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‘Servicification’ of international trade takes centre stage at UNCTAD expert meeting
Ambassadors, trade negotiators, policymakers, and national and international services regulators and experts concluded the third session of the Multi-year Expert Meeting on Trade, Services and Development, on May 13, 2015.
National economies and international trade are increasingly relying on services – a phenomenon dubbed “servicification” – and debates at the third session of the Multi-year Expert Meeting on Trade, Services and Development, hosted by UNCTAD in May, recognized the importance of this phenomenon.
Ambassadors, trade negotiators, policymakers, and national and international services regulators and experts discussed experiences and lessons learned from services sectors, particularly infrastructure services such as energy, telecommunication, transport and financial services. The objective was to help UNCTAD’s member States to design and implement regulatory and institutional frameworks to strengthen their services economy and trade flows.
The key role of the services sector in the post-2015 development agenda has also been acknowledged in the proposed sustainable development goals (SDGs) to be adopted in New York in September: many of the goals and targets refer to the crucial role of infrastructure, universal access to basic services, access to financial services, energy, health, education, telecommunications, and transport. Moreover, several cross-cutting goals are predicated on the efficient, environmentally friendly and equitable functioning of services. The services sector development will therefore have a crucial role as means of implementation of SDGs.
Several components of UNCTAD’s “services toolkit” were highlighted in the discussion, most notably, UNCTAD’s Services Policy Reviews (SPRs). These are conducted under an innovative, participative and multi-stakeholder methodology and provide a systematic review of the policy and the regulatory and institutional framework of a country’s services sector in order to make recommendations that can help promote coherent and comprehensive national and sectoral development plans and strategies.
Improving the services sector contributes to a fundamental sustainable development aim – namely alleviating poverty. This is because services can have wide-spread positive spill-over effects on other sectors. But this interconnectedness also makes it more difficult, and at times sensitive, to reform than other parts of the economy.
“Getting policies, regulations and institutions right sounds good, but it is easier said than done,” UNCTAD Deputy Secretary-General Joakim Reiter said. ”The challenge is even bigger in developing countries, where, in some cases, the services sector is still nascent and underdeveloped, and so are the national regulatory frameworks. The challenge is big, but the task is not impossible; UNCTAD can help. And one of the ways in which we can do it is through our SPRs. The reviews have served as a tool for assessing the robustness of services policies, regulations and institutions and the potential of services and trade for development.”
The meeting brought together senior representatives from those countries that have benefited from UNCTAD’s SPRs and similar support, including Bangladesh, Colombia, Ecuador, Indonesia, Jamaica, Lesotho, Nepal, Paraguay, Peru, Rwanda and Uganda, as well as Southern African Development Community and Andean Community countries. They shared their experiences and lessons learned in identifying policies and regulations that fit their specific national contexts best. They expressed their appreciation to UNCTAD for the support provided through SPRs and other exercises.
His Excellency Ambassador Shameem Ahsan, Permanent Representative of Bangladesh, expressed his government’s appreciation to UNCTAD for having conducted the first ever SPR of Bangladesh. ”The observations and recommendations made in the SPR would not only help Bangladesh formulating pragmatic policies in our emerging services sectors, but also enable us to effectively participate, as an LDC, in the negotiations in the World Trade Organization on Services Waiver,” he said. “It will also help in the ongoing process of formulating an integrated national policy on Trade in Services in order to fine-tune our objectives at the national level and also in regional and international trade negotiation regimes.” He concluded by saying “UNCTAD’s initiative is a commendable beginning” and “this SPR hopefully would remain an essential tool for us to further build upon in future”.
Several country representatives, including a representative of the Pacific Islands Forum, expressed their interest in receiving UNCTAD’s support in conducting SPRs. States recognize that it is crucial to ensure that trade gains are fairly shared among countries and within the countries. In the past decades, rising inequalities have been observed in many part of the world. Research from the International Labour Organization indicates that trade in general and trade in services do not automatically lead to better jobs and rising incomes without a public policy of economic and inclusive development.
Trade liberalization and national regulatory efforts should go hand in hand. The more countries liberalize the more they need sound regulations and stronger institutions. Although liberalization could be a component of services policy reforms, coherence of such reform with other complementary policies are needed to harness the services potential. These include policies aimed at labour skill enhancement, innovation and technologies upgrading. Policies are also needed to facilitate transition from informality to formality as many services are found in the informal sector. While much policy attention has been given to market access issues, addressing regulatory divergence and regulatory barriers could be more amenable to facilitating trade in services. International standards on services, and international regulatory cooperation (for example labour mobility, infrastructure development), can play a major role in this regard.
On the financial services side, speakers pointed to the need of a combined approach to regulation with micro and macro regulatory tools. The paradigm shift pertaining to the increased convergence of information and communication technology and financial services is increasing the need for greater regulatory competences and coordination between different regulatory bodies in order not to hamper the development of new technologies and services. As countries seek to strengthen their services sectors, UNCTAD stands ready to support them through its comprehensive work on services and the several components of its toolkit, in harnessing the potential of services economy and trade for post-2015 sustainable development goals.
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Gamechanger Djibouti-Ethiopia railway ready, will cut goods travel time from two days to 10 hours
99% of imports from fast-growing Ethiopia pass through its neighbour, while Djibouti is nursing geopolitical ambitions.
The leaders of Djibouti and Ethiopia will oversee the completion of a railway linking their two capitals on Thursday, with the ambition that the link might eventually extend across the continent to West Africa.
Djibouti’s President Ismail Omar Guelleh and Ethiopia’s Prime Minister Hailemariam Desalegn will attend the ceremonial laying of the last track in the 752-kilometre (481-mile) railway, financed and built by China, linking the port capital of Djibouti with landlocked Ethiopia’s capital Addis Ababa.
The first scheduled train is expected to use the desert line in October, reducing transport time between the capitals to less than 10 hours, rather than the two days it currently takes for heavy goods vehicles using a congested mountain road.
“Some 1,500 trucks use the road every day between Djibouti and Ethiopia. In five years, this figure will rise to 8,000,” said Abubaker Hadi, chairman of Djibouti’s Port Authority. “This is not possible, this is why we need the railway.”
With a capacity of 3,500 tonnes – seven times the capacity of the old line at its peak – the new electrified line will mainly be used for transporting goods to Africa’s second-most populous nation.
Ethiopia’s economy is growing fast, with almost 90% of its imports going through Djibouti. Both countries benefit from economic integration, with Ethiopia gaining access to the sea and Djibouti gaining access to Ethiopia’s emerging market of 95 million people.
“Ethiopia is an important country for us,” said Djibouti’s Transport Minister Ahmed Moussa Hassan. “It is the main customer for our logistics facilities and this new railway line will strengthen trade.”
The new line is in fact the resurrection of an old one, built in 1917 by the Franco-Ethiopian Railway Company, but decades later it fell into disrepair and only worked erratically. Trains would regularly derail and it could take as long as five days to make the journey between the two capital cities.
Some abandoned parts of the old line are still visible in Addis Ababa and in central Djibouti.
Djibouti’s ambitions
Another new line linking Djibouti and the northern Ethiopian town of Mekele is also due to be built, but this is not the extent of the project’s ambition.
Hadi says the railway is a step towards a trans-continental line reaching all the way to the Gulf of Guinea, in West Africa.
“We are already the gateway to Ethiopia. We intend to continue this railway line to South Sudan, the Central African Republic (CAR) and Cameroon to connect the Red Sea to the Atlantic Ocean,” said Hadi.
Djibouti, the smallest state in the Horn of Africa, is embarking on large infrastructure projects, building six new ports and two airports in the hope of becoming the commercial hub of East Africa.
Late infrastructure
“Infrastructure is coming very late to Africa. It is impossible for a truck to cross the continent. To transport goods from the east coast to the west coast of Africa, it is necessary to circle the continent by boat,” Hadi said of a sea voyage that can take more than three weeks.
A trans-Africa railway is feasible “in seven or eight years,” he said, as long as conflicts in South Sudan and CAR come to an end.
Liu Xiaoyan, commercial director of the China Civil Engineering Construction Corporation, who is in charge of the Djibouti-Addis line, said his company is ready to continue the work.
“We want to show off Chinese technology to everyone, especially to Africa,” he said, adding that it was also an opportunity to strengthen China’s trade ties with Africa and its presence on the continent.
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Gender is my Agenda Pre-Summit Conference: Statement of the Chairperson of the AU Commission
Statement of the Chairperson of the AU Commission, delivered by HE Mrs Fatima Acyl, Commissioner of Trade and Industry, to the Gender Is My Agenda Pre-Summit Conference: 8-9 June 2015, Sandton, Johannesburg
It is truly an honour for me to address this meeting of GIMAC, on behalf of Her Excellency, Dr. Nkosazana Dlamini Zuma, who unfortunately cannot make this meeting due to other continental duties she is undertaking.
For those of you who know my boss, Dr. Dlamini Zuma takes the issues of African structural transformation very seriously. She always reminds our heads of state and leadership, if they are serious about development and shared prosperity, they cannot ignore more than 50% of our population, the women. If we don’t empower women, we will function at halve capacity, and it will be a huge missed opportunity. When talking to and about women, there is no big or small gathering for the Chairperson and she would have loved to be here today.
She also most definitely shares your commitment to move from solemn declaration to solemn action.
Let me start by congratulating GIMAC for once again providing this critical platform for civil society and women’s organisations, to meet, to reflect on progress and jointly strategize on how we should push forward our Pan African agenda.
In January this year, on the margins of the Summit in Addis Ababa, we discussed the theme for the Year: Women’s Empowerment and Gender Equality for the realisation of Agenda 2063.
We agreed that we must use this year to make decisive progress on key areas, and identified the six priority areas: health and reproductive rights; financial inclusion and women’s empowerment; peace and security; representation and education and skills with a focus on STEM and women in agriculture.
Since then, we have focused on the practical issues to take each of these priority areas forum.
I am sure that this GIMAC forum will take stock of where we are and the practical issues needed as we finalise the first ten-year plan for Agenda 2063.
Let me highlight a few of these issues, which we want to address at this Summit.
Firstly, during the Malabo Summit on Agriculture, and in the Agenda 2063 consultations, women farmers appealed to us to relegate the handheld hoe to the museum. We have listened and at this Summit we will launch the campaign to replace this relic with more modern technology, and to achieve this in the next ten years.
Secondly, the Summit will also launch the start of negotiations on the Continental Free Trade Area, and on 10 June 2015 tripartite of SADC, Comesa and EAC composed of 23 countries concluded an agreement in Shamal Sheik as an important step in this direction.
