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Renewable energy: Future of SADC energy sector
Access to clean sustainable energy has become part of the international development agenda during the past two decades, reflecting the global recognition of the important role that energy plays in the delivery of basic services and in generating jobs and income.
Widely regarded as the “Missing Millennium Development Goal (MDG)”, energy has a direct impact on the welfare of people, facilitating the supply of water and fuelling agricultural output, helping in the delivery of health and education, creating job and contributing to overall environmental sustainability.
According to the African Development Bank (AfDB), the region has the potential to become a “gold mine” for renewable energy due to the abundant solar and wind resources that are now hugely sought after by international investors in their quest for clean energy.
For example, the overall hydropower potential in SADC countries is estimated at about 1,080 terawatt hours per year (TWh/year) but capacity being utilised at present is just under 31 TWh/year. A terawatt is equal to one million megawatts (MW).
The SADC region is also hugely endowed with watercourses such as the Congo and Zambezi, with the Inga Dam situated on the Congo River having the potential to produce about 40,000 MW of electricity, according to SAPP.
With regard to geothermal, the United Nations Environment Programme and the Global Environment Facility estimate that about 4,000MW of electricity is available along the Rift Valley in the United Republic of Tanzania, Malawi and Mozambique.
However, at present there are low levels of Renewable Energy (RE) penetration and use across the region. This is largely attributed to a lack of effective legislative and regulatory frameworks that would support market development.
There is overwhelming evidence of underutilisation of RE across the region in spite of there being abundant resources to produce RE.
For instance, research has shown that most countries in southern Africa receive more than 2,500 hours of sunshine per year. This is because the SADC region, and in fact the whole of Africa, has sunshine all year round.
In the majority of cases, RE projects, particularly those involving more than one SADC Member State, often take long to get off the ground. This is partly attributed to the challenges associated with cross-border trade as national interests have the tendency to prevail over regional energy needs.
There is, therefore, need to adopt measures to stimulate the uptake of RE products and technologies. Such measures include making it compulsory for the electricity industry to purchase RE or supply a certain proportion of their energy from renewable sources as well as the development of a guaranteed market.
There is also need for a harmonized sub regional RE framework that will, among other things, result in the reduction of investment costs in RE technologies and improved reliability of the quality of new and renewable energy services.
With all their advantages, solar systems are not cheap to install; a typical home system in the region costs anywhere between US$500 and US$1,000, according to the AfDB.
There is also need to emphasize the importance of community participation in the development of RE products and technologies to ensure ownership and acceptance of the new sources of energy.
Community participation is key to building an empowered society and adds value through the infusion of indigenous knowledge systems into the RE sector.
It is in light of this that the SADC region is developing a centre to promote the uptake of RE products and technologies.
The proposed SADC Centre for Renewable Energy and Energy Efficiency (SACREEE) is expected to increase the uptake of clean energy in southern Africa, enabling the region to address its energy challenges.
It will, among other things, promote market-based adoption of RE and energy efficiency technologies and services in SADC Member States.
The centre is expected to contribute substantially to the development of thriving regional renewable energy and energy efficiency markets through knowledge sharing and technical advice in the areas of policy and regulation, technology cooperation, capacity development, as well as investment promotion.
Various cooperating partners such as the Austrian Development Agency and the United Nations Industrial Development Organization (UNIDO) have pledged to provide financial support to the centre for the first three years. After that, the centre should be self-sustaining.
Establishment of the centre is expected to be carried out in three phases, the first of which involves the selection of a host country and establishment of the SACREEE Secretariat, which will be responsible for the day-to-day management of the centre.
The management team will be headed by an executive director appointed by the executive board and will consist of various levels of permanent staff to be complemented by consultants and seconded international staff as may be deemed necessary from time to time.
At least five countries are vying for the right to host the centre. Bids to host the SACREEE have been received from Botswana, Mozambique, Namibia, South Africa and Zimbabwe. South Africa’s bid is, however, subject to parliamentary approval.
Establishment of SACREEE, including the choice of the host country, is awaiting the holding of the annual SADC Energy Ministers meeting.
The Energy Ministers meeting was scheduled for September, but was postponed after Malawi said it was not able to host the meeting due to various challenges.
Mauritius has been approached to serve as alternative host.
The decision of the ministers would be forwarded to the SADC Council in February 2015, which would give final approval.
The Preparatory Phase, that was initially expected to run from January-October 2014, would also see the creation and inauguration of the SACREEE executive board and technical committees.
The composition of the executive board and technical committee will be agreed upon by member states.
The First Operational Phase is expected to run from the end of 2014-2017 during which the centre will primarily focus on developing renewable energy programmes for the region and resource mobilisation.
The Second Operational Phase, from 2018-2021, will focus on activities to ensure sustainability of the centre after the exit of international cooperating partners such as UNIDO.
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Kenya seeks extension of Comesa sugar safeguards
The government is seeking another extension of Comesa safeguards on sugar as the current ones expire on February 28, potentially exposing local millers to an influx of cheaper imports.
Head of the Sugar Directorate Rosemary Mkok told the Star on Monday that the state is engaging with key decision makers, including the Common Market for Eastern and Southern Africa governing council, to see it secure the third extension.
The current extension was for 12 months effective March 1, 2014. “It is true the government is seeking for another extension for the sugar safeguards from the Comesa,” Mkok said on phone.
However, it is unclear yet on the duration of extension being sought and the likelihood that the state request will be successful as it is yet to tidy up house even with the previous two extensions.
Mkok declined to disclose when the discussions begun. “I will tell my officials to get back to you,” she said.
The directorate was yet to respond on queries for further details by the time of going to press. The Comesa safeguards allow Kenya to maintain a 350,000-tonne ceiling on duty-free sugar imports from within the trade bloc, which stretches through to South Africa.
The country’s sugar sector is ailing, with millers faced with issues of cane supply shortage due to varieties that take long to mature and are rain-fed, rampant cane poaching and general mismanagement.
This leads the state to turn to policy interventions to keep the sector afloat as cheaper imports would spell doom especially to state-run millers, and those that it partially owns such as Mumias Sugar.
Last year, the government said the safeguards would help in the privatise five state-owned millers to return them into profitability, but little has moved since the extension was granted.
The millers lined up for privatisation include Nzoia, Sony, Miwani, Mohoroni and Chemilil. Mumias Sugar, which was partially privatised through sale of a stake on the Nairobi Securities Exchange in 2000 has returned into the red, plagued by corrupt officials alleged to have engaged in an import scam that cost it over Sh1.1 billion.
Mumias reported net losses for the second year in a row for the period ended June 30, 2014, and is now seeking state intervention to rescue it from debts.
On Friday, Cabinet Secretary for Agriculture Felix Koskei said the government will inject Sh500 million into the miller to turn it around. The insolvent Mumias Sugar was initially seeking up to Sh2 billion in the bailout.
Mumias Sugar chairman Dan Ameyo on Monday said the move to protect millers from smugglers would be most ideal as they undertake restructuring programmes. “Mumias will benefit from any safeguards that aim to protect the local industry and we fully support the move to seek an extension,” he said on phone.
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Pan-African banks expansion could boost systemic risks
Rapid expansion of cross-border banking in Africa in recent years poses oversight challenges that, if unaddressed, may increase systemic risks, IMF staff said.
A recent report noted that pan-African banks have a systemic presence in around 36 countries and are now more important than the continent’s long-established European and American banks.
Pan-African banks are improving competition, especially in host countries with small markets, driving innovation, and bringing new opportunities for diversification for the home countries.
But the report highlighted that supervisory capacity is constrained and under-resourced in most of Africa. Progress is being made in several areas, but efforts to strengthen oversight in some cases need to be intensified.
“The emergence of pan-African banks is a welcome development given the need for financial deepening and inclusion in Africa. At the same time, the rapid cross-border expansion of these banks also raises new regulatory and supervisory challenges that, if left unaddressed, could pose systemic and spillover risks” said Mauro Mecagni, Assistant Director of the IMF’s African Department.
Drivers of the expansion
The rise of pan-African banks reflects a convergence of factors.
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The end of apartheid in the mid-1990s opened the door for South African banks to extend their expertise abroad.
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In Nigeria, the large increase in minimum capital requirements, following a banking crisis in the mid-2000s, pushed banks to consider expanding abroad to make use of their new capital bases.
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Moroccan banks also saw opportunity to extend their networks south in the face of more limited opportunities at home.
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A renewed impetus for regional integration, coupled with the success of mobile payments in Kenya was propitious to the expansion of Kenyan banks in east Africa.
More generally, increasing trade linkages between African countries induced banks to follow their clients abroad. The easing of civil conflicts, the significant improvements in macroeconomic performance, and the opportunities arising from large unbanked populations across the continent was fertile ground for the expansion
New business
The presence of pan-African banks offers opportunities and benefits for the economies involved. In particular, cross-border activity brings new business opportunities and diversification for the home countries, while host countries benefit from
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Increased competition, access to higher skills and expertise, and access to capital;
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Diversification of sources of financing; and
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Possible upgrades in the quality of supervision and regulation induced by foreign banks that bring higher home country standards, such as those of Morocco and South Africa.
Anecdotal evidence suggests that cross-border banks are improving competition, especially in host countries with small markets. These banks are driving innovation, enhancing financial inclusion, and in some cases have contributed to lower costs.
African banks have also become lead arrangers for syndicated loans, filling the gap left by European banks. The global financial crisis and associated regulatory stiffening, along with high costs of small-scale operations, has accelerated the retrenchment of European banks from the continent.
Channels for risk
The rise of pan-African banks also opens new channels for transmission of macro-financial risks and other spillovers across home and host countries. As these groups develop in reach and complexity, significant supervision gaps, governance issues, and questions about cross-border resolution have emerged. This expansion has created a network of systemically important banks, whose financial health in some cases is not fully known due to gaps in consolidated supervision.
Supervisory capacity is already constrained and under-resourced in most of Africa, and the cross-border banks put additional pressure on home supervisors to ensure these groups are adequately supervised. Progress is being made in most areas but efforts to strengthen oversight in some cases needs to be intensified. In one important case a large cross-border bank is not subject to regulation or supervision on a consolidated basis.
Charles Enoch, of the IMF’s Monetary and Capital Markets Department when the report was compiled, noted: “This project is an application of the institutional priorities of sharpening the focus of surveillance by strengthening the assessment on the financial sector, interconnectedness and spillovers and represents an example of excellent collaboration among IMF’s departments and with the authorities in the region”.
