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Uganda stands alone on political federation
Uganda has been left alone in its push to fast-track a political federation of the five East Africa Community members.
Kenya, Tanzania, Rwanda and Burundi have broken ranks with Kampala and want to consult more on the report compiled by experts that was to be presented for adoption to the Heads of State Summit in Nairobi on November 30.
The political federation had been pencilled in at the top of the agenda but a ministers’ meeting held in preparation for the Summit left the matter hanging, with no clear recommendation. Usually, the heads of state act on what has been agreed by the preparatory organs that include experts, permanent secretaries and ministers.
At the Council of Ministers meeting, the four countries called for more time to consult on the drafting of a constitution for the federation and the timelines for implementation.
Uganda, however, said such consultation was not necessary because the road map had been agreed upon and should be presented to the presidents for adoption as earlier directed.
Kenya, Rwanda, Tanzania and Burundi indicated that there were no concrete proposals submitted by the experts on the model structure for drafting of the federal constitution. They said the experts should be given more time to finalise the work and submit the report to the Council in four months, by March 30, 2015.
Uganda argued that experts had settled on a two-tier structure composed of the federal state and constituent states as the model for the EAC federation.
“The federal state will be responsible for federal matters while constituent states will be responsible for non-federal matters. In terms of structure, the federal state will be comprised of an executive, legislature and judiciary, all with functions based on the principle of separation of powers amongst the three organs,” said Uganda.
Uganda recalled that the 15th Summit held on November 30, 2013 in Kampala noted that the revised model structure, roadmap and action plan would be considered by the Council and submitted to the Summit.
Consequently, the Summit considered the progress on the establishment of political federation and directed the Council to initiate the process of drafting a constitution for the federation and develop a roadmap of what the constitutional drafting process would involve.
“The Summit made the above directives after considering the model structure that had been developed by the Secretariat in 2012 together with regional experts,” noted Uganda.
Under a two-tier system, the federation would have a leader, with partner states sharing foreign policy, defence, currency, economic and trade policies even as they manage domestic affairs that have no regional dimension.
The Union between Tanganyika and Zanzibar to found Tanzania is an example of a two-tier system. Although Zanzibar has its own elected government, it operates under Union government policies in terms of foreign policy and international relations.
A one-tier system would see all member countries come under one president, uniform policies and citizens involved in electing the federal leader.
The drafting of the federal constitution is expected to commence after the Council and the Summit have endorsed the concept note and agreed on the model of the structure of the EAC political federation.
However, since the EAC has no referendum law, there is no need for an EAC Referendum Commission as indicated on the road map. The partner states can be left to conduct their own referenda under national laws, the results of which can be communicated to the Council and Summit Uganda has been in the forefront in the push for an EAC political federation.
President Yoweri Museveni in his previous remarks has emphasised the need to fast-track the political federation, saying that the region should not only be an economic bloc, but also a political one.
In his address last year as the chair of the EAC, President Museveni said that even if the economic integration were successful, there were certain issues that could not be addressed through economic integration alone. He said that it was not easy, for instance, to address the issue of common defence when you have different countries.
The Heads of State Summit was to decide on whether to have a political federation that comes into being instantly or one that favours a gradual and incremental process that will culminate in a fully fledged political federation.
Uganda proposes that the political federation take a transition period of five years to enable the development of federal institutions, but the other four partner states are asking for a longer period, to be determined later, as part of the phased rollout that will allow for the building of strong institutions, confidence and mutual trust among member states.
Uganda is also pushing for a deal that would see all member states lose their sovereignty as countries, a proposal that has been rejected by the other four partners who want dual sovereignty, with member countries retaining some level of sovereignty while giving up some to the federation.
The other issue under debate is whether all the partner states should join at their own time or at the same time.
While Burundi and Tanzania are pushing for all the five member states to join the federation at the same time, Uganda, Rwanda and Kenya favour the principle of variable geometry, which allows member countries to join the federation at different times and stages.
Kenya and Tanzania are against the admission of new members to the political union, once formed and fully operational. But the other partners want the bloc to come up with criteria for allowing into the federation other countries seeking to join.
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New system to slash cargo clearance time at Mombasa port, other points
Nine government agencies involved in cargo clearance at the Kenyan port of Mombasa have until December 31 to migrate to the Single Electronic Window System before its full rollout.
Starting January 1, all trade transactions involving the agencies – including applications for permits, as well as payment and collection of taxes, fees, duties and levies needed in cross-border transactions – will henceforth be made through the new system.
According to Alex Kabuga, the chief executive officer of the Kenya Trade Network Agency (KenTrade) – a state corporation set up to implement, operationalise and manage the National Electronic Single Window System – so far, 15 agencies are on board and are using the system but nine others are yet to join.
“The target is to have all the 24 government agencies involved in cargo clearance at the port and border posts integrated with the single window by December 2014, which is in line with the Port Charter,” said Mr Kabuga.
“The target is to have the configuration and training for these agencies completed in time for it to go live by January 2015 alongside all other government agencies.”
The Agriculture, Fisheries and Food Authority; Kenya Maritime Authority; Postal Corporation of Kenya; Anti-Counterfeit Agency; Kenya Police Service; Kenya National Chamber of Commerce & Industry; and the Ethics and Anti-Corruption Authority are yet to migrate to the electronic system.
The Kenya Revenue Authority (KRA), Kenya Bureau of Standards, Pharmacy and Poisons Board, Port Health and the Horticultural Crops Development Authority are already integrated in the system.
Launched by President Uhuru Kenyatta on May 2, the Single Electronic Window System is expected to facilitate international and domestic trade at the port. It has been touted as the solution to the persistent delays at the major gateway to the region.
The system will allow parties involved in trade and transport to lodge standardised information and documents at a single entry point. That is expected to reduce the time it takes to process goods through Customs at the port by half – from seven days to three.
Clearance time to fall
At the country’s airports, cargo clearance time will fall to just one day from five while at border posts it will take an hour instead of two days, sponsors of the $18 million project said.
According to Mr Kabuga, since its launch, there has been a 40 per cent increase in trader and company compliance levels and this is expected to go up to 80 per cent by June next year.
Mr Kabuga said efforts spearheaded by the East African Community Secretariat are under way to have a regional electronic single window system that will be integrated into the EAC Single Customs Territory (SCT). A technical working group has been formed to work on the concept, he said.
He however added that change of management for most companies from manual to digital systems has been a challenge.
The integration of the Simba System into the Single Window System will be completed by December 31 and cargo declarations will henceforth be live and lodged through the new system.
