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tralac’s Daily News selection: 5 June 2015
The selection: Friday, 5 June
Namibia: Cabinet seeking to finalize outstanding issues on TFTA before approval (New Era)
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 at the third COMESA-EAC-SADC tripartite summit set to take place during the second week of June in Egypt.
One-stop border posts on cards (Zambia Daily Mail)
Zambia, Malawi, Mozambique and Tanzania plan to establish fully-fledged one-stop border posts with assistance from international co-operating partners to facilitate rapid clearance of goods. Malawi’s Minister of Foreign Affairs George Chaponda said this in Livingstone on Tuesday at the high-level ministerial meeting for landlocked developing countries. Mr Chaponda said the World Bank and the African Development Bank are assisting the four countries to establish the facilities. He said COMESA and SADC have put in place several initiatives to establish one-stop borders to facilitate rapid clearance of goods and services.
African Competitiveness Report: ‘Transforming Africa’s economies’ (World Bank / AfDB / OECD / WEF)
The biennial report, themed Transforming Africa’s Economies, combines detailed data from the World Economic Forum’s Global Competitiveness Index 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. [Download]
African businesses 'could unlock $350bn a year' (News24)
Rick Menell: 'Business must take the lead in selling the merits of Africa' (Business Day)
No more free rides for Africa, says Barclays chief (News24Wire)
Cecilia Malmström: 'EU Africa trade: a new partnership' (European Commission)
EPAs also have potential to make the business environment in general more predictable and more transparent. That's particularly the case when it comes to customs administrations. And the rendez-vous clauses in these deals on services, investment and competition offer the potential to go much further. And EPAs will also help African companies to gain access to imports that can help them become more competitive. The deals will gradually and carefully open African markets to European exports as well. That's in our mutual interest.
But all this can only happen if they are put into practice. I hope that our partner governments across the region see that as a priority. And that they also help to develop the institutions, the infrastructure the governance that is necessary to support it and that's a core part of our relationship. We need to take a clear look at this.
The African Network of Centers of Excellence in Electricity: appraisal report (AfDB)
The African Network of Centers of Excellence in Electricity (ANCEE) is a continental undertaking championed by the Association of Power Utilities of Africa (grant beneficiary) on behalf of countries and the 77 member utilities involved. The overall project objective is to improve the performance of the power sector and enhance regional trade through building technical and managerial capacities in various works and governance in the sector. In the longer term, it [pooling] will strengthen the operational and investment frameworks for major projects such as those in the PIDA PAP.
Tanzania: Power sector reform and governance support programme - appraisal report (AfDB)
Fight against NTBs will be top priority, says new EABC chief (New Times)
Rwanda’s Denis Karera was over the weekend elected chairman of the East African Business Council (EABC), a body of 54 business associations and 102 corporate members of the private sector from across the five member states of the EAC. Karera says his team’s priorities will be to ensure they advocate for total elimination of trade barriers, foster self-reliance and sustainability of the council. Business Times’ Peterson Tumwebaze caught up with him on Saturday and talked about his other plans for the council and what the chairmanship means for Rwanda.
Implementation of the WTO Trade Facilitation Agreement: the potential impact on trade costs (OECD)
Implementing the WTO Trade Facilitation Agreement 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 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. [Download]
Build good roads, LLDCs told (Times of Zambia)
Increasing capacity of Sena railroad is one Mozambique’s priorities for 2015 (MacauHub)
Kenya, Uganda could agree on key oil route (Daily Nation)
A key decision on the route the Uganda-Kenya crude oil pipeline will take could be made this week during the Northern Corridor Heads of State summit. The presidents of regional countries are expected to be handed the feasibility studies and the design for the pipeline route from the ministries.
Where are the women? Inclusive boardrooms in Africa’s top-listed companies (AfDB)
Major findings in the report, which measured 2013 data for 307 companies in 12 countries, include: the greatest sectoral champions for women on boards in Africa are the financial services, basic materials and construction, and automotive industries; the African countries with the highest percentage of women on boards are Kenya (19.8%), South Africa (17.4%), Botswana (16.9%), Zambia (16.9%) and Ghana (17.7%); the companies with the highest percentage of women on boards are East Africa Breweries of Kenya (45.5%), followed by two South African firms, Impala Platinum Holdings (38.5%) and Woolworths Holdings (30.8%). [Download]
Jobs without Borders (World Bank)
The World Bank Group has released the first comprehensive study on online outsourcing, called “The Global Opportunity in Online Outsourcing.” This study is complemented by a web-based toolkit (available at www.ictforjobs.org) to diagnose the feasibility for establishing the online outsourcing industry in developing countries, in order to increase access to employment and income-generation opportunities. Dissemination events were conducted in Nigeria and Kenya in May 2015 to discuss the potential of online outsourcing with policy makers, local online outsourcing intermediaries and workers.
The partnership is part of the Rockefeller Foundation’s Digital Jobs Africa initiative, which seeks to catalyze new, sustainable employment opportunities and skills training for youth in Africa, with a goal to positively impact one million lives in Egypt, Ghana, Kenya, Morocco, Nigeria, and South Africa through the ICT sector, and ultimately improve the social and economic well-being of entire families, communities and nations.
Internet development and internet governance in Africa (Internet Society)
UN agency reports world food prices declining to six-year low (UN News Centre)
According to the UN agency’s monthly Food Price Index, the May 2015 forecast for the global production of wheat, coarse grains and rice has been “upgraded” as maize harvests in China and Mexico as well as more abundant wheat harvests in Africa and North America are currently anticipated. The resulting drop in prices for May marks a steady 3.8 per cent monthly decline in the cereal price index, a 2.9 per cent drop in the dairy price index and a one per cent drop in the meat price index. In addition, the Organization also predicts that global rice output will grow by 1.3 percent from last year mainly due to increases across Asia.
Science partnership to improve the quality of indigenous food products in the SADC region (CSIR)
Gates Foundation to spend $776 million tackling hunger (BusinessDay)
WTO: India unfairly blocking US poultry, egg imports
The World Trade Organization has upheld a ruling that India is unfairly blocking imports of U.S. poultry and eggs. The Obama administration called the decision a major victory that should greatly expand export opportunities for American farmers. The ruling announced Thursday by the Geneva-based WTO's appellate body upheld a decision issued by a dispute panel last October. India imposed the trade barriers in 2007 to prevent avian influenza from entering the country. The WTO said they were too restrictive and not based on international scientific standards. [The ruling]
US trade deficit narrows as exports of services hit record high (Reuters)
Sustainable consumption and production: a handbook for policy makers (UNEP)
The handbook contains compelling data on both the impact of unsustainable consumption and production, and the efficiency gains to be made by mainstreaming SCP patterns. The estimated 1.2 billion people still living in extreme poverty, depend on natural capital - the wealth derived from activities related to nature - far more than the affluent. Those on low income count nearly a third of their wealth in natural capital, while those on high income have approximately 4 times less dependency on natural capital.
Eco-system services, such as mangroves filtering water, and other 'non-market' goods can account for as much as 47 per cent, in India, to 90 per cent, in Brazil, of the so-called "GDP of the poor", highlighting their vulnerability to pollution or climate change. Sustainable consumption and production is therefore essential for improving the lives of those living in poverty.
2015 Ministerial Council statement: Unlocking investment for sustainable growth and jobs (OECD)
We recognise the important role of the OECD in the international policy landscape, including its contributions to the work of G-7 and G-20. We are encouraged by the ongoing efforts of the OECD to enrich its analytical frameworks and methods, including its tools for long-range analysis. In particular, we welcome the Final Synthesis Report on the New Approaches to Economic Challenges initiative and recognise the importance of indicators beyond GDP including OECD work on How’s Life and Green Growth indicators. We call on the OECD to further mainstream multidimensional analysis, including the work on inclusive growth and gender equality, in flagship publications.
Kenya: IMF completes review mission
The mission urged the authorities to boost efforts to mobilize domestic revenue and restrain current spending, so as to preserve room for critical priorities, notably closing infrastructure gaps, supporting an orderly devolution process, and strengthening the social safety net.
Next week: 8th International Conference on Migration and Development (World Bank)
Dar urges speedy conclusion to Nile Basin talks (The Citizen)
South Africa: Government to review new visa rules to protect tourism (Business Day)
MasterCard eyes remittances in new pact with Somalia bank (The EastAfrican)
Development fund proposed for Ghanaian poultry industry (The Poultry Site)
Walmart says its difficult to enter Kenyan market (Daily Nation)
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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tralac’s Daily News selection: 4 June 2015
The selection: Thursday, 4 June
WEF Africa: updates from IOL
Northern Corridor experts meet ahead of presidential summit (New Times)
Senior officials and experts from member states of the East African Community (EAC), yesterday, met in Kampala ahead of the 10th Northern Corridor Integration Projects (NCIP) Summit. The summit, which is expected to be attended by at least four heads of state on Saturday, is aimed at assessing the implementation status of projects launched under the NCIP framework. It is expected to draw the Presidents of Kenya, Rwanda, South Sudan and the host Uganda. The NCIP meeting will have three other sessions; the private sectors’ meeting (Thursday), the ministerial session (Friday), and the Heads of State Summit (Saturday).
The summit will also have a special focus on how to actively involve the private sector in the integration projects. Robert Nkusi Ford, the second vice chair of the Private Sector Foundation (PSF), said the private sector has already identified opportunities in the public-private partnership arrangement that include investment in the ICT sector.
@DonatBagula: I presented the impact assessment of northern corridor performance improvement to senior officials from member states
Gerhard Erasmus: 'The Continental FTA should develop its own REC acquis' (tralac)
The notion of the “REC acquis” has become a notable feature of intra-African trade negotiations. What is the acquis and how could it help to design trade arrangements suitable for 21st century conditions and challenges? A recap of recent negotiations will shed light on how the acquis has been introduced into the African trade and integration debate. We also offer ideas on how to utilize this concept in a more imaginative manner.
Illicit financial flows and development indices: 2008–2012 (Global Financial Integrity)
“For nearly one-quarter of the 82 countries that we analyzed, the ratio of illicit financial outflows to GDP is 10% or greater,” commented Mr. Spanjers, the principal author of the report. “For example, IFFs to GDP amount to a staggering 21.7% in Honduras, 18.1% in Zambia, and 11.2% in Ethiopia. It would not be overstating the point to note that, if any other economic factor had a double-digit ratio to GDP, it would be front-page news. Unfortunately, this is often not the case when illicit flows are concerned.”
South Africa: SARS to employ more tax specialists to deal with base erosion, profit shifting (Business Day)
South Africa: Business confidence slips to a 16-year low (SACCI)
Business confidence slipped to a sixteen-year low as the SACCI Business Confidence Index (BCI) slumped to 86.9 in May 2015 compared to the level of 86.8 registered in September 1999. Comparisons with more recent figures show the BCI two index points lower than in May 2014 and three index points lower than in April 2015.
Patel spells out IDC’s contribution to regional economy (Business Day)
India to resume preferential trade talks with South Africa (Mining Weekly)
Retailers express concern over import licences (The Herald)
Confederation of Zimbabwe Retailers president Mr Denford Mutashu told The Herald Business during a tour of supermarkets and wholesalers by Industry and Commerce Minister Mike Bimha on Tuesday that there is need for checks and balances after the issuance of import licences to prevent indiscipline and corruption. “The issuance of import licences is a noble idea but because they are awarded mostly to middlemen; most of them have seen it as an opportunity to make money.” His comments come in the wake of an outcry by the grain milling industry over the issuance of import permits for mealie meal.