Policy recommendations
The paper included a set of policy recommendations, among which high priority is given to implementing consolidated supervision, enhancing cooperation on crisis management and resolution, ensuring effective supervisory colleges are in place for all the pan-African banks, and creating an oversight committee of main cross-border bank regulators to drive the reform agenda.
The lack of regulatory oversight of bank holding companies and their supervision on a consolidated basis in some home jurisdictions needs to be addressed urgently, the report added. And without a clear cooperation plan for resolution mechanisms, the report said, supervision alone may have limited effectiveness.
Most African countries need also to enhance their bank resolution frameworks at the national level. The recent global financial crisis has demonstrated the costs of not having a workable cross-border resolution framework in place, and the difficulty of constructing one, underscoring the need for sustained efforts in this area, the report noted.
Next steps
On January 12, IMF staff briefed the IMF’s Executive Board on the report and key findings were discussed with the governors of the central banks involved during the 2014 IMF-World Bank Annual Meetings in Washington, D.C. Both the authorities and the Board welcomed the initiative as timely, important, and contributing significantly to addressing the issues, and strongly supported the recommendations. The innovative regional approach is already informing the new thrust on macrofinancial aspects of the Fund’s surveillance work.
Paul Mathieu, regional advisor for Africa in the IMF’s Monetary and Capital Markets Department noted that “this work was just the first step of a project to better understand growing cross-border financial linkages and systemic risks in Africa and reinforce financial oversight.”
The first step is to ensure that the findings and recommendations inform bilateral and regional surveillance. This has already begun with the IMF’s Article IV economic check-up consultations currently under way with Morocco and the West African Economic and Monetary Union.
The IMF staff is also exploring ways to deepen the analytical work through stress tests of major pan-African banks; and to better understand the interconnectedness of cross-border linkages, vulnerabilities and avenues of contagion. In addition, a dedicated technical assistance effort will be elaborated with IMF partners in Africa to support needed reforms across the continent.
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Advancing the Post-2015 Development Agenda requires a development policy rethink
In its latest Policy Brief, UNCTAD lays out four elements of a more ambitious and flexible policy approach required for developing countries to spur growth and attain the goals of a post-2015 development agenda.
Global demand is unlikely to return to a rapid and sustained growth path any time soon – unless there is a significant shift in the policy mix of advanced countries.
This unfavourable turn in the external economic environment poses a risk not only to sustained economic growth in developing countries, but more generally to attainment of the goals of an ambitious development agenda with structural transformation at its centre.
To meet the ambitious and transformative post-2015 agenda envisioned by the proposed sustainable development goals, developing countries need to have enough policy space in particular in the areas of trade, finance, and industrial development. In addition, they must have the fiscal revenues to match their ambition.
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Speedy implementation of Trade Facilitation Agreement proves key to Mauritius’s competitiveness
Mauritius was among the first developing countries to submit its list of binding trade facilitation commitments to the World Trade Organization in July 2014, following assistance from ITC and the United Nations Conference on Trade and Development.
‘Trade facilitation is of key importance for countries seeking to take full advantage of market access, trade liberalization, and the economic development opportunities offered by international trade agreements,’ said Ambassador Israhyananda Dhalladoo, Permanent Representative of Mauritius to the WTO. ‘Despite trade openings, our exporters are still facing difficulties in areas such as customs procedures, logistics frameworks, and meeting technical and quality standards in target markets.’
The WTO Trade Facilitation Agreement, concluded in December 2013, is an important tool in helping developing countries and least developed countries (LDCs) reduce costs linked to international trade. This is particularly crucial for small and medium-sized enterprises (SMEs), which often lack the capacity, personnel and resources to navigate complex and expensive border procedures.
Upon entry into force, the Agreement will create binding obligations for WTO members to improve customs procedures, transparency and efficiency. For instance, governments will be required to publish information about import- and export-related rules and border procedures, trade-related fees, import duties and appeal procedures available to traders. They will have to simplify documentation requirements, and limit customs processing fees and charges so that they stay roughly in line with the costs they entail to governments. As a general rule, customs agencies will have to issue so-called ‘advance rulings’ setting out traded goods’ tariff treatment before they actually arrive at the border.
While simplifying border procedures and cutting red tape promises to substantially reduce trading costs around the globe, especially among developing countries, the capacity of developing country governments to implement these reforms varies considerably. During the negotiations that led to the Agreement, they insisted that they would need time and assistance to implement their prospective obligations.
As a first step towards implementation, therefore, the Agreement requires developing countries and LDCs to categorize their obligations under the treaty into so-called Category A commitments, which they will implement immediately, Category B commitments, which they are only in a position to implement later, and Category C commitments, for which they require assistance and support.
Mauritius was one of 19 countries that ITC assisted with categorizing obligations under the Trade Facilitation Agreement. The joint ITC-UNCTAD project kicked off with a national workshop in April 2014 with public and private stakeholders to introduce the Agreement and brainstorm about its importance and relevance to the private sector. ‘This created national momentum around the implementation process and emphasized the need to have a collaborative forum for regular consultation amongst the stakeholders including the private sector’, Dhalladoo explained.
Having sought the input of stakeholders from across the country, the government prepared the implementation plan. This was vetted in a second meeting, involving the business community, before the plan was actually submitted to the WTO, Dhalladoo said. ‘Most of the Category A measures identified by UNCTAD/ITC were taken into account when Mauritius notified its Category A commitments to the WTO,’ he said.
Public-private dialogue
Public-private dialogue is the cornerstone of ITC’s approach to trade policy formulation. For trade policy to successfully bring the desired benefits to exporters, it is necessary for public and private sector representatives to work in coordination. ITC supports developing countries in creating platforms for such dialogue, and in facilitating the engagement of the private sector in various policy areas, including trade facilitation, said Mohammed Saeed, who heads the trade facilitation practice area t ITC. ‘Improving the business environment is the first step in increasing the competitiveness of SMEs,’ he noted.
In Mauritius, ITC and UNCTAD also assisted in the establishment of the Mauritius National Trade Facilitation Committee, which will remain instrumental in overseeing the implementation of the commitments, Dhalladoo explained.
It is important that ITC assist as many countries as possible, as this would contribute to the speedy implementation of the Agreement worldwide, Dhalladoo said. ‘We look forward to the full implementation of the Agreement not only in Mauritius, but also by our trading partners.
For an open economy such as ours, seamless borders are key to the international competitiveness of our enterprises.’ Reduced paperwork, advance processing of documents and the quick release of perishable goods are some of the measures that will help the island’s exporters, he added.
Mauritius has requested further assistance in implementing Category B and Category C measures, and looks forward to working with ITC in this area, Dhalladoo said.
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Ebola: Acting quickly and effectively for agriculture and food security in Guinea
In January 2015, the Ministry of Agriculture of Guinea, the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP) published the rapid assessment report on the Ebola Virus Disease (EVD) outbreak’s impact on agriculture and food security.
The findings of this assessment, carried out between 14 October and 3 November 2014, show a significant deterioration in households’ food security. The outbreak has had a considerable impact in affected areas, especially on markets, agricultural and livestock sectors and sources of income such as agricultural labour, small shops and hunting and selling bush meat. According to the assessment’s findings, the coming farming year will see a fall of 4 percent nationally for rice production, the main food staple for Guinea’s population. In affected areas, 74 percent of the communities interviewed said they had reduced their number of meals and 59 percent admit that they have eaten their seed stock. Agricultural production’s contribution to the GDP is set to shrink from 5.3 to 3.3%.
The results of this rapid assessment enable the Government and its partners to identify and set up measures to support the agricultural sector. Alternatives are envisaged to support and protect the livelihoods of communities whose activities have been disrupted by the epidemic. Special attention will be given to women’s groups, especially those whose members used to earn most of their income from selling bush meat before the ban.
When the findings of the rapid assessment were presented in Conakry in December 2014, Jacqueline Marthe Sultan, the Minister for Agriculture, urged partners to act, “We need to act quickly and effectively to help farming communities challenged by the outbreak”. In response to this appeal, WFP Representative, Ms Elisabeth Marie FAURE explained that “in the short term, her organization plans to reopen canteens in 843 primary schools in rural areas when term starts again in January 2015”.
The FAO Representative, Isaias Angue OBAMA, listed the activities currently implemented by FAO to fight the epidemic, in particular its participation in the National Ebola Coordination Unit’s social mobilization efforts. From October to December 2014, more than 81 823 farmers, hunters and herders were sensitized to preventative measures against Ebola through an awareness campaign led by 90 agents from public ministries trained with FAO support.
He also presented FAO’s response programme that takes into account this assessment’s recommendations, proposing actions aiming to revive agricultural production, income-generating activities, alternatives to selling bush meat and post-harvest activities. In order to implement the programme, FAO is launching an appeal for funding of 14.2 million dollars to improve the livelihood resilience of the 75 000 farming households hardest hit by the outbreak in Guinea.
While recognizing that the current priority is to stop the disease from spreading, the FAO Representative pointed out that “from now on, we must support the rural population in managing the post-Ebola phase. Preparations are therefore underway for an ‘Early Warning System’ project document”. The objective of this new FAO assistance to the government will focus on the establishment of a harmonized framework between ministries and decentralized structures through the creation of working groups to foster a multisectoral approach.
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Building roads key to combating hunger, study says
Investments in basic transport and electricity in developing nations are among the best ways to curb hunger by 2030, since a quarter of all food is now wasted after harvest, according to a report issued by International Food Policy Research.
A total of €208 billion invested over the next 15 years, in road and railway connections to connect farms to markets, and in electricity supplies to improve cold storage, would yield benefits of €2.7 trillion by safeguarding food, the report says.
Mark Rosegrant, lead author and a director of the International Food Policy Research Institute in Washington, said that rural infrastructure was often overlooked by governments and investors as a way to cut food waste from rice to beef.
“The hope is to bring it (infrastructure) to the forefront,” he said of the study, which is part of a larger effort to help the United Nations set targets for 2030 to succeed Millennium Development Goals (MDGs) for 2000-15, which include halving rates of poverty.
Food losses, ranging from poor harvesting techniques in fields to rotting vegetables in consumers’ kitchens, wipe out a quarter of all food produced, according to one 2012 study. Halving such losses could feed a billion people.
Past national studies had shown that improved roads, such as in India, help curb food waste. Rosegrant said the study was an attempt to estimate benefits for developing nations in Africa, Latin America and Asia.