The government, through the Kenya Ports Authority (KPA), has been implementing the directive by President Kenyatta to the port authorities to improve operations at the facility in order to stimulate trade and cut transport costs.
In the recently concluded Pan-Africa Ports Conference at the Kenyan Coast, KPA managing director Gichiri Ndua announced that 70 per cent of the ongoing construction of the second container terminal at the port of Mombasa is done and the works are expected to be completed by March 2015.
The $327 million terminal will therefore be completed ahead of the 2016 deadline, the KenTrade boss added.
Second container terminal
“Construction of the second container terminal is already at 70 per cent, which means it is ahead of schedule and could be completed by March 2015 despite the fact that the completion time was set for 2016,” said Mr Ndua.
He said the completion of the terminal and other ongoing port upgrade efforts will uplift its status to a world-class facility where bigger vessels can dock and offload cargo.
The new terminal is expected to increase Mombasa’s container handling capacity from 771,000 to 1.2 million containers and help to reduce the clogging that has forced some port users to relocate to neighbouring Dar es Salaam.
Mr Ndua said the port expansion, coupled with other infrastructure projects at the Coast – including the upgrading of Moi International Airport and the Nairobi-Mombasa highway, as well as the construction of the standard gauge railway – will serve to enhance Kenya’s status as a regional economic hub.
“Efficiency at Mombasa also means that the port will be doing more business than before, considering that traders could multiply the number of transactions,” said Mr Ndua.
Kenya is also building another port in Lamu as part of the Lamu Port-South Sudan-Ethiopia Transport Corridor, better known by the acronym Lapsset.
Mombasa port, which also serves Uganda, Rwanda, DR Congo, Burundi and South Sudan, is overstretched, largely because of a sharp increase in imports into Kenya and the region.
Kenya’s ultimate aim is to secure a geostrategic position as the key access to the Indian Ocean to serve the economic zone straddling the Nile Basin countries – a position Tanzania, too, is keen to achieve.
Clearance still taking too long
However, a stakeholder’s meeting on the initial findings of a survey on East African non-tariff barriers held in Nairobi last week indicated that, while the recently launched SCT by the partner states is supposed to result in a seamless flow of goods to enhance trade and reduce costs for all stakeholders in the region, clearance of goods out of the port is still taking too long.
Delegates from the Kenya Revenue Authority (KRA), the Uganda Revenue Authority (URA) and the Tanzania Revenue Authority (TRA) said it took up to two days to generate and issue the exit note, which is supposed to take not more than an hour.
“More revenue authority officers should be stationed at the port by both countries and the SCT should automate the entire process, thereby eliminating delays,” they said in a statement.
Rwanda issues the whole set of documents at one go online, which saves everyone a lot of time. However, it takes KRA 24 hours to process certificates of origin to exporters since it has to be done in one central point in Nairobi, causing delays in transportation of goods to destinations in the region.
It also emerged that it can take up to 24 to 48 hours to get the service providers with the electronic seals to put on the ready truck because the providers do not have the seals readily available. The delegates said, there is a need for the service providers to have their seals available at any time.
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Mombasa among ports to benefit from Sh108bn World Bank project
Mombasa is among three ports in East Africa earmarked for further investment by the World Bank to enhance capacity and efficiency.
World Bank Country Director for Burundi, Tanzania and Uganda, Mr Philippe Dongier, said lakes Victoria and Tanganyika would also benefit from investments aimed at reviving the region’s inland waterways.
“We will invest in specific transport links to better connect landlocked countries (Burundi, Rwanda, Uganda and South Sudan) to the Northern and Central corridors to improve these countries’ access to the ports of Mombasa and Dar-es-Salaam,” said Mr Dongier during the EAC Heads of State Retreat in Nairobi at the weekend.
Improve competitiveness
Mr Dongier said the bank would provide Sh108 billion ($1.2 billion) to support the initiative and improve the region’s competitiveness.
The bank would also provide additional resources for regional infrastructure through market-driven private sector financing and guarantees, he added.
“The financing will contribute to EAC states’ planned investments in the next three to seven years. This support is additional to large ongoing individual country programmes,” he said.
He added: “We are partnering with EAC governments, other development partners and the private sector to invest in regional infrastructure and help deepen policy integration and reduction of barriers to trade.”
The retreat on infrastructure development and finance focused on policies and reforms necessary to strengthen regional integration through enhanced efficiency of infrastructure investment and financing.
“Working with private sector partners, IFC is already investing more than Sh90 billion ($1.0 billion) annually in sub-Saharan African infrastructure to spur economic growth and improve living standards,” said Mr Oumar Seydi, IFC director for Eastern and Southern Africa.
He said IFC would do more to support ports, power, rail, transport and other key infrastructure projects in the East African Community.
The retreat was officially opened by Deputy President William Ruto and was to be followed by a Heads of State Summit Sunday.
Participants include the EAC Heads of State or their representatives, ministers, chief executives of development banks and regional economic communities, high commissioners, ambassadors and private sector leaders.
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UN official sees upcoming Lima climate talks as ‘stepping stone’ for universal treaty
As Governments prepare to meet for the United Nations Climate Change Conference in Lima, Peru, starting on Monday, a top UN official has highlighted the session as an opportunity to raise immediate awareness on climate change and lay the foundation for a new universal agreement to be adopted in 2015.
“Never before have the risks of climate change been so obvious and the impacts so visible. Never before have we seen such a desire at all levels of society to take climate action. Never before has society had all the smart policy and technology resources to curb greenhouse gas emissions and build resilience,” said Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) in a press release on 28 November 2014.
“All of this means we can be confident we will have a productive meeting in Lima, which will lead to an effective outcome in Paris next year,” she added, referring to the climate conference that will take place in December 2015 in Paris, France, where the new universal UN-backed treaty on climate change will be adopted.
The UNFCCC is an international treaty that considers what can be done to reduce global warming and to cope with whatever temperature increases are inevitable.
The 20th session of the Conference of the Parties (COP), being held in Lima through 12 December, brings together the 196 Parties to the UNFCCC, which is the parent treaty of the 1997 Kyoto Protocol. Over the course of the next two weeks, delegates will attempt to hammer out the new universal treaty, which would enter force by 2020.
Ms. Figueres explained that Governments meeting in Lima under the Ad Hoc Work Group on the Durban Platform for Enhanced Action need to define the scope and the type of contributions they will provide to the Paris agreement, along with clarity on how finance, technology and capacity-building will be handled.