Kenya: Weak euro eats into horticulture earnings (Business Daily)
Horticulture exporters earned Sh1 billion less in the first quarter compared to a similar period in 2014, partly as a result of a weaker euro. Kenya National Bureau of Statistics (KNBS) data shows that earnings from flower, vegetable and fresh fruit exports for quarter one 2015 stood at Sh24.79 billion compared to Sh25.86 billion last year. Kenya Flower Council chief executive Jane Ngigi said exporters are not only facing reduced earnings due to the weaker euro compared to last year, but also face higher costs due to the stronger dollar which they use to pay for 70 per cent of their costs.
Shilling’s decline could scale down ballooning imports (Business Daily)
Tanzania: Dont kill Dar port with unjustifiable charges (editorial comment, The Citizen)
FDI values in Africa hit five year high (African Review)
The 2015 Africa Attractiveness Survey conducted by Ernst and Young revealed that foreign direct investment into Africa reached US$128bn, up 136 per cent in 2014. The number of jobs created from FDI rose by 68 per cent in the same year, resulting in 188,400 new positions across Africa, according to the survey.
Tanzania: NSSF to invest heavily in coffee, cotton, cashew nut processing in three regions (IPPMedia)
The National Social Security Fund has taken initiatives to invest heavily in coffee, cotton and cashew nut products by build building three key factories in three regions so as to add value to those crops. This was said here on Tuesday by the NSSF Director General, Dr Ramadhan Dau when briefing stakeholders about the Fund during the 5th Annual General Meeting. “We intend to invest in processing plants in three regions, and once the projects are completed, Tanzania will no longer sell raw materials at cheaper prices as is the case at the moment,” he said.
Agriculture production and transport infrastructure in east Africa: an application of spatial autoregression (World Bank)
This paper examines the agricultural potential of East Africa, namely, Burundi, Kenya, Rwanda, Tanzania and Uganda, through an examination of the two different sources of spatial data. Despite the currently high international commodity prices, in particular in the traditional export crops, such as coffee and cotton, these East African countries are still struggling to improve agricultural productivity. This paper specifically aims at: (i) generating spatial agricultural production and potential data for the region; (ii) developing spatial data to show transport accessibility in each locality; and (iii) developing an empirical model to link these data and analyze the relationship between agriculture production and transport infrastructure investment.
How much of the labor in African agriculture is provided by women? (World Bank)
The contribution of women to labor in African agriculture is regularly quoted in the range of 60 to 80 percent. Using individual-disaggregated, plot-level labor input data from nationally representative household surveys across six Sub-Saharan African countries, this study estimates the average female labor share in crop production at 40 percent. It is slightly above 50 percent in Malawi, Tanzania, and Uganda, and substantially lower in Nigeria (37 percent), Ethiopia (29 percent), and Niger (24 percent). There are no systematic differences across crops and activities, but female labor shares tend to be higher in households where women own a larger share of the land and when they are more educated.
Smallholders’ land ownership and access in Sub-Saharan Africa: a new landscape?
This paper draws on unique household-level data from six countries (Ethiopia, Malawi, Niger, Nigeria, Tanzania, and Uganda). We aim to explore three issues, namely (i) the distribution of land ownership and associated inequality as well as landlessness; (ii) the extent of land rental market activity (including potential gender bias in such activity); and (iii) the factors associated with land market participation interpreted in light of the structural transformation of Africa’s economies.
Costs and benefits of land fragmentation: evidence from Rwanda (World Bank)
African fields to whole foods: the potential of organic trade in Africa
Firm productivity and infrastructure costs in east Africa (World Bank)
The current paper aims at examining the impacts of improving the quality of public infrastructure services in five East African countries: Burundi, Kenya, Rwanda, Tanzania and Uganda, where the industrial sector, especially manufacturing, has been weak in recent years. While the countries achieved relatively high GDP growth of 5–8%, the sectoral contribution of manufacturing was less than 0.5% of GDP. Burundi and Rwanda experienced negative growth in the manufacturing sector in recent years. By contrast, the service sector and the construction industry contributed significantly to economic growth in the region.
Towards a framework for the governance and delivery of infrastructure (OECD)
The framework offers decision makers a methodology to analyse challenges, mapping out options on how to solve them, and guides them in carrying through decisions. It consists of two components: i) a list of governance preconditions - these concern the overall enabling governance environment for infrastructure; and, ii) a decision tree, which guides countries with respect to making sectoral decisions and overall infrastructure decisions.
Africa Regional Forum on Sustainable Development (UNECA)
SADC: Developing a regional mediation training curriculum
Brazil's May trade surplus up on lower imports
Cecilia Malmström: 'The geopolitical aspect of TTIP' (EU)
Tom Vilsack: '5 facts you should know about the role trade plays on America's farms and ranches' (The White House)
The impact of trade on labor market dynamics (Federal Reserve Bank of St. Louis)
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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FDI values in Africa hit five year high
The 2015 Africa Attractiveness Survey conducted by Ernst and Young (EY) revealed that foreign direct investment (FDI) into Africa reached US$128bn, up 136 per cent in 2014.
The number of jobs created from FDI rose by 68 per cent in the same year, resulting in 188,400 new positions across Africa, according to the survey.
“In the past year, Africa has experienced stronger headwinds than in recent times. Consequently, economic growth this year is likely to be at its lowest in five years, dragged down by the impact of lower oil prices on the Nigerian and Angolan economies, the softening of other commodity prices, and South Africa’s sluggish growth,” said Ajen Sita, chief executive officer at EY Africa.
“At the same time though, economic growth across the continent remains resilient. Sub-Saharan Africa will still experience the second highest economic growth rate in the world this year, with 22 economies growing at a rate of five per cent or higher.”
Africa is showing promising growth as rising urbanization across the continent is defining new trends. In line with these trends, FDI inflows into real estate, hospitality and construction (RHC) have boomed.
The biggest share of investor activity in Africa continues to be drawn in by three sectors – technology, media and telecommunications (TMT).
The survey also noted that one-third (31 per cent) of the respondents expect agriculture to be a key factor in encouraging growh in Africa over the next two years.
Figure 1: Map showing FDI projects in Africa for 2014
» Download: Africa Attractiveness Survey 2015: Making choices (7.33 MB)
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Then and Now: Reimagining Africa’s Future – Catalysing Investment for Transformative Growth
Africa continues to grow at a moderately rapid pace, despite weaker global growth
Africa entered the twenty-first century with promising economic prospects. Over the past decade, most African countries have enjoyed good economic growth relative to the continent’s historical growth performance and the average growth rate for the global economy. The average annual growth rate of real output increased from 1.8 per cent between 1980 and 1989 to 2.6 per cent between 1990 and 2000 and 5.3 per cent between 2000 and 2010. Furthermore, 12 countries had an average growth rate above the developing-country average of 6.1 per cent from 2000-2010, and two countries (Angola and Equatorial Guinea) had double-digit growth rates. Unlike its performance in the 1980s and 1990s, Africa’s average growth rate since the turn of the millennium has also been higher than the average growth rate of the world economy. The continent experienced a significant slowdown in growth due to the global financial and economic crisis of 2008-2009. Nevertheless, its average growth rate in the post-crisis period (2008-2012) was about 2 percentage points higher than that of the world economy.
Responding to emerging sustainable development challenges
Despite Africa’s recent growth performance, there are indications that countries on the continent are experiencing the wrong type of growth in the sense that joblessness is still widespread and growth has not led to significant reductions in poverty. One of the reasons for jobless growth in Africa is that it has not gone through the normal process of structural transformation, involving a shift from low- to high-productivity activities both within and across sectors. In the normal process of economic transformation, economies begin with a high share of agriculture in GDP and as incomes rise, the share of agriculture declines, and that of manufacturing rises. This process continues until the economy reaches a relatively high level of development where both the shares of agriculture and manufacturing fall and that of services rise.
The structural change observed in Africa has not followed this process. Over the past three decades, the continent has moved from a state in which agriculture has had a very high share of output to one in which the service sector, particularly its low-productivity activities, dominates output. This transition has taken place without any significant manufacturing development, which is critical to creating employment. It is therefore not surprising that Africa has experienced jobless growth over the past decade.
Although Africa has enjoyed relatively strong economic growth over the past decade, many of its countries are grappling with several development challenges ranging from food insecurity, Ebola, high unemployment, poverty and inequality, to commodity dependence, lack of economic transformation, environmental degradation and low integration in the global economy. Since the dawn of the new millennium, African Governments and the international community have adopted various initiatives aimed at addressing these development challenges and improving living conditions.
At the continental level, African Heads of State and Government adopted the New Partnership for Africa’s Development, which emphasizes African ownership of the development process and outcome, and calls for interventions in the following priority areas: agriculture and food security, regional integration and infrastructure, climate change and the environment, human development, economic governance, capacity development and women’s empowerment. At the international level, world leaders adopted the Millennium Development Goals, which called for, among others, a halving of the proportion of people living in poverty by 2015. There are also ongoing efforts by the international community to delineate and finalize the broad contours of the post-2015 development agenda within the framework of sustainable development.
While Africa has made some progress in achieving the goals set out in existing development frameworks, overall it has yet to realize the broad vision set out in these initiatives. It is still wrestling with extreme hunger and poverty, and unemployment and inequality have increased over the past decade (Economic Commission for Africa and Organization for Economic Cooperation and Development, 2013). Reversing this trend is a challenge that African policymakers have to address effectively in the short to medium term to enhance the likelihood of achieving the African Union’s vision of an integrated, prosperous and peaceful Africa.
Finally, in 2015, the international community will convene in Addis Ababa for the third International Conference on Financing for Development to assess progress made in the implementation of the 2002 Monterrey Consensus and the 2008 Doha Declaration on Financing for Development, address new and emerging issues and reinvigorate and strengthen financing for development. For Africa, this will mean addressing three key interrelated issues: enhancing domestic resource mobilization, plugging leakages to tackle illicit financial flows and enhancing flows of ODA. At the international level, it will be necessary to consider more rigorous compliance criteria in meeting existing ODA commitments. Clearly, catalysing investment will be essential in reinvigorating and strengthening finance for development in Africa.
The contents of this report are based on the Economic Development in Africa Report 2014: Catalysing Investment for Transformative Growth in Africa, launched on 3 July 2014. All references to “dollars” are United States dollars. Sub-Saharan Africa: unless otherwise stated, this includes South Africa. North Africa: Sudan is classified as part of sub-Saharan Africa, not North Africa.
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Northern Corridor experts meet ahead of presidential summit
Senior officials and experts from member states of the East African Community (EAC), yesterday, met in Kampala ahead of the 10th Northern Corridor Integration Projects (NCIP) Summit.
The summit, which is expected to be attended by at least four heads of state on Saturday, is aimed at assessing the implementation status of projects launched under the NCIP framework.
It is expected to draw the Presidents of Kenya, Rwanda, South Sudan and the host Uganda.
The NCIP meeting will have three other sessions; the private sectors’ meeting (today), the ministerial session (tomorrow), and the Heads of State Summit (on Saturday).
“We have discussed a number of issues, including the fact that airports will now also have branded tourism information centres contrary to the earlier position where the branded centres were only to be stationed at border entry points,” said Monique Mukaruliza, Rwanda’s national coordinator for the NCIP.