Bjørn Lomborg, head of the Copenhagen Consensus Centre which commissioned the study, said debate about waste in rich nations was usually about how to discourage consumers from buying too much food, and then throwing away large amounts, uneaten.
In developing nations, waste is linked to a lack of basic infrastructure before it reaches markets, he said. Among problems, “it can get eaten by rats in the fields, or spoils because there’s not enough cold storage”, Lomborg commented.
The study also recommended a 160% rise in research to improve crop yields, estimating that an extra €76.6 billion spent over the next 15 years would give benefits of €2.58 trillion.
Christopher Barrett, a reviewer at Cornell University, called Rosegrant’s study the “most serious attempt to date” to estimate how cuts in post-harvest losses could feed a rising population.
“In a world where currently up to 900 million people are chronically malnourished, reducing post-harvest losses could play a significant role in meeting the coming challenge,” he wrote.
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Kenya gets $700 million from IMF as ‘insurance’ financing
The IMF Executive Board approved February 2 a financing package for Kenya of about $700 million that the East African country’s authorities plan to use as insurance against external shocks.
This financing is precautionary, as Kenya plans not to draw on it unless the balance of payments comes under pressure.
The financing package approved by the Board involves “blended access” – combined general and concessional resources comprising a $504.3 million Stand-By Arrangement and a $194 million arrangement under the Stand-By Credit Facility. The move makes available a total of $543 million up front, with the remainder available in two equal tranches upon completion of semi-annual program reviews.
Kenya’s rising income and a track record of access to international markets justifies the country’s eligibility for blended access financing. The frontloaded access is consistent with risks to the outlook tilted to the downside in the near term, in case the economy is affected by a sudden shift in global investors’ risk sentiment, a deterioration of security conditions, or large weather-related shocks.
The new financing package thus represents an effort to tailor existing Fund facilities to the specific insurance needs of the country. This is the first financing package of this type approved by the Fund for a “frontier” market – second-generation emerging market country – in sub-Saharan Africa.
Strong record
Kenya has consolidated macroeconomic stability in recent years: growth has been robust, inflation contained, debt has remained sustainable, and reserve buffers have increased. Kenya has implemented reforms in a market-friendly environment, attracting strong interest from foreign investors operating across East Africa.
As a result, Kenya has consolidated its status as a successful frontier market. A Eurobond debut issue of $2 billion in June 2014 was the largest in sub-Saharan Africa so far, followed by a $750 million re-tap in December at yields 100 basis points lower than at original issuance.
Annual capital inflows have reached about 10 percent of GDP in recent years, lifting international reserve cover to 4 ½ months of prospective imports. Banks are more intensively using medium-term credit lines for small and medium-sized enterprises’ project financing.
The economy expanded by 5.3 percent in 2014 boosted by construction, manufacturing, and retail trade, despite poor rains constraining agriculture growth and security concerns affecting tourism significantly. GDP growth is projected to rise to 6.9 percent, lifted by implementation of the first stage of a regional railway project.
Inflation declined to 5.5 percent in January from 6 percent in December, well within the central bank inflation target range, reflecting lower electricity costs and helped by Kenya’s investment in geothermal power generation coming on stream. Geothermal generation capacity doubled in the second half of 2014, an overall increase of 18 percent in Kenya’s generation capacity, bringing the unit electricity cost down by 25 percent in recent months.
Policy anchor
The new precautionary financing arrangements would provide a policy anchor for continued macroeconomic and institutional reforms, and help to mitigate the impact of potential exogenous shocks while these reforms are being pursued, thereby supporting continued strong growth and durable poverty reduction.
The main features of the government’s program are
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Maintaining a sustainable medium-term debt path consistent with regional convergence commitments, while preserving fiscal space to implement an ambitious public investment program that includes reducing infrastructure bottlenecks;
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Strengthening public financial management by improving cash and debt management, embarking on parastatals reform, and adopting a strong legal framework for natural resource management;
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Transitioning to a fully fledged inflation-targeting framework by further improving the monetary policy framework and enhancing the central bank’s liquidity management;
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Addressing financial sector vulnerabilities stemming from rapid credit growth and rising cross-border operations by Kenyan banks; and
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Upgrading data quality to emerging market standards, by adopting a five-year action plan to adhere to the IMF’s Special Data Dissemination Standard.
The new arrangement therefore supports the authorities’ efforts to further strengthen their macroeconomic management and pursue more inclusive growth, carefully balancing a scaling up of infrastructure investments towards critical transport and energy infrastructure with maintaining debt sustainability and financial stability.
The program recognizes that the room for fiscal policy to adjust for demand management purposes is limited in the near term by the ongoing devolution process and the authorities’ commitment to infrastructure projects. However, a significant improvement in security conditions as response of the authorities’ ongoing efforts would boost growth over the medium term.
Low oil prices could also induce higher-than-envisaged domestic demand. The new precautionary financing arrangements aim at helping to secure the gains made so far, insure against underlying risks, and continue the momentum to implement the reform agenda.
Rail project
On the path to economic integration, Kenya has started implementation of the first phase of the Standard Gauge Railway linking Mombasa and Nairobi. The project is expected to result in both shorter freight delivery time and lower transportation costs, boosting regional trade.
The authorities expect a significant increase in freight rail traffic following a large share of road traffic shifting to railways use as cost differential materializes. The government of Kenya will finance 10 percent of the $4 billion rail project, with the remainder financed by Exim Bank China through two separate loans, to be repaid from future rail revenues.
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Kenya Public Expenditure Review: Decision time: spend more, or spend smart?
Kenya is reaping the fruits of its transformative devolution program and also from increased investment in infrastructure to improve its prospects for economic growth and shared prosperity, according to a new World Bank Group (WBG) report.
The report, the Kenya Public Expenditure Review, also notes that opportunities for broad-based growth have expanded, underpinned by macroeconomic stability. At the same time, the report says, the Jubilee government is experiencing budgetary pressure from rising spending on devolution, security, flagship infrastructure projects and persistent increase in the public wage bill.
The report also recommends that the government reflect and make choices on whether to spend more or spend smart.
“The PER highlights the tremendous economic and social progress that Kenya has made in recent years and the challenges that continue to impact on the economy,” said Diarietou Gaye, World Bank Country Director for Kenya. “The government needs to make choices to spend more or to spend smarter.”
While the government’s expansionary fiscal policy has increased opportunities for growth, it has also constrained public expenditure management particularly in the allocation and utilization of resources, the report says. Some economic fundamentals, such as capacity to service debt, haven’t changed, even though Kenya’s economy is much larger after its gross domestic product (GDP) was revised in September 2014. The revision reduced the share of revenue and exports to GDP to 20% and 10% respectively. Key messages in the report include:
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The growth rate will likely remain around 6-7% in the medium term, particularly if the government effectively manages its big spending decisions to contain growth of administrative recurrent costs, improve selection, prioritization and execution of infrastructure projects, and to sufficiently provide for recurrent operating costs
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The county governments implementing the devolution program, now in its second year, have benefitted from an allocation of one-fifth of the total national expenditure, or an equivalent of 4% of the Gross National Product. This is much more than was negotiated when the August 2010 constitution was promulgated after being widely endorsed by Kenyans. The spending by the counties is considered an important catalyst for stimulating growth at the grassroots across the country.
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Inefficiencies within sectors adversely affect the poor. Apurva Sanghi, the WBG’s lead economist for Kenya, cites the example of spending on primary health, which is highly pro-poor but receives 29% of the total health budget, while 40% of the health budget is spent on curative health, which disproportionately benefits the rich
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Medium term prospects are robust, though Jane Kiringai, WBG senior economist for Kenya, cautions that spending on critical areas will continue to put pressure on the budgets at both national and county government levels. The prevailing situation, she said, increases the risk of inflation if economic growth accelerates beyond the prevailing levels.
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The report recommends that the government allocate sufficient resources for operations and maintenance, whose budget as a share of GDP has been cut back from 8.5% in 2010/11 to 6% in 2013/14. It also calls on the development agencies to coordinate their development assistance more effectively to improve efficiency and development outcomes.
The Kenya PER is produced by the WBG in collaboration with the Kenya government. The policy note is intended to make a contribution toward how the government and development agencies design and implement their policies and programs.
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One-stop borders require financial services – officials
While the business community is upbeat about benefits to accrue when Kagitumba-Mirama Hills One-stop Border Post (OSBP) on Rwanda-Uganda border opens in April, there is need to extend financial services to enable people make full use of the new facility.
This was noted Thursday as the Minister for East African Community Affairs, Valentine Rugwabiza, visited the border post to assess progress on the construction of the 24-hour OSBP. The project aims at facilitating easy movement of people and their goods by reducing the time transporters spend clearing goods. It is projected that this will in turn improve intra-regional trade as well as boost revenue collection.
Gerard Mahoro, a customs officer, told the minister that while all is set for the April launch, “the picture will not be complete if basic financial services such as banking and insurance are not here to facilitate trade.”
The nearest commercial bank, Banque Populaire du Rwanda, is 10km away in Matimba trading centre while insurance firms such as Corar and Radiant are far away in Nyagatare.
Construction of the OSBP, with $10.5 million funding from TradeMark East Africa, is at 95 percent. By April, all the infrastructure – customs and immigration offices, police post, customs inspection sheds and warehouse, clearing and forwarding offices will be ready. Also to be built are roads, water treatment and storage tanks, parking yards and staff quarters.
Immigration officials say over 233, 000 tourists crossed this border point in 2013/14.
Rugwabiza urged the people to work together and make full use of this facility.
“Many trucks are soon going to go through here and businesses will sprout. People have to think about the opportunities and must prepare to exploit and benefit fully,” she said.
Her remarks were echoed by the Governor of Eastern Province, Odette Uwamariya, who described the OSBP as “an economic pull factor.”
OSBPs are designed to reduce time spent in clearing transporters from two hours to less than 40 minutes. “This will have a big impact. We need to start thinking about private enterprises. Apart from the mainstream business perspective, the place will look [a tourist attraction],” Uwamariya said.
Last October, Ugandan President Yoweri Museveni launched works to upgrade the 37km Ntungamo-Mirama Hills road to bitumen. Once that part of the major northern corridor road is upgraded to bitumen standard, traffic on the border is expected to more than double.