Countries will put forward what they plan to contribute to the 2015 agreement in the form of Intended Nationally Determined Contributions (INDCs) by the first quarter of 2015, in advance of the Paris conference in December.
The Lima conference should provide final clarity on what the INDCs need to contain, including for developing countries that are likely to have a range of options from, for example, sector-wide emission curbs to energy intensity goals, she said.
Welcoming the leadership of the European Union, the United States and China, who have publically announced their post-2020 climate targets and visions, Ms. Figueres stressed that many countries are working hard to increase emission reductions before 2020, when the Paris agreement is set to enter into effect.
“It is hugely encouraging that well ahead of next year’s first-quarter deadline, countries have already been outlining what they intend to contribute to the Paris agreement. This is also a clear sign that countries are determined to find common ground and maximize the potential of international cooperation,” she said.
In particular, Ms. Figueres said that Governments should work towards streamlining elements of the draft agreement for Paris 2015 and explore common ground on unresolved issues in order to achieve a balanced, well-structured, coherent draft for the next round of work on the text in February next year.
In addition, she noted that the political will of countries to provide climate finance is increasingly coming to the fore.
At a recent pledging conference held in Berlin, Germany, countries made pledges towards the initial capitalization of the Green Climate Fund totalling nearly $9.3 billion. Subsequent pledges took this figure to $9.6 billion, so that the $10 billion milestone is within reach, Ms. Figueres said.
“This shows that countries are determined to build trust and to provide the finance that developing countries need to move forward towards decarbonizing their economies and building resilience,” she noted.
During the course of 2014, Governments have been exploring how to raise immediate climate ambition in areas with the greatest potential to curb emissions, ranging from renewable energy to cities, she said.
As part of the “Lima Action Agenda,” countries will decide how to maintain and accelerate cooperation on climate change by all actors, including those flowing from the Climate Summit in September, where many climate action pledges were made.
“We have seen an amazing groundswell of momentum building this year. One of the main deliverables of the Lima conference will be ways to build on this momentum and further mobilize action across all levels of society,” Ms. Figueres said.
“Society-wide action in concert with Government contributions to the Paris agreement are crucial to meet the agreed goal of limiting global temperature rise to less than two degrees Celsius, and to safeguard this and future generations,” she added.
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Swaziland has potential to increase intra-COMESA trade by E20.9bn
Swaziland has a potential to increase intra-COMESA trade by E20.9 billion (US$1.9 billion), recent analysis has shown
This was said by Minister of Commerce, Industry and Trade Gideon Dlamini when speaking at the Royal Swazi Convention Centre on Thursday. It was during the Federation of Swaziland Employers and Chamber of Commerce (FSE&CC) Gala Dinner on Thursday.
The minister said products identified for potential export growth in Swaziland include milk, cream, fruits, nuts and other edible parts of plants, concentrates, textiles, wooden furniture and other wooden products.
“The COMESA market, which has a membership of 19 countries and with a potential to reach 20 (at the accession of South Sudan) has population of more than 370 million, which really presents the opportunity for the country to increase its trade balance,” Dlamini said.
He mentioned that Swaziland has trade relations with other regions and countries, which offer market access for local products at either lower duty or no duty at all.
Dlamini went on to say there are also ongoing trade negotiations that Swaziland is participating in, including the Tripartite Free Trade Area, which will encompass 26 members of the African Union (from the COMESA, SADC and the East African Union).
The Tripartite FTA which will span from Cape to Cairo will have a combined population of 625 million people and a Gross Domestic Product (GDP) of (E13.2 trillion) US$1.2 trillion, will account for 58 per cent of the continent’s GDP.
The minister said the tripartite FTA, popularly known as the Grand Free Trade Area, will be the largest economic bloc on the continent and the launching pad for the establishment of the continental free trade area in 2017.
Dlamini added that a relatively new area in the trade arena that is getting much attention is trade in services. He said in COMESA, SADC and the Tripartite FTA negotiations, there is a commitment to advance trade in services among member states.
In COMESA and SADC for example, at least six priority sectors have been identified for countries to make commitments for liberalisation of tourism, transport, financial services, energy, construction and communication.
He is of the view that trade in services has a potential to enhance the participation of small and medium enterprises (SMEs) in the above-named sectors, because of in most cases it does not require substantial capital to be established.
“Swaziland, in phase two of the EPA agenda, will be negotiating trade in services with the EU.
“An area of interest in the trade in services for Swaziland may include mode four, which is the temporary movement of natural persons – that is – professionals in different fields of specialisation be allowed to work in the EU.
Inversely, service providers from the EU may be allowed to operate in Swaziland with a requirement to encourage local participation, such as, joint ventures.
Similarly, our export performance with other regions of the world continues to be relatively low in relation to the opportunities that have been made available to us through negotiations.
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Region in fresh push for Monetary Union Protocol
The implementation of the EAC Monetary Union Protocol have gathered fresh impetus after Rwanda joined an ambitious cross-border payments system last month, which aims at speeding up payments and promoting trade within the region.
The East African Payments System (EAPS), which went live on November 25 last year, links the Real Time Gross Settlement Systems (RTGSs) of the EAC member countries.
“We have now brought on board Rwanda, which joined in October. Burundi is still implementing its RTGS and once they are ready they will also join,” said Stephen Nduati, the head of the National Payments System at the Central Bank of Kenya.
The integrated regional payment system, which was officially launched in May this year by the governors of the region’s central banks is part of the economic integration drive, which seeks to among other things connect the EAC member countries through a single currency by 2024.
The regional heads of state signed the Monetary Union Protocol in Kampala on November 30, 2013 setting a 10-year roadmap towards the realisation of the single currency.
Mr Nduati said the cross-border payment infrastructure is now operational in Kenya, Uganda, Tanzania and Rwanda.
“It is an efficient and secure means of transferring money across the region linking the RTGSs of the four countries through their respective central banks,” said Mr Nduati.
EAPS is a multi-currency system in which payments are effected using any of the currencies of the EAC partner states.
According to Mr Nduati, the payment platform makes it easier for East African citizens to do business and transfer as much as $5 million within the region at a cost of only $5.
Louis Kasekende, the Deputy Governor of the Bank of Uganda said it will make cross-border payments easier, and facilitate safe and efficient transfer of funds within the region.
“EAPS will also be vital in promoting regional trade and enhancing economic integration,” said Dr Kasekende.
The system sends and receives cross-border payments in the region’s currencies: Kenyan shillings, Tanzanian shilling, Ugandan shillings and now Rwandan francs from any of the commercial banks in the four countries in real time.