As we know, women make up the majority of cross border trades (up to 85%), we must therefore look at ways to ensure that the voices and issues of women traders feature prominently in the CFTA negotiations.
Thirdly, as indicated in January, we will be launching at this Summit the inaugural African Gender Scorecard, as an instrument to monitor progress and share best practice, so that we hold each other and our governments accountable for the implementation of our gender instruments such as the Protocol and the Solemn Declaration.
In addition to these issues, we will at this Summit and for the remainder of the Year also continue to pay attention to the issue of financial inclusion and economic empowerment, as well as health, reproductive rights and the focus on skills, science, technology and innovation.
On financial inclusion, the Ministers of Finance and Planning at the March meeting discussed the issue of women’s access to credit in the content of the first 10 year plan on Agenda 2063, as well as domestication of Agenda 2063. The Chairperson of the AUC wants to also involve Central bankers as well as the private sector in addressing this issue of access to credit for women.
Dr. Dlamini Zuma on this occasion said:
“We must move away from always talking about micro credit and micro enterprises when we talk about women. There is nothing micro about us. There is nothing micro about women.”
The voices and actions of civil society remain critical to taking our struggle for gender equality and women’s empowerment forward. We therefore wish this GIMAC forum all success, and look forward to the outcomes of your deliberations.
I thank you.
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Global trade costs could drop dramatically if countries implement WTO Trade Facilitation Agreement, OECD says
Implementing the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA) could reduce worldwide trade costs by anywhere from 12.5% to 17.5%, according to new OECD analysis, with the greatest benefits accruing in developing countries.
The 2015 OECD Trade Facilitation Indicators (TFIs) find that countries which implement the TFA in full will reduce their trade costs by anywhere from 1.4 to 3.9 percentage points more than those that only implement the minimum requirements. The greatest opportunities for reductions in trade costs are in low and lower middle income countries.
Trade costs include all tariff and non-tariff costs including transport, border-related and local distribution costs from foreign producer to final user in the domestic country.
The Trade Facilitation Agreement was the most substantive outcome of the WTO’s first multilateral agreement, concluded in December 2013 during the 9th WTO Ministerial Conference in Bali, Indonesia. The TFA creates a significant opportunity to improve the speed and efficiency of border procedures, thereby reducing trade costs and enhancing participation in the global value chains that characterise international trade. The WTO General Council formally adopted the Bali Package measures in November 2014, and the TFA will enter into force once two-thirds of WTO members have completed domestic ratification processes.
The updated OECD Trade Facilitation Indicators (TFIs) provide the most current assessment of the impact of the WTO TFA. The OECD TFIs are designed to inform governments on potential measures to improve border procedures, reduce trade costs, boost trade flows and reap greater benefits from international trade. The Indicators identify areas for action and enable the potential impact of reforms to be assessed post-implementation.
“As G20 economies seek to achieve an additional 2% of GDP growth by 2018, facilitating a more open flow of goods and services across international borders should be a key contributor to this target,” OECD Secretary-General Angel Gurría said. “The new Trade Facilitation Indicators will help countries benchmark their performance and identify areas of priority action where great rewards can be reaped with little effort.”
The case for fully implementing the Trade Facilitation Agreement is compelling – for producers of goods and services, full implementation will lift export performance and lower the costs of imports. These lower costs will eventually be passed onto consumers, especially those in countries that can afford these imports the least.
Significant financial assistance is available to help countries implement reforms. Nearly USD 1.9 billion has been disbursed in aid for trade facilitation since 2005, with annual commitments up eightfold between 2005 and 2013. An even more compelling argument is the fact that most of the TFA measures with the highest cost reduction effect are easy and cheap to put in place.
The 2015 OECD Trade Facilitation Indicators were presented in the context of the OECD’s annual Ministerial Council Meeting, which devoted one of its sessions to discussing the cross-linkages between trade, investment and development, including efforts to combat protectionism and further strengthen the multilateral trading system.
For further information on the Trade Facilitation Indicators, an interactive website allows users to review and compare trade facilitation indicators across 152 countries. Once a given countries’ trade facilitation performance is identified, a policy simulator allows users to test the effects of policy changes.
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tralac’s Daily News selection: 9 June 2015
The selection: Tuesday, 9 June
The President of Dangote Group, Aliko Dangote's decision to inject a fresh $16 billion into Africa's industrialisation in the next three years, leaves even the daring entrepreneurs perplexed over the point at which a man would agree that his has done enough business in one life time. For Dangote however, this is no longer just setting up businesses for profit, it is setting examples for other investors, both African and foreign, to assure them that Africa indeed is the new frontier for thriving investment.
AGOA and South Africa: selected commentaries
AGOA compromise mixed blessing for SA (Business Day)
Malcolm Ferguson: 'Poultry deal a day late and a dollar short' (Business Report)
Siyabonga Mkhwanazi: 'SA needs to cushion sector from US chicken deal' (Business Report)
Catherine Grant Makokera: 'AGOA - a look at the US-SA relationship' (Tutwa Consulting)
TFTA: Council of Ministers finalize Tripartite launching instruments (COMESA)
The COMESA-EAC-SADC Council of Ministers has finalized the preparation of the instruments to launch of the Tripartite Free Trade Area on Wednesday June 10. These include the COMESA-EAC-SADC Tripartite Free Trade Area Agreement which will be signed by the Heads of State and Government and the Sharm El Sheikh Declaration launching the Tripartite FTA. The others are Post Signature Implementation Roadmap, the Indicative Schedule of Negotiations on Outstanding Issues in Phase I and Phase II negotiations, and the Programme of Work on Movement of Business Persons and the Industrial Development Pillar.
17 African states join COMESA-EAC-SADC's pre-launch meeting
Egypt's exports to Africa in 1st quarter of 2015 totals $810 million (Egypt Independent)
Malawi companies to benefit from Africa trade deal: Mutharika to sign accord in Egypt (Nyasa Times)
EAC, WB and partners discuss integrated solutions to the development of key trading corridors (World Bank)
The Integrated Corridor Development convention, held at the UNESCO headquarters, brought together representatives from major bilateral and multi-lateral donor organizations, to discuss solutions to facilitate the funding of corridor development in land-locked countries, such as Burundi, Rwanda and Uganda. During the convention, development partners and country representatives presented their institutional priorities, and discussed potential collaboration in accelerating the implementation of development corridor projects such as the Lake Victoria and the Lake Tanganyika transport programs. The two programs will require a total investment of US$1.8 billion, of which the World Bank has committed US$850 million to date.
China asks for business plan to fund EAC railway project (New Times)
The Chinese request follows a joint visit to Beijing by ministers for foreign affairs and infrastructure from April 26 to May 1, to promote various infrastructure projects that are being implemented, with SGR taking centre stage. In China, the delegation from East Africa met with top executives of the Chinese Export and Import Bank (Exim), which is expected to fund the project. The bank is state-owned. “The Chinese government expressed a positive feedback and recommended to finalise feasibility studies for further discussion,” the ministers told the presidents.
Tazara: Buggered, but can be fixed (Daily Maverick)
Tazara railway can be turned around, though it will require dollops of political will to do so. At first, it will necessitate a recognition that its current state is not ‘fixed’, even though it suits several key actors to keep it down and out. Turning the political economy of protecting privilege, plunder and survival into one of prosperity will lie at the heart of the railway’s transformation, as with any infrastructure in Africa. [The author: Greg Mills]
Port of Lüderitz set to diversify exports (The Namibian)
There is huge interest from mining companies at the Northern Cape in South Africa to export manganese via the port of Lüderitz. The manager at the port of Lüderitz, Max Kooper, alluded to this during a recent visit by The Namibian. According to Kooper, Lüderitz has a shallow port with a draught of 8,15 metres. Until recently, Lüderitz port was without a railway link. But that will soon be a thing of the past as Namport has embarked on rail infrastructure within the port, which is at the final stage of implementation.
Construction of key Djibouti-Ethiopia rail line to finish (AFP)
The leaders of Djibouti and Ethiopia will oversee the completion of a railway linking their two capitals on Thursday, with the ambition that the link might eventually extend across the continent to West Africa. Djibouti’s President Ismail Omar Guelleh and Ethiopia’s Prime Minister Hailemariam Desalegn will attend the ceremonial laying of the last track in the 752-kilometre (481-mile) railway, financed and built by China, linking the port capital of Djibouti with landlocked Ethiopia’s capital Addis Ababa.
The first scheduled train is expected to use the desert line in October, reducing transport time between the capitals to less than 10 hours, rather than the two days it currently takes for heavy goods vehicles using a congested mountain road. “Some 1,500 trucks use the road every day between Djibouti and Ethiopia. In five years, this figure will rise to 8,000,” said Abubaker Hadi, chairman of Djibouti’s Port Authority. “This is not possible, this is why we need the railway.”
Regional integration takes center stage at 2015 AfCoP Annual Meeting (AfDB)
Over 150 representatives of member states of COMESA and the West African Economic and Monetary Union will convene in Abidjan, Côte d’Ivoire from June 8-10, 2015 to take stock of the two blocs’ efforts towards economic integration and regional development results in Africa. These delegates will attend the second Africa for Results (AfriK4R) Forum and seventh Annual Meeting of the African Community of Practice on Managing for Development Results (AfCoP-MfDR), which will examine the landscape of challenges, opportunities and trends, related to Africa’s regional integration agenda. Initial insights from country and regional assessments and activities under AfCoP’s flagship AfriK4R initiative will also be presented. [www.afrik4r.org]
G7 Summit Leadersʼ Declaration: trade, global economy issues
We are committed to strengthening the rules-based multilateral trading system, including by contributing to full and swift implementation of the WTO Bali package. The focus in 2015 should in particular be on the entry into force of the WTO Trade Facilitation Agreement (TFA). To that end, G7 members commit to making every effort to complete their domestic ratification procedures in advance of the Tenth WTO Ministerial Conference (MC 10) in Nairobi this December. We also call for swift agreement by July of a WTO post-Bali work programme that secures a prompt conclusion and balanced outcome of the Doha Round and we fully support ongoing efforts in the WTO to this end. Both the implementation of the TFA and agreement on a post-Bali work programme should lay the ground for a successful MC 10, the first WTO Ministerial to be held in Africa. [Download]
Oxfam: G7 emissions have 'savage impact' on African crops (Deutsche Welle)
Duty-free under duress: Kenya’s trade with the EU (Deutsche Welle)
Tanzania lifts gas resources estimate to 55 trillion cubic feet (The EastAfrican)
"As a result of ongoing exploration activity, natural gas resources discovered in the country rose from 46.5 tcf in June 2014 to 55.08 tcf in April 2015, equivalent to an increase of 18 per cent," George Simbachawene, Tanzania's energy and minerals minister, said in a presentation to parliament on Saturday. Mr Simbachawene said a pipeline connecting offshore natural gas fields to Tanzania's commercial capital Dar es Salaam would be commissioned in September, ahead of the energy ministry's previous estimates of November. The government said the pipeline would enable the country to switch to gas-fired power plants and reduce oil imports, hence leading to annual savings of over $1 billion.