“We hope business will pick up greatly such that when all big trucks and vehicles start going through here, we will all make more money as the place becomes more vibrant,” said Leocadie Batamuliza, who works for a cleaning firm.
“Things seem to be getting better here,” said Eric Nsengimana, a Kagitumba resident who was walking to the other side of the border. “I am old now but my children will be better off as more development comes to us. This is really impressive.”
James Taremwa, a ministry of trade official, said they plan to build a cross-border market on a two hectare plot some 200 meters from the border.
“This market will link traders with producers in the area so that they exploit local agricultural produce,” Taremwa said.
Hannington Namara, TradeMark East Africa country director, said that by the end of the year, the two bridges at the border will also be completed. Of the total $10.5 million TMEA package, $2.4million is for constructing two new bridges, one on each side of the old bridge at the border.
“Time is money and when one wastes a lot of time in clearing and transport logistics this affects profits,” Namara said.
A similar OSBP was recently launched at Rusumo border with Tanzania. It was funded by the Japanese government.
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Ethiopia to implement competition and consumers protection laws, with assistance from UNCTAD and Luxembourg
An UNCTAD technical assistance project to reinforce the capacities of the Ethiopian Trade Competition and Consumer Protection Authority was launched in Addis Ababa on 29 January. The project is funded by the Grand Duchy of Luxembourg.
On 21 March 2014, Ethiopian government introduced a new Trade Competition and Consumers Protection Proclamation (No. 813/2013) to protect the business community from anti-competitive and unfair market practices and also consumers from misleading market conducts.
At the request of the Ethiopian Government, UNCTAD will assist the Ethiopian Trade Competition and Consumer Protection Authority (TCCPA) to implement the new competition and consumer protection laws. The Grand Duchy of Luxembourg agreed to provide financial support to this three-year project.
The project was launched in Addis Ababa, on 29 January 2015, at an event organized by UNCTAD, the Luxembourg Permanent Mission to the United Nations in Geneva and Embassy of Luxembourg in Ethiopia, Ethiopian Trade Competition and Consumer Protection Authority and the Ministry of Foreign Affairs of Ethiopia.
The event attracted high level representation from the Ethiopian Government and the media. Participants included:
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H.E. Alto Ali Siraj, Minister of State, Ministry of Trade.
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H.E. Negash Kibret, Ambassador Extraordinary and Plenipotentiary, and Permanent Representative of Ethiopia to the United Nations in Geneva, representing the Ministry of Foreign Affairs.
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H.E. Jean-Marc Hoscheit, Ambassador of Luxembourg to Ethiopia and Permanent Representative to the African Union.
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Mr. Merkebu, Director General, Trade Competition and Consumer Protection Authority (TCCPA).
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Ms. Elizabeth Gachuiri, Economic Affairs Officer, Competition and Consumer Policies Branch of UNCTAD.
The event provided an opportunity for the TCCPA to present the Project to relevant stakeholders and for the Trade and Foreign Affairs Ministries’ representatives to outline the Government’s objective to create an enabling environment for business through the development and implementation of appropriate policies and laws.
The Luxembourg Ambassador expressed his government’s commitment to enhance bilateral relations with Ethiopia.
UNCTAD, in collaboration with the TCCPA, will start work on the project in the first quarter of 2015 – drawing up an implementation plan and facilitating the establishment of a steering committee, in order to enhance its implementation.
The project will cover activities based on four broad areas, including policy and legal framework, institutional framework, enforcement capacity building, and advocacy for competition and consumer protection.
Competition law enforcement is an essential tool to ensure that Ethiopians benefit from trade liberalization. Consumer protection is complementary to competition law and policy in enhancing consumer welfare.
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Bold steps needed to place the continent’s growth on recovery path, says Kaberuka
In order to achieve Africa’s socioeconomic transformation, the continent’s leaders have to embrace new thinking, and break with the past, according to Donald Kaberuka, President of the African Development Bank.
Kaberuka urged leaders to follow in the footsteps of Ethiopia’s late Prime Minister, Meles Zenawi, whose zeal to reform his land saw him assess the country’s experience, create a growth plan while establishing viable policies to enhance development.
“He had the determination to build upon the country’s own experience, assessing any outside advice against that experience, not vice-versa. He had the stamina to see through a strategy, even if unpopular in the short term. These are all traits of a transformational leader,” observed Kaberuka. The Bank President made the remarks during an inaugural lecture on January 29 at the launch of the Meles Zenawi Foundation on the sidelines of the African Union Summit in Addis Ababa.
Kaberuka noted Ethiopia’s steady growth over the years, a result of the radical steps undertaken by its late leader. “In 1991, Ethiopia was one of Africa’s least developed economies, exhausted by communist ideology after decades of feudal rule; a poster child of poverty and recurrent famines.” But by the time Meles passed away in 2012, Ethiopia was a net exporter of food. It was already a net energy exporter, attracting massive investments and laying a basis for industrialisation.
According to Kaberuka, Meles’ legacy is a challenge to other leaders, illustrating what happens when a country takes charge of its own destiny.
“While we know what can impede development, our knowledge of how development happens requires a deep level of modesty not assisted by a fundamentalist approach to complex political economy issues,” Kaberuka said.
“At the end of the day, therefore, every nation has to ask the simple question: What is it that works for us?”
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AU adopts self-finance strategy
The AU has made a “big breakthrough” by adopting a plan to drastically reduce its dependence on foreign funders within five years.
AU commission chairwoman, Nkosazana Dlamini Zuma, said African leaders had agreed at their summit in Addis Ababa, which ended on Saturday, to raise about $600 million (R6.9 billion) a year to fund itself.
Because this was such a huge amount, it would be phased in over five years.
By then it would be paying 100 percent of its own operating costs, 75 percent of its programme costs and 25 percent of its peace and security costs.
She said peace and security were the primary responsibility of the UN Security Council, but the AU would also contribute.
According to South African officials, the new plan would quadruple the country’s contribution to AU funds, but AU officials could not confirm this.
South Africa is among a group of the continent’s five largest economies which now pays 75 percent of African governments’ dues to the AU.
Dlamini Zuma said a new formula had been agreed upon whereby those countries whose economies represented more than 4 percent of Africa’s total GDP would fund 60 percent of the total, and that smaller economies would pay less.
The AU had examined various alternative sources of funding, such as taxes on oil revenue or air transport, but met resistance from some African governments to all of them.
Eventually it proposed that member countries could decide for themselves how they raised their share of the total.
“It’s important that we do what we want to do and not what other governments pay us money to do,” she said.
But she added that the AU was not trying to isolate itself from the international community and would continue to need some funds from donors.
In his closing speech at the summit, Zimbabwean President Robert Mugabe, who had just been elected to chair the AU, welcomed the self-financing plan and said it was “unacceptable” that 70 percent of the AU’s budget now came from foreign sources. This was a threat to the AU’s security.
Mugabe, 90, put his stamp on the summit by having his usual digs at colonials, Westerners, whites, women and homosexuals.
According to a tweet from someone in one of the summit’s closed sessions, he told Kenyan President Uhuru Kenyatta “you made us sad” by agreeing to appear before the International Criminal Court (ICC) in The Hague on charges of having committed crimes against humanity after the 2007 elections.
The ICC dropped the charges against Kenyatta in December for lack of evidence and Kenyatta proposed to the summit that the AU should turn its back on the ICC and focus instead on its own African Court which is being given criminal jurisdiction so it can try the same sort of crimes as the ICC.
According to a tweet, Mugabe suggested to the summit that “bloody whites” should appear before the African Court. He also said at a press conference that women could not be on a par with men because of their biological differences.
“Some things women can do, men cannot do… you can’t suckle babies can you?” he said to a male journalist. “Not even the gay ones can.”
The theme of the summit was women’s empowerment and development, but it was overshadowed by security crises, especially the reign of terror which the Islamist militant group, Boko Haram, had inflicted on northern Nigeria and its neighbours.
The summit adopted a plan to deploy a beefed-up regional force of 7 500 troops from Nigeria and four other west African nations against Boko Haram.
The conflict in eastern Democratic Republic of Congo (DRC) also preoccupied the summit, especially after the DRC government announced that it had launched its long-awaited offensive against the Democratic Forces for the Liberation of Rwanda (FDLR) rebels in the east.
But confusion soon arose about whether the UN peacekeeping force, Monusco, would join the DRC army in the battle against the FDLR.
Diplomats said Monusco’s tough Force Intervention Brigade - which includes more than 1 000 South African troops - would not support the DRC army until it replaced DRC General Bruno Mandevu who had just been appointed last Sunday to head the operation against the FDLR.
This was because Mandevu had been accused of scores of human rights violations in past operations.
The diplomats said they believed that Mandevu would soon be removed.
The civil war in South Sudan also figured at the summit as the country’s President Salva Kiir and his arch-enemy, Riek Machar, conducted face-to-face talks.
Regional mediators had hoped they could nail down a power-sharing deal which would be announced at the summit, but the two rivals could not agree on how to divide the power between them.
The AU leaders accepted South Africa’s offer to host the next AU summit, in June/July, replacing Chad which pulled out because of the proximity of the Boko Haram threat.
There was some speculation that the summit would take place in Durban, but Dlamini Zuma said that had not yet been decided and that she was officially neutral, though she would favour a city “which is warm in winter”.
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Kenya joins ‘Lucky Seven’ successors of BRICS
Kenya is tipped to be among seven economies that will replace the BRICS as new frontiers for long-term investment.
According to Fortune magazine, the other markets it dubbed the “Lucky Seven” are Indonesia, Mexico, India, Columbia, Poland and Malaysia.
India, already a member of the BRICS (Brazil, Russia, India, China and South Africa), is projected to remain among the world’s hotspots for capital.
The February 2015 edition of the magazine says the seven have demonstrated improved governance and stability, factors that have helped Kenya edge its bigger African rivals like Nigeria and South Africa.
The magazine observes that with China’s economy slowing, Brazil on the brink of economic recession owing to severe drought and massive tax increases and the drop in crude prices taking a heavy toll on Russia’s economy, the economic powerhouses of BRICS are headed for a difficult period.
Economic turmoil
“Africa’s other large economies, Nigeria and South Africa, face more than their share of political and economic turmoil these days, but Kenya appears headed in the other direction,” the magazine says.
Fortune says President Uhuru Kenyatta appears poised to fast-track the overdue expansion of the power sector and other infrastructure, helped by Jubilee’s parliamentary majority.