According to the International Monetary Fund, the formal launch of the EAC payments system is a significant step in enhancing monetary and economic integration in a region with a population of about 140 million and a combined GDP of more than $100 billion.
The Monetary Union Protocol sets out the process and legal and institutional framework for the establishment of a single currency, including macroeconomic convergence criteria.
Joint monetary policy will be governed by an independent EAC central bank with a system of national central banks as its operational arms.
To qualify, countries are expected to meet the convergence criteria and comply with them for at least three years.
The primary convergence criteria are ceilings on headline inflation (eight per cent), fiscal deficit including grants (three per cent of GDP), gross public debt (50 per cent of GDP in net present value terms) and a floor on reserve coverage (4.5 months of imports).
In addition, there are three indicative criteria including ceilings on core inflation (five per cent) and the fiscal deficit excluding grants (six per cent of GDP); and a floor on the tax-to-GDP ratio (25 per cent).
The EAPS project is an integral element of the overall infrastructure and technological platform required to support the proposed East African Monetary Union to function effectively.
It will also contribute to managing the convertibility of the EAC partner states’ currencies in the region.
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Ugandan traders threaten to boycott Mombasa port
Uganda traders under the Kampala City Traders Association (Kacita) have given the Kenya Revenue Authority (KRA) two weeks to unconditionally release Uganda-bound cargo or boycott the Mombasa port.
The ultimatum was issued on Thursday after hours of consultations on the impact of the KRA’s decision to tax all goods that dock at the port upfront.
Previously, traders had been collecting port fees and other handling charges.
The move, according to Kacita, is not only against the spirit of EAC integration but is also hurting Ugandan traders and the country’s economy.
AN ULTIMATUM
Kacita chairman Everest Kayondo said: “By Wednesday there were about 4,000 containers held up at Mombasa, Kenya, because of arbitrary taxes that KRA keeps introducing.”
”And for that we are giving them (KRA) two weeks, beginning immediately (Thursday) to release all Ugandan-bound cargo that (has) cleared all port charges and other logistical fees or else we relocate to the Dar es Salaam Port,” he added.
In addition, the traders said if their conditions were not met, they would put pressure on the Ugandan government to block Kenyan products from getting to the Ugandan market.
The association’s spokesperson, Mr Isa Ssekitto, said they would write a formal letter to the governments of Uganda and Kenya outlining the traders’ resolutions.
The letter, he said, would also remind Kenya to pay Ugandan traders $14 million (USh40 billion) that they lost during the post-election violence of 2007/08 in Kenya.
UPFRONT PAYMENT
However, Uganda Revenue Authority commissioner for Customs Richard Kamajugo told the Daily Monitor the piled-up cargo at the port had nothing to do with the Single Customs Territory.
The cargo, which he said consists of almost 100 [containers], has been held because KRA wants traders to pay all tax dues upfront.
Amb Julius Onen, the Permanent Secretary in the Ministry of Trade, confirmed the development, saying officials were trying to handle the matter at a high level.
Before (the) close of the week or earliest next week, this issue is likely to have been sorted (out),” he said.
MUSEVENI WARNS
On Wednesday, Ugandan President Yoweri Museveni warned Kenyans that he would block the country’s goods from entering Uganda if the Kenya Revenue Authority did not stop blocking Ugandan exports from entering Kenya.
Museveni said the move was not only “myopic” but contravenes the East Africa Community Protocol.
”We buy a lot of goods from Kenya. Some of those (KRA) officials are narrow-minded. They wanted to block our sugar. Now they have gone for our chicken. If I say no more, Kenya will feel it...,” he said.
Speaking at the launch of the Hudani Manji Chicken plant in Semuto, Nakaseke District, President Museveni said he would petition the Kenya government to resolve the matter.
”I shall sort it out with President Uhuru Kenyatta,” he said.
KRA officials said on Thursday evening they would comprehensively respond to Mr Museveni’s comments on Friday.
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WTO clinches first global trade deal
The World Trade Organization adopted the first worldwide trade reform in its history on Thursday, after years of stalemate, months of deadlock and a final day’s delay following an eleventh-hour objection.
The agreement means the WTO will introduce new standards for customs checks and border procedures. Proponents say that will streamline the flow of trade around the world, adding as much as $1 trillion (0.64 trillion pounds) and 21 million jobs to the world economy.
“It’s all agreed,” a WTO official said outside the closed-door WTO meeting in Geneva, after trade diplomats applauded the end of their 19-year wait for a deal.
Still, the agreement is just a fraction of the original Doha Round of trade talks begun in 2001, which eventually proved impossible to agree on. The WTO cut back its ambitions and aimed for a much smaller deal.
Even that was blocked by a four-month standoff caused by India, which had vetoed adoption of the reform package as the original deadline passed at midnight on July 31.
India demanded more attention be given to its plans to stockpile subsidized food, in breach of the WTO’s usual rules. A compromise on wording reached by the U.S. and Indian governments broke the deadlock.
The reform package adopted on Thursday was agreed at a WTO meeting in Bali in December last year. Its passage is widely seen as opening up progress towards further global negotiations, the content of which is due be laid down by July 2015.
That should reassure smaller nations in the 160-member WTO. Many had feared India’s tough stance would prompt the United States and the European Union to turn their backs on the WTO and concentrate on smaller trading clubs instead, ending hopes of trade reforms benefiting all.
Thursday’s deal had originally been due for agreement on Wednesday, but an objection by Argentina forced its postponement for 24 hours.
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Launch of free trading arrangement to spur China - Africa trade relations
Analysts said on Thursday that a proposed tripartite free trading arrangement to be launched by three African trading blocs next month will have a positive bearing in promoting China-Africa trade relations.
The Common Market for Eastern and Southern Africa (COMESA), the Eastern African Community (EAC) and the Southern African Development Community (SADC) are expected to launch the tripartite free trading arrangement in December. Once launched, the tripartite free trading arrangement will be the largest economic bloc on the continent and will pave way for the establishment of a continental free trade area in 2017.
Dr. Lubinda Habaazoka, a Lecturer in the School of Business Studies at the Copperbelt University (CBU) said the initiative presents unique opportunities for the enhancement of trade relations between China and member countries of the regional bloc.
"This will good for the enhancement of relations between China and Africa. Instead of negotiating with individual countries, China will be negotiating with a bloc and this is good for business development," he said in an interview with Xinhua.