Tanzania: Milk production ‘too low’ (The Citizen)
Milk production and marketing puzzle continues to haunt the country as only 30 per cent of potentials are being utilised, while per capita milk consumption is a mere quarter of global standard of milk consumption. “We really need to go up to nine billion litres per year in order to catch up with FAO standards. Milk production and marketing face chronic problems of low output, compromised quality and dominance of informal market,” a senior lecturer of animal science at Sokoine University of Agriculture, Dr George Msalya, said.
Zimbabwe: Capacity utilisation reaches 39% (NewsDay)
The manufacturing sector has recorded a 1,9 percentage increase in capacity utilisation to 39% driven by activities in the beverages and construction sectors, the Confederation of Zimbabwe Industries (CZI) has said. In the same period in 2014, capacity utilisation was 37,1%.
Tracing the value-added in global value chains: product-level case studies in China (UNCTAD)
The rise of the global value chains (GVCs) is reshaping the whole structure of worldwide trade flows. It is no longer true that all, or even the bulk of the value of a country’s exports can be assumed to be domestically produced. Three product-level case studies were conducted to identify where China is placed within the GVCs and to find out what and to what extent value is added in China. The three case studies relate to rubber tyres, light-emitting diodes (LEDs) and fasteners. They reveal that the selected industries are based mostly on mid-level technologies, and that China is generally in the midstream of the GVC with its comparative advantage in labour cost vis-à-vis its developed trading partners.
Ethiopia seeks to protect migrant workers from abuse in Middle East (The EastAfrican)
Call for proposals of African Financial Markets Initiative (AfDB)
Uganda: We are no longer a colony, government tells EU envoys (Daily Monitor)
Multimedia: Attracting FDI investments critical to Mauritius' economy (CNBC Africa)
Effective governance central to unlocking the potential of the Blue Economy (SAIIA)
SA, China sign ICT plan of action (SAnews.gov.za)
SA delegation explores opportunities in Mozambique (CAJ News)
This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)
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G7 Summit Leadersʼ Declaration: 7-8 June 2015
Think Ahead. Act Together.
We, the leaders of the G7, met in Elmau for our annual Summit on 7 and 8 June 2015. Guided by our shared values and principles, we are determined to work closely together to meet the complex international economic and political challenges of our times. We are committed to the values of freedom and democracy, and their universality, to the rule of law and respect for human rights, and to fostering peace and security. Especially in view of the numerous crises in the world, we as G7 nations stand united in our commitment to uphold freedom, sovereignty and territorial integrity.
The G7 feels a special responsibility for shaping our planet’s future. 2015 is a milestone year for international cooperation and sustainable development issues. The UN Climate Conference in Paris COP 21 is crucial for the protection of the global climate, the UN summit in New York will set the universal global sustainable development agenda for the years to come and the Third International Conference on Financing for Development in Addis Ababa will support the implementation of the Post-2015 Development Agenda. We want to provide key impetus for ambitious results. “Think ahead. Act together.” – that is our guiding principle.
We have today agreed on concrete steps with regard to health, the empowerment of women and climate protection, to play our part in addressing the major global challenges and to respond to some of the most pressing issues in the world. Furthermore, in addition to fostering trade as a key engine for growth, putting these concrete steps into action, will help us to achieve our pivotal goal of strong, sustainable and balanced growth as well as job creation. We call on others to join us in pursuing this agenda.
Global Economy
State of the Global Economy
The global economic recovery has progressed since we last met. In some major advanced economies growth is strengthening and prospects have improved. The decline of energy prices has supportive effects in most of the G7 economies. However, many of our economies are still operating below their full potential and more work is needed to achieve our aim of strong, sustainable and balanced growth. Overall G7 unemployment is still too high, although it has decreased substantially in recent years. We also continue to see challenges such as prolonged low inflation rates, weak investment and demand, high public and private debt, sustained internal and external imbalances, geopolitical tensions as well as financial market volatility.
We commit to addressing these challenges and to continuing our efforts to achieve growth for all. Stronger and inclusive growth requires that we confront the vulnerabilities in our economies. To ensure that G7 countries operate at the technological frontier in the years ahead, we will foster growth by promoting education and innovation, protecting intellectual property rights, supporting private investment with a business friendly climate especially for small and medium-sized enterprises, ensuring an appropriate level of public investment, promoting quality infrastructure investment to address shortfalls through effective resource mobilization in partnership with the private sector and increasing productivity by further implementing ambitious structural reforms.
We agree to deliver on past reform commitments in these areas which will increase confidence and lift sustainable growth. We will continue to implement our fiscal strategies flexibly to take into account near-term economic conditions, so as to support growth and job creation, while putting debt as a share of GDP on a sustainable path. We concur that monetary policies should maintain price stability and support economic recovery within the mandate of central banks. We reaffirm our existing G7 exchange rate commitments.
A sound economic basis is a cornerstone for a better life for all people. Putting the world on a sustainable growth path in the long run will require in particular the protection of our climate, the promotion of health and the equal participation of all members of society. Therefore, the G7 commits to putting these issues at the centre of our growth agenda.
Trade
Trade and investment are key drivers of growth, jobs and sustainable development. Fostering global economic growth by reducing barriers to trade remains imperative and we reaffirm our commitment to keep markets open and fight all forms of protectionism, including through standstill and rollback. To that end, we support a further extension of the G20 standstill commitment and call on others to do the same. At the same time, we remain committed to reducing barriers to trade and to improving competitiveness by taking unilateral steps to liberalize our economies. We will protect and promote investment and maintain a level playing field for all investors. International standards for public export finance are key to avoiding or reducing distortions in global trade, and we emphasize our support for the international working group on standards for public export finance.
We are committed to strengthening the rules-based multilateral trading system, including by contributing to full and swift implementation of the WTO Bali package. The focus in 2015 should in particular be on the entry into force of the WTO Trade Facilitation Agreement (TFA). To that end, G7 members commit to making every effort to complete their domestic ratification procedures in advance of the Tenth WTO Ministerial Conference (MC 10) in Nairobi this December. We also call for swift agreement by July of a WTO post-Bali work programme that secures a prompt conclusion and balanced outcome of the Doha Round and we fully support ongoing efforts in the WTO to this end. Both the implementation of the TFA and agreement on a post-Bali work programme should lay the ground for a successful MC 10, the first WTO Ministerial to be held in Africa. We stand ready to continue our support to developing countries to help implement the measures agreed in the TFA. We must build on the success of the 2013 WTO Ministerial, which reinvigorated the negotiating pillar of the WTO, and demonstrated that flexibility is achievable within the consensus framework of the WTO. We look forward to the discussions at the G20 on ways to make the multilateral trading system work better, based on input from the WTO.
While strengthening the multilateral trading system remains a priority, we also welcome ongoing efforts to conclude ambitious and high-standard new bilateral and regional free trade agreements (FTAs) and look forward to swift progress in plurilateral negotiations, including the Trade in Services Agreement (TiSA), the expansion of the Information Technology Agreement (ITA) and the Environmental Goods Agreement (EGA). We will work to conclude the expansion of the ITA without delay. These agreements are able to support the multilateral system, contribute to stronger global trade and to more growth and jobs and can act as building blocks for future multilateral agreements. To this end, FTAs need to be transparent, high-standard, and comprehensive as well as consistent with and supportive of the WTO framework.
We welcome progress on major ongoing trade negotiations, including on the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the EU-Japan FTA/Economic Partnership Agreement (EPA), aimed at reaching ambitious, comprehensive and mutually beneficial agreements. We will make every effort to finalize negotiations on the TPP as soon as possible as well as to reach agreement in principle on the EU-Japan FTA/EPA preferably by the end of the year. We will immediately accelerate work on all TTIP issues, ensuring progress in all the elements of the negotiations, with the goal of finalizing understandings on the outline of an agreement as soon as possible, preferably by the end of this year. We welcome the conclusion of the negotiations on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU and look forward to its timely entry into force. We will work to ensure that our bilateral and regional FTAs support the global economy.
Development
Post-2015 Agenda for Sustainable Development
2015 is a milestone year for international sustainable development issues. The Third International Conference on Financing for Development in Addis Ababa, the UN Summit for the adoption of the Post-2015 agenda in New York and the Climate Change Conference in Paris will set the global sustainable development and climate agenda for the coming years.
We are committed to achieving an ambitious, people-centred, planet-sensitive and universally applicable Post-2015 Agenda for Sustainable Development that integrates the three dimensions of sustainable development – environmental, economic and social – in a balanced manner.
The agenda should complete the unfinished business of the Millennium Development Goals, end extreme poverty, leave no-one behind, reduce inequality, accelerate the global transition to sustainable economies, promote sustainable management of natural resources, and strengthen peace, good governance and human rights. In order to mobilize appropriate action in and by all countries and by all stakeholders, we support the formulation and communication of key policy messages. We are committed to building a new global partnership based on universality, shared responsibility, mutual accountability, efficient and effective monitoring and review and a multi-stakeholder approach to our common goals of ending extreme poverty by 2030 and transitioning to sustainable development.
To help foster this new transformative agenda, we have committed to significant measures on global health, food security, climate and marine protection, sustainable supply chains and women’s economic empowerment.
Collectively, we commit to supporting furthering financial and non-financial means of implementation, including through domestic resource mobilization, innovative financing, private finance, official development and other assistance and an ambitious policy framework.
We reaffirm the essential role that official development assistance (ODA) and other international public finance play as a catalyst for, and complement to, other sources of financing for development. We reaffirm our respective ODA commitments, such as the 0.7% ODA/GNI target as well as our commitment to reverse the declining trend of ODA to the Least Developed Countries (LDCs) and to better target ODA towards countries where the needs are greatest. We also commit to encouraging private capital flows.
