thomas-Greenfield noted that the recent 10-year reauthorisation of AGOA garnered bipartisan support in the U.S.
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SA business wants visa-free entry for BRICS member countries
South African business on Tuesday welcomed the decision by Russia to consider offering visa-free entry for tourists from China, India, Brazil and South Africa as fellow members of BRICS.
“This is a step in the right direction! If the business doors are open or 10 multi-year visas entry are issued, that will no doubt boost our economic growth,” Brian Molefe, chairman of BRICS Business Council SA, told Xinhua.
With an open visa, coupled with a free trade policy, an estimated three million jobs can be created every month within the grouping, according to Molefe.
A number of South African business organisations have been pushing for the scrapping of visas among BRICS members so as to make doing business and travelling easier.
Trade and economic experts say South Africa’s strict visa regulations have become the main impediment for mutual economic and trade deals among BRICS members.
The BRICS countries together have a combined Gross Domestic Product of 33 trillion US dollars and accounted for 17 percent of global trade last year.
Russian President Vladimir Putin on Monday called for visa-free travel for tourists from India and South Africa, in a move to boost Russia’s ailing tourist industry which has been hit by the falling ruble and foreign travel restrictions for Russian officials.
“In order to attract foreign tourists we may provide further simplification of visa formalities, for example, to expand the practice of visa-free exchanges for tourist groups. It may be applied to all BRICS countries,” Putin said at a session of the State Council Presidium in Crimea.
South Africa has been criticized for its heavy handedness in dealing with foreigners, and tight visa regulations, which have already impeded tourism growth.
“Interestingly, South Africa is more open to the countries in the West like the UK and US than her BRICS partners despite political talk of interaction and cooperation,” said Dr James Matthews, a lecturer in international relations at the Witwatersrand University in Johannesburg.
Lunga Ngqengelele, spokesperson for SA Minister of Home Affairs Malusi Gigaba, said, “You may not be aware that BRICS countries that carry official and diplomatic passports are exempted from visa requirements. What remains to be dealt with are passport holders of ordinary people and business persons to be exempted for those countries.”
Notwithstanding, a South Africa businessman, Peter Daniels of Metal and Steel Company based in Johannesburg said, “SA is the only BRICS member country that offers a 10-year multiple-entry visa to business people in the grouping. All the BRICS members should also take a leave from South Africa and do the same.”
Brazil does not require visa for South Africa nationals and vice versa, according to Paul Murray of Immigration Solutions, a company that provides immigration consultancy.
He noted that for South Africans visiting China, they need a visa, which costs an average of US$ 50 and the process takes about four working days. And visitors from China are not spared of these hassles when they want to visit either South Africa or India.
The number of tourists from China dropped by almost a quarter in 2014 when less than 83, 000 Chinese tourists visited South Africa, down from 109,000 in 2013, according to a report compiled by the Tourism Business Council of South Africa in June.
South African President Jacob Zuma said earlier this year that his country was making efforts to remove trade barriers and promote investment opportunities, therefore it was necessary to remove barriers so as to help BRICS countries grow faster and create more jobs.
South Africa’s ANC backs oil-law plan in economic policy review
South Africa’s ruling African National Congress backed a plan to split legislation governing the oil and gas industry from mining laws as the party begins a review of its policies.
South Africa needs a separate law to account for the specific needs of the industries as the country prepares for the “potential game-changer” of oil, gas and shale exploration, the ANC said in a document due to be discussed at its National General Council meeting in October.
The ANC’s backing strengthens the hand of Mineral Resources Minister Ngoako Ramatlhodi, who won plaudits from the Chamber of Mines in January when he spearheaded the plan. Oil and gas companies are in favor of a separate law because the industries are different and require diverse rules.
The NGC is a chance for the ANC to assess its policies halfway through President Jacob Zuma’s second term as leader of the party. It comes at a time when the economy is beset by power cuts, strikes, weak commodity prices and a one-in-four unemployment rate.
These factors “herald a difficult period for South Africa,” ANC policy head, Jeff Radebe, told reporters in Johannesburg on Monday. “The ANC is to review policies to deepen South Africa’s industrial base in manufacturing, agricultural development and mining.”
In the document, the ANC urged the government to take measures to improve the competitiveness of Africa’s most industrialized economy. It proposed “moderating” administered price increases, “better managing” the level and volatility of the rand and reducing “anomalous” port and freight subsidies for commodity exporters.
The rand has weakened 18 percent against the dollar in the past year. Economic growth, which weakened to an annualized 1.3 percent in the first quarter, could continue to disappoint if labor relations and power shortages worsen, the World Bank said on Monday.