While acknowledging that the launch of the initiative was long over-due, the analyst said it was appropriate that it was coming at a time when China has emerged as a super economic power house and when African nations are looking to the Asian country for increased investment. According to him, the launch of the free trading arrangement will allow for the smooth movement of goods and services but member countries are urged to consider free movement of people as well. He further warned that some industries in some countries may face negative consequences and close due to cheap goods that may be moving throughout the free trade area and urged countries to put in place measures to enhance productivity.
Richard Musauka, country director of Development Partnership International (DPI) Zambia office said the initiative has come at a time when China has invested a lot in improving infrastructure in many countries in Africa.
"This initiative will definitely have an influence on Africa/ China trade relations. Like you know, China has invested a lot in improving infrastructure in Africa and will definitely try to take advantage of this initiative to improve trade relations," he said. He however said China should help countries in the three regional blocs through technology transfer and training of human resource. The tripartite free trading arrangement encompasses 26 member states from the three regional blocs, with a combined population of 625 million people and a gross domestic product of 1.2 trillion U.S. dollars. It will account for half of the membership of the African Union and 58 percent of the continent's gross domestic product. Sindiso Ngwenya, the head of COMESA said in October that the launch of the initiative followed progress made by the three economic blocs in tariff offers and rules of origin which stipulates that imported products should meet 75 percent value addition from the country of origin. The initiative will particularly benefit the business community due to an improved harmonized trade regime which in turn will reduce the cost of doing business as a result of elimination of overlapping trade regimes.
The launch of the initiative was arrived at following a tripartite sectorial meeting of ministers in Burundi in October. It will be launched during a tripartite summit of heads of state to be held in Egypt next month.
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Zimbabwe Government suspends platinum export tax
Government has suspended export tax on unbeneficiated platinum until January 1, 2017, Finance and Economic Development Minister Patrick Chinamasa said in the 2015 National Budget statement.
In view of the potential to beneficiate platinum, Government introduced an export tax at a rate of 15 percent, with effect from January 1 2015. The move was designed to force companies to build refineries as Government intensified efforts to realise real value of mineral exports.
Zimbabwe has three platinum mining companies – Zimplats, Unki and Mimosa. Following commitment by platinum producers to undertake beneficiation and value addition initiatives, Government decided to defer export tax on unbeneficiated platinum to 2017.
“Platinum producers have, however, demonstrated efforts to beneficiate, to the extent that Zimbabwe Platinum Mines Limited will be commissioning a $200 million base metal refinery in the next twenty four months.
“The facility will be expanded to accommodate other platinum producers. I, therefore, propose to defer export tax on un-beneficiated platinum to January 1 2017,” said Minister Chinamasa.
He said the country is currently one of the major producers of diamonds in the world yet most of the diamonds are exported in raw form, thus depriving the country of employment opportunities as well as potential revenue to the fiscus.
Minister Chinamasa, however, proposed to remove royalties on rough diamonds sold to firms licensed to cut and polish diamonds, with effect from January 1 2015 in a bid to support beneficiation.
He said Government in 2013 comprehensively reviewed the fiscal mining regime, with a view to ensuring a balance between the viability of the mining industry and revenue inflows to the fiscus.
Minister Chinamasa said the long term sustainability of the mining sector requires Government to put in place a mechanism to assess the economic impact of various policy decisions.
The mining fiscal model will enable Government to design an appropriate tax system that attracts investment into the mining sector and promotes optimal mineral extraction and revenue generation, without sterilising minerals, that is, extraction of high grade ores, at the expense of less economic grades.
In addition, the model will be used as an audit tool to assess mineral and revenue leakages and also project future revenues from the mining sector. He also noted that there must be transparency accountability in the mining sector if real value is to be realised.
The effectiveness of the mine fiscal model is dependent on the availability of quality data from the mining sector and availability of data will ensure transparency of the mining operations.
“I, therefore, propose to compel mining houses to provide data to the Zimbabwe Revenue Authority, such as exploration costs, pre and post operative costs, debt-equity mix and repayment terms in a prescribed format,” said Minister Chinamasa.
Zimbabwe is increasingly looking to the mining sector as the anchor to economic revival and development.
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Least Developed Countries Report 2014
Modernization in least developed countries requires economic diversification and more jobs, new report says
A major shift in policies aimed at upgrading and diversifying the economic structure of least developed countries (LDCs) into more sophisticated and higher value-added products is being proposed by UNCTAD in its publication, The Least Developed Country Report 2014. This will require innovation, skills upgrade and massive transfer of resources towards more sophisticated products and activities. Such a policy change is especially important for those LDCs overly dependent on the extractive sector.
Subtitled Growth with Structural Transformation: A Post-2015 Development Agenda, the Report says policy proposals must go beyond those aimed at large-scale urban manufacturing to embrace measures for agricultural upgrading and rural economic diversification.
The LDCs are a group of 48 nations, most in sub-Saharan Africa, which have been recognized by the United Nations as requiring transformative economic change in order to lift their peoples from poverty.
Economic growth in the LDCs during the last two decades was associated with changes in the composition of their production and exports, the Report says. LDC economies that were able to diversify their production into higher value-added manufacturing activities grew at consistently higher rates than countries that remained heavily dependent on natural resources.
Exporters of manufactured goods, mostly in Asia, such as Bangladesh and Cambodia, experienced fast changes in the composition of their productive structure, with a 16 percentage point decline in the agricultural sector’s share of employment.
This transformation was supported by a significant increase in labour productivity in agriculture, which was above 2 per cent per year, and it made possible a progressive shift of the workforce towards industry and services. Labour productivity in industry, in turn, reinforced this dynamic, displaying an average growth rate of over 4 per cent between 1991 and 2012.
Asian LDCs also displayed the strongest increment in manufacturing production (whose share of total output increased by 5 percentage points), outperforming the remaining LDCs with a GDP per capita growth of 3.3 per cent or above per year.
In African LDCs, on the contrary, output per capita grew more slowly, at average annual rates of only 1.9 per cent, the Reports notes, and in countries specialized in the export of minerals, such as Guinea and Zambia, it stagnated.
Not surprisingly, African LDCs and LDCs specialized in the export of minerals also showed only limited or even negative changes in agricultural productivity (for example, minus 1 per cent annually for the mineral exporters) and little sign of transformation of the employment structure, with a decline of agricultural labour share of 7 and 0 percentage points, respectively. More importantly, the Report says, both groups of countries experienced a decrease of 1 percentage point in the manufacturing share of total output.
Even in African LDCs, however, labour productivity in the industrial sector grew substantially over the period 1991-2012, at an annual rate around 2.5 per cent.