The tourism information centres will market, among other projects, the East Africa Single Tourist Visa, which makes the Northern Corridor partner states a single tourist destination.
With the visa, tourists have many choices of getting value for their money by seeing more in just one trip across the three countries.
The summit will also have a special focus on how to actively involve the private sector in the integration projects.
Opportunities for the private sector
Robert Nkusi Ford, the second vice chair of the Private Sector Foundation (PSF), said the private sector has already identified opportunities in the public-private partnership arrangement that include investment in the ICT sector.
“Partner states are now looking at co-funding an awareness campaign up to the tune of $140,000 on the use of national identity cards, voters cards and students ID,” he said.
Officials emphasised the need for members of the private sector to be involved by buying shares in the Northern Corridor projects so they can benefit from them.
Alex Mugire, the Rwanda Revenue Authority head of compliance and enforcement, said Rwanda was in the process of procuring electronic car tracking system.
“Once we have this system estimated at $3.9 million, we will be connected to the common platform with Uganda and Kenya. It will mean that there will be one seal – and not like the case it is today of tracking cargo in bits,” he said.
The Northern Corridor brings together countries that are mainly served by Mombasa port in Kenya.
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New study: Illicit outflows correlate to higher poverty and inequality, lower human development
Illicit financial flows (IFFs), stemming from crime, corruption, and tax evasion, have an outsized impact on the world’s poorest countries, according to a new study released on 3 June 2015 by Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. Titled “Illicit Financial Flows and Development Indices: 2008-2012,” the report also finds strong correlations between higher illicit outflows and higher levels of poverty and economic inequality.
“Illicit financial flows have an outsized impact on the poorest countries in the world,” said Tom Cardamone, GFI’s managing director. “The value of this study is that it goes beyond ‘the big number’ of cumulative global illicit outflows and focuses instead on the impact of IFFs in the poorest of places. A lot of attention gets paid to the massive amount of illicit money flowing out of China, Russia, and other major emerging markets. However, on a relative basis, when you compare illicit financial flows to major development indices like GDP, FDI, and total trade, it becomes extremely clear that illicit outflows take a particularly devastating toll on the world’s poorest economies.”
Authored by GFI Junior Economist Joseph Spanjers and GFI Economics Fellow Håkon Frede Foss, the report compares illicit outflows from the world’s poorest economies to some traditional indicators of development – including GDP, total trade, official development assistance plus foreign direct investment, public expenditures on education and health services, and total tax revenue, among others – for the years 2008-2012, the most recent five-year period for which data are currently available.
“For nearly one-quarter of the 82 countries that we analyzed, the ratio of illicit financial outflows to GDP is ten percent or greater,” commented Mr. Spanjers, the principal author of the report. “For example, IFFs to GDP amount to a staggering 21.7 percent in Honduras, 18.1 percent in Zambia, and 11.2 percent in Ethiopia. It would not be overstating the point to note that, if any other economic factor had a double-digit ratio to GDP, it would be front-page news. Unfortunately, this is often not the case when illicit flows are concerned.”
The authors additionally find a disturbing correlation between illicit financial flows and 1) higher levels of poverty, 2) higher levels of economic inequality, 3) and lower levels of human development, as measured by the United Nations’ annual Human Development Index.
“Higher illicit outflows aggravate poverty, exacerbate income inequality, and erode human development in the world’s poorest countries,” added Mr. Spanjers.
Additional correlations are found between higher relative levels of illicit financial flows and trade openness, tariff rates, and the efficiency of customs.
Policy Recommendations
The report lays out several policy recommendations, and puts a particular emphasis on the outcome of next month’s Third Financing for Development (FfD) Conference in Addis Ababa.
“Concerted action is needed by the international community to assist all developing nations in curtailing the phenomenon of ‘trade misinvoicing’ (i.e. trade fraud) which moves up to 80 percent of all illicit funds offshore,” said Mr. Cardamone, GFI’s managing director, who is leading the organization’s work on the FfD process. “As world leaders continue to negotiate the outcome of next month’s Financing for Development Conference, curtailing trade misinvoicing must be a focus given its link to domestic resource mobilization.”
“We look forward to a robust agreement that: 1) mandates the IMF to regularly measure trade misinvoicing levels from all developing countries; 2) commits the world community to halve trade misinvoicing in all developing countries by 2030; and 3) requires donor countries to provide financing for trade pricing databases and training in customs departments so poor nations can stop misinvoiced goods before they leave the ports. It’s simply impossible to produce a credible FfD Outcome Document that doesn’t commit to measuring and reducing trade misinvoicing by an explicit percentage,” added Mr. Cardamone.
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tralac’s Daily News selection: 3 June 2015
The selection: Wednesday, 3 June
The WEF Africa conference started this morning in Cape Town: some links
Africa faces mounting risks to keep rising growth record going (Bloomberg)
Sim Tshabalala: 'How finance can accelerate steady inclusive growth in Africa' (Business Report)
Book launch: 'Africans investing in Africa' - edited by Terence McNamee, Mark Pearson, Wiebe Boer (Brenthurst Foundation)
SA gets chance to shine at WEF (Business Report)
Leaders discuss a single market for Africa, need for peace and stability (AfDB)
Ghanaian President John Dramani Mahama while in agreement with his counterparts on the need to have peace and stability as a means of enhancing integration efforts, also suggested how it could be done: through participatory integration that allows every African to play a role. “That way, we can avoid or reduce the risk of people that might want to burn the place down because they feel they’re not being included,” he cautioned.
Mahama also challenged AfDB to take the centre-stage in the campaign for a single market for Africa arguing that the Bank has managed to transform itself into a respected institution of the continent and it was ready to take on such serious responsibilities. “It’s now time for AfDB to now transform the continent that gave birth to it, through funding Africa’s integration agenda” Mahama challenged.
Zambia - DR Congo discuss the Simplified Trade Regime (COMESA)
The three day meeting hosted at the COMESA Secretariat is expected to come up with a unified, negotiated list of products that can be traded by the two neighbouring countries. This will boost trading by bringing cross-border trade into formal mainstream trade. Products usually traded are maize, pulses, groundnuts, fish, electronic products, plastics, cosmetics, other hardware parts, clothing and textile materials and shoes among others.
Among the issues to be addressed in both the short and long term include the products in the STR Common List and the value threshold for high value products between the two countries. Others are excessive taxes and fees and the complexities of other regulatory procedures which are still considered important such as sanitary and phyto-sanitary measures. This bilateral meeting between the DRC and Zambia is the first in a long time. If successful, the STR will be launched at the DRC/Zambia borders of Kasumbalesa, Mokambo and Sakanya.
Eliminating counterfeits: laws alone not enough (The New Times)
How will an ordinary mwananchi owning a building in Bungoma, Rwakiruuri, Nyagatare, Ombokolo, Buyenzi, Nyakanyansi, or any other rural township in East Africa know whether his tenant businessman is selling a fake BIC pen or a genuine one? Legislation alone will not be enough.
As legislation progresses, the East African Business Council must take the lead into the following measures:
The ultimate break-through will be a clearly defined EAC industrialisation path, defined on the following key tenets:
EAC budget dwindles third year in a row as sponsors exit (Daily Nation)
East African Community budget has for the third time in a row dropped, with a significant reduction in the number of development partners. Last week the regional legislative assembly debated and approved a Sh10.734 billion budget for the 2015/16 financial year, down from Sh12.049 billion approved last year. The assembly approved Sh12.785 billion in 2013.
This report presents the findings of the independent evaluation of the quality at entry of country and regional integration strategies. The purpose of this evaluation is two-fold: (1) assess the quality at entry of Country Strategy Papers (CSPs) and Regional Integration Strategy Papers (RISPs) and whether it has improved since the last independent quality at entry exercise (QAE1) undertaken in 2008 - 2009 (retrospective); and (2) to suggest potential improvements to the Bank’s design process for its country/regional strategies in light of the Bank’s Ten-year strategy (prospective).
ADF innovation policy Lab: EOI for chief advisor (AfDB)
The consultant will be a Chief Advisor responsible for the overall operation and management of “Shaping the Future of the African Development Fund” and creation of an ADF Policy Innovation Lab project. The Project is funded by Bill & Melinda Gates Foundation Trust Fund and will bring together the best creative, cross sector and cross-disciplinary minds to brainstorm on the subject of innovation for development finance in Africa.
Where are the keys to Africa’s industrialization? (AfDB)
Hellen Hai, CEO of the Made in Africa initiative, shared her experience of having started a shoe factory in Ethiopia which has grown to become one of Africa’s model stories and is spreading to more African countries such as Rwanda. “The Chinese model will require that you jump on the tiger and decide how to ride it when you are already on its back,” she said, her message indirectly urging African governments to launch the campaign for industrialization.
Ethiopia’s compelling rise - lessons for Africa (Brenthurst Foundation)
The Ethiopian government has driven growth through a range of infrastructural investments – rail and air transport, hydro-electricity and a national fibre optic cable scheme, to name some of the biggest – supported by sound policy. In contrast to its neighbours, Ethiopia remains politically stable, with a functioning and efficient government which has curbed corruption and reduced security threats in the country. Ethiopia’s state-centric approach to development has exposed a number of shortcomings, however. Its (in)ability to create or attract a productive private sector able to translate major infrastructural investments into the basis for a dynamic modern economy could yet blunt its future prospects. [The authors: Christopher Clapham, Greg Mills]
Nigeria’s foreign direct investment drops 49% q/q in Q1 2015 (BusinessDay)
The latest capital importation report released by National Bureau of Statistics has shown that Nigeria’s foreign direct investment declined by 48.7% in Q1 of 2015 in relation to the preceding quarter (Q4) 2014. The NBS report states that FDI showed the lowest year-on-year decline in inflows, at $96.09 million growing at -14.77%, while on quarter on quarter basis, the decline was larger at $374.25 million or -48.68%. [Download]
IMF adviser Njoroge picked as Kenya’s next central bank head (Bloomberg)
“The appointing authority saw it fit to get someone with international exposure,” Robert Bunyi, managing director of Nairobi-based investment company Mavuno Capital, said by phone on Wednesday. “As Kenya’s financial system integrates more with the global financial system, and we issue more debt instruments, our currency will come to the fore.” Njoroge’s appointment comes as the central bank grapples with accelerating inflation and a weakening currency.
AGOA: 'What came first: the chicken or the leg?' (The Trade Beat)
On the sidelines of this week’s OECD meetings in Paris, South Africa’s Minister of Trade and Industry Rob Davies and US Trade Representative Mike Froman will try and overcome the protracted dispute between the two countries on chicken exports. It is an example of a blind spot in global trade regulation: structural oversupply markets. These are markets that are in a state of permanent disequilibrium, in which supply always outstrips demand. [The author: Christopher Wood]
SA citrus exports to EU increase (Business Report)
South Africa’s citrus exports to the European Union (EU) increased by 9% in value last year despite having been hit by the troublesome citrus black spot fungus (CBS), said EU ambassador to South Africa Roeland van de Geer. More than 34% of South Africa’s citrus is exported to the EU and 40% of all citrus consumed in the EU in winter was imported from South Africa. Van de Geer strongly dismissed some suggestions from the South African side that the restrictions on CBS-infected citrus were a disguised trade protection measure.