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Foreign Direct Investment: An important source of external development financing for the poorest economies
Over the past decade, foreign direct investment (FDI), in terms of stock, tripled in least developed countries (LDCs) and small island developing States (SIDS), and quadrupled in landlocked developing countries (LLDCs), the Special Financing for Development Issue of UNCTAD’s Global Investment Trends Monitor says.
Since the first Conference on Financing for Development, which produced the Monterrey Consensus of 2002, particular concern has focused on mobilizing financing and investment for LDCs, LLDCs and SIDS, in order to ensure robust, resilient growth and sustainable development. In the context of the post-2015 development agenda, financing for those economies is even more to the fore.
With a concerted effort by the international community, a quadrupling of FDI stock in these economies by 2030 from today’s level is achievable, and consistent with past and recent growth in FDI inflows. Beyond international initiatives per se, today a wider range of investors than ever before are potential sources of financing for investment. They include commercial banks, State-owned banks, pension funds, insurance companies, multinational enterprises (MNEs), sovereign wealth funds, foundations, endowments, family offices and venture capital funds.
The challenge is to mobilize and channel them into the sustainable development goals (SDGs) sectors and make positive contributions to sustainable development and inclusive growth.
FDI is a critical source of finance for developing countries, but policymakers need to pay due regard to minimizing risks. For host countries, FDI can contribute to employment generation, technology diffusion, economic growth and sustainable development. However, potential risks should be minimized through: good governance and capable institutions, high absorptive capacity and an effective regulatory framework.
The UNCTAD Investment Policy Framework for Sustainable Development and its Action Plan for Investing in the SDGs are designed to guide investment policy making and implementation focusing on productive capacity building, inclusive growth and sustainable development.
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Duty-free under duress: Kenya’s trade with the EU
Despite the presence of ‘outreach guests’ from Africa at the G7 summit in Bavaria, relations between Africa and Europe can be acrimonious. Kenyans accused the EU of using ‘blackmail’ to implement a recent trade deal.
Talks on a European Partnership Agreement between the 28-nation European Union (EU) and the East African Community (EAC) – Kenya, Rwanda, Burundi, Tanzania and Uganda – lasted ten long years.
A deal was reached in October 2014 and four EAC countries committed themselves to gradually opening up their markets to EU exports in return for continued exemption from EU customs duty.
Initially, Kenya refused to sign the deal.
On the outskirts of Nairobi, Goedfrey Ng’anga owns 1,500 chickens and six cows. One of Kenya’s many smallholders, he sees the power of the European market as a threat to his livelihood.
“They should be buying our produce – eggs, milk and poultry. But their technology is very good and they can sell their produce much cheaper than we call sell ours,” he said.
Oppostion to EPA deal
Supporters of the EPA say it will be beneficial for all sides. “EPA is a true partnership that forces EAC integration as well as providing better frameworks to attract foreign investment” claimed an EU promotional video produced for Kenya in 2013.
But there was strong resistance to the EPA in Kenya. The worry was the Kenyan horticulture - the cultivation of fruit, vegetables and nuts - would be unable to compete with subsidized produce from the EU.
“It’s a very bad deal,” Frederick Njehu of the Kenyan Human Rights Commission said.
“If you look at the demands that the EU has placed on the EAC – I don’t see them handling what the EU has demanded, especially when you look at the liberalization, for instance, of 82.6 percent. That means you are effectively eliminating import tariffs over the next 15 years,” he added.
The 82.6 percent refers to the share of the market that is to be opened up to EU exports.
When Kenya refused to sign the EPA, the EU flexed its muscles and imposed duties of between eight and a half and 30 percent on Kenyan cut flowers – one of the country’s major exports – as well as on Kenyan coffee, tea and tinned pineapple.
It was blackmail as some Kenyans observed bitterly. But that did not lessen the impact. A few weeks later the Kenyan government signed the EPA. Many have criticized the EU’s heavy-handed tactics, including the German government’s Africa Commissioner, Günter Nooke, who suggested that it was counter-productive.
“We transfer a lot of taxpayers’ money to Africa in the shape of development programs. One shouldn’t set out to demolish with trade talks that which we in the development ministry are trying to help create,” he said in an apparent reference to sustained economic growth in Kenya.
Economists at the United Nations have also voiced criticism of the EPA, saying it is more of a threat than an opportunity for the East Africans.
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China asks for business plan to fund EAC railway project
The Chinese government has reportedly expressed readiness to bankroll the proposed East African standard gauge railway (SGR) but has asked that partners on the multi-billion Northern Corridor project present feasibility studies to prove the project’s bankability.
According to a progress report presented to the Presidents of Kenya, Uganda, Rwanda and South Sudan during last week’s 10th Northern Corridor summit held in Kampala, China wants to have more details on the project before it can commit funds.
The project’s estimated budget is about $14 billion.
The Chinese request follows a joint visit to Beijing by ministers for foreign affairs and infrastructure from April 26 to May 1, to promote various infrastructure projects that are being implemented, with SGR taking centre stage.
In China, the delegation from East Africa met with top executives of the Chinese Export and Import Bank (Exim), which is expected to fund the project. The bank is state-owned.
“The Chinese government expressed a positive feedback and recommended to finalise feasibility studies for further discussion,” the ministers told the presidents.
Last week, in Kampala, ministers for foreign affairs in the four countries were tasked by the summit to coordinate the next joint visit to China which is expected to take place before December.
But, in the meantime, the Northern Corridor partner states will be under pressure to get the required studies ready before the next trip to China for use by the Exim Bank executives to evaluate the project’s profitability.
It was also agreed in Kampala that partner states would finalise the bankable project proposals for SGR and report progress during the next round of meetings.
The New Times understands that partner states are at different stages of implementation and preparation of feasibility study reports; but during the Kampala summit, they vowed to complete them by December.
For instance, Uganda only signed an engineering procurement and construction (EPC) contract agreement with China Habour & Engineering Company (CHEC) in March, for the SGR’s northern and eastern leg to a tune of $3.32 billion.
The northern and eastern route of SGR connects Uganda and South Sudan and the two countries are collaborating on the feasibility study. China has also reportedly provided $16 million grant to fund technical studies for bankable proposals on the route.
Rwanda and Uganda are expected to cooperate on the western and southern routes of SGR that will connect the two countries at Mirama, in Ntungamo District in Uganda and Birembo in Rwanda’s Eaestern Province.
During the summit in Kampala, the two countries reportedly signed an agreement with a contractor to launch activities for the route’s engineering, procurement and construction process.
Meanwhile, Kenya reported that the feasibility studies leading to bankable proposals for the section Nairobi-Nakuru-Kisumu-Malaba are underway and these will form part of the financing requirements and the basis to approach Exim Bank.
Also ready is the business plan for SGR that was prepared by the partner states’ ministers for finance and this too will be presented as part of the documents to convince Exim Bank executives of the project’s bankability.
SGR protocol unendorsed
Only Uganda and Rwanda have completed the ratification of the SGR protocol; Kenya and South Sudan are yet to do so and were urged during last week’s summit in Kampala, to have done so by the next summit.
The protocol is important as it formalises the pledge by the four partner states to jointly source for financing of SGR project.
Kenya pledged to have the protocol ratified by June 15, while South Sudan, whose president was represented by Kuol Manyang Juuk, the Minister for Defence and Veterans Affairs, said its ratification was awaiting parliamentary approval.
The Kampala summit gave Kenya and South Sudan until July 31 to ratify the protocol.
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Delivering on the promise: Launch of AfDB-Gates Foundation report on extractives and human development
“Africa needs to adopt policies to transform its natural resources into human capital and better living standards for its citizens and learn from the existing good practices on the continent.” These were the words of African Development Bank President Donald Kaberuka, at the launch of the report “Delivering on the promise: Leveraging natural resources to accelerate human development in Africa” on Friday, June 5 during the World Economic Forum for Africa in Cape Town.
The report is the fruit of an innovative partnership between the AfDB and the Bill and Melinda Gates Foundation, and highlights the options available for countries to use newly discovered natural resources to deliver a step change in human development outcomes. The report was spearheaded by the AfDB’s African Natural Resources Center with contributions from the Bank’s Development Research and Human Capital Development Departments. The publication looks at the cases of Ghana, Liberia, Mozambique, Sierra Leone, Tanzania and Uganda in building accessible policy frameworks to link revenue management decisions to human development agendas. The report also examines how best to leverage extractives companies’ employment, procurement, infrastructure and social investments.
“This report is about narrowing the knowledge gap between the process of extraction of resources and the delivery of human development outcomes for Africa,” said Mark Suzman, President for Global Policy and Advocacy at the Bill and Melinda Gates Foundation at the launch.
The launch event was attended by 20 eminent African policy-makers, industry leaders and civil society who gathered to discuss how to take forwards the report recommendations to transform human development in the continent.
Sheila Khama, Director of the African Natural Resources Center, pointed out that “if this complex agenda is to succeed, African countries need to balance overreliance on revenues with direct linkages between the extractive industry and the rest of the domestic economy”.
About the Report
Despite impressive economic growth in recent years, many African countries have seen uneven progress in improving health, education, and other social outcomes for their citizens. As domestic resources become more critical to financing these needs, new natural resource discoveries – oil, minerals, and gas – offer a new source of revenue for advancing human development and supporting countries on the path to self-sufficiency.
Most African governments have expressed a commitment to directing new revenues from natural resources toward improving social outcomes as well as creating more and better jobs and business opportunities. But several countries in the region are finding it challenging to scale up investments to the right level, and the contribution from extractives to socioeconomic development will remain unfulfilled unless their commitments become a significant part of their national development agendas.
Policymakers in these countries are aware that they face tough and often complex policy choices along the way: balancing social investments with needs in other sectors of the economy, being transparent and carefully managing citizen expectations, and ensuring benefits for both extractives and non-extractives communities and for current as well as future generations.
In light of these challenges, the African Development Bank and the Bill & Melinda Gates Foundation have produced a joint report to examine how revenues from extractives can be managed for greater social impact. The report makes three fresh contributions to the discussion:
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It provides a broad estimate of the magnitude and timing of new extractives revenues in Ghana, Liberia, Mozambique, Sierra Leone, Tanzania, and Uganda – six countries that have recently discovered significant oil, gas, or mineral reserves. The report shows that despite recent drops in commodity prices, these reserves could boost government revenues by 9% to 31%.
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It offers a policy framework for funding social sectors, absorbing and managing the revenues while maintaining economic stability, and creating appropriate fiscal rules. The report also provides an overview of different types of spending programs and their relative strengths.
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It highlights ways to leverage extractives companies’ direct spending – as well as procurement, skills transfer, and social investment – throughout the lifecycle of extractives projects to ensure that the benefits to businesses and individuals ultimately advance human development.