This figure hides an important contrast between those LDCs where the industrial sector is dominated by manufacturing and those where it is dominated by extractive industries (basically oil, gas and metal mining). Exporters of manufactured goods (primarily Asian LDCs) in fact proved to be resilient to the negative external shock engendered by the global economic crisis that started in 2008.
In those LDCs where the industrial sector is dominated by extractive industries, on the other hand, the crisis pushed labour productivity into a steep decline. This underlines the vulnerability of economies that are dependent on natural resources, and the importance of diversifying their production structures.
The Report also finds that, even in those countries that are relatively successful exporters of manufactured goods, a large part of the workforce has resorted to service activities that offer low-productivity and informal fallback options for workers lacking an industrial job. Urban industry has not been able to keep up with the extraordinary pace of rural-to-urban migration registered in the last two decades, and the service sector has absorbed a large part of the excess supply of workers in urban areas.
The rise in the share of workers employed in low-productivity informal jobs is a serious impediment to aggregate productivity growth and development in all the LDCs. Moreover, since low productivity is associated with low incomes, these jobs not only restrain economic modernization, but they also keep workers in poverty.
NOTE: Forty-eight countries currently are designated by the United Nations as LDCs. They are Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People´s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Vanuatu, Yemen and Zambia.
UNCTAD’s Least Developed Countries Report 2014 says that the international community must learn from the failure of most of the poorest countries to meet the Millennium Development Goals (MDGs) despite registering strong economic growth – a phenomenon the Report dubs the “LDC paradox”.
The Report says that world’s 48 least developed countries (LDCs) are the battleground on which the post-2015 development agenda will be won or lost: its success will depend on action by the international community and the LDCs to structurally transform their economies and break the vicious circle of human and economic development that has trapped these countries in poverty.
The “LDC paradox” arises from the failure of their economies to achieve changes in their economies despite having grown strongly as a result of strong export prices and rising aid flows. Subtitled “Growth with Structural Transformation: a Post-2015 Development Agenda”, the Report highlights key policy priorities as part of a post-2015 development agenda for LDCs. The core of this agenda should be a virtuous circle between economic and human development, reversing the vicious circle currently trapping LDCs, the report says.
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WTO work is “back on track”, says Azevêdo
Director-General Roberto Azevêdo, at a meeting of the General Council on 27 November, congratulated members for adopting decisions related to public stockholding for food security purposes, the Trade Facilitation Agreement and the post-Bali work.
Statement by DG Azevêdo:
Thank you Mr Chairman.
It seems we liked Bali so much we wanted to do it all over again!
But, we made it.
I want to thank everybody – Ambassador Fried, Ambassador Conejos, all of the chairs, everyone who has brought us here today.
This is a very important moment for the WTO.
By agreeing these three decisions we have put ourselves back in the game. We have put our negotiating work back on track – that means all the Bali decisions: trade facilitation, public stockholding, the LDC issues, the decisions on agriculture, development, and all of the other elements.
And we have given ourselves the chance to prepare the post-Bali work program.
But, crucially, during this process we have seen a renewed commitment to the multilateral system.
This would not have happened without the commitment and political will of all 160 WTO members present here today.
Members have shown the willingness to compromise – and a real commitment to the multilateral system.
So I want to take this opportunity to thank everybody for the restraint and flexibility that you have shown in recent days.
It has been a tough period for our negotiating work, but we have got the right result today.
Nevertheless, I think we would all agree that we need to find an easier way of doing things. While we have seen renewed commitment to the WTO, the truth is that we must avoid repeatedly putting ourselves in this position.
We have lost precious time since July, and it goes without saying that we can’t wait another two decades to deliver further multilateral outcomes.
We have to think about how we can operate in a more efficient way.
The size and diversity of the Organization is not an impediment to that. The consensus rule – that people talk about so much and which will never disappear – is not an impediment either.
We showed in Bali that we can deliver. Now we need to figure out how to deliver more and how to deliver faster.
So we should be pleased that our work is back on track. But this is where the real work begins.
We have to make this breakthrough meaningful by seizing the opportunities for progress that it provides.
We have just finished one journey – but now we must embark on another.
You have just adopted texts which say that work will start immediately.
And that means immediately. The dictionary definition is: without delay, instantly, at once, without lapse of time. So this is what we will do.
You have committed to engage constructively on all of the Bali decisions and the work program on the remaining DDA issues.
It is clear that members place real priority here and so we must get to work straight away.
I will be convening a meeting with the negotiating group chairs tomorrow to ask that they bring members together immediately to begin resuming work in all of these areas.
It is important that we start planning for 2015 as soon as possible. We have a new deadline for the work program of July 2015. So we definitely don’t have any time to lose.
Ambassador Fried as the chair of the General Council will also be moving straight away to take forward the decisions which come under the regular bodies of the General Council. Indeed, he told me a moment ago that he will be convening a meeting of the chairs of the regular bodies next week.
So all of this work is back on track.
On Public Stockholding, we are committed to following an accelerated timeframe.
I trust that members will now deliver this commitment and work constructively together towards finding a permanent solution. We have a target date to conclude the negotiations: December 2015. So again, we don’t have any time to lose.
On Trade Facilitation, adopting the Protocol of Amendment was an essential step. It allows the process of implementation to begin. But this is just one of many steps we need to take going forward.
It is very positive that we have already received 50 Category A notifications, including the first from an LDC member. This is a large proportion of the potential total given that developed members are not eligible as they don’t submit these notifications.
Now all members must work closely with their capitals to begin the process of ratification. Two thirds of members must deposit their instruments of acceptance for the agreement to come into force.
So I urge you to push forward the ratification process in your capitals.
The adoption of the protocol is also significant because – I am very pleased to say – it means that the Trade Facilitation Agreement Facility is now officially operational.
I want to thank the many donor members and Annex D organizations who have shown strong support for the Facility.
We will be giving the Secretariat resources to ensure that the Facility is a success, but for this initiative to thrive and succeed, it will need buy-in from all of us.
Since its launch in July, many members have already expressed their willingness to make contributions to the Facility.
I ask members to further strengthen their bilateral programs, but I also ask them to provide all the support they can to the Facility. We must ensure that LDCs and developing countries get the help they need to reap the full benefits of the Trade Facilitation Agreement.
Through the Facility we will continue to work closely with other organizations such as the World Bank, the WCO, UNCTAD, the OECD, the ITC and others.
Many developing country members have already benefitted from assistance programs provided by these organisations, and I encourage this work to continue alongside, and in support of, the Facility.