The magazine says the government has strengthened the state’s security bureaucracy in the wake of recent terrorist attacks and that the ICC withdrawal of charges against Kenyatta brings a new measure of stability.
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Trade Related Facility (TRF) commences operations
A Facility Support Unit (FSU) has been set up within the SADC Secretariat to facilitate implementation of the SADC Trade Related Facility (TRF), established through a Contribution Agreement between the EU and SADC. Located at the MASA Centre in Gaborone’s Central Business District, the FSU will provide technical support to Member States in implementing their commitments under the SADC Protocol on Trade and the Economic Partnership Agreement (EPA) with the EU. Operations of the TRF commenced on 5th January 2015.
The TRF, which is a €32 million project is funded under the EU’s 10th EDF, consists of two financing windows:
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The STP Window seeks to ensure a higher level of compliance and implementation of commitments undertaken by SADC Member States under the Protocol on Trade; and
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The EPA Window will facilitate effective implementation and monitoring of the SADC-EU EPA with a view to enhance its potential benefits, particularly in terms of improved market access.
Areas of interventions include customs cooperation and trade facilitation, technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures, industrial development, trade in services, trade promotion and development, trade remedies and trade-related adjustment support.
The support to Member States is in the form of financial incentives paid after achievement of clearly identified milestones and based on a Country Implementation Plan and detailed project activities and related costs. Generally, the TRF will seek to address implementation challenges faced by SADC Member States in their trade and industrial development agenda so as to increase intra-SADC and international trade. It will complement other regional integration programmes such as the Project Preparation and Development Facility (PPDF) and the Regional Economic Integration Support (REIS). The PPDF seeks to bridge gaps in infrastructure provision aimed at improving competitiveness and facilitate regional and international trade, while REIS aims to build regional level capacity to enhance regional economic integration.
The TRF is specifically targeted at national level implementation challenges and constraints, which are identified by Member States themselves through their National Indicative Programmes (NIPs).The projects and programmes to be supported should be coherent with SADC’s integration strategy and Member States’ national development plans, policies and strategies. Indicative nominal allocations have been determined for eligible SADC Member States.Calls for applications will soon be announced and launched on the SADC Website and communicated to all SADC Member States through the National Focal Points for the TRF.
The TRF will be managed under the TIFI Directorate. Its 3 Technical Experts are Charles Chaitezvi as the Team Leader; Paul Kalenga as Technical Expert for the STP Window and Dumisani Mahlinza as Technical Export for the SADC EPA Window. All experts have substantial experience in regional integration in Southern and Eastern Africa. The Finance Officer is Musonda Chiteba while the Project Administrator is Guida Hope.
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Delayed review of EAC undermines integration process
The long overdue review of institutions of the East African Community to align them with the expanding mandate of the bloc is costing the community “a lot of money,” the accounts committee of the regional legislature says.
The delay is also negatively impacting on the implementation of the Common Market Protocol, the second stage of the regional integration process that involves free movement of goods, labour, services and capital.
This is seen as the cornerstone of regional economic integration as it aims at boosting trade and investment and the exercise that started in July 2010 was supposed to enable the EAC build capacity to effectively implement the protocol.
According to the East African Legislative Assembly (EALA) member Straton Ndikuryayo (Rwanda), the Council in April 2009 directed the Secretariat to undertake a comprehensive study and propose institutional reforms to boost efficiency in executing the expanded mandate.
“It’s now six years and the review exercise is not yet complete,” Ndikuryayo said.
As the exercise drags on, money is being paid to an external consultant working on the exercise and staffing gaps in key positions remain a hindrance to efficiency.
Ndikuryayo said that key positions remains vacant awaiting completion of the review process.
“And because of this, The EAC organs and institutions don’t have required personnel to effectively and efficiently discharge their expanded mandates,” he said.
“In this situation, It will be difficult to follow up the implementation of EAC Common Market protocol in its freedoms and rights; movement of goods, labour, persons, capital, services, rights of residence and of establishment”.
In November 2011, the Council of Ministers directed the Secretariat to appoint a consultant to conduct a thorough institutional review of the EAC given that the latter’s mandate had evolved since the founding of the Permanent Tripartite Commission in 1993. The exercise was supposed start in January 2013 after the signing of a $116,500 contract between the EAC and a consultancy firm, WYG. Four clear deliverables and timelines were set but they were never met.
Eala Accounts Committee, in its report for the year that ended June 30, 2013, recommended that the EAC Council of Ministers revive and prioritise the review.
While highlighting discomfort about the endless costs of the exercise, the Chairperson of the Accounts Committee, Jeremie Ngendakumana (Burundi), pointed to “unnecessary delays,” that are not the consultant’s fault.
Toothless Secretariat
The EAC Secretariat says delay is partly due to “pending policy issues” on which partner states must pronounce themselves on before the consultant can proceed.
It was earlier expected that the review would be completed after the consultant received harmonised policy guidance and submitted a final report for consideration by Council in November 2014.
Sunday Times understands that a full-fledged department would be set up at the Secretariat to handle the Common Market Protocol. It is currently handled by the understaffed Planning Department.
The source said: “Ever since 2010, no implementation plan has been drawn for the Common Market Protocol.”
Partner states have also not pronounced themselves on a proposal to replace the secretariat with a more powerful commission, a source said. A commission, unlike the current secretariat, would have power to enforce decisions made by partner states. Today, only partner states have ultimate authority over decisive issues – a move that renders the executive organ of the community almost toothless.
The proposed commission would also conduct “enough research in policy analysis and understanding especially regarding policy issues of partner states” as the secretariat lacks the expertise for that.
Sources said that implementation of decisions under a commission would be faster “because of the permanent nature of the commissioners or ministers in place.” Presently, ministers in charge of EAC affairs reside in their respective countries, but with a commission in place, they would permanently reside in Arusha working on a daily basis.
Peter Mutuku Mathuki (Kenya), a member of the EALA Accounts Committee, said the institutional review exercise is basically about assessing the capacity of personnel and resources. The secretariat, he said, is currently operating below capacity – meaning some services won’t be delivered to the expectations of East Africans.
Mathuki attributes the delay to “many factors” including hesitation by partner states due to possible budget implications.
“The departments at the Secretariat are not well-staffed and staff is overstretched with consequences such as less productivity. Take the issue of monitoring – if you don’t have enough staff, it becomes difficult to monitor progress of projects,” he said.
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Botswana: Budget Speech 2015
The 2015/2016 Budget Speech for Botswana was delivered by Honourable O.K. Matambo, Minister of Finance and Development Planning, on 2 February 2015
The 2015/16 Budget Speech focuses on interventions aimed at promoting economic growth and diversification in the country as they are critical in addressing the persistent challenges of unemployment, income inequality and poverty. Therefore, in this financial year’s budget, Government will continue to allocate significant budgetary resources to human capital and physical infrastructure development. This is in recognition of their importance in improving factor productivity and competitiveness, and ultimately increasing economic growth and diversification.
INTRODUCTION
To achieve the goals of promoting economic growth and diversification, Government will continue to adopt appropriate policies and strategies and make substantial budgetary allocations to human capital and physical infrastructure development in recognition of their importance in improving factor productivity and competitiveness. However, it should be noted that the role of Government in promoting growth in the country is a facilitatory one through the provision of a conducive environment for efficient operations of the private sector; which should be the engine of growth. To this end, domestic enterprises would also need to play their part by: improving their operational efficiency; enhancing productivity; and adopting appropriate technologies, in order to enhance their access to global supply chains and networks, which is necessary for global competitiveness.
Despite the positive domestic economic outlook for the financial year 2015/2016, there is a need to continue with prudent management of our resources, given the continued uncertainty over the recovery of the global economy. To this end, expenditure management and control should remain a priority, if fiscal policy is to continue to be supportive of a stable macroeconomic environment, which is necessary for growth and economic diversification. This means that the implementation of the programmes and projects should be guided by the principles of efficiency, effectiveness and financial discipline. Hence, the need to continuously strive for a balance between economic and social investment decisions, to ensure that, emphasis on one does not jeopardise progress in the other. Above all, there is need to ensure value-for-money throughout the implementation of our projects and programmes.
KEY THEMATIC AREAS FOR 2015/2016 FINANCIAL YEAR
With economic growth and diversification remaining the country’s economic priorities, the Government has identified four key thematic areas which are: Growing the economy; Promoting inclusive growth; Enhancing business environment to promote investment and foster diversification; and strengthening the judicial system and combating crime and corruption. These thematic areas are critical in promoting growth and ensuring economic diversification, and therefore assisting in efforts to create employment and improve on the general infrastructure, health and social development and the fight against corruption and crime.
GROWING THE ECONOMY
To address the development challenges of poverty, unemployment, and income inequality, we need economic growth. Without enlarging the size of the economy, it would be impossible to create jobs that the country desperately needs to address youth unemployment, and generate revenues to support Government’s social welfare programmes. It is for this reason that growth and economic diversification should remain our economic priorities.
Economic growth can also be generated through improving total factor productivity and increasing the productive human and capital inputs. Whereas, the country has performed reasonably well in increasing factor inputs, growth in factor productivity has been a challenge in the recent years. In this regard, improving productivity must remain a priority for driving economic growth and ensuring that the economy performs at its potential capacity.
Improving Productivity to Drive Economic Growth
A recent challenge to the promotion of growth and economic diversification has been the declining total factor productivity in the domestic economy, especially labour productivity. In this regard, Government will continue to put in place measures to promote productivity that include: reforming the country’s education and training system; improving work ethic through training the workforce; as well as reviewing labour legislation; with a view to promoting efficiency in the labour market. Such labour market reforms will assist the economy to transit from mineral-led to a knowledge economy. To further improve on total factor productivity, Government is implementing public sector reforms, enhancing research and development, and developing appropriate human skills.
Public Sector Reforms
Madam Speaker, public sector reforms are critical in improving productivity and achieving efficient public service delivery. Hence, a comprehensive Public Sector Reform Coordination Programme is being developed and will be implemented during NDP 11. The Programme is expected to generate five key results, which are: improved relevance and convergence of public sector reforms and their alignment with national priorities; enhanced coordination; increased capacity of implementing agencies; improved monitoring and evaluation; and informed decision making on prioritization and funding. These results are expected to improve service delivery within the public sector and thus, have a positive bearing on labour productivity and economic growth.