The following key policy priorities emerged from the research, conversations, and consultations that shaped the report:
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Define and commit to clear, achievable human development goals that will be linked to natural resource revenues.
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Use multiple channels to direct extractives resources toward human development outcomes.
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Be realistic about the timing and amount of new revenues, and communicate those expectations appropriately.
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Identify human development priorities and the best and most feasible interventions, given the revenue projections.
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Manage macroeconomic risks, and resist spending revenues before they arrive.
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Leverage private-sector investments at project sites.
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Engage with companies in the broader economy.
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Heads of state of Northern Corridor member states agree to form authority to expedite the implementation of projects
The Heads of State of the Northern Corridor member states; Uganda, Kenya and Rwanda met on 6th June 2015 at Muyonyo Speke Resort for the 10th Northern Corridor Integration Projects Summit. During the Summit, the Leaders agreed to form an authority to expedite the implementation of infrastructure projects in the East African Region.
The summit was attended by Presidents Paul Kagame (Rwanda), Uhuru Kenyatta (Kenya), ministers and delegates from South Sudan, Tanzania, Burundi, Ethiopia and the Democratic Republic of Congo.
The Northern Corridor is the busiest and most important transport route in East and Central Africa, providing a gateway through Kenya to the landlocked economies of Uganda, Rwanda, Burundi and Eastern DR Congo. It also serves Southern Sudan since it broke away from Khartoum.
Highlights from the Joint Communiqué
The Heads of State appreciated the progress in the implementation of various projects under the Northern Corridor Initiative and reiterated their collective resolve to continue working together to widen and deepen the integration of the region through fast tracking implementation. The Summit directed the establishment of the Northern Corridor Projects Authority to coordinated and follow up on the implementation of decisions.
The Heads of State welcomed the commitment by the Private Sector to partner with governments of the Northern Corridor Member States in the realization of the vision and goals of transforming the regional economy through the Public-Private Sector Partnership in the delivery of the flagship projects.
The Summit welcomed the signing of Memoranda of Understanding that included an Agreement on Total Liberalization of Free Movement of Labour, Agreement on Total Liberalization of Free Movement of Services, Memorandum of Understanding on Foreign Policy Coordination, and Memorandum of Understanding on Cyber Security.
The Summit lanuched the NCIP Web Portal that will facilitate communication and dissemination of information on the Northern Corridor Integration Projects: www.nciproject.org
The Heads of State considered the Ministerial Report, endorsed the recommendations contained therein and directed as follows:
On the Standard Gauge Railway, the Summit noted the signing by Uganda of the US$ 3.32 billion Engineering Procurement and Construction (EPC) Contract with China Harbour and Engineering Company (CHEC) for the Northern and Eastern Route of the Standard Gauge Railway.
On Oil Refinery Development, the Summit noted the progress made by Uganda in the establishment of the National Oil Company.
On Single Customs Territory, the Summit considered the NCTTCA study and noted with appreciation the substantial gains that have been achieved since the implementation of the SCT. The Summit called upon the Revenue Authorities and other stakeholders of the Partner States to continuously improve their performance on cargo clearance time and costs and work towards the minimum indicators identified by the NCTTCA study.
On Power Generation, Transmission and Interconnectivity, the Summit reiterated the urgent need to observe the timeliness for the completion of the infrastructure that will facilitate power trade between the partner States.
On Commodities Exchange, the Summit noted the progress made in the areas of Legal and regulatory framework, warehousing receipt system, and harmonization of standards and directed the Ministers to ensure value addition in agricultural products and develop regional trading platforms in commodities.
On Defense, Peace, and Security Cooperation, the Summit noted the operationalization of the Joint Intelligence Centre (JIC) in Nairobi and re-affirmed their commitment to jointly address the security threats in the region, including terrorism.
On Land and Infrastructure Corridor, the Summit directed the use of alternative dispute resolution mechanisms in settlement of land acquisition disputes.
Other issues discussed and given various recommendations included Political Federation, Human Resource Capacity Building, Tourism, and Air Space Management.
The next Summit will be held in Nairobi, Kenya in two months time.
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tralac’s Daily News selection: 8 June 2015
The selection: Monday, 8 June
The African leadership will need to speed up the implementation of the integration agenda as the continent urgently needs to create jobs for the over 60 percent of its population who are the youth, the Chairman of the COMESA-EAC-SADC Tripartite Task Force Sindiso Ngwenya has said. Speaking at Sharm El Sheikh after the opening of the meeting of Technical officials preparing for the launch of the Tripartite Free Trade Area on Wednesday June 10, Mr Ngwenya said the current upsurge of illegal migration out of Africa with its attendant risks is testimony of the youth frustration in getting employment. Africa has the world's youngest population at over 60% of its population.
World Bank Group President Jim Yong Kim to deliver TFTA keynote address (World Bank)
Africa negotiates 'one trade regime' for common market (New Vision)
Egypt seeks export increase to African countries over next 3 years (Daily News)
AU Commission: CFTA, Agenda 2063 updates (African Union)
Mr Mwencha highlighted progress in the implementation of the Continental Free Trade Area, informing the meeting that the CFTA will be launched during the on-going summit. He described the project as having the capacity to bring industrialisation and prosperity. The Deputy Chairperson said Africa does not have the time to do things slowly. “We cannot wait for another two decades” to emerge out of poverty, he said, adding that it is for this reason that the first ten year implementation plan of Agenda 2063 has agreed to fast track a number of initiatives that will transform the continent.
CFTA: 'Towards one African market' (African Union)
The need for action on the CFTA is urgent. The world is changing with the countries in other parts of the globe joining Mega-Regional Trade Agreements, and that is reshaping the global trading system. Africa must act now, or risk being left behind. Research by the United Nations Economic Commission for Africa shows that the establishment of the CFTA will better position the African continent vis-à-vis the rest of the world.
We are not starting from scratch. Progress is already underway with the Tripartite Free Trade Area (TFTA), launching in June 2015, which includes 26 African countries, and the 15 countries of ECOWAS, the Economic Community of West African States, which have already come together.
There are also significant gains that can be made by negotiating certain issues that have been less controversial. It is also possible for a coalition of countries to go forward with negotiations for more contentious issues and for other countries to join when they are ready. Ideally, all AU member states should participate in the negotiations and consider making commitments on specific issues as and when they are ready to do so.
DRC-Zambia STR outcomes (COMESA)
A bilateral meeting was held on 2nd – 4th June, 2015 between the DRC and Zambia to discuss and agree on a common list of products eligible to trade under the COMESA Simplified Trade Regime (STR). The meeting was facilitated by the COMESA Secretariat in partnership with the AfDB and the EU. The meeting was attended by Senior Government Officials from the two countries, members of the Cross Border Traders’ Association, Cross Border Network Africa and other cross border trade related SMEs. The DRC delegation informed the meeting that the process regarding the DRC joining the COMESA FTA has reached a very advanced stage at the level of His Excellency the President of the Democratic Republic of Congo. The two parties agreed on the following:
Doubts over Trans-Kalahari (Southern Times)
The envisaged multi-billion dollar Trans-Kalahari Railway line connecting Botswana to Namibia’s Atlantic coast hangs in the balance as legislators and relevant authorities in Botswana have questioned and raised doubt about its viability.
Northern Corridor Integration Projects: 11 outcomes (State House Uganda)
The highlights of the summit are as follows: Creation of a Northern Corridor Projects Authority body with permanent senior officials from each member country to follow up on the implementation of the projects
Signing of the Memoranda of Understanding that included the aspect of Cyber Security, Total Free Movement of labor, Total Free Movement of Services and the Co-ordination of Foreign Policy
EAC summit endorses projects authority (Daily Monitor)
East African heads of state under the Northern Corridor cluster on Saturday expressed frustration at the slow realisation of projects agreed on during their summits, and agreed to establish a joint authority to fast track project implementation.
Presidents to boost private sector (New Vision)
Regional business council, manufacturers partner (New Times)
Northern Corridor countries establish common intelligence centre in Nairobi (The EastAfrican)
Paving a new route for trade in East Africa (The Commonwealth)
Convened by the Commonwealth Secretariat, the meeting will take place from 8-9 June 2015 in Arusha, Tanzania. Participants will address national and regional issues relating to implementing the Transports Internationaux Routiers (TIR) system in East Africa. At the meeting in Arusha, the Secretariat will share key findings and recommendations from work carried out with the Export Promotion Council of Kenya to institutionalise the TIR system. Without regional interest, the initiative will have limited impact.
East Africa's Budget Week – selected previews: EAC member states budget expenditure swells (Daily Monitor), Kepsa pushes for key Bills to attract foreign investments (Business Daily), Government to fund 44.5% of Uganda’s Budget (Daily Monitor), No common ground yet on taxes as EAC member states read budgets (The EastAfrican), Will one currency counteract volatility in the region? (The EastAfrican)
Developing rail network will unlock East Africa infrastructure potential (The EastAfrican)
Rail traffic density in East Africa is the lowest on the continent with none of the lines having more than one million traffic units per route kilometre. By global standards, these traffic volumes are a little more than what might be carried by a moderately busy branch line. Moreover, such low traffic volumes do not generate the revenue needed to finance infrastructure rehabilitation and upgrading.
To achieve a world class system driven by technology where East Africa rail capacity and revenue are comparable to developed markets; I believe that the following areas need to be addressed in order to sustainably operationalise the region's rail network. [The author, Rajiv Sharma, is an infrastructure, capital projects manager with Deloitte East Africa]
Joint statement by the United States and South Africa on agricultural trade (USTR)
The United States and South Africa are pleased to announce that in joint meetings, the two industries have agreed on the framework to provide for renewed market access for U.S. bone-in chicken into the South African market. The Governments also agreed to a firm set of actions this month to resolve the remaining sanitary issues related to poultry, pork, and beef. The framework provides for the return of exports to South Africa of U.S. bone-in chicken after the two governments complete necessary implementation steps. The South African government will implement the framework following a public consultation process.
While both sides recognize it may take some time for the South African government to complete its regulatory process, both sides are committed to expedite processes and resume shipments of U.S. chicken as quickly as possible. Both Governments and industries have committed to further engagements on development issues that will enhance production in South Africa as well as participation of Historically Disadvantaged Individuals (HDIs) into the poultry industry.