African Natural Resources Centre seeks comments on its 2015-2020 strategy (AfDB)
The newly established African Natural Resources Center has launched an online consultation to seek comments from all stakeholders on its draft strategy for 2015-2020. This online consultation is consolidated by a series of regional and global consultations. Participation to the online consultation is possible through the following address: http://j.mp/ANRC_Consultation
Strengthening climate and disaster resilience in Sub-Saharan Africa (World Bank)
Most meteorological and hydrological service providers in Sub-Saharan Africa are unable to meet users’ current needs for weather and climate information. Also, corresponding infrastructure is inadequate. A recent WMO survey showed that 54% of the surface and 71% of the upper air weather stations in the region did not report data. In addition, there is limited and often fragmented funding from development partners. The need for a larger, sustainable system architecture inspired the WMO, African Development Bank, and World Bank Group to join forces. The initiative will have a flexible framework to coordinate and leverage financing, ranging between US$550-US$600 million, from various sources of development and climate finance. The initial phase will focus on 15 countries and four regional centres.
Transport in Africa: the African Development Bank’s intervention and results for the last decade (AfDB)
The goal of this evaluation is to inform future policy, strategic, and operational directions for the Bank’s assistance in the transport sector by: (i) identifying emerging trends in the sector; (ii) assessing how the Bank has responded to these trends; (iii) taking stock of the results of the Bank’s assistance; and (iv) drawing lessons for future work. In informing the renewal of the Transport Sector Policy, this evaluation sought to answer four main evaluation questions:
Capacity building for SADC parliamentarians: value for money in social sectors (AfDB)
Strict scanning rule leaves tonnes of export tea stuck in Mombasa (Daily Nation)
Burundi tax revenue declines as unrest persists (Africa Review)
Political unrest slows Burundi cargo uptake at Mombasa port (The Star)
Silencing the Guns: strengthening governance to prevent, manage, and resolve conflicts in Africa (AU/IPI)
The 30m-strong Africa diaspora likely sends $160bn home every year: Where does it go? (Mail and Guardian Africa)
More Nigerian professionals in Europe than in Nigeria, says EU (BusinessDay)
China factories scrabble for growth in May, export demand shrinks (LiveMint)
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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SA gets chance to shine at WEF
The World Economic Forum (WEF) on Africa kicks off in Cape Town today, giving South Africa an opportunity to make its investment case to an audience of global and African business leaders as the country looks for ways to boost growth, alleviate poverty and cut unemployment.
WEF Africa represents a crucial platform for engagement across a range of topics over the next three days – from governance, to innovation, to entrepreneurship, to infrastructure, to the empowerment of women, to youth and to the environment.
This week’s gathering will be attended by more than 1 000 high-level participants from business, politics, civil society, academia and the media, making it the largest ever held in Africa by the WEF.
The meeting also marks the 25th anniversary of WEF meetings in Africa.
Last year, WEF Africa was held in Abuja, Nigeria, under the theme “Forging Inclusive Growth, Creating Jobs”, marking the first time that the meeting was held in west Africa.
President Jacob Zuma is leading the South African contingent, and he will use the opportunity of hosting WEF Africa to promote South Africa’s appeal as an investment destination within the context of an emergent Africa.
WEF figures show that Africa is home to six of the 10 fastest growing economies in the past 10 years.
Zuma is accompanied by a dozen ministers, including Nhlanhla Nene, the finance minister; Ebrahim Patel, the minister of economic development; Ngoako Ramatlhodi, the minister of mineral resources; Tina Joemat-Pettersson, the minister of energy; Derek Hanekom, the minister of tourism; Maite Nkoana-Mashabane, the minister of international relations and co-operation; and Mzwandile Masina, the deputy minister of trade and industry.
The ministers are scheduled to participate in key sessions during the meeting.
“The country is open for business and offers a sound investment destination for savvy investors,” South African cabinet spokeswoman, Phumla Williams writes in Business Report today.
“South Africa is the most diversified economy on the continent and plays an integral role in Africa’s advancement,” Williams added.
Helped by its status as Africa’s most advanced economy, South Africa has been able to claim a growing share of investment coming into Africa.
Legacy
Even so, the legacy of apartheid remains all too commonplace – with recent figures showing that unemployment in the first three months of this year jumped to 26.4 percent from 24.3 percent.
Moreover, the current power crisis has not helped South Africa’s image here and abroad even as the government scrambles to plug holes in the country’s power generating capacity to sustain growth.
Analysts worry that the power constraints will make it impossible for South Africa to realise gross domestic product growth north of 2 percent in the short to medium term.
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Multinational companies cheat Africa out of billions of dollars
Africa was cheated out of US$11 billion in 2010 through just one of the tricks used by multinational companies to reduce tax bills, according to new Oxfam report, ‘Africa: Rising for the few,’ released on 2 June 2015.
This is equivalent to six times the amount needed to plug the healthcare funding gap in Ebola affected countries of Sierra Leone, Liberia, Guinea and Guinea Bissau.
Oxfam’s findings come as African political and business leaders get set to attend the 25th World Economic Forum Africa in South Africa. The main theme of the meeting will be how to secure Africa’s economic rise and deliver sustainable development. Reforming global tax rules so that Africa can claim the money it is due – and which is needed to tackle extreme poverty and inequality – is critical if the continent is to continue its economic rise.
Oxfam is calling for all governments to send their Head of State and Finance Ministers to the Financing for Development Conference in Ethiopia, in July. The Addis conference will set out how the world will finance development for the next two decades and is an opportunity for governments to start developing a more democratic and fairer global tax system.
Winnie Byanyima, Oxfam International’s Executive Director said: “Africa is hemorrhaging billions of dollars because multinational companies are cheating African governments out of vital revenues by not paying their fair share in taxes. If this tax revenue were invested in education and healthcare, societies and economies would further flourish across the continent.”
In 2010, the last year for which data is available, multinational companies avoided paying tax on US$40billion of income through a practice called trade mispricing – where a company artificially sets the prices for goods or services sold between its subsidiaries to avoid taxation. With corporate tax rates averaging out at 28 percent in Africa this equates to $US11 billion in lost tax revenues.
Trade mispricing is just one of the ways multinational companies avoid paying their fair share of taxes. According to UNCTAD, developing countries as a whole lose an estimated US$100billion a year through another set of tax avoidance schemes involving tax havens.
Companies also lobby hard for tax breaks as a reward for basing or retaining their business in African countries. Tax breaks provided to the six largest foreign mining companies in Sierra Leone add up to 59 per cent of the total budget of the country or eight times the country’s health budget.
Byanyima added, “African leaders must not sit by while international tax reforms are agreed which give multinational companies free reign to sidestep their tax obligations in Africa. Political and business leaders must put their weight behind the ever louder calls for the reform of global tax rules. African nations must also introduce a more progressive and democratic approach to taxation – including calling a halt to tax exemptions for foreign companies.”
Existing international efforts to tackle corporate tax dodging such as the BEPS (Base Erosion and Profit Shifting) process, led by the Organisation for Economic Cooperation (OECD) for the G20, will leave gaping tax loopholes that multinational companies can continue to exploit across the developing world. Many African nations have been shut out of discussions on BEPS reform and will not benefit from them as a result.
Further resources
According to the UN’s Economic Commission for Africa’s Report on the High Level Panel on Illicit Financial Flows from Africa, there was a US$40 billion outflow from Africa due to trade mispricing in 2010. With corporate tax rates averaging out at 28 per cent in Africa this equates to nearly $US11 billion in lost tax revenues. Given that companies and investors from G7 countries are responsible for more than half of the foreign direct investment in Sub-Saharan Africa, companies from G7 countries may be responsible for robbing African governments of around $6 billion every year from just one tax trick alone.
Developing countries lose estimated US$100billion a year as a result of one set of tax avoidance schemes involving tax havens: see UNCTAD’s Investment Policy Hub Working Paper, ‘FDI, Tax and Development’.
Tax breaks provided to the six largest foreign mining companies in Sierra Leone add up to 59 per cent of the countries budget or eight times the country’s health budget: ‘Losing Out: Sierra Leone’s massive revenue loses from tax incentives’, London: Christian Aid.
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Burundi tax revenue declines as unrest persists
The Burundi Revenue authority (OBR) has recorded a 16 per cent tax decline for the last financial year.
The unrest that has hit the country since April has only made things worse for OBR.
Burundi is contending with protests occasioned by the ruling CNDD-FDD party's nomination of President Pierre Nkurunziza to contest for a third term in office.
The move is viewed as unconstitutional and going against the Arusha Accord that ended Burundi's long-running civil war.
OBR recorded a 32 per cent tax decline in the past one month.
Below the target
“We had several challenges, not only the unrest, but also the fuel shortage for the last months that contributed to the low revenue collections, but OBR will continue its mission to secure revenues for strengthening Burundi’s economy,” said the agency Commissioner General, Mr Domitien Ndihokubwayo.
In April, OBR recorded 9 billion francs shortfall and with the persisting protests in the capital Bujumbura, the revenue authority has now recorded another 16 billion francs below the target.
The figure is considered the least revenue collection for May for the last three years.
OBR was established by the government in 2010.
“I can’t do business for now, with this kind of insecurity most of the people are scared so we have to wait until the situation gets back to normal,” said Mr Eddy Niyirora, a trader.
OBR launched an Electronic Single Window System (ESS) early this year which allows investors to access online standardised information and documents with a single entry point.
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SA citrus exports to EU increase
South Africa’s citrus exports to the European Union (EU) increased by 9% in value last year despite having been hit by the troublesome citrus black spot fungus (CBS), said EU ambassador to South Africa Roeland van de Geer.
EU and South African scientists are still arguing over whether or not CBS could infect European citrus plants, he told journalists. But in the meantime, the exports from South Africa continue, though under strict controls to prevent fruit with the black spot on its skin, entering the EU market.
EU officials said South African citrus growers had themselves decided to stop citrus exports to EU near the end of last year’s season, because too many CBS-infected fruits bound for export were being discovered.
So the volume of exports had dropped slightly but the monetary valued had increased by about 9 percent because of higher prices in Europe.
After the citrus industry had stopped exporting from CBS affected areas, it improved its system for weeding out CBS-infected fruit. A team from the EU’s Food and Veterinary Office had recently visited South Africa and concluded that South Africa’s measures complied with EU legislation.
So exports had already begun again at the start of the 2015 season and they would continue unless there was a surge in the number of CBS-infected citrus fruits intercepted.
Van de Geer said the outcome of the joint South Africa and EU scientific investigation of whether CBS could infect EU citrus plants should hold no risks for South Africa.
If the scientists found there was a risk of infection, exports should continue under the existing control measures. And if they found there was no risk of infection, the measures could be lifted.
More than 34% of South Africa’s citrus is exported to the EU and 40% of all citrus consumed in the EU in winter was imported from South Africa.
Van de Geer strongly dismissed some suggestions from the South African side that the restrictions on CBS-infected citrus were a disguised trade protection measure. He noted, for comparison, that the recent eruption of Xylella Fastidiosa disease into southern Italy via plant material imported from Central America had forced farmers to destroy thousands of olive trees.
Van de Geer said that relations between the EU and South Africa were generally good and the annual EU-South Africa summit would take place later this year in Brussels.
It had been cancelled last year because both sides were preoccupied with elections.
Last year had been seen by some as a bad one in relations – because of disagreements over South Africa’s unilateral cancellation of investment protection treaties with individual EU member states, the CBS dispute and President Jacob Zuma’s last-minute withdrawal from the EU-Africa summit in Brussels because Belgium would not give a visa to Zimbabwean President Robert Mugabe’s wife Grace who is under a EU travel ban.