Furthermore, a Public Finance Management Reform Programme was adopted in July 2010 as part of on-going fiscal reforms. In this connection, the last few years have seen Government gradually strengthening its macro-fiscal management and budget formulation capabilities. In the process, my Ministry has been able to develop and implement a Medium-Term Fiscal Framework which generates medium-term fiscal forecasts. In addition, Government will implement a Medium Term Expenditure Framework in 2015/2016 financial year to strengthen management of public finance spending.
Enhancing Research and Development
Research and development are essential ingredients in driving economic growth and keeping the country abreast of emerging global competition. To this end, Government has undertaken to regularly generate indicators of Research, Science, Technology and Innovation to inform on the current status of Botswana’s capability in supporting and maintaining research and innovation. The indicators generated from the 2012/2013 data show that Botswana’s capability in research and development in terms of investment, private sector involvement and human resource dedicated to research, is still too low. Hence, the need for a coordinated, aggressive and concerted implementation of the Research, Science, Technology and Innovation Policy of 2011.
PROMOTING INCLUSIVE GROWTH
Despite the positive economic growth registered in the past years, the country continues to face development challenges of unemployment and poverty. To address this, Government will be promoting inclusive growth by creating a conducive environment for productive economic opportunities while ensuring that the benefits of economic growth are equitably shared among various sections of the society. While the focus will be on productive employment, Government will continue with its efforts to eradicate abject poverty by providing social welfare programmes to the poor and most vulnerable groups in the society.
Employment Creation
An inclusive growth approach is premised on gainful employment of factors of production, especially labour. The current unemployment rate of 19.8 percent therefore represents underutilisation of one of the country’s important resource, namely our human capital. This is a challenge for the country, especially that it affects the youth. It is for this reason that Government will continue to implement various programmes, projects and strategies geared towards assisting the youth and women to improve their livelihood. This year’s development budget of P12.93 billion which will mainly be spent on infrastructure projects such as construction of new schools, new power transmission lines and water pipelines, is expected to go a long way in creating new employment opportunities. In addition, complementary laws, labour laws such as the Employment Act, Trade Disputes Act, Workers’ Compensation Act and Trade Unions and Employers’ Organisations Act will be reviewed to facilitate harmonious industrial relations and also to make the labour relations environment conducive for investment.
Poverty Eradication
To address one dimension of inclusive growth, which is, the protection of the disadvantaged and marginalised groups of the society, Government will continue to put in place measures to improve the efficacy of our social welfare programmes. These measures will ensure food security, availability of social safety nets to reduce poverty, and the promotion of opportunities for special groups such as women, the elderly and people living with disabilities.
It is therefore pleasing to note that the poverty eradication efforts by the Government continue to yield results, as indicated by the decline in the population living in poverty from 30.6 percent in 2002/2003 to 19.3 percent in 2009/2010. Since November 2014, 9,588 projects funded by the Poverty Eradication Programme have been fully operational, covering all districts. Beneficiaries of such projects are now earning sufficient income to graduate from extreme poverty. Government will therefore continue to fund the programme, with a view to assisting more deserving citizens.
Meanwhile, Government is in the process of formulating a Botswana Poverty Eradication Strategy, which is expected to be finalized by end of September 2015. This strategy will serve to guide all efforts of Government towards poverty eradication across sectors to ensure consistency of action and results as well as fostering inclusive growth in our economic development agenda.
Financial Inclusion
Achieving inclusive growth as a policy objective will depend on, among others, the extent to which the financial system provides basic financial services to the people. In this regard, the financial sector has intensified its efforts to promote financial inclusion, broadly defined as the delivery of financial services at affordable costs to disadvantaged and low-income segments of the society. Mobile financial services is one of those initiatives that are being used to promote financial inclusion. It includes mobile money transfer and mobile banking such as e-wallet and others which are easily accessible and convenient medium for the delivery of financial services. In addition, the Ministry of Finance and Development Planning has adopted the Making Access to Financial Services Possible Approach to Financial Inclusion. During the year 2015/2016, a Making Access to Financial Services Possible diagnostic analysis will be carried out in Botswana with the view to developing a comprehensive financial inclusion road map, which should lead to a more accessible, inclusive and robust financial system.
Citizen Economic Empowerment
Inclusive growth cannot be achieved without empowering citizens to take an active role in economic activities. It is for this reason that Government continues to make concerted efforts to empower citizens in order to benefit from economic growth. To this end, the amended Citizen Economic Empowerment Policy makes it mandatory for sub-contracting of Government funded projects to 100 percent citizen owned companies. It further stipulates that 30 percent of each Ministry’s projects budget should be reserved for 100 percent citizen owned companies to promote citizen empowerment.
To further advance citizen economic empowerment, the implementation of Local Procurement Scheme has been progressing at different levels across the country. All the District Administration Tender Committees have been trained on the Scheme. Effective implementation of the Scheme should translate into more empowerment of citizens in rural areas, especially through businesses owned by women, youth and People Living with Disabilities.
The Government is committed to creating a favourable environment for the development of the small, medium and micro enterprises (SMMEs), as part of citizen empowerment in the country. However, the success of the SMMEs will depend on various factors such as their ability to deliver quality products to clients, delivery of goods and services on time, and reasonable pricing of such goods and services. This, in turn, requires that SMME’s also invest in innovation and skills development to ensure their long term sustainability.
ENHANCING THE BUSINESS ENVIRONMENT TO PROMOTE AND FOSTER DIVERSIFICATION
Economic diversification is a long-term process that, despite some achievements, is still a challenge. To address this challenge, Government continues to embark on several strategies that, of late, include cluster and value chain development, financial sector support, as well as fostering an environment that allows for complementarity between macro and micro economic policies and deregulation of domestic markets to promote competition.
Development of Cluster and Value Chain in Selected Sectors
The cluster and value-chain approach to development has yielded positive results in some countries. The concept of clusters refers to a group of inter-connected firms, suppliers and related industries, while a value chain is a sequence of activities that firms operating in a specific industry perform in order to deliver a valuable product or service. In this regard, Government has adopted the Cluster Development Approach as a practical strategy to achieve economic growth and diversification. The four identified clusters are Diamond, Tourism, Cattle, and Mining, comprising of coal, copper and other minerals excluding diamonds. Some work has already started on the development of the Diamond cluster. Regarding the Cattle cluster development, three districts of; Central, Kgatleng and Gantsi have been identified for the first phase of implementing the concept. The concept will include, among others, ensuring that within each district, there is development of industries such as livestock feed processing plants, abattoirs, and refrigerated transportation to support the beef industry.
Another sector where the cluster approach will be introduced is the tourism sector, which continues to be one of the key sectors that contribute to the diversification of the economy. During 2013, tourist arrivals were estimated at 2.4 million while receipts amounted to P6.24 billion. Government is reviewing the Tourism Policy to address local, regional, and international challenges experienced within the tourism industry. Such a review process is in its final stages and the revised Policy is expected to create a more supportive and enabling environment for local investors. Furthermore, Government is reviewing the Wildlife Conservation and National Parks Act No. 28 of 1992 and the revised Act is expected to be considered by Parliament during 2015/2016 financial year.
Financial Sector Support
In view of the critical role of the financial services sector in creating a conducive business environment for diversification, Government remains committed to the implementation of the Financial Sector Development Strategy of 2012, whose aim is to promote a smooth development of the financial services sector, including the development of the domestic capital market. Some of the measures pursued in this regard include development of financial regulatory framework and policies, as well as adequate resourcing of relevant regulatory institutions. Among the measures to further improve financial and business services, is a project on the electronic cheque imaging and truncation, whose objective is to reduce the cheque clearing cycle from the current four to two days. A successful implementation of the project will allow bank customers paid by cheque to have quicker access to their funds.
In order to improve on the level of protection of users of financial services, my Ministry has been working with the Non-Bank Financial Institutions Regulatory Authority in drafting several pieces of legislation. To this end, the Securities Act and the Retirement Funds Act were passed during the July 2014 sitting of Parliament. Furthermore, the Insurance Industry Bill is scheduled to be presented at this sitting of Parliament and we intend to present several new Bills to Parliament during the 2015/2016 financial period. The new Bills include: a revised Non-Bank Financial Institutions Regulatory Authority Bill; and a new Collective Investment Undertakings Bill.
Complementary Macro and Microeconomic Policies
In order to achieve the goals of economic growth and diversification, a number of policy reforms are necessary and should continue to be implemented at both the macro and the micro level. These include the implementation of macroeconomic policies such as fiscal: monetary and exchange rate, as well as micro policies such as privatization; promotion of efficient labour market; deregulation of domestic market to encourage competition; and promoting trade through participation in regional and international trade agreements such as SADC Trade Protocol, and SADC/EU Economic Partnership Agreement.
In terms of the macroeconomic policies, Government has maintained a stable macroeconomic environment by ensuring coordination between fiscal, monetary and exchange rate policies. The results of this coordination include: the return to positive budget balances following the 2008/2009 global recession; a monetary policy stance that balances between price stability and economic growth; and an exchange rate policy mechanism that aims for a stable real effective exchange rate to promote domestic competitiveness. In turn, it is expected that the private sector will take advantage of the conducive macroeconomic environment to grow and create employment opportunities.
STRENGTHENING THE JUDICIAL SYSTEM AND COMBATING CRIME AND CORRUPTION
A secure environment is a pre-requisite for both domestic and foreign investments, which are essential ingredients for growth and economic diversification. Botswana, like other developing countries, is increasingly becoming susceptible to complex security challenges such as cybercrime, terrorism, human trafficking and drug smuggling, to mention but a few. As a result, there is need to maintain a high state of readiness to protect people and property against any form of threat. It is for this reason that Government continues to invest in security services, as part of an effort to create a conducive environment for growth and economic diversification.
Despite accolades received by the country on good governance by reputable institutions such as Transparency International, corruption remains a challenge in Botswana. Achieving economic and social development will therefore require continued efforts to address this scourge. In this regard, Government will be: reviewing legislation, where necessary; increasing anti-corruption education; and promoting partnerships in the fight against corruption.
Furthermore, the Directorate on Corruption and Economic Crime has completed drafting of the National Anti-Corruption Policy, which aims at promoting accountability and providing a framework against which anti-corruption legislation and other interventions may be undertaken. A draft policy has been circulated to various ministries and stakeholders for their input and advice, after which it will be presented to Cabinet and Parliament. It is worth noting that a successful fight against corruption is necessary for attracting investors into the country to grow the economy, and create more employment opportunities.