US imports ‘could affect poultry jobs’ (Business Day)
Sens. Coons and Isakson announce “significant progress” on deal to end US-SA chicken fight
South Africa loses game of chicken in renewal of US trade agreement (RFI)
Delivering on the promise: leveraging natural resources to accelerate human development in Africa (AfDB)
The report is the fruit of an innovative partnership between the AfDB and the Bill and Melinda Gates Foundation, and highlights the options available for countries to use newly discovered natural resources to deliver a step change in human development outcomes. The report was spearheaded by the AfDB’s African Natural Resources Center with contributions from the Bank’s Development Research and Human Capital Development Departments. The publication looks at the cases of Ghana, Liberia, Mozambique, Sierra Leone, Tanzania and Uganda in building accessible policy frameworks to link revenue management decisions to human development agendas. The report also examines how best to leverage extractives companies’ employment, procurement, infrastructure and social investments. [Download]
Agriculture in Africa: telling facts from myths (World Bank Blogs)
Armed with solid nationally representative household survey data, filled with detailed plot level information on agriculture, from six African countries which together represent 40 percent of Sub-Saharan African population, the “Agriculture in Africa – Telling Facts from Myths” team has embarked on a myth busting journey. It articulates our understanding of African agriculture and rural livelihoods in 15 statements and subjects them to the data. The facts revisited include:
Power, People, Planet: seizing Africa’s energy and climate opportunities (Africa Progress Panel)
The report reveals that households living on less than US$2.50 a day collectively spend US$10 billion every year on energy-related products, such as charcoal, kerosene, candles and torches. Measured on a per unit basis, Africa’s poorest households are spending around US$10/kWh on lighting – 20 times more than Africa’s richest households. By comparison, the national average cost for electricity in the United States is US$0.12/kWh and in the United Kingdom is US$0.15/kWh. The 2015 Africa Progress Report urges African governments to:
Ghana: Poverty reduction over thirty years (UNU-WIDER)
Ghana is relatively rare among Sub-Saharan African countries in having had sustained positive growth every year since the mid-1980s. This paper analyses the nature of the growth and then presents an analysis of the evolution of both consumption poverty and non-monetary poverty outcomes over this period, showing improvements in almost all indicators over this period. At the same time, inequality has risen over the past 20 years and spatial inequality, in both monetary and non-monetary outcomes, remains an important concern. This increase in inequality is one reason why growth has not led to faster poverty reduction. [The authors: Andy McKay, Jukka Pirttilä, Finn Tarp]
Financing for Development: latest Global Investment Trends Monitor (UNCTAD)
This monitor includes a stocktaking of inward FDI and other external flows to LDCs, LLDCs, and SIDS since Monterrey 2002, in addition to an analysis of recent trends, to assist policymakers and the international community in debating and agreeing policies and initiatives to further boost investment for sustainable development. For ease of reference, the stock-taking is organized as three fact sheets, one for each group. [Download]
Domestic resource mobilization in West Africa: missed opportunities (OSIWA)
ECOWAS at 40: the driving philosophy of multinationalism (ThisDay)
Shaping the Global Development Agenda after the MDGs and what it means for Africa, Rwanda (New Times)
SADC Technical Committee on Fisheries: update (SADC)
How is the AU steering Africa towards a healthy blue economy? (ISS)
China's exports down 2.8% in May (Xinhua)
In 5 years, submarine cables have brought a 20-fold increase in bandwidth in Africa (Quartz Africa)
This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)
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Speed up integration to stem illegal migration
The African leadership will need to speed up the implementation of the integration agenda as the continent urgently needs to create jobs for the over 60 percent of its population who are the youth, the Chairman of the COMESA-EAC-SADC Tripartite Task Force Sindiso Ngwenya has said.
Speaking at Sharm El Sheikh in Egypt after the opening of the meeting of Technical officials preparing for the launch of the Tripartite Free Trade Area on Wednesday June 10, Mr Ngwenya said the current upsurge of illegal migration out of Africa with its attendant risks is testimony of the youth frustration in getting employment. Africa has the world's youngest population at over 60% of its population.
Mr Ngwenya who is also the Secretary General of COMESA said the Tripartite FTA launch was historical as it will have great outcomes in the region and beyond.
"The FTA will ensure that jobs are created as companies involved in the production of goods and service across borders will be established in the region to take advantage of the wider market base of 26 member States with a population of 625 million people and a Gross Domestic Product of USD$ 1.3 trillion," he said.
Further, he said free movement of people across borders was key on the agenda for the tripartite as will stimulate business development and investment opportunities for the three regions.
“Despite having not tackled the issue thoroughly as the tripartite, we have included the free movement of people in the market integration as this affects the other two pillars which are Infrastructure development and Industrial.
The COMESA-EAC-SADC Tripartite FTA will allow for businessmen and women to trade freely and cheaply adding that multiple trade regimes usually result in expensive business deals while a one and harmonized trade regime will allow for cheap business deals.
The decision to establish the COMESA-EAC-SADC tripartite was informed by overlapping membership of the States to the three regional economic communities (RECs). During their Summit in 2008, the Heads of State of the three RECs decided, that to overcome this challenge, there was need to establish a single FTA for the 26 countries that constitute the membership.
The Heads of State, launched negotiations for the establishment of the COMESA-EAC-SADC Tripartite Free Trade Area in 2011 and agreed that these negotiations should be completed by 2014.
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Africa Competitiveness Report 2015: Transforming Africa’s Economies
Boosting agriculture, services and value chains is key to Africa’s competitiveness
In Africa, economic growth has risen steadily for the past 15 years and rapid population growth holds the promise of a large emerging consumer market as well as an unprecedented labor force that could provide significant growth opportunities.
But the continent remains a largely agrarian economy with a large informal sector and growth driven mainly by natural resources. Despite consistent high growth rates, nearly one out of two Africans continues to live in extreme poverty, and income inequality remains among the highest in the world. In addition, across sectors – from agriculture, to manufacturing, to services – productivity levels remain low.
African economies’ prospects for long-term, sustainable growth are under threat from weakness in the core conditions necessary for competitive and productive economies, despite outwardly healthy-looking growth rates in many parts of the region.
A new report from the World Bank Group – The Africa Competitiveness Report 2015 – provides detailed competitiveness profiles for the 40 African countries included in the World Economic Forum’s Global Competitiveness Index. The report provides country-specific context and highlights the unique challenges facing economies.
The biennial report, themed Transforming Africa’s Economies, combines detailed data from the World Economic Forum’s Global Competitiveness Index (GCI) with studies on three key areas of economic activity; agricultural productivity, services sector growth and global and regional value chains. The data points to low and stagnating productivity across all sectors: agriculture, manufacturing and services, partly as a result of ongoing weakness in the basic drivers of competitiveness, such as institutions, infrastructure, health and education. This shortfall masks a better performance in other areas of the economy; specifically, better functioning of labour and goods markets.
In view of Africa’s young and growing population, labour-intensive sectors must play a larger role in the continent’s transformation: the growth in services – both in terms of GDP and employment – cannot propel Africa’s growth alone, and even here development remains uneven, with too many people employed in low productivity services.
“Due to the rapid growth of Africa’s working-age population, investments in highly productive labor-intensive sectors will be crucial to create more globally competitive economies. These investments will also promote the regional agenda for inclusive growth and generate much-needed employment opportunities for women and youth,” said Barak Hoffman, World Bank Group Governance Specialist and co-author of the report.
Africa’s best path forward, according to the report, is to turn high growth into sustainable and inclusive growth by raising productivity across all sectors of the economy and creating quality employment.
“Business cannot continue as usual in Africa’s agriculture sector. It is imperative that productivity be significantly boosted through tailored agriculture research, harnessing ICT and strengthening linkages between small-scale farmers and commercial producers while better integrating them into regional and global value chains,” said Steve Kayizzi-Mugerwa, Ag. Vice President at the African Development Bank.
“The service sector is rapidly becoming much more prominent on the development agenda across Africa and for the World Bank. In many countries across the region, services are the most rapidly growing sector, creating new jobs and economic activities, and providing critical inputs to boost production in other sectors. Yet productivity of the service sector remains low. To be more competitive, governments must lower trade barriers as well as enact complementary regulatory reforms. These reforms are also necessary for Africa to deepen its integration into global value chains,” said Anabel González, World Bank Group Senior Director for Trade and Competitiveness.
“To consolidate the progress achieved and make new gains that will allow sub-Saharan Africa to fulfil its full potential, we need to promote further investment in infrastructure, adopt swifter trade procedures, increase regional integration and build more effective institutions. Faster structural transformation is also needed to boost productivity, enhance job creation and improve social cohesion,” said Angel Gurría, Secretary-General at the Organisation for Economic Co-operation and Development (OECD) in Paris.
Key findings
Transforming Africa’s economies
Although other regions have emphasized a growing manufacturing sector as the driving force of economic development, Africa’s path has been different. While agriculture continues to employ over half of the continent’s population, it is being slowly replaced by an expanding services sector, which accounts for over 50% of GDP.
This shift has taken place largely in the market service sector – most notably in retail, distribution and other trade services – employing 25% of the working-age population. But there is room for enhancement in labor productivity in both the agriculture sector and the trade service sector – where most agriculture employment has shifted.
Increasing agricultural competitiveness
Despite a wealth of arable land, Africa has the world’s highest rates of undernourishment and imports many food staples. The agricultural sector, largely characterized by small-scale subsistence production, has not benefited from the green revolution that aided much of the developing world.
Development of agricultural value chains integration is key to the sector’s success. The Africa Competitiveness Report emphasizes that value chains should include connections to large, commercial agribusiness, but also to small-scale farmers. In addition, a sound regulatory and institutional system, appropriate financial instruments, and increased spending in research are vital to encouraging production of high-yield crops. Furthermore, land reform will be particularly crucial for increasing access to land.
The role of services
The increasingly important role of services in economies across Africa is challenging the conventional understanding of the path of structural transformation. The report uses new trade statistics to show that service exports are much more significant for Africa than previously thought. Services, for example, account for 83% of the final price of Ethiopian roses in the Netherlands. Yet service exports from Africa remain a small portion of overall exports. To maximize potential gains from this sector, countries in Africa need to reduce direct barriers to trade in services as well as poor regulations that indirectly impede trade.
Tapping the potential of global value chains
Recent data suggests that participation in global value chains (GVCs) is associated with economic benefits, particularly for developing economies, where GVC participation helps countries enhance productivity, develop skills, and diversify exports.
The region’s participation in GVCs remains small, and two-thirds of that participation is related to the continent’s rich endowments in natural resources and low levels of industrialization. Further development of GVCs will depend on the implementation of a broad set of policies, with a particular focus on trade facilitation, investment policy, and improved transport infrastructure and access to finance.