But Van de Geer insisted that the public perception was wrong and that much had been achieved last year, mainly the signing of an EU Economic Partnership Agreement (EPA) with South Africa and several Southern African Development Community (Sadc) states after protracted negotiations.
There had also been a very successful South Africa Week in Brussels, citrus sales to the EU had increased in value despite the dispute over CBS and development cooperation had continued, with a new seven-year programme of 250 million euros.
South African exports to the EU in 2014 had increased to R193 billion from R165 billion in 2013. EU exports to South Africa had increased from R284 billion to R301 billion.
And fully 50% of South Africa’s exports to the EU were of value-added goods, rather than raw materials.
Van de Geer said he expected the EPA deal – which gives both South Africa and the EU greater access to each other’s markets – would begin to be implemented later this year.
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Africa faces mounting risks to keep rising growth record going
African nations are facing mounting risks as they seek to extend two decades of rapid economic growth.
While the continent has benefited from increasing investor inflows from abroad, it’s now contending with a commodity downturn, power shortages, political instability, a slowdown in China and the prospect of higher U.S. interest rates. The International Monetary Fund last month lowered its 2015 growth outlook for sub-Saharan Africa by 1.25 percentage points to 4.5 percent. Expansion in Nigeria and South Africa, Africa’s two largest economies, is set to slow.
“Sustaining Africa’s growth is going to prove increasingly challenging,” Peter Attard Montalto, an economist at Nomura International Plc in London, said by phone on Tuesday. “External demand is volatile, global growth potential has fallen and competition for trade and investment within the continent is increasing. All countries will need to step up their game.”
Government leaders, policy makers and executives from companies ranging from Barclays Plc to BT Group Plc are meeting at the World Economic Forum in Cape Town on Wednesday for three days of meetings on how to build on Africa’s progress.
The talks will also focus on distributing wealth more evenly in a region where 585 million people, or 72 percent of the population in sub-Saharan Africa, still live in or at the brink of poverty, according to the United Nations.
Oil Boom
Surging prices of oil and other commodities helped to more than triple the size of sub-Saharan Africa’s economy since the start of 2000, according to IMF data. With a halt to the resources boom – the price of Brent crude is down 40 percent over the past year and copper has fallen 13 percent – African nations are increasingly relying on consumer spending and infrastructure expenditure to drive their economies.
“Domestic demand has continued to boost growth in many countries while external demand has remained mostly subdued because of flagging export markets,” the Abidjan, Ivory Coast-based African Development Bank said in a May 25 report.
“So far, African economies have been relatively resilient to the sharp fall of international commodity prices,” the bank said. “But if commodity prices remain low or decline further, growth in resource-rich countries might slow down as governments need to cut spending.”
Africa attracted $128 billion in foreign direct investment last year, up from $52.6 billion the year before, even as the number of projects fell by 8.4 percent, accounting firm Ernst & Young said in its annual Africa attractiveness survey released in Cape Town on Tuesday.
Losing Appeal
Forty-four percent of the spending was on projects in the real estate, hospitality and construction industries, while oil, natural gas and coal accounted for 25 percent, it said.
Nine of the world’s 15 fastest-growing economies are in Africa and most investors remain positive about the continent’s prospects, EY Africa’s Chief Executive Officer Ajen Sita told reporters in Cape Town. Detracting from that are an Ebola virus outbreak in West Africa, Islamist militant insurgencies in Nigeria and Kenya and political upheavals in countries such as the Central African Republic and South Sudan, he said.
“Although tremendous progress has been made over the past 15 years, Africa and its leaders are poised at an inflection point,” Sita said. “Deliberate and urgent choices are required to raise levels of productivity and competitiveness, accelerate structural transformation and make the shift toward an inclusive, sustainable growth path.”
An EY survey of more than 500 business executives in 30 countries identified Africa’s political instability, corruption, poor security, lack of infrastructure and a scarcity of skilled labor as the biggest deterrents to investors.
For John Mackie, head of Johannesburg-based Stanlib Asset Management’s Pan African Investment portfolios, investing in the continent is for the long haul.
“It’s a patience game,” he said by phone from Johannesburg on Tuesday. “It’s going to take time” for the continent to realize its full potential.
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Eliminating counterfeits: Laws alone not enough
To stem the ever-rising threat of counterfeit products on the East African Community (EAC) market, governments in the bloc are enacting tough laws and stringent measures against those importing and dealing in counterfeit products.
Legislation at the EAC secretariat, for example, seeks to enjoin owners of commercial buildings as well: every landlord must ensure that their tenant businessmen do not deal in counterfeit products.
How will an ordinary mwananchi owning a building in Bungoma, Rwakiruuri, Nyagatare, Ombokolo, Buyenzi, Nyakanyansi, or any other rural township in East Africa know whether his tenant businessman is selling a fake BIC pen or a genuine one?
Legislation alone will not be enough. As legislation progresses, the East African Business Council must take the lead into the following measures:
Establishing a industrialists’ data bank
We must establish a manufacturer data bank of virtually every item imported into the EAC bloc, the way it is done for pharmaceuticals.
Every manufacturer and brand owner worth the name will have a website detailing its product range, market coverage, distribution chain, and all the vital information.
The respective commercial attachés’ in foreign missions must provide supplementary support in this exercise. With the data bank, it is possible to separate fake products from genuine ones.
Rethinking liberalisation, strengthening regional markets
We are reaping the fruits of unfettered liberalisation, which is slowly degenerating into anarchy. Yet there are enough provisions in the World Trade Organisation (WTO) agreements and protocols, which can be used to enforce protection. Counterfeiting and sub-standard goods are not protected by WTO provisions.
The argument that brand new, genuine products are expensive, so the citizens cannot afford them is self-defeating. Genuine goods are expensive because their market is eaten-into by fakes and mitumba.
If a trader, importing genuine leather shoes sells only one pair in a month, he will hike the price, to cover his operational costs. If he sold a hundred pairs, (the way the fake dealers do), his prices would be affordable.
One common advanced argument in favour of liberalisation is that our markets are small, so we need to ‘go global’.
By 1992, data with the PTA Bank showed that the then PTA zone could meet 80 per cent of its needs through intra-regional trade. What happened to this market potential?
Have we fully exhausted this, before seeking ‘global’ markets whose terms and conditions of access end in favour of the developed world and to our detriment?
As Cambridge Prof Ha Joon Chang argues, world trade has never been free trade “…virtually all of today’s developed countries actively used interventionist trade and industrial policies aimed at promoting, not simply protecting infant industries during their catch-up periods…the current orthodoxy advocating free trade and laissez-faire policies seems at odds with historical experience, …developed countries that propagate such a view seem to be ‘kicking away the ladder’ that they used in order to climb up to where they are...”
The way forward
The ultimate break-through will be a clearly defined EAC industrialisation path, defined on the following key tenets:
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Declare 2015-2025 EAC Industrialisation Decade, with policies and strategies similar to those employed by the developed world during their ‘catch-up periods’. Go beyond ‘summit themes’, and define what industrialisation path we should take, given our levels of technology and resource endowment.
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Industrialisation occurs at different levels namely, Resource-based (RB); Light Technology (LT); Medium Technology (MT) and High Technology (HT). All these are possible in EAC at varying degrees.
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Fast-track the incorporation of the East African Development Corporation (EADC), owned only and fully by the five EAC states. This will be a holding company, with the mandate to champion industrialisation in the region, in close concert with the East African Development Bank, the private sector and social security funds.
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Identify key sectors in the region for priority state investment through EADC, in majority shareholding with EAC corporates, institutions, individuals and foreign investors in that order.
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Zoning of the investment sectors throughout the Community, guided by the respective levels of industrial development, natural resource base, labour and skills. Only then will integration have meaning to EAC wananchi beyond conferences and summits.
Enforce trade regulation
The liberalised trade regime has seen the rise of brief-case businessmen. This is evidenced in the ‘Dubai phenomenon’: anybody now can travel to Dubai and import anything, pay (or evade) taxes, and flood the market with all sorts of fakes. With regulated trade, every product will have a known and traceable value chain.
Take branded television brand called Mvule;
Manufacturer: Mvule Corporation of Kyoto, Japan
Licenced Assembler in Africa: Mukunyu Industries Ltd, Kyenjojo, Uganda
Authorised COMESA Distributor: Musasa Distributors of Rwamagana, Rwanda
East African Distributor: Mgumo Stores, Nyeri, Kenya
Wholesalers: Authorised wholesalers across East Africa.
Retailers: Retail outlets all over the region.
Such a streamlined value chain will leave little space for counterfeits.
The author is a partner at Peers Consult Kampala and CET Consulting, Kigali.
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Investment Climate: The Journey so Far
On 28th May 2015 ICF and the African Development Bank held a joint event to promote investment climate reforms in Africa. The event, titled “Investment Climate: The Journey so Far”, was held as part of the African Development Bank's Annual Meetings which took place in Abidjan, Ivory Coast, from 25th to 29th May 2015.
The event explored the progress that has been made so far in improving the investment climate in Africa and called for countries to make greater changes and to do it faster.
Conversation with Leaders
The event provided an opportunity for participants to hear from Benjamin Mkapa, former President of Tanzania and ICF Co-Chair, and also from Daniel Kablan Duncan, Prime Minister of Ivory Coast.
Prime Minister Duncan explored the benefits that Ivory Coast has received from improving its business environment and giving the private sector an opportunity to contribute to economic growth. This includes a bridge that was constructed through private sector funding, and the provision of electricity by the private sector. “We think the private sector should be the driver of change,” the Prime Minister said, adding that government does not always have the funding to provide the infrastructure that the country needs.
The Prime Minister also pointed out the need for governments to improve their performance in order to reduce bureaucracy and work with the private sector in a more efficient manner. “We need to retrain people to improve the effectiveness of our administration. Time is money and we need to move faster,” he said. He called for the use of information and communication technologies to improve government efficiency because, as he put it, “they provide a shortcut to development”.
President Mkapa highlighted the fact that many countries are afraid of integration, and have the wrong belief that integration will reduce their independence. “Integration actually enables you to develop and therefore to enjoy your independence in larger freedom,” he pointed out. He urged African governments to focus less on politics and more on the economy so that they can see the benefits that economic integration offers.
He also called for governments to not only give the private sector a chance, but to also pay attention to the feedback they provide as they are best placed to say whether economic policies are working or not. “Make a deliberate effort to listen to the private sector,” he urged.
Engagement with Public Sector, Development Partners and Captains of Industry
A panel consisting of Public Sector officials, Development Partners and Captains of industry explored the progress that African countries have made in creating a conducive environment for business and the gaps that still exist.
The panellists included Baroness Lynda Chalker, former UK Minister of Overseas Development, current ICF Trustee and Chairperson of Africa Matters; Ebenezer Essoka, Standard Chartered Bank's Vice Chair of Africa; Naglaa Al-Ahwany, Egypt's Minister of International Cooperation; Jean-Louis Ekra, Afrexim Bank CEO; Thomas Duve, KfW's Director of Regional Funds; Mahamadou Sylla, IPS CEO; and Abdourahmane Cisse, Ivory Coast's Minister of Budget.
From the discussions, it was evident that many African counties have, in the past decade or so, made efforts to improve the investment climate in an effort to boost their economies. These reform efforts are bearing fruit and businesses are benefiting.