Select infographics
Gross Domestic Product
Real economic growth registered 5.8% in 2013; estimated at 5.2% in 2014 and forecast at 4.9% in 2015. Estimated GDP in current prices for FY 2014/15 = P143.7 billion, and projected for FY 2015/16 = P155.7 billion.
Balance of Payments and Foreign Exchange Reserves
Balance of international payments surplus of P10.0 billion in 2014 compared P1.3 billion in 2013.
As at the end of December 2014, Foreign exchange reserves stood at P79.0 billion, enough to finance 18 months of goods and services imports. Foreign exchange reserves in terms of SDRs and USD were 5.7 billion and 8.3 billion, respectively as at end December 2014.
Revenues and Grants
The projected total revenues and grants for 2015/2016 amount to P55.38 billion, of which Mineral Revenue accounts for 34.4 percent, Customs and Excise for 29.5 percent, while Non-Mineral Income Tax accounts for 17.5 percent of total revenue.
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Boosting solar energy capacity in Africa
Sub-Saharan Africa is rich in energy resources but its potential remains mostly untapped. Despite the abundance of sunlight, solar projects have been developed slowly and often inefficiently.
Weak competition and high transaction costs are some of the obstacles that hamper the progress of the technology.
In a continent where most people live without electricity, expanding the supply of energy has become an imperative that cannot be delayed. To meet projected demand, Africa needs to increase its power-generation capacity by 7,000 megawatts each year – equivalent to the capacity installed in Ireland, and seven times the current rate. That gap hinders economic growth and deters much-needed foreign investment.
Increasing access to power in Africa has long been of critical importance to IFC. We are the leading financier of independent generation projects, having supported not only the continent’s first private distribution company, in Uganda, but also its private integrated utility, in Cameroon.
IFC has recently launched an initiative to expand the market for solar power in Africa. Known as Scaling Solar, it provides an integrated package to project developers, incorporating all of the distinctive capabilities available within the World Bank Group. The initiative aims to reduce the time it takes to deliver solar installations to the market, stimulate competition, and lower tariffs to customers.
Scaling Solar will allow smaller African countries to enjoy the purchasing power of bigger and more developed economies – allowing several African countries that still rely on diesel-fired power to finally benefit from recent dramatic cost reductions in solar-power technology.
In the past two fiscal years alone, IFC has invested and mobilized over $2 billion in financing to support more than 1,500 megawatts of new generation capacity in Africa. Besides investing in debt and equity, we facilitate connections between viable investment opportunities and the financiers that can support them.
We take innovative approaches to our investments, supporting large, potentially transformative projects. We also help developing countries expand the use of cutting-edge technologies, such as concentrated solar power – which uses mirrors to reflect and concentrate rays of sunlight to heat steam that power turbines. For instance, IFC helped launch two landmark concentrated solar projects in South Africa in 2012 that will help diversify the country’s electricity from coal-fired power.
In addition, IFC continues to support off-grid projects that bring power directly to unconnected households in rural and remote areas. IFC has organized a debt facility for Off Grid Electric, a company that provides solar home systems in a “solar as a service” model. Combining mobile payment technology with solar technology, the system allows customers to pre-pay for energy just as they would for using a cell phone. The facility will provide the working capital the company needs to connect about 100,000 homes.
Senegal’s middle-income drive taps experience of peers
Low-income economies aspiring to make a decisive stride toward middle-income status may learn a lot from the experience of peer countries that have made the move, brainstorming participants concluded at IMF headquarters in Washington, D.C
A three-day peer-to-peer exchange “Transforming Senegal into an Emerging Economy” was organized by the IMF and the Senegalese authorities. Senior officials from Cape Verde, Mauritius, and Seychelles came together, in person and via teleconference, with the delegation from Senegal on December 15-17, 2014.
The event built on the model of a peer learning seminar in Mauritius a month earlier that explored the path for middle-income economies toward high-income status. That seminar brought together 18 senior officials from seven small middle-income countries in Africa at the Africa Training Institute in Mauritius. The participants agreed that peer learning offers untapped potential to help move reforms forward in their countries.
Exit the trap
The brainstorming aimed at supporting the Senegalese authorities in reforms needed for the success of their new development strategy, the pdf “Plan Sénégal Emergent” (7.20 MB) . The plan was discussed and supported by the IMF Executive Board in the context of Senegal’s 2014 Article IV consultations. It is designed to help Senegal exit the trap of low growth and high poverty of recent years and make it an emerging economy within the next two decades.
Structured around several pillars – growth through transformation and diversification; human development and social protection; and better governance, peace, and security – the plan envisages reforms to unlock inclusive growth. Scaling up of investment – public and private, domestic and foreign – in growth-enhancing projects, infrastructure, and human capital would allow Senegal to move to middle-income status within the lifespan of the current generation.
Priority will be given to making delivery of public services more efficient, improving the impact of government spending through public financial management reforms, containing public consumption to generate the fiscal space for investment, and strengthening social safety nets.
Others have done it
Experience of other countries suggests that Senegal’s ambition is achievable.
Between 1990 and 2013, about 40 countries across the world have achieved average growth in real per capita GDP of 5 percent or more (at purchasing power parity). International experience suggests that Senegal can be even more ambitious and lift its growth rate to 7 percent in the medium term, driven by domestic reforms and foreign investment-generated exports.
Although not all countries succeeded in all reforms, countries that Senegal could emulate include India, Guyana, and Sri Lanka. African “lion” emerging economies, such as Cape Verde, Mauritius, and Uganda, have also begun the journey already traveled by Asian “tiger” economies to move from low-income to middle-income emerging market status.
Khoudijah Boodoo, Board of Investment, Mauritius: “The path to reforms is full of challenges at the implementation phase. Issues are the same, irrespective of the country and level of development, although not of the same dimension – capacity to implement projects, monitoring, evaluation, budgeting. Peer learning is a good platform to focus on ‘how-to’ experiences. Hearing from practitioners helps understand challenges, learn from failures, and get different perspectives on issues.”
Focus on ‘how to’
From the outset, the Senegalese delegation emphasized that rather than discussing what to do, the brainstorming should focus on how to do it, as all priority reforms needed for Senegal are already listed in the Plan Sénégal Emergent. With topics selected by the authorities, sharing of first-hand experience by peers and experts generated the following priorities:
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Revenue mobilization is key for creating solid fiscal space to finance reforms. The idea of setting a unit focused on the link between information collection, tax control, and tax recovery was the main takeaway.
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The quality of public expenditure needs fundamental improvement. Identification of specific zones of efficiency would be the starting point incorporating also an eight-step project selection procedure suggested by the World Bank and already used in some peer countries. Technical assistance and periodic external evaluation would help ensure integrity of the processes.
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In public financial management, reliable information systems are critical. The Système Intégré de Gestion des Finances Publiques and the system for customs information management used in Senegal have proved broadly reliable for efficient and transparent budget and customs management. Peers and international experts outlined the benefits of alternative public finance and customs management systems.
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Peer guidance on reform of Senegal’s energy sector was strategic: ensure universal access to electricity as a priority, even if the quality of services still can be improved; then take steps to raise their quality; and consider raising tariffs as a last resort, and only after the quality of services has been improved.
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On capacity building, the experience of Mauritius in attracting the diaspora with programs for young graduates, for example through public-private sector partnership projects, is particularly relevant for Senegal. Such an approach would reinforce the capacity of the civil service and raise the prestige of public service.
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Social protection is a critical companion for any successful reform. Good targeting and management would allow government transfers to become a reliable revenue flow for families in need. A register of the poor, properly established and maintained, would allow the authorities and donors to effectively channel help.
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Finally, strict monitoring of reforms is important.
Pierre Ndiaye, Ministry of Economy and Finance, Senegal: “Our delegation is definitely strongly encouraged by this meeting. We plan to respond favorably by strengthening the dialogue internally and developing South-South cooperation, especially with peer countries.
“We were delighted by the possibility offered by the Institute for Capacity Development to have training for Senegalese in areas key for our reforms. We particularly appreciate the possibility of integrating in these workshops peers from countries with experience of interest to Senegal.”
Mutual benefits
The brainstorming benefited Senegal and the peer countries, helping to sharpen their thinking on reforms. Practical issues where peers learned from each other included ways to improve expenditure efficiency, setting up monitoring mechanisms, use of delivery units, project management techniques beyond cost/benefit analysis, the importance of political buy-in for project selection, mechanisms for project cancellation during implementation, and pathways to electricity sector reform.
Also, peer learning represents a cost-efficient tool for knowledge sharing. Participants in both the brainstorming and the Mauritius seminar suggested that existing multilateral platforms such the IMF’s Africa Training Institute and regional technical assistance centers, and regional bodies such as the West African Economic and Monetary Union, could be used for more peer-to-peer learning and support, in person and online. By exchanging on these platforms, peer countries could not only learn from each other but also set common policy goals, sharing successful experiences with those facing similar challenges.
Bertrand Belle, Seychelles Ministry of Finance: “Divergence would occur on the strategies to implement certain measures. Although countries may diverge fundamentally, it is more comfortable to assume that the divergence occurs because of the differing contexts. Diverging on the basis of context negates the need to have diverging technical views, the latter of which is quantitative. This could end with a winner and loser and could lead to uncomfortable experiences.”
Road to follow
These events helped establish guidelines for peer-to-peer learning.
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First, there should be natural affinities between participants: all peers should be equally interested in providing and receiving advice.
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The exchange should focus on practical solutions to specific reform issues. A list of specific reforms should be formulated by the interested peer, drawing on its own reform priorities.
To gain traction, discussions may focus on the components of reforms that participants are working on. As no country can excel equally in each area, the right counterparts from the leading peers should be invited for focused discussions. As no country can excel in all areas, peer learning discussion should also be selective and focus on the most successful and relevant reforms in individual countries.
For example, for Senegal these included the introduction of tax identification numbers, investment planning, tourism, and mobilization of the diaspora in Cape Verde; and elimination of subsidies and development of tourism in Seychelles.
The potential of peer learning from the expertise of Mauritius is particularly extensive and includes such areas as setting up credit information bureaus, modernization of land titling and registration, supporting young entrepreneurs, attracting young talent to the civil service, taxation of telecommunications, support for the tourism sector, creating zones with good business practices, certification of service standards in the public service, strengthening the capacity of the public administration, and public-private partnerships.