Moving forward
The report finds that the following levers are most critical for addressing the continent’s challenges:
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Developing transport and ICT infrastructure: Increased spending on rural infrastructure will help reduce the continent’s dependence on rain-fed agriculture by supporting intensified irrigation, increasing resilience to climate change, and improving access to markets for intermediate inputs and agricultural produce. It will also help unlock (intra-) African trade and participation in regional and global value chains. ICT infrastructure is also critical to the provision of services within countries and across national borders.
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Increasing the quality of education: Although the continent has made considerable progress in improving access to primary education, enrolment rates in higher education remain disappointingly low. Empirical evidence shows that tertiary education enrolment is an important determinant of services in developing countries, primarily via skills and entrepreneurial activity.
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Reducing barriers to trade: Beyond the poor quality of physical infrastructure and high tariffs, estimates shows that 60% to 90% of trade costs relate to non-tariff measures. In addition, delays and unpredictability often impede the region’s participation in GVCs because many industries rely on just-in-time production and depend on the reliability of the supply of intermediate inputs. Essential steps include simplifying import-export procedures.
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Strengthening the regulatory framework: The absence of land markets prevent the most efficient farmers from scaling up their production, and insecure land tenure limits farmers’ ability to use their land as collateral and thus to access credit markets. Large parts of the service sector – such as telecommunications, professional services and transport services – are relatively restricted in many countries.
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South Africa loses game of chicken in renewal of US trade agreement
South Africa’s “chicken war” with the US has been resolved, removing a barrier to the renewal of a key trade agreement. Restrictions on US poultry imports to South Africa had threatened South Africa’s inclusion in the extension of the African Growth and Opportunity Act (AGOA) which enables African countries to import certain products to the US duty-free.
“We had a discussion on a quota of poultry products that would enter South Africa and essentially this will consolidate and fortify South Africa’s position in the African Growth and Opportunity Act,” South Africa’s Minister of Trade and Industry Rob Davies told RFI in an interview at the South African embassy in Paris on Saturday.
The chicken war resulted from accusations that US poultry producers had been dumping cheap chicken into the South African marketplace, hurting domestic producers who could not compete on cost.
Pretoria slapped anti-dumping charges on US chicken exports to protect its own chicken farmers. However, the American poultry industry lobbied hard to have South Africa’s tariffs lifted and called into question the favourable treatment other South African export products receive through AGOA.
The agreement on a quota system for US poultry paves the way for the renewal of AGOA but is likely to threaten South Africa’s domestic chicken producers.
“It will place the United States as a very prominent importer,” said Minister Davies. “It will not just be that it will replace other imports, it will have an impact on local production."
The compromise reached between the two countries removes any obstruction to South Africa’s inclusion in AGOA as the agreement comes up for renewal later this year.
Since its inception 15 years ago, AGOA has given a boost to the South African economy and in 2014 it banked more than 1.7 billion dollars of export revenue as a result of the agreement. Considering the impact of AGOA across sub-Saharan Africa, South Africa benefits from up to 75 per cent of non-oil US imports under the agreement.
“I think by solving this matter we’ve put the relationship back on a more cordial and productive footing,” said Davies, following negotiations that took place in Paris.
“It’s important to say that the South African Poultry Association, which had nothing to gain, came to the party and was a participant in this negotiation and played a patriotic role in terms of looking to the bigger national interest and making a concession,” he added.
In light of the concession made by South African poultry producers, there will be initiatives to try to manage the fallout from the likely reduction in sales of domestic chicken products.
“There will be a package to support small black companies in the import of the US product and its packaging and further processing in our country,” the minister said. “We have been talking more generally about other components of a developmental package which we have to work through, which would include training of people in our poultry industry in the United States.”
The US Senate has already agreed to extend the AGOA agreement. The finer details will be debated by Congress with a renewal of the agreement expected by September.
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Towards One African Market: The Continental Free Trade Area (CFTA) for Africa
Next month Africa will take a bold step towards integration with the launch of negotiations for the Continental Free Trade Area (the CFTA). A trader in Ghana with dreams of breaking into the faraway markets of East Africa will be one step closer to making his or her dream a reality.
Presidents from all around the continent will gather together at the African Union’s Heads of State and Government Summit in Johannesburg, South Africa (from the 7th to the 15th of June) to launch negotiations that will lead to the establishment of a free trade area to span the continent. Now there’s a real urgency among Africa’s leaders to find ways to break down the barriers that separate their economies. As Kenya’s President Uhuru Kenyatta passionately put it:
“There cannot be a good reason why it is easier for us to trade with Asia, Europe and the Americas, rather than with fellow Africans.”
That sentiment is echoed on the other side of the continent by H.E Mr. John Mahama, President of Ghana and Chair of the High-Level African Trade Committee:
“It was a dream of our founding fathers to create a continent where people can move freely (with) goods and services across the continent. Fast tracking the creation of a CFTA is the way to go”. -
Africa’s leaders have set 2017 as the deadline for establishment of the CFTA. Creating a free trade area among Africa’s 54 countries won’t be easy and will require an enormous amount of energy and effort but there’s a firm belief that for the continent to truly develop Africa must trade with Africa.
But it’s not just about trade.
The CFTA will help address many of Africa’s biggest challenges such as youth unemployment, skills development, women’s empowerment, industrialization and infrastructure development.
The African Union’s Trade Commissioner, H.E. Mrs. Fatima Haram Acyl, is inviting key members of the media to join her at the Summit to hear more about the launch of the negotiations of the CFTA and what this historic milestone means for Africa. The Department of Trade and Industry is assembling prominent delegates and African Union representatives for the media to interview. Commissioner Acyl says:
“The CFTA would bring together 54 African countries with a combined population of more than one billion and a combined gross domestic product of more than US$3 trillion. It would establish a single continental market for goods and services… help[ing] turn 54 fragmented and individual African economies into a larger and more coherent market.”
The Time is Now
The need for action on the CFTA is urgent. The world is changing with the countries in other parts of the globe joining Mega-Regional Trade Agreements (MRTAs), and that is reshaping the global trading system. Africa must act now, or risk being left behind. Research by the United Nations Economic Commission for Africa shows that the establishment of the CFTA will better position the African continent vis-à-vis the rest of the world.
Never before have our challenges been so large. Africa faces a myriad of development challenges: high youth unemployment, a low-skilled workforce, and issues of international migration, widespread poverty, gender inequality, and limited industrialization.
At the same time, never have we had so many opportunities to capitalize on. The establishment of the Continental Free Trade Area will help combat these myriad challenges while taking advantage of the opportunities.
2017 is an Ambitious but Achievable Goal
The African Union is planning to conclude the negotiations for the Continental Free Trade Area (CFTA) by 2017. While we will have to overcome many challenges, we can achieve this goal.
We are not starting from scratch. Progress is already underway with the Tripartite Free Trade Area (TFTA), launching in June 2015, which includes 26 African countries, and the 15 countries of ECOWAS, the Economic Community of West African States, which have already come together.
There are also significant gains that can be made by negotiating certain issues that have been less controversial. It is also possible for a coalition of countries to go forward with negotiations for more contentious issues and for other countries to join when they are ready. Ideally, all AU member states should participate in the negotiations and consider making commitments on specific issues as and when they are ready to do so.
And the CFTA has support a wide range of African leaders:
H.E Mr. John Dramani Mahama, President of the Republic of Ghana and Chair of the High-Level African Trade Committee:
“It was a dream of our founding fathers to create a continent where people can move freely and goods and services across the continent. Fast tracking the creation of a CFTA is the way to go”.
H. E. Mr. Uhuru Kenyatta, President of Kenya:
“There cannot be a good reason why it is easier for us to trade with Asia, Europe and the Americas, rather than with fellow Africans.”
H.E. Mrs. Fatima Haram Acyl, Commissioner for Trade and Industry, African Union Commission:
“Our leaders believe in the potential of the CFTA to unleash substantive benefits for Africa’s socio-economic growth and development. Its establishment will significantly boost intra-African trade and investment, making it easier to move goods, services, and people around the continent. It will support 4 sustainable development, create jobs and empowering women, as well as strengthening the geopolitical position of Africa vis-à-vis the rest of the world.”
The CFTA by the Numbers:
- 54 countries
- More than 1 billion people
- Over US$3 trillion in total GDP
- 52% ($35 billion) increase in intra-African trade by 2022
- 6% increase in African exports
Other Benefits of the CFTA include:
Boosting intra-African trade:
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The World Trade Organization estimates that intra-African trade in 2012 was about 12%. This is in stark contrast to much higher rates of intra-regional trade in more developed regions of the world: 60% in Europe, 40% in North America, and 30% in ASEAN.
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United Nations Economic Commission for Africa (UNECA) estimates that the CFTA could increase intra-African trade by $35 billion, or 52% above the baseline, by 2022.
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It further estimates that agricultural and industrial exports would increase by $4 billion (7%) and $21 billion (5%) above the baseline, respectively.
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“There cannot be a good reason why it is easier for us to trade with Asia, Europe and the Americas, rather than with fellow Africans.” – H.E. Uhuru Kenyatta, President of Kenya
Increasing exports:
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Africa’s share of global trade is only about 3%
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UNECA estimates that in conjunction with ongoing initiatives, such as trade facilitation measures to reduce time and cost of trading, the CFTA would help increase Africa’s export volumes to the rest of the world by 6%.
Improving Africa’s political position via-a-vis the rest of the world:
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UNECA has shown that the establishment of the CFTA will better position the African continent to negotiate in the multilateral trading system
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“Research on the impact of these [Mega-Regional Trade] agreements on Africa is clear: We will be better positioned and better off if we move to establish the CFTA as quickly as possible.” – H.E. Mrs. Fatima Haram Acyl, Commissioner for Trade and Industry
As part of the long-term vision of Africa:
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The CFTA is a flagship project of the African Union’s Agenda 2063
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“It was a dream of our founding fathers to create a continent where people can move freely (with) goods and services across the continent. Fast tracking the creation of a CFTA is the way to go”. – H.E Mr. John Dramani Mahama, President of the Republic of Ghana and Chair of the High-Level African Trade Committee.
As well as:
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Increased food security through reduction of the rate of protection on trade in agricultural produce among African countries
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Increased competitiveness of Africa’s industrial products through harnessing the economies of scale of a large continental market of about one billion people
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Increased rate of diversification and transformation of Africa’s economy and the continent’s ability to supply its import needs from its own resources
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Better allocation of resources, improved competition and reduced price differentials among African countries.