However, a lot more needs to be done to enable businesses in Africa to operate in a fair and transparent environment. One of the areas that was highlighted by the private sector as needing urgent improvement in many countries is the legal system and especially mechanisms for resolving commercial disputes. Another area was the need to build the capacities of small and medium enterprises to enable them to succeed. “Many Africans come up with great ideas, but these ideas need to be turned into bankable business plans,” said Jean-Louis Ekra, CEO of Afrexim Bank.
Mahamadou Sylla, CEO of IPS, pointed out that improving the investment climate is one thing. Equally important is the need for governments to improve their day to day interactions with the private sector so that businesses are treated in a fairer manner.
Abdourahmane Cisse, Ivory Coast's Minister of Budget, explained that governments are paying closer attention to the private sector and are hearing their call for government to improve the business environment. He gave an example of Ivory Coast where the Government has made efforts to reduce bureaucracy. “We have heard the private sector and we are making improvements in how we work with them,” he said.
Benjamin Mkapa, ICF Co-Chair and former President of Tanzania, called upon African countries to increase the pace and scope of investment climate reforms so that Africa can achieve the economic progress it urgently needs.
And to help countries achieve this, ICF and AfDB are increasing their collaboration through joint investment climate projects, analytical work, and promotion of the investment climate in Africa.
About 300 participants attended the event.
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tralac’s Daily News selection: 2 June 2015
The selection: Tuesday, 2 June
COMESA-EAC-SADC Tripartite Sectoral Ministerial Committee: Statement (SADC)
The Joint Meeting of the COMESA-EAC-SADC Tripartite Sectoral Ministerial Committee took place on 29th-30th May 2015 in Dar es Salaam. The purpose of the meeting was to consider progress made in preparation for the Third COMESA-EAC-SADC Tripartite Summit to be held on 10th June 2015.
Ministers reiterated the importance of making tariff offers and concluding related negotiations expeditiously. In this regard they decided that Member States that had not exchanged tariff offers do so within 6-12 months and those that have exchanged and are negotiating tariff offers should endeavour to conclude within 12 months. They noted that rules of origin are a crucial element for the TFTA and therefore Member States needed to expedite work to finalise outstanding areas and agree on the Tripartite rules of origin that will be applied in the new TFTA.
The Meeting also endorsed the transitional arrangements on trade remedies that will apply to the TFTA pending the finalisation of a complete Annex in this area. It should be noted that the TFTA Agreement already includes detailed dispute settlement disciplines and a completed Annex on Tripartite Dispute Settlement Mechanism.
25th Assembly of Heads of State and Government of the African Union
The Heads of State and Government will exchange views on: the report of H.E. Mr. Macky Sall, President of the Republic of Senegal and Chairperson of NEPAD Heads of State and Government Orientation Committee; the report of H.E. Mr. John Dramane Mahama, President of the Republic of Ghana and Chairperson of the High Level African Trade Committee...
Africa: Rising for the few (Oxfam)
Africa was cheated out of US$11 billion in 2010 through just one of the tricks used by multinational companies to reduce tax bills, according to new Oxfam report, ‘Africa: Rising for the few,’ released today. This is equivalent to six times the amount needed to plug the healthcare funding gap in Ebola affected countries of Sierra Leone, Liberia, Guinea and Guinea Bissau. Oxfam’s findings come as African political and business leaders get set to attend the 25th World Economic Forum Africa in South Africa. The main theme of the meeting will be how to secure Africa’s economic rise and deliver sustainable development. Reforming global tax rules so that Africa can claim the money it is due – and which is needed to tackle extreme poverty and inequality – is critical if the continent is to continue its economic rise. [Download]
Are SA’s new visa rules too much? (Business Report)
The International Air Transport Association notes with concern South Africa’s new immigration measures that were supposed to come into effect on Monday, including requiring adults travelling with children to carry unabridged birth certificates. IATA fully supports South Africa in its laudable campaign to combat child trafficking. But just how big is the problem? Is the country dealing with a problem of crisis proportions? And how much of it takes advantage of airlines serving South Africa’s major international airports? [The author, Raphael Kuuchi, is the vice-president, Africa, for the International Air Transport Association]
Michael Rake: 'A reinvigorated trade agenda necessary for all the countries' (IOL)
But where is South Africa in this torrent of trade dialogue? It seems to be taking something of a cautious approach, particularly to bilateral dialogue. It has not joined the TiSA dialogue in Geneva, and has seemed to put less emphasis on pursuing free trade agreements than some major emerging economy nations. The current difficulty in achieving progress via the Doha Round may mean that South Africa needs to devote more resources to trade outreach, as do other Brics and MINT nations.
Virusha Subban, Nkuleko Khumalo: 'South Africa must pursue US free-trade deal' (Business Day)
The proposed 10-year extension of AGOA, if passed, will provide some breathing space and an opportunity for SA and its SACU counterparts to seek to secure a contractual trade arrangement with the US. This is clearly time to reopen the stalled or failed US-SACU free-trade negotiations. [The authors are attached to Bowman Gilfillan]
Lesotho may lose 35000 jobs if US drops AGOA trade access (Bloomberg)
South Africa: DA calls for debate in Parliament over cost of AGOA exclusion (Demcoratic Alliance)
Rob Davies: 'Are companies investing in South Africa?' (ANC)
Kenya: Botswana retailer bids to take over 10 Ukwala stores (Business Daily)
Botswana’s retail chain Choppies on Monday said it had struck a deal to buy mid-tier Kenyan supermarket Ukwala for close to Sh1 billion, marking its entry into East Africa’s biggest economy. Choppies is entering the Kenyan market through a joint venture with the promoters of Export Trading Group, a Tanzania-based agri-business and logistics company.
Tanzania to sign second MCC compact (IPPMedia)
Tanzania is in a much better position to sign the second Millennium Challenge Corporation compact programme which focuses on power sector following the government commitments to put in place strategic reforms. Kamran Khan, Vice President of the Department of Compact Operations at the Millennium Challenge Corporation said yesterday: “MCC is impressed with government commitments in the undertakings.”
Tanzania: Dream come true as major railway line projects take off (Daily News)
Major railway infrastructure projects to link Tanzania with her landlocked neighbours are now set to take off. Analysts say that railway network will stimulate the economy and prosperity of the region as it will boost trade and investments and create thousands of job opportunities. But, on the other hand, a good railway network will make Tanzania a truly regional hub for transport and help the country make optimal use of her strategic geographical positioning which had remained manifestly underutilised for many years. Tanzania is a gateway to several landlocked central African countries including Burundi, Democratic Republic of Congo (DRC), Malawi, Rwanda, Uganda and Zambia.
Mozambique: Agriculture exports drop 23% – why should we care? (SPEED)
Traditional agricultural exports were down 23% in 2014 compared to 2013, according to the Bank of Mozambique. Falling world prices meant exports of tobacco were down 40% and of sugar 8%. SPEED has found that Mozambique’s agricultural production is not competitive. This directly affects us as consumers and citizens.
Namibia: Access to global meat markets vital (New Era)
Following the widespread occurrence of Rift Valley Fever (RVF) in South Africa in 2010, and apparent spill-over into Namibia and the recent upsurge in occurrence of foot and mouth disease (FMD) outbreaks in the Southern African Development Community (SADC) region, a risk analysis for imports of livestock and meat and meat products into Namibia was seen as important. A recent investigation which examined the animal disease situation in countries that contribute to the Kavango-Zambesi (KAZA) Transfrontier Conservation Area (TFCA) as well as countries that border on those KAZA TFCA countries concluded that:
Namibia and Mozambique discuss new trade cooperation (Spy Ghana)
Namibia and Mozambique have a fishing agreement made in 2012 which allows the two countries to fish in each other’s waters. The two countries has allocated each about 36, 000 tons of fishing quotas over a five-year period through different fishing joint ventures. During the meeting in Abuja, Nyusi expressed the hope that both Namibian and Mozambican fishing companies will fully utilize the agreement from this year.
Uganda: Bitter sugar story (The Independent)
Having studied the Uganda commercial sugar industry over the past five years, the evidence emerging suggests that this is a sector which does not enjoy a comparative advantage in sugar production relative to other countries in the world. Sugar is number 1 trading commodity in the world, and according to the Global Ranking Report of 108 Sugar Producing Countries for 2013, Uganda is ranked number 38 in sugar production and number 41 in sugar yields per hectare. The table shows that SADC Sugar Producing countries have a comparative advantage of early market production of 9-12 months while Uganda requires 15-18 months (depending on whether its ratoon or plant cane crop). This translates into a a market lead-time or lag time of 6 months for Uganda. [The author, Michael Mugabira is a doctoral student at the UCT Graduate School of Business]
Better agriculture policies in the EAC (East African Business Week)
International conference on Africa's fight against Ebola (AU)
In line with the decision of the Assembly, the international conference will be organized in Equatorial Guinea from 20 to 21 July 2015 by the AUC, in collaboration with Liberia, Guinea, Sierra Leone and Equatorial Guinea, as well as ECOWAS and the Manu River Union. The conference on Ebola has strong propensity to provide an opportunity for Africa to take action and progress towards achieving robust national health systems that are adequately staffed and financed, that are resilient to shocks and health threats, and that are able to reach all people with good quality preventive and curative services. Within this, is the opportunity for analyzing concomitant approaches for better preparedness to confront and deal with outbreaks of communicable and non-communicable diseases as well as other public health emergencies.
SADC ministers: 'Increase funding for gender programmes' (The Herald)
“Ministers recommended that member-states, in consultation with Ministers of Trade, Investment and Industry, develop a regional multi-dimensional women’s economic empowerment and explore ways of enhancing women’s access to financial resources and markets and establish mechanisms and instruments to facilitate their access to finance for economic empowerment,” she said.
Azevêdo voices concern with slow progress in key negotiating areas (WTO)
Nigerian-Chinese Council promotes local Chinese industries (Leadership)
Community processing centres to drive Rwanda's industrial development - NIRDA (New Times)
Tanzania hosting Africa forum on electronic IDs (IPPmedia)
Uganda: How to widen tax base to gain additional revenue in next budget (Daily Maverick)
Republic of Congo: IMF completes 2015 Article IV Mission (IMF)
Vale Moçambique starts exporting coal via the port of Nacala this year (MacauHub)
Start of ethanol and sugar production increases diversification of Angola’s economy (MacauHub)
Budget reform before and after the global financial crisis (OECD)
Building financial sectors that support development (World Bank)
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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Building financial sectors that support development
Policy makers around the world continue to balance the demand for stringent oversight of the financial industry with the need for a well-developed sector that supports productive firms and broad-based financial inclusion. Nearly a decade since the start of the global financial crisis, stakeholders are asking: How can governments enable dynamic financial sectors that contribute to stable economies and sustainable growth?
From May 4th-8th, the Research Department and the Finance and Markets Global Practice hosted the 12th Overview Course of Financial Sector Issues 2015: Building Financial Sectors that Support Development. This week-long training event covers the fundamentals of the financial sector and identifies emerging issues relevant to policy makers. Officials from central banks, ministries of finance, and regulatory agencies as well as World Bank Group staff members were in attendance.
Every year, the World Bank organizes this workshop to bring together academics, policy makers, and development practitioners. Notable speakers this year included Viral Acharya (New York University), Thorsten Beck (Cass Business School and Tilburg University), and Simon Johnson (MIT).