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tralac’s Daily News selection: 19 August 2015
The selection: Wednesday, 19 August
Summit noted the critical role played by macroeconomic convergence programme in facilitating stability and deepening market and financial integration, and urged Member States to intensify and consistently implement regional policies and programmes as well as Member States’ economic reforms, plans and strategies to resolve the challenges affecting SADC economies for sustainable growth path.
Summit noted progress in the implementation of the Regional Indicative Strategic Development Plan 2015-2020 and of the Industrialisation Strategy and Roadmap 2015-2063, and resolved to continuously monitor the actualization of key milestones at its Ordinary Summits;
Summit noted the need to explore sustainable ways of financing SADC programmes, in particular the implementation of the Revised RISDP and Industrialisation Strategy. To this end, Summit directed Council to finalise on-going work on alternative sources of funding and report to the next Ordinary Summit. Summit resolved to scale up implementation of regional infrastructure as a key enabler to economic integration in support of industrialization. [Download]
2015 SADC People’s Summit: communiqué
On cross border traders, small scale farmers: Governments must extend the Simplified Trade Regime, implemented in COMESA, to the SADC region with a focus on the removal of Non-Tariff Barriers, Empowerment of Women, and simplified paperwork; Governments must put in place pre-requisite infrastructure to support production, agro-processing & value addition of agricultural produce and promote market access in regional and other export markets; and Governments must ensure that trade policies protect women small-scale farmers and cross-border traders and that they need to be gender-sensitive, in line with SADC gender declarations.
SADC to implement uniform goods valuation (The Herald)
The Southern African Development Community is working towards effective implementation of a uniform valuation of goods at customs clearance centres among member states to ensure proper valuation of imports and exports. This is expected to be achieved through training of customs of officials. SADC currently uses World Trade Organisation valuations but uniform implementation of the system by some member states has been the biggest challenge. Speaking to The Herald Business on the sidelines of the SADC Customs Training for Trainers Programme 2013-2016 yesterday, SADC senior programme officer for Customs Mr Willie Shumba said the development of capacity in customs is critical in promoting compliance of legitimate international trade.
Freight forwarders oppose COMESA’s RCTG scheme (The Post)
Zambia risks massively losing out on business and government revenue if COMESA’s RCTG scheme is implemented, says the Customs Clearing and Freight Forwarding Agents’ Association. The Regional Customs Transit Guarantee scheme, popularly referred to as the CARNET, is a customs transit regime designed to facilitate movement of goods under customs seals in the COMESA region and to provide the required customs security and guarantee to the transit countries. Last month, Nakonde customs clearing agents said the Zambian government should not sign up for the scheme because it would make clearing agents at the border town redundant, which would have far-reaching negative effects on Nakonde’s economy. But Common Market for Eastern and Southern Africa (COMESA) secretary general Sindiso Ngwenya reacted by insisting the local clearing and freight forwarding fraternity should not fear the RCTG scheme because it is a mechanism that will give them business opportunities to participate in regional trade.
EALA Committee on Communication, Trade and Investments: report on the workshop on investment policies and strategies in the EAC
The legislators also want a framework in place to ensure that specialization in investments are encouraged among the Partner States as opposed to intra-competition. In addition, they are calling for inculcation of mechanisms to enable investors to capitalize a certain percentage of profits in the EAC countries rather than repatriating all the money back to their home countries. The issues are summed up in a report of the Communications Trade and Investment (CTI) on investment promotion policies in the region that was debated and adopted on Tuesday morning as the EALA Session commenced in Kampala, Uganda. [Download]
Experts call for regional body to regulate unfair trade competition (Daily Monitor)
In training workshop recently organised by SEATINI Uganda in partnership with CUTS and with support from TradeMark East Africa, experts on competition related matters said with the growth of cross-border trade, it is prudent to establish a regional authority that will regulate inevitable unfair trade tendencies.
Middle East and North African countries meet to work on competition and consumer protection policies (UNCTAD)
Over 140 mines in Congo are now officially conflict-free: the latest list (ENOUGH)
Funded by USAID and the German government's Federal Institute for Geosciences and Natural Resources, the teams are led by the International Organization for Migration and include representatives from Congolese civil society, the Congolese government, business, and the United Nations. The teams of "validation missions" have made significant progress since they started: out of a total 180 mines assessed so far, 141 have now been validated as conflict-free. While this does not include every mine, it does cover a large percentage of the minerals trade, as many of the large mines in eastern Congo have been validated. However, the validation missions still need to travel to several other areas, including Shabunda and Walikale.