So there is a lot of work ahead to honour what we have decided here today.
We have just two weeks until the December meeting of the General Council.
Let’s make the most of the momentum that we have today and use these next two weeks to plan our way forward.
I will be travelling over the next few days: attending the East African Community summit in Nairobi, conducting a bilateral visit in Dar es Salaam, and taking part in the African Union trade ministers meeting in Addis Ababa.
And, as I have set out, there will be a range of meetings going on here in Geneva during this period.
We should aim, by the time of the General Council on the 10th of December, to have a clear sense of what lies ahead – and a plan for taking our work forward in the New Year.
We have delivered today on a promise we made in Bali.
Now let’s make it count.
Thank you all.
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Transfer Pricing in Mining – An African Perspective
A briefing note Transfer pricing in mining: An African Perspective, has been published by IM4DC, the World Bank (WBG) and the Centre for Exploration Targeting (CET) at The University of Western Australia. The report highlights the objectives, methodology and current progress of a study on transfer pricing with specific focus on mining in Africa.
The study was commissioned in early 2014 by the WBG and IM4DC, with the research being co-ordinated and technically led by CET. Reviews commissioned by the WBG of the mining taxation policy and administrative procedures of a number of mineral-rich African countries have identified a strong need for a study focusing specifically on the administration of transfer pricing in the African mining sector.
The results of this transfer pricing study, to be published in a source book jointly by the WBG, IM4DC and CET in 2015, will complement the economy-wide work being undertaken on transfer pricing by the WBG and others such as the G20, OECD and the United Nations. In particular, the source book will provide practical guidance on transfer pricing in the sector to tax practitioners in mineral-rich developing countries in Africa and elsewhere.
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Regional Cotton Centre in Pipeline
Tanzania and Brazil are finalising the establishment of the regional cotton centre at Ukiriguru in Mwanza Region to improve seedling and train farmers on better farming technology to enhance productivity and quality of cotton. Ukiriguru Agriculture Research Institute is one of the oldest research station and the main cotton research centre that has been assisted by the overseas development agency since 1976.
The Brazilian Ambassador to Tanzania Mr Francisco said on Wednesday in Dar Es Salaam at a press briefing on the workshop to share Brazillian experience on conservation agriculture and food security solutions.
"The establishment of the cotton centre is one of the main priority areas of cooperation between the two countries,"he said, adding that the technical team from Brazil will sooner or later arrive in the country to finalize some logistics for the establishment of the centre. Mr Luiz said the deal for the establishment of around 6 million US dollars of the cotton centre is expected to be signed in June next year.
Other countries that will be served by the cotton centre include Kenya and Burundi to begin with and later Uganda, Democratic Republic of Congo (DRC), Zambia and South Sudan.
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Minister Rob Davies: Media briefing on State visit by President Jacob Zuma to the People’s Republic of China
The President of the Republic of South Africa Mr Jacob Zuma and the President of the People’s Republic of China Mr Xi Jingpin will meet next month in Beijing, China, and exchange views strengthening bilateral trade and investment relations between the two countries.
The total trade between South Africa and China experienced an upward trajectory since 2008, growing from R121 billion to R271 billion by the end of 2013. Since 2009, China has been our number one trading partner globally and in Asia. However, the trade balance has been in favour of China since 2008 due to the composition of trade between the two countries where South Africa exports primary products and commodities to China, whilst importing manufactured and high-tech products from China.
The composition of trade remains a concern for South Africa and there are measures underway to increase South Africa’s exports of manufactured products to China, such as the SA expo in China held annually since 2011. China has also undertaken to support South African initiatives aimed at promoting value-added products in China, including encouraging procurement missions to visit South Africa and source value added products starting from 2015.
With regard to investment, a total of 11 South African companies are investing in China with a capital expenditure of R51.8 billion between January 2003 and September 2014, and are investing in a range of sectors such as consumer products, industrial machinery, minerals, business services, chemicals to name but a few. A total of 39 Chinese companies are investing in South Africa with a capital expenditure of R14.7 billion between January 2003 and September 2014. Chinese investments are mainly in automotive (FAW), metals (Sinosteel), building and construction sectors (Jingdong). China is also considering investing in processing of agricultural products (i.e. macadamia nuts and soya beans).
South Africa sees value in enhancing its relations with China so as to take advantage of new trade and investment opportunities in rapidly growing emerging markets. The two countries continue to work together to further South-to-South cooperation and tackle global challenges both within BRICS and on the multilateral front.
On Human Resource Development, China will continue to provide capacity building to South African experts in the field of Special Economic Zones (SEZs), Clothing and Textiles, and young entrepreneurs.
A South Africa-China Business Forum will be held on 5 December 2014. Approximately 100 South African companies operating in sectors such as finance, infrastructure, energy, manufacturing and mining and capital equipment will participate. It is expected that approximately 150 Chinese enterprises will attend the Business Forum. The Business Forum will be utilised as a platform for engagement between the South African and Chinese business entities to deliberate on issues related to cooperation in the following sectors: finance, energy, manufacturing and mining and capital equipment. The expectation is that numerous deals will be concluded as a result of the interaction at the afore-mentioned platform.
The State visit is taking place after the dti organised our yearly South Africa Expos in China last month in Hong Kong, Shenzhen, Chengdu, Shanghai and Beijing. The Expos are amongst others aimed to:
- raise the profile of and improve an understanding and appreciation of South Africa in China
- establish balanced bilateral trade and investment flows
- cultivate an environment that creates multi-sectoral relations towards realising our goals identified in our bilateral agreements and
- promote engagements with Two-Tier provinces with the aim of enhancing economic growth.
In order to successfully achieve this task, we organised more than 50 South African companies in the Mining and Metals beneficiation, Capital equipment, ICT & Electronics, Agro-processing and Automotives and components to participate in the exhibitions. The event also aimed to attract foreign direct investment in the following sectors: Mining and beneficiation, renewable energy, Infrastructure, Oil and gas, ICT and Electronics, Capital projects, Transport as well as Agro processing.
According to report back questionnaires received from participants, on the spot export sales generated at the event were approximately R1.2 million. Collective expected future sales as a result of participation and trade leads are expected to surpass R380 million. Trade leads received by participants during the Showcase were 330.
Beside government to government MoUs, several commercial MoUs are expected to be signed at the Business Forum focusing amongst others on media, banking, and technology. The signing of the agreements will strengthen the trade and investment bilateral relationship between South Africa and the People’s Republic of China.