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Growth of intra-industry trade and the development of geographically-based specialisation in Africa
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Reduced vulnerability of Africa to external trade shocks, and
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Enhanced participation of Africa in global trade and reduced dependence of the continent on aid and external borrowing.
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Wise investors should not wait
The opportunity to fund Africa’s infrastructure was huge and wise investors should move and get involved in financing this development, President Jacob Zuma said last week.
“Africa will never go back. Africa is moving forward. The opportunities are huge. They are in the area of trillions. Any wise investor will realise that this is the moment to invest in the continent, therefore all the financial institutions should do the same,” Zuma added, speaking during a session entitled, “Meeting the infrastructure challenge”, at the World Economic Forum on Africa.
Viswanathan Shankar, Standard Chartered head of Europe, Middle East, Africa and the Americas, said that Africa needed to spend about $100 billion (R1.255 trillion) each year for the next 20 to 30 years to remove its infrastructure deficit.
Instead, $50bn was being spent at present on African infrastructure each year, he added. “So there is roughly a financing gap of about $50bn. The real question is, is the $50bn going to be available?” Shankar said.
The bank established by Brazil, Russia, India, China and South Africa – the Brics – was one of the possibilities for financing infrastructure on the continent, Zuma said.
The Brics had agreed to set up a $50bn development bank to rival the International Monetary Fund and the World Bank at last year’s summit in Brazil, as well as a $100bn currency exchange reserve.
Programme
“The Brics bank is a developmental bank and it is going to have a branch here in South Africa. That is done precisely to participate in the massive African infrastructure programme and other economic activities that are going to take place. It adds to the sources that have been there all the time, like the World Bank, the International Monetary Fund and the development finance institutions,” he added.
“I’m sure the Brics bank will be able to prove itself whether it can walk the talk,” Zuma said.
He said that one of the critical things that Africa needed was in the area of energy infrastructure.
Standard Chartered’s Shankar said the problem in Africa was that the continent had a savings rate of 15 percent compared to 30 to 40 percent in Asia. “Financing is going to be more challenging.”
Patrick Dlamini, the Development Bank of Southern Africa chief executive, said in the 1990s the collective gross domestic product of the African continent was $500bn and that had risen to $2.7 trillion.
“In the next 30 years, I can confidently say to you that you will see a completely different African continent,” he said.
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OECD Ministers launch new framework to boost sustainable investment
OECD Ministers have endorsed updated guidelines to help national governments and regional groups create the right conditions to attract domestic and foreign investment.
Ministers agreed the updated Policy Framework for Investment (PFI) – first developed in 2006 – during the OECD’s annual Ministerial meeting in Paris.
The updated version places more focus on infrastructure, small and medium-sized enterprises and the role played by global value chains in economic activity. It also includes gender issues, a vital element of inclusive development, as well as policies to channel investment in areas that promote green growth.
“The global investment landscape has changed dramatically over the past decade,” said OECD Secretary-General Angel Gurría. “This updated Framework will help get investment to where it is most needed, making it more effective and sustainable to benefit business, society and the environment.”
The Policy Framework connects 12 policy areas: investment policy; investment promotion and facilitation; competition; trade; taxation; corporate governance; finance; infrastructure; developing human resources; policies to promote responsible business conduct and investment in support of green growth; and public governance.
A taskforce, co-chaired by Finland and Myanmar, led the work on the update. More than 25 countries at varying levels of development and across all continents have already used or are currently using the PFI to assess their business climate and design reforms, ranging from Botswana and Burkina Faso to Cambodia, China, India, Indonesia, Morocco, Myanmar, Peru and Zambia. This experience has informed the update. The PFI is ready for use as a global reference for investment policy reforms, including for development co-operation.
The PFI also complements other areas of OECD work on investment and long-term financing, including the OECD Guidelines for Multinational Enterprises, the OECD Principles of Corporate Governance and the G20/OECD High-Level Principles for Long-Term Investment Financing by Institutional Investors.
Ministers from the 34 OECD member countries were joined at the annual Ministerial Council Meeting by ministers and representatives from Brazil, China, Colombia, Costa Rica, India, Indonesia, Latvia, Lithuania and South Africa, as well as by senior officials from various international organisations. Ministers and high-level representatives from Argentina; Hong Kong, China; Kazakhstan; Myanmar; Morocco; Peru; and Senegal were also invited to participate in certain sessions of the Ministerial.
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Namibia: Cabinet seeking to finalize outstanding issues on TFTA before approval
The proposed new regional economic bloc, that would merge the East African Community, Southern African Development Community (SADC) and COMESA blocs, will only see Namibian cabinet consideration when negotiations on outstanding work is finalized and the attorney general has cleared the draft agreement as well as all its components.
Namibia has indicated that it will not sign the Tripartite Free Trade Agreement (TFTA) at the third COMESA-EAC-SADC tripartite summit set to take place during the second week of June in Egypt.
The TFTA is an attempt to merge the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern Africa Development Community (SADC) and has been described as a major step towards trade and infrastructure development in Africa.
The proposed integrated market involves 26 member states with a combined population of 625 million people and a gross domestic product (GDP) of US$1.2 trillion.
This week Cabinet directed the Ministry of Industrialisation, Trade and SME Development to coordinate national positions on the outstanding issues identified in the TFTA negotiations with the view to concluding phase 1 of the TFTA negotiations.
Cabinet also directed the Ministry of International Relations and Cooperation to coordinate Namibia’s participation.
The TFTA has been hailed by many as the foundation of the Continental Free Trade Area being promoted by the Africa Union (AU) Commission and its partners.
The main reason the three regional economic communities (RECs) decided to launch the tripartite programme in 2006 was to remove some of the inconsistencies and costs in regional integration brought about through overlapping membership.
Thus, the tripartite arrangement is not a new legal structure neither is it a new REC but rather an attempt to merge the existing regional organizations into an African economic community.
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At UN-backed meeting, landlocked developing countries call for greater action on efforts toward sustainable development
Ministers and senior Government officials on 4 June rallied the international community in a Call to Action, capping off a three-day meeting in Livingstone, Zambia, which aimed to accelerate the implementation of an ambitious action-plan that would put the world’s 32 landlocked developing countries (LLDCs) on a steady path to sustainable, inclusive and economic development.
The United Nations-backed gathering is the first Ministerial meeting held since the adoption of the Vienna Programme of Action for LLDCs (VPoA) in 2014 – a 10-year blueprint for the development of LLDCs which underscores the commitment of the global community to support LLDCs in dealing with challenges related to landlockedness, remoteness and geographical disadvantages.
Speaking at the close of the meeting, Zambia’s Minister of Transport, Works, Supply and Communications and Chair of the Group of LLDCs, Mr. Yamfwa Mukanga, told more than 200 delegates, ‘As the post-2015 UN Development Agenda is about to be adopted, the international community at large should ensure that the challenges of LLDCs are taken on board and that solutions are found.’ He added that the Call to Action was clear and therefore ‘the means of implementation are cardinal’.
The Livingstone Call to Action urges Member States to pursue several concrete measures to catalyse the implementation of the six priorities areas outlined in the VPoA. These include steps to enhance structural economic transformation in the LLDCs, improve their share of international trade by easing trade facilitation and tackling fundamental transit policy issues. Delegates proposed strategic interventions to improve infrastructure development, bolster regional integration and cooperation as well as specific ways to implement, mainstream and monitor the VPoA.
‘The Livingstone meeting was critical in highlighting the importance of the effective implementation of the VPoA in partnership with transit countries and development partners. Enhanced and strengthened multi-stakeholder partnership will be indispensable for turning landlocked countries into landlinked countries. This is what came out strongly in the high level meeting,’ said High Representative for Least Developed Countries, LLDCs and Small Island |Developing States, Mr. Gyan |Chandra Acharya.
The Call to Action underscores the critical need for the development of productive sectors in the LLDCs noting that inclusive industrialisation, access to energy and finance, agro-business development together with concrete programmes for rural upliftment will be critical to bring about structural transformation in LLDCs. Within the ambit of structural transformation, LLDCs committed themselves to strengthening industrial clusters, which would ensure the expansion of exports and economic diversification. While recognizing the need for greater investment in research and development to improve technical capacity, LLDCs called for international assistance to kick-start innovation and stimulate emerging technology firms.
Given that their share of international trade in 2014 stood at 1.2 per cent, the document highlights actions to improve international trade, trade facilitation, and transit policy issues suggesting that developed and developing countries consider establishing a preferential access scheme specifically for exports from LLDCs, with tariff concessions and without nontariff barriers. Delegates further urged LLDCs and transit developing countries to domestically ratify the WTO Trade Facilitation Agreement as soon as possible, in order to ensure its coming into force by the time of the WTO’s 10th Ministerial Conference in Nairobi in December 2015. A further recommendation was that developed and developing countries work towards the conclusion of the Doha Development Agenda which would create new market access opportunities for the LLDCs and eliminate trade distorting practices that affect their exports.
In order to address the serious infrastructure gap in the LLDCs, delegates appealed to the international community to at least double their annual investments for infrastructure development in the LLDCs from all sources, including official development assistance (ODA), North-South, South-South cooperation and public private partnerships. New and additional funding from development banks will be especially instrumental in efforts to reach this goal. The LLDCs were encouraged to develop and imbed infrastructure investment plans in their national development strategies and strengthen the domestic enabling environment.
As part of discussions to identify means of implementing the VPoA, the document calls on donors to honour their ODA commitments and ensure that the distribution of ODA is based on country-specific priorities and needs of the recipient countries, with particular consideration for LLDCs where the need is greatest. It adds that donors should ensure that a larger share of Aid for Trade is directed towards LLDCs, given their particular infrastructure and trade-related needs. Moreover, international development banks should support regional investments in infrastructure projects on transport, energy and ICT in order to support deeper regional and sub-regional integration, as well as deepening of regional markets and enhance competiveness of LLDCs.
In order to ensure that the momentum of the Vienna process is maintained, the document urges Member States to mainstream the VPoA into their sectoral and national plans, suggesting that integration at the national level and support at the regional level would be critical. Monitoring progress in the implementation of the VPoA was seen as key and it was suggested that based on a selection of relevant indicators, Member States and other partners should report on the progress on a regular basis towards attaining the objectives set out in the VPoA.
The Livingstone Call to Action concludes by encouraging LLDCs to redouble their concerted efforts to integrate the implementation of the VPoA into the Post-2015 Development Agenda, financing for development, climate change, and global trade talks so that their interests are fully reflected in the follow-up to these global processes.