Ali Mansoor, Assistant Director, IMF African Department: “The peer learning approach is experimental for the Fund. It worked because Senegal was interested in learning from its peers. The three middle-income countries, on their side, found it useful to participate. The IMF was essentially a facilitator and played a key catalytic role in bringing together the officials, who had gone through a similar challenge, and providing a platform for expertise sharing. Fund and World Bank experts offered a broad prospective of best international practices. Now, it is for our Senegalese colleagues to make the best use of the advice they got.”
The IMF is a clearing house for cross country experience and offers a unique platform for knowledge exchange. It can provide support through a range of instruments, including through strengthened policy dialogue, technical assistance from headquarters and regional centers, and facilitating future exchanges with peers.
The seven small middle-income countries that participated in the seminar in Mauritius are actively discussing next steps in their peer learning process, drawing a forthcoming book titled “Africa on the Move: Unlocking the Potential of Small Middle Income Countries (SMICs).”
The Senegalese authorities plan to continue engaging with a few comparator countries to develop an active peer learning effort. The next workshop is scheduled for early 2015, focusing on public-private partnerships and involving South Africa and Mauritius among other countries.
Another workshop on delivery units, with the World Bank and possible involvement of the United Kingdom, Malaysia, Mauritius, and South Africa could follow. Finally, these peer-learning discussions will contribute to a forthcoming book tentatively titled “Senegal Emerging: Unlocking the Potential of Low-Income Countries” (“Sénégal: La marche vers l’émergence”).
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24th AU Summit ends with strong call for women Empowerment in Africa as a step towards achieving the goals of Agenda 2063
The 24th Session of the Summit of the African Union has concluded in Addis Ababa on 31st January 2015, with closing remarks from the newly elected Chairperson of the African Union, H.E Robert Mugabe who is also the President of the Republic of Zimbabwe.
The AU Chairperson expressed satisfaction to the adoption of the AU Agenda 2063 framework, “we have rededicated ourselves to the Pan-African ideals of our founding fathers for the Africa we want,” he said.
President Mugabe called on the AU Members States to implement all the decisions adopted during the summit “as that is the only way for African states will leverage their resources for the benefits of their people”, underlined President Mugabe. He added that women and youth are the greatest asset for Africa. Hence the theme of this year’s summit: “women empowerment and development towards agenda 2063”.
The AU Chairperson further called on the Member States to contribute fully in the decision adopted by the summit on the alternative sources of financing AU’s activities. He also commended the solidarity showed by all Africans during the great mobilization to combat the Ebola epidemics.
Amongst some of the key decisions adopted during the 24th AU Summit are the following:
On the Hissène Habré case
The Assembly called on Member States, partner countries and institutions to continue supporting Senegal through the African Extraordinary Chambers in the execution of the AU mandate to prosecute and try Mr Hissène Habré, on behalf of Africa, with guarantees for a fair trial.
On the Ebola virus disease (EVD) outbreak
The Assembly recommended the extension of the mandate of the African Union Support to the Ebola Outbreak in West Africa (ASEOWA): called upon Member States who have not yet done so, to lift all restrictions imposed on Ebola affected countries; requested the international financial institutions and partner countries to cancel the debt of the three affected countries (Guinea, Liberia and Sierra Leone); approved the recommendation to urgently convene a Global Conference on the Ebola epidemic; requested the Commission to liaise with all stakeholders in this regard; and appealed to the scientific community to accelerate the search for a vaccine against Ebola.
On the Establishment of the African Centre for Disease Control and Prevention (African CDC)
The Assembly expressed satisfaction for efforts made by the Commission to speed up the process for the establishment of the Centre by mid-2015; approved that the coordination office should initially be at the Headquarters of the African Union in Addis Ababa and authorised the Commission to undertake the mobilization of funds from Member States, development partners and the private sector who have already indicated an interest and with experience in the domain.
Regarding the Report of the High Level African Trade Committee (HATC) on trade issues
The Assembly reaffirmed its commitment to launch continental free trade area negotiations in June 2015; and mandated the Chairperson of the HATC in collaboration with the Chairperson of the Commission to engage in high level consultations for the establishment of the CFTA. [Read the Decision here].
On the World Trade Organisation (WTO)
The Assembly urged Member States to identify key issues in the post-Bali work programme that facilitate the achievement of Africa’s strategic structural transformation and regional integration agenda.
On African Growth and Opportunity Act (AGOA)
The Assembly called upon AGOA-eligible countries to enhance the advocacy to complement the efforts of the African Group of Ambassadors in Washington, USA towards the reauthorization of AGOA.
On Africa’s engagements at the UN climate summit and lima global Climate Change Conference (COP2O/CMP 10)
The Assembly requested the Commission to facilitate the implementation of the WPCCAA and put in place a mechanism for follow up and regular reporting to the Summit on its implementation; and the AMCEN and AGN to take into account the WPCCAA in their negotiations and engagement with other partners in the climate change processes and for a. It approved the recommendation that a Troika comprising the outgoing, current and incoming presidents of AMCEN be the coordination mechanism of CAHOSCC.
On the creation of an African Centre for Information and Communication Technologies in N’djamena
The Assembly commended the Republic of Chad and its President for this crucial initiative and for the funds already mobilized towards the construction of ACIT with a view to promoting information technologies in Africa, which are critical in the continent’s development process.
On the status of preparations for the 11th African games due to take place in Brazzaville, Republic of Congo in September 2015
The Assembly encouraged all Member States of the African Union to actively participate in the African Games in Brazzaville as a demonstration of solidarity with Congo and a testimony to continental unity.
On the continent-wide solidarity against BOKO HARAM
The Assembly welcomed and supported the efforts deployed by Member States of the Lake Chad Basin Commission and the Republic of Benin for having agreed to deploy national contingents and establish a Joint Military Staff Headquarters for conduct of military operations against the Boko Haram terrorist group.
It expressed its high appreciation to the Republic of Chad for the timely intervention to assist the Republic of Cameroon in combating the Boko Haram terrorist group and called on all Member States to render every possible assistance towards defeating the dangerous Boko Haram Group.
On a culture of peace in Africa
The Assembly requested the Commission to explore with UNESCO and the Government of Côte d’Ivoire the possibility of creating a “School of Peace”.
On the report of the Peace and Security Council on its activities and the state of peace and security in Africa
The Assembly welcomed the progress that continues to be made in terms of peace-building and post-conflict reconstruction in The Comoros, Madagascar, with the continuation of the reconciliation process in Côte d’Ivoire and Guinea-Bissau.
The Assembly reiterated Africa’s solidarity with countries in West Africa affected by the Ebola epidemic (Guinea, Liberia & Sierra Leone) and welcomed the deployment by the Commission of ASEOWA, as mandated by the PSC.
The Assembly welcomed the completion of the transition in Tunisia, with the holding, in November and December 2014, of presidential election and welcomed the positive developments in Burkina Faso.
The Assembly expressed appreciation to the International Support Mission to the Central African Republic (MISCA) and troops and police contributing countries for the excellent work done in the Central African Republic (CAR), as well as to Member States and international partners who have provided logistical, technical and financial support to the Mission.
The Assembly welcomed the steps that continue to be taken towards the full operationalization of the African Peace and Security Architecture (APSA). It noted with deep concern that despite the progress made, Africa continues to face serious challenges in the field of peace and security, which undermine socio-economic development efforts, cause catastrophic humanitarian consequences and contribute to project a negative image of the continent.
It reiterated concern at the continued worsening of the scourge of terrorism and violent extremism in Africa, as demonstrated by the cowardly and dastardly attacks perpetrated by different terrorist groups across the continent, including Al Shabaab, the Lord’s Resistant Army (LRA), Boko Haram, Al-Qaida in the Islamic Maghreb (AQIM), the Movement for Oneness and Jihad in the West Africa (MOJWA), al-Murabitun and the Ansar al-Sharia groups.
On the report of the High Level Committee on the Post 2015 development Agenda
The Assembly endorsed the formation and the Terms of Reference of the African Group of Negotiators on the Post 2015 Development Agenda which shall be the single negotiating body acting on behalf of the continent.
On the deployment of the African capacity for immediate response to crises and the African standby force rapid deployment capability
The Assembly decided that;
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In conformity with the provision of Art 9 (2) of the Constitutive Act, to delegate its authority under Article 4 (h) of the Constitutive Act to the Peace and Security Council of the African Union (PSC) to authorize the deployment in a rapid manner.
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The Peace and Security Council of the African Union shall immediately report such deployment within 90 days or to the next meeting of the Assembly for rectification,
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Member States which are Volunteering Nations (VNs) or contributing resources to an Intervention Force shall be represented and participate in the deliberations of the Peace and Security Council on a possible ACIRC/ASF-RDC intervention mission;
On the report of alternative sources of financing the African Union
The Assembly urged all Member States that have not yet done so, to honour as soon as possible their contributions and arrears to the Union; and requested the Ad-hoc Ministerial Committee on the Scale of Assessment to pursue consultations in an open-ended manner.
On the report of Heads of State and Government Orientation Committee (HSGOC) on NEPAD
The Assembly requested the NPCA to develop a coherent Programme of Work to operationalize the Malabo CAADP Implementation Strategy and Roadmap (IS&R) and monitor implementation performance based on the CAADP Results Framework, with emphasis on enhanced support to small-holder farmers, women, youth and promoting inclusive agricultural value-chains, preference for regional markets and strengthening natural resources governance.
The Assembly endorsed in the context of the Dakar Agenda for Action, the PIDA Implementation Acceleration Strategy (PAS) and the PIDA Service Delivery Mechanism (SDM) developed by the NPCA and AUC in conjunction with AfDB, ECA, RECs to implement the Dakar Agenda for Action.
The Assembly endorsed the membership of the five (5) initiating countries and the re-election of the 15 rotating HSGOC members by the 32nd HSGOC Session.
On the fifteenth report of the Committee of Ten Heads of State and Government on the Reform of the United Nations Security Council
The Assembly reiterated its call for Africa to continue to speak with one voice and cohesively on all issues relating to the United Nations Security Council reform and related matters; and UNDERSCORES the overriding need to ensure that the interest of Africa continues to be maintained and safeguarded at all times in the on-going Intergovernmental Negotiation on Security Council reform.
Meanwhile, with regards to the decision on the date and venue of the 25th Ordinary Session of the Assembly of the African Union in June/July 2015
The Assembly accepted the offer of the Republic of South Africa to host the 25th Ordinary Session of the Assembly of the African Union in June/July 2015.