AfDB bails out Zimbabwe (NewsDay)
Zimbabwe’s bid to join the African Trade Insurance Agency has received a major boost after the African Development Bank chipped in with $4 million of the money required to get registration, Finance minister Patrick Chinamasa has said. Zimbabwe requires $15m as minimum capital subscription to the ATI.
Kenya cuts Uganda power imports by more than 50% (Business Daily)
Kenya has cut electricity imports from Uganda by more than half following the injection of additional geothermal power into the national grid. Data from the Energy Regulatory Commission indicates that Kenya imported 27.97 million kilowatt-hours from the neighbouring countries including Ethiopia in the first half of the year, down from 57.91 million kWh in same period last year, a 51.7 per cent drop. Uganda, which is pushing for increased trade with Kenya, accounted for 95 per cent of Kenya’s power imports or 26.49 million kWh.
Talks on for direct Nairobi-Tokyo flights (Daily Nation)
Kenya has started talks with Japan over the introduction of direct flights between Nairobi and Tokyo. Speaking at a Kenya-Japan investment forum in Nairobi on Wednesday, Foreign Affairs and International Trade Cabinet Secretary Amina Mohamed said direct flights between Tokyo and Nairobi would boost business between the two countries.
Dangote Cement: reaping the benefits of African expansion (ThisDay)
Goddy Egene writes that the financial results of Dangote Cement Plc for the half year ended June 30, 2015, show that the company has begun to reap the benefits of its expansion across Africa. Dangote Cement Plc recently inaugurated its new cement plant in Zambia. The Zambia plant, the sixth integrated plant outside Nigeria, was in line with the company’s plan to invest massively in Africa bearing in mind the impact it would have on Africans. The company, which is the highest capitalised on the Nigerian Stock Exchange, accounting for almost 30% of the total market value, had announced plans to create 16 cement plants across Africa to produce at least 80 million tons of cement and address the infrastructure needs of the continent.
SA business wants visa-free entry for BRICS member countries (Gbooza/Xinhua)
South African business on Tuesday welcomed the decision by Russia to consider offering visa-free entry for tourists from China, India, Brazil and South Africa as fellow members of BRICS. "This is a step in the right direction! If the business doors are open or 10 multi-year visas entry are issued, that will no doubt boost our economic growth," Brian Molefe, chairman of BRICS Business Council SA, told Xinhua. With an open visa, coupled with a free trade policy, an estimated three million jobs can be created every month within the grouping, according to Molefe.
Ghana, South Africa trade below $1b in 2014 (Ghana Business News)
South Africa: Companies urged to thrive on regional integration (CAJ News)
Ghana remains a strategic trade partner for South Africa – Deputy Minister Masina (thedti)
How similar is Chinese investment in Africa to the West’s? (Brookings)
This data provides insight into what the Chinese private sector is doing in Africa. Based on the descriptions of the overseas investment, we categorize the projects into 25 industries covering all sectors of the economy (primary, secondary, and tertiary). The allocation of the projects across countries and across sectors provides a snapshot of Chinese private investment in Africa. Some things immediately jump out from the data. In terms of sectors, these investments are not concentrated in natural resources; services are the most common sector and there are significant investments in manufacturing as well. [The authors: Wenjie Chen, David Dollar, Heiwai Tang]
Study finds gaps in Africa-EU food security R&D links (SciDev)
A report has identified gaps in the capacities and funding for Africa-Europe food security research collaborations, and the need to strengthen such networks and research uptake. In a report published by the CAAST-Net Plus, a EU-funded consortium that advances collaboration between Sub-Saharan Africa and the EU in research and innovation for global challenges, the authors examined 74 Africa-EU food security research projects implemented between 1998 and 2014. [Download]
Africa Beyond 2015: 15th International Economic Forum on Africa
The Africa Forum is the annual gathering where OECD and African policy makers, private sector representatives, academics and civil society leaders meet to debate the performance of African economies and the challenges ahead. It will do so in light of the debates on Sustainable Development Goals and Financing for Development, the impact of the continent’s future demographic development on its economic transformation, and the policy responses to climate change. [Session concept notes available as downloads]
Copper dips below $5000 a ton amid China concerns
Chinese companies create 6000 jobs in Namibia: ambassador (Global Post)
The resource curse revisited (Chatham House)
Poaching to render 4m people jobless in Africa - ministry (IPPmedia)
UNSC debate on the UN, regional organisations and global security (UN)
ECOWAS warns army to stay out of Bissau crisis (Jollof News)
US to provide $110m to African countries annually for peacekeeping (Ghana Business News)
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