Setting the stage for the week, Simon Johnson (MIT) gave an overview of the evolving role of banks and bank supervision in the US, starting from its early stages in the 19th century through the deregulation of the 1970s and the recent regulatory response to the financial crisis of 2008 – 2009. Johnson described current measures to increase leverage ratios as “small progress at the heart of the world’s financial system,” and called for bank regulators to focus on straightforward capital adequacy requirements as a robust and hard-to-game mechanism to ensure a stable banking sector.
Turning to an issue that is on the minds of many developing country policy makers, Director of Research Asli Demirguc-Kunt discussed long-term finance and its role in supporting economic development. Demirguc-Kunt identified the presence of an active long-term finance market in a developing country as a mark of regulatory strength and an economy in which investors have confidence. “When we see a high level of short-term finance, we worry that providers are concerned about macroeconomic stability and borrower risk,” she said. She urged policy makers to focus on promoting macroeconomic stability and to strengthen regulatory and institutional frameworks rather than supplying government guarantees to avoid crowding out private sector engagement.
The event also focused on the role of finance in meeting the needs of the poorest. A panel session featuring Lead Economist Leora Klapper, Global Lead for Financial Inclusion Douglas Pearce, and Technical Adviser and Regional Manager Xavier Faz took stock of the progress achieved so far in expanding financial access and what can be done to keep the momentum going. According to the recently launched Global Financial Database 2014 (Findex), 62 percent of the world’s adults now have accounts, up from 51 percent in 2011. However, women and the poor continue to lag in terms of access. Since 2011 the gender gap has remain unchanged, with a persistent nine percentage point gap in account ownership in developing countries.
The week of events also exposed participants to a wide variety of specialized topics related to finance, including pension systems, capital markets, SME finance, financial literacy, and disaster risk management.
The Overview Course of Financial Sector Issues takes place annually each spring—interested participants for next year’s course can check the All About Finance blog in early 2016 for details.
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Joint Meeting of the COMESA-EAC-SADC Tripartite Sectoral Ministerial Committee: Statement
The Joint Meeting of the COMESA-EAC-SADC Tripartite Sectoral Ministerial Committee took place on 29th-30th May 2015 in Dar es Salaam. The purpose of the meeting was to consider progress made in preparation for the Third COMESA-EAC-SADC Tripartite Summit to be held on 10th June 2015.
The Tripartite Summit launched the Free Trade Area in 2011 when SADC took over the chairpersonship and will be handing over the chairpersonship to COMESA at the third Summit scheduled to take place in June, 2015. Negotiations are at advanced stages and the COMESA-EAC-SADC Tripartite Free Trade Area is expected to be launched at Sharm El Sheikh on 10th June, 2015.
When concluded, the Tripartite FTA will encompass 26 Member States, that is, half of the African Continent with a GDP of over US$1.2 trillion that represents over 50% of the Continent’s GDP, and a population of 625 million. When operational, it will become a means for enhancing economic inter-linkages and enabling business environment to unlock regional potentials, scale up productive capacities and competitiveness, stimulating beneficiations and value chains, enhancing technological set-ups. More importantly, the TFTA will also address the issue of overlapping membership that has resulted in a number of challenges for the region’s business and trading community. It is foreseen that the TFTA will constitute an important foundation for the continental free trade area negotiations that will be launched by the African Union Summit in June 2015 towards the realisation of Agenda 2063 of the African Union.
Ministers reiterated the importance of making tariff offers and concluding related negotiations expeditiously. In this regard they decided that Member States that had not exchanged tariff offers do so within 6-12 months and those that have exchanged and are negotiating tariff offers should endeavour to conclude within 12 months. They noted that rules of origin are a crucial element for the TFTA and therefore Member States needed to expedite work to finalise outstanding areas and agree on the Tripartite rules of origin that will be applied in the new TFTA.
The Meeting also endorsed the transitional arrangements on trade remedies that will apply to the TFTA pending the finalisation of a complete Annex in this area. It should be noted that the TFTA Agreement already includes detailed dispute settlement disciplines and a completed Annex on Tripartite Dispute Settlement Mechanism.
It is worth noting that the SADC region has adopted a Strategy and Roadmap on Industrialisation and therefore the incorporation of the pillars on Industry and Infrastructure are important and strategic components for the success of the Tripartite agenda. From a SADC perspective the Industrialisation work programme should result in the economic and technological transformation of the region, engender competitiveness as an active process to move from comparative advantage to competitive edges, reinforce regional integration and ultimately the development and economic prosperity of the Community. SADC would be implementing this strategy jointly with other regional priorities outlined in the Regional Infrastructure Development Medium Term Plan and the Regional Indicative Strategic Development Plan.
The SADC Industrialisation Strategy is anchored on three pillars, namely: Industrialisation as a champion of economic and technological transformation; competitiveness as an active process to move from comparative advantage to competitive edges, and Regional integration and geography as the context for industrial development and economic prosperity. The important features of the Industrialisation Strategy are focused programmes aimed at enhancing economic inter-linkages to unlock regional potentials, scaling up productive capacities and competitiveness, stimulating beneficiations and value chains, enhancing technological set-ups, and improving the business enabling environment. The implementation of the strategy will be underpinned on sound policies and appropriate enabling environment across the Member States.
In the area of ICT, commendable progress has been made in the SADC region with the roll out of Digital Terrestrial Migration equipment given the looming ITU switch-over deadline of 17 June, 2015.
SADC has developed and adopted the Regional Infrastructure Development Master Plan (RIDMP) which defines SADC’s infrastructure development strategy and constitute basis for prioritization of projects, as well as the modus operandi for implementation. The RIDMP constitutes the approved SADC Regional Infrastructure Development Programme and guides the process of selection and implementation of regional infrastructure projects at the level of feasibility assessments, preparation for bankability and investment. It also constitutes the basis for SADC Member States commitment to a common infrastructure development programme.
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Azevêdo voices concern with slow progress in key negotiating areas
Director-General Roberto Azevêdo convened a meeting of all WTO members in Geneva today (1 June) to discuss the current state of play in negotiations on the work programme to advance the remaining issues of the Doha Development Agenda.
Members agreed in November 2014 to agree a work programme by July this year as a springboard towards the WTO’s 10th Ministerial Conference in Nairobi in December. The Director-General gave a detailed briefing to members on recent consultations, covering a range of Doha issues, but with an important focus on the three key areas of agriculture, industrial products and services.
DG Azevêdo said:
“We are still seeing good engagement – and this is positive. We have been having detailed conversations across a range of issues, and in some areas we are seeing progress. However, on the basis of the discussions I have had over recent weeks, I am becoming increasingly concerned that we are not making the progress that is needed in the key areas of agriculture, industrial products and services.
“Agreeing on a work programme was never going to be an easy task. But as of today we are still waiting for the necessary convergence on key issues in order to deliver the outcome we need by July and to help us build towards a successful ministerial meeting in Nairobi in December.”
The Director-General outlined, as he had on previous occasions, that this work will continue over the coming weeks in the WTO’s various Negotiating Groups, through the Director-General’s own consultations, and through meetings convened by members or groups of members. He reiterated his commitment to the transparency and inclusiveness of the negotiating process, which was a crucial element of the success in Bali in 2013. Today’s meeting was the seventh meeting of the full membership convened so far this year.
Commenting on the forward process, the Director-General said:
“I will ensure that meetings of the full membership are held even more frequently from now on to ensure that members are fully briefed on all aspects of the negotiations. This will be essential to ensure that the necessary political calls can be taken in due course.”
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Better agriculture policies in the EAC
East African community countries have been urged to come up with policies that support small farmers to participate effectively in the Agriculture sector where they contribute about 60%.
Uganda’s Minister in charge of East African Community Affairs Shem Bageine in his speech read by the Commissioner of production and Social services in the Ministry of East African Affairs Ronah Sserwada during the East African Community Agriculture Budget Summit held at Entebbe said that it’s the responsibilities of the Governments in the community to guarantee the thrives of Agriculture sector in the Five member states of EAC.
“Member states should create a conducive, policy, Legal and program frame work that supports the growth and expansion of Agriculture sector where the major stake holders are small farmers who need much support from their Governments,” the minister said.
The Minister noted that the Agriculture sector contributes much in the regional Economies but because of the lack of pro-small farmer’s policies the sectors contribution in the regional Gross Domestic products is declining For stance the Minister said that the Contribution of Agriculture sector in the Economy of Burundi has decline by 34%, Kenya 29% Rwanda 32% Tanzania 25% and Uganda at 23%.
Bagaine in his speech told participants majority being small farmers from all over the Five member states that East African Community has established Regional Integration protocols Where member states committed themselves to co-operate to attain Food security and rational agriculture production through the community by promoting complementarity and specialization in order to increase productivity, Food Sufficiency, exports and Agro based Industries but such objectives may not be achieved if the larger population (small scale farmers) are not supported.
Presenting the overview of the state of Public Financing for Agriculture in the East African Community, David Walakira, the Budget Analyst at the Civil Society Budget Advocacy Group (CSBAG), said the Agriculture sector growth in the Community block is still ragging behind the 6% Sector Annual Growth which was set up by the African heads of states during the Maputo declaration in 2003 and its failure is attributed to the poor funding of the sector by the regional Governments.
“This call for the examination of Government priorities and the need to call up on national Governments to allocate more funding to the agriculture sector and work towards an annual sector growth of 6% as captured in the Maputo declaration of 2003 and the Malabo declaration of 2014,” he advised the EAC Governments.
EAC country Draft Budgets for the financial year 2015/2016 indicates that Rwanda in the financial year has allocated 5.9% of her total Budget, Uganda 3.35% Kenya 3.15%. This is still far behind the proposed 10% African Heads of states agreed on during the Maputo declaration.
According to the Maputo declaration all Heads from the African Union agreed that 10% of their Country’s Total Budget should be allocated to Agriculture Sector however. According to Walakira no single Government from the EAC has implemented the declaration.
The Two declaration are fundamental towards the development of the Agriculture sector if are well implemented for stance the recent Malabo declaration which meant to transform Africa’s Agriculture and Food Security sector Using the Comprehensive African Development programme (CAADP).
Some of the Objectives of the Malabo declaration 2014 is to End Hunger by 2025, Halving Poverty also by the year 2025 and boasting Intra-African Trade in Agricultural commodities and services. However the Budget Expert said such Economic Objectives will remain on paper if African Governments particularly those in EAC do not implement the Maputo protocol which calls for the allocation of 10% of the total Budget to the Agriculture sector which is employing about 60% of the Total population in EAC.
Participants in the Agriculture Budget said because of the poor funding of the sector it has made the cost of Agriculture production to be very expensive especially to the small Scale farmers in the EAC block especially in countries prone to droughts.
Philippe Rivuzumwami small scale farmer from Burundi said the Agriculture sector in his country is doing badly in some parts of the Country especially in the North which are prone to Droughts and in Southern parts of the Country where they experience some moderate of Rainfall, the soil is not fertile this call s for the Application of fertilizers and Irrigation.
“Our Farmers in Burundi cannot afford to pay for Irrigation services and Buy fertilizers that is why the sector’s contribution to our GDP is declining as farmers we call up on Governments in the region (EAC) to subsidizes the prices for modern farming practices that is when small scale farmers will effectively participate in the Agriculture Sector,” he said during the Budget Meeting.
The EAC agriculture Budget summit attracted stake holders from Governments Civil societies Academia and policy makers from the parliament of Uganda. The Regional Agriculture Budget Summit was Jointly organized by the Civil Society Budget Advocacy Group (CSBAG) Action Aid Uganda and Eastern and Southern Africa Farmers Forum (ESAFF) and its Objectives was to enable small scale farmers to Understand how the Regional Countries are performing in allocating resources to the Agriculture sector.
Other participants especially those from Uganda pointed out factors such as the presence of fake seeds on the market, Inadequate access to financial services from credit institutions coupled with lack of Access to Agricultural Extension services by majority Local farmers as the major obstacles pending Small scale farmers to progress in Agro based related Business in the Country .
Responding to farmers, Samuel Ssemanda, the Commissioner for Agriculture planning in the Ministry of Agriculture Animal Industry and Fisheries, said the Ministry has developed a new comprehensive Agriculture policies which are pro small scale farmers sin the country.
“The Government has come up with new Agriculture sector policy which will focus on supporting local farmers through the implementing the National Agriculture Advisory Services-single spine Extension services system where Local farmers will get access to Agricultural Extension services from services providers at the Lower Local Governments,” he assured the participants in the forum
According to the Ministerial Policy Statement of the sector, the implementation of the single spine extension system is apriority in the financial year 2015/2016 in order to implement the new system the Ministry requires about UGX39billion to fully staff and pay salaries for the vacant extension staff in all districts and sub counties in accordance with the new staff structure.
The new structure provides for one veterinary Officer, Agriculture and Fisheries officers at the District level at subcounty level and at the District level the structure provides for One District production Coordinator, one principle Agricultural officer one principle Veterinary officer and Fisheries officer the combination of the two structure will be responsible for Implementing the Single spine extension systems
Uganda’s former Minister of Agriculture Animal Industry and Fisheries Victoria Sekitoleko told the East African Business Week that farmers need the Advises of the Agricultural Extension Services providers saying this can lower the cost of Agricultural production.
“Some farmers are ignorant about certain types of agricultural inputs such as seeds pesticides and fertilizers but if there’s that opportunity of interacting with Extension services providers some of the information gaps can be closed thus lowering the cost of Agricultural production being incurred by the farmers in the rural areas,” the former Minister said.
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The selection: Monday, 1 June
The AERC Biannual Research Workshop is taking place this week in Arusha: Presentations from the AERC's capital flight workshop, AERC conference agenda
Zambia: follow-up to 2nd UN conference on Landlocked Developing Countries (UN-OHRLLS)
The Zambian Government together with the United Nations Office of the High Representative for Least Developing Countries, Landlocked developing Countries and Small Island Developing States and development partners will from 2nd to 4th June 2015 hold a three day follow-up meeting to The Second United Nations Conference on Landlocked Developing Countries that was held in Vienna, Austria in November 2014. Since it is being organized shortly before the Financing for Development Conference in July 2015 and the UN Summit in September 2015 which will adopt the post-2015 development agenda, the meeting will also aim to establish linkages with these global processes. The specific objectives of the meeting are to:
Largest free trade area set for launch (COMESA)
The Tripartite FTA offers significant opportunities for business and investment within the Tripartite and will act as a magnet for attracting foreign direct investment into the Tripartite region. The business community, in particular, will benefit from an improved and harmonized trade regime which reduces the cost of doing business as a result of elimination of overlapping trade regimes due to multiple memberships. The launching of the Tripartite Free Trade Area is the first phase of implementing a developmental regional integration strategy that places high priority on infrastructure development, industrialization and free movement of business persons.
Draft Africa trade deal gets 26-member nod (The EastAfrican)
Trade experts who attended the last TFTA ministerial meeting in Dar es Salaam told The EastAfrican that a number of member states failed to produce tariff offers for the private sector to work with but endorsed the draft agreement on the basis of the principle of variable geometry. “We endorsed the draft because without it, there won’t be any TFTA to talk of and we will as a continent be the laughing stock of the world,” said Francis Mangeni, director of Trade, Customs and Monetary Affairs at Comesa. [Tripartite Website 2015]
African leaders decide to skip WEF (Business Day)
The African Union summit, which opens in Johannesburg next week, has dented the guest list for the World Economic Forum on Africa that will be hosted in Cape Town this week. Only two heads of state, SA and Egypt’s, will attend the WEF event. In 2013, nine African heads of state went to the forum when Cape Town last hosted it, and there were more than a dozen in attendance at last year’s event in Abuja, Nigeria. WEF officials said most African presidents and prime ministers were reluctant to travel to SA twice in so short a space of time.
Kenyatta urges SEAMIC to protect Africa from mining exploitation (African Quarters)
President Uhuru Kenyatta has urged an African mining organization to develop policies that will make the continent reap maximum benefit from the mining industry. He said the Southern and Eastern African Mineral Centre (SEAMIC) must ensure African countries are not short changed by multinational corporations extracting minerals in the continent. “We should not allow multinational companies to play us against one another by imposing unnecessary competition among us. They should be made to find the same mining conditions across the continent,” President Kenyatta said.
Region opts for 'homegrown' African mining watchdog (The EastAfrican)
African countries are seeking to pull out of an international initiative that tracks governance in the mining sector and form one of their own. Kenya, Uganda, Tanzania, Sudan, Ethiopia, Angola and Mozambique have called for the formation of a parallel transparency organ for mining in Africa. Ministers and ambassadors from the seven countries, who met in Nairobi on Wednesday, called for Africa to form an alternative to the Norway-based Extractive Industries Transparency Initiative (EITI). Of the seven countries only Tanzania, Ethiopia and Mozambique are members of EITI.
Tanzania leads region in earnings from minerals (The EastAfrican)
AfDB gathers ideas for African Natural Resources Center strategy (AfDB)
How to ensure Africa’s natural wealth stays in Africa (AfDB)
Japan push into Africa resources sputters, helps China (The Namibian)
South Africa: April trade statistics (SARS)
The South African Revenue Service (SARS) has released trade statistics for April 2015 that recorded a trade deficit of R2.51 billion. This figure includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS). Africa: Trade surplus of R17 333 million - a 15.9% increase. BLNS (only): Trade surplus of R8.60 billion. [Download]
How SA investors are quietly increasing presence in Kenya (Daily Nation)
Last year, South Africa was concerned after several of its business brands failed in attempts to invest in Kenya and deployed experts to find out what went wrong and how to fix it. South Africa Inc was conducted in partnership with Brand Kenya and returned negative results about Kenyans’ perceptions of South Africa businesses and their managers as “imposing, aggressive and ignorant of the local reality.” The report made public this year concluded that Kenya’s perception of South African business stemmed from “how South Africa managers conduct themselves and treat Kenyans.”
Zimbabwe-China trade shrinks 43% (The Herald)
Trade between Zimbabwe and China, one of the country’s largest trading partner shrunk 43% in the first quarter compared to the same period last year. Bilateral trade between the two countries reached $360m during the first quarter, according to China’s Economic and Commercial Counsellor’s Office in Zimbabwe. As trade remains in favour of Zimbabwe, exports declined by 51,4% to $274m while imports from China totalled $85m, an increase of 36,7%.
Namibia, Angola currency agreement set for June (The Namibian)
The Bank of Namibia and Banco National de Angola have agreed that the currency conversion agreement will come into effect on 18 June. The agreement will facilitate reciprocal conversion of the national currencies of Namibia and Angola at the border towns of Oshikango and Santa Clara, the central bank said.
Reforms needed to avoid middle income trap – Bank of Botswana (Mmegi)
Promotion of inclusive growth and continued evolvement of institutions are some of the key reforms Botswana has to implement if it is to graduate from a middle to higher income country, the Bank of Botswana has advised. Addressing the media in Gaborone this week, Deputy director of the monetary and financial stability division, Mathew Wright said that tackling the constraints to transition from MIC status encompasses recognising that established institutions and procedures, however successful in the past, may not be sufficient to maintain the momentum to the next level.
Two perspectives on AGOA: Renew the Africa trade pact (Bloomberg View), Former envoy misses crux of poultry dispute (Business Report)
Tanzania awards $9 bln rail projects to Chinese companies (Reuters)
Tanzania has awarded contracts to build new railway lines worth about $9 billion to Chinese firms, its transport minister said, expanding Beijing's presence in East Africa's second-biggest economy. Transport Minister Samuel Sitta told parliament on Saturday a Chinese consortium had been awarded a contract to build a 2,561 km (1,536 miles) standard gauge railway connecting Dar es Salaam port to land-locked neighbours at a cost of $7.6 billion.
EAC to set up authority to push for free, fair trade (The EastAfrican)
A regional body to be charged with enforcing laws that protect and promote free and fair competition among businesses with cross-border presence will be operational as from June. The EAC Secretariat is in the final stages of setting up the organisational structure of the EAC Competition Authority, to be headed by a board of commissioners – one from each of the EAC partner states. Other sections are the Office of the Registrar, Directorate of Mergers and Acquisitions, Directorate of Monopolies and Cartels, Directorate of Consumer Protection and Directorate of Corporate Affairs.
EAC: communique of the emergency summit on Burundi
Uganda: Foreign contractors to sit the English tests (New Vision)
Foreign contractors interested in taking up the construction of infrastructure in Uganda like roads, power dams among others will be required to pass the English test before they can be given the contract. The move will ease communication at a time of inspection by government officials who speak English as the official language while most contractors cannot fully express themselves in English. This was revealed by the minister of works, John Byabagambi, in a meeting between contractors and manufactures of suppliers of steel and cement, organized by the Uganda Manufacturers Association (UMA).
Five secrets of success of Sub-Saharan Africa’s first road PPP (World Bank Blogs)
Why is Senegal’s Dakar-Diamniadio toll road, which opened on time and on budget in August 2013, so successful? The road has dramatically improved urban mobility around Dakar, reducing commute times between the city and its suburbs from two hours to less than 30 minutes. Building on this positive experience, in 2014 the Government of Senegal awarded a further concession to extend the motorway to connect it to Dakar’s new Blaise Diagne International Airport. Excluding South Africa, this is the first greenfield road PPP in sub-Saharan Africa. What lessons can we draw?
Make in India: which exports can drive the next wave of growth? (IMF)
This paper breaks new ground in analyzing India’s exports by the technological content, quality, sophistication, and complexity of the export basket. We identify five priority areas for policies: (1) reduction of trade costs, at and behind the border; (2) further liberalization of FDI including through simplification of regulations and procedures; (3) improving infrastructure including in urban areas to enhance manufacturing and services in cities; (4) preparing labor resources (skills) and markets (flexibility) for the technological progress that will shape jobs in the years ahead; and (5) creating an enabling environment for innovation and entrepreneurship to draw the economy into higher productivity activities.
David Dollar: 'What institutions do Asian countries need to keep growing?' (East Asia Forum)
Peter Drysdale: 'Will Asia’s growth fizzle out?' (East Asia Forum
The Pacific Trade and Development (PAFTAD) conference series
President Muhammadu Buhari: inaugural speech (APC)
Adeyeye Adebajo: 'Only Nigeria can fulfil the West African dream' (Business Day)
The real dangers of EPA to ECOWAS — Ukaoha (Vanguard)
Myles Wickstead: 'The future of development - aid and beyond' (UNU-WIDER)
Taming the dollar as regional currencies take a beating (The EastAfrican)
Rwanda: IMF completes third PSI Review (IMF)
BoB rejects Russian bank licence application (Mmegi)
Why Africa must keep an eye on new US, EU trade bloc (Business Daily)
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