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Zimbabwe: 2015 Budget Statement
The Minister of Finance and Economic Development, Hon. P.A. Chinamasa presented the 2015 National Budget on 27 November 2014. The 2015 National Budget, which is under the theme “Towards an Empowered Society and Inclusive Economic Growth”.
Growth in Zimbabwe’s economy is expected to pick up slightly to 3.2 percent next year from an estimated 3.1 percent in 2014, while inflation should remain subdued, Finance Minister Patrick Chinamasa said on Thursday.
Presenting his 2015 budget to lawmakers, Chinamasa said low global commodity prices, a liquidity crunch in the financial sector, low domestic savings and lack of investment were responsible for weak growth.
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Museveni adds voice to Uganda’s push for full trade access to Kenya
President Yoweri Museveni on Wednesday sided with Uganda businessmen accusing Kenya of blocking their products from accessing the Kenyan market.
Addressing the public during the launch of Hudani Manji Ltd, a chicken farm plant in Semuto Nakaseke District, about 50km from Kampala, President Museveni said refusal by Kenyan officials to allow Uganda goods into the country was in contravention of the East Africa Community protocol.
He said he would petition President Uhuru Kenyatta on the issue.
“We buy a lot of goods from Kenya. Some of those Kenya officials are ‘narrow-minded’. They wanted to block our sugar. Now they have gone for our chicken. If I say no more Kenya products to Uganda, they will be forced to buy,” President Museveni said.
“I shall sort it out with President Uhuru Kenyatta,” he added. Two weeks ago, the Uganda Sugar Manufacturers Association accused Kenya of selectively blocking export of sugar, demanding full access to the market.
“…sugar from other countries in SADC and Comesa who are not in the East African Community enters Kenya with ease. The Uganda sugar industry would want to know why,” Uganda Sugar Manufacturers Association chairman Jim Kabeho was quoted saying.
President Museveni reacted after Hudani Manji Ltd chairman Alykhan Hudani complained of Kenya Revenue Authority officials blocking his firm from exporting chicken to Kenya.
“Most of our chicks are imported from Kenya, they feed on Uganda-made feed, but they do not allow us to export to Kenya. We have invested a lot of money and there is also some potential market in South Sudan. I [have previously] urged the government to negotiate on our behalf to access these markets,” Mr Hudani said.
Kenya's Largest Export Market:
Uganda was until February this year Kenya’s largest export market. However, by July 2014, Tanzania had edged past Uganda as Kenya’s largest export market in East Africa due to ongoing elimination of non-tariff barriers and increasing local production in Uganda of goods that were previously imported. Uganda has traditionally been Kenya’s top trading partner in the region, but recent data from the Kenya National Bureau of Statistics rank the country third, with Tanzania coming second. Uganda was overtaken by the US in June as the leading export destination for Kenyan goods. The report showed that the US imported goods from Kenya worth Sh3.7 billion ($41.8 million) in June, followed by Tanzania at Sh2.8 billion ($31.6 million) and Uganda at Sh2.5 billion ($28.3 million).
“We broke ground in November 2011 and 18 months later, the integrated operation consisting of a broiler farm, feed mill and abattoir was commissioned,” Mr Hudani noted.
He added: “In the next three years, we hope to open three more firms for us to realise profits.”
Mr Hudani said they decided to invest in poultry industry because of high local demand and lack of reliable supply. “The sector consists of small suppliers with unreliable supply chains that frustrate both wholesale and retail customers,” he said. About 300 jobs have been created since the chicken plant was established.
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‘Harmonising standards key to development’
The Zambian Government says there is need for stakeholders to acknowledge the role that harmonisation standards play in the socio-economic development of any country. Ministry of Commerce, Trade and Industry permanent secretary Siazongo Siakalenge said the participation of stakeholders in the Southern African Development Community (SADC) region to harmonise standards of trade and services will enhance activities.
Mr Siakalenge said it is important for the region to maintain harmonised standards in a transparent manner through the application of the Southern African Development Community Cooperation in Standardisation (SADCSTAN) harmonisation procedure for the benefit of all SADC member states.
“The Zambian government continues to be committed to the SADC protocol on trade and is positive that the recently amended technical barriers to trade annex to the protocol will enhance the operations of the SADC standardisation, quality assurance, accreditation and metrology structures which is aimed at fostering the liberalisation of intra-region trades in goods and services in the region,” he said.
Mr Siakalenge said this in a speech read for him by Ministry of Commerce, Trade and Industry director department of industry Tobias Mulimbika at the SADCSTAN training workshop on standards harmonisation procedure and the development of technical committee business plans organised by the Zambia Bureau of Standards yesterday.The workshop has attracted over 20 delegates from SADC member states, representatives from the SADC secretariat and the African Organisation for Standardisation.
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The East African Community consultative meeting on the CFTA/BIAT
Background
In January 2012, the African Union Summit of Heads of States and Government approved an Action Plan for Boosting Intra-African trade and the establishment of a Continental Free Trade Area (CFTA) by an indicative date of 2017. According to the approved Road Map, during the period 2012 to 2014, the Regional Economic Communities that are recognised by the African Union are supposed to ensure the effective implementation of regional free trade agreements. During this period, it is expected that COMESA, EAC and SADC will conclude negotiations for the Tripartite Free Trade Area (TFTA) by the year 2014. ECOWAS, ECCAS, AMU, IGAD and CEN-SAD are encouraged to ensure that their regional free trade areas are working effectively and to prepare to engage for negotiations that are scheduled to take place starting from 2015.
As part of the preparations for the CFTA negotiations, the African Union Commission is partnering with the EAC Secretariat and UNECA in organising the EAC Consultative Meeting on the CFTA. Issues to be discussed in the meeting include the current state of trade liberalisation in EAC, Implementation Strategy for Boosting Intra Africa Trade, studies on the trade potential of the CFTA, Principles Guiding the Negotiations for the CFTA, Institutional Arrangements for the Negotiation of the CFTA, technical issues on the CFTA and private sector views on the CFTA.
The Consultative Meeting will be attended by Member Sates of EAC; Burundi, Kenya, Rwanda, Tanzania and Uganda on 27-28 November 2014. The East African Business Council will also be invited to attend the meeting. UNECA and AfDB will also attend the Meetings as members of the AUC-UNECA-AfDB Joint Secretariat.
The Objectives:
i. To Facilitate consultations and dialogue among EAC Member States on the CFTA with a view to develop regional strategies for engagement in the CFTA Negotiations.
ii. To Prepare EAC Member States for effective engagement in CFTA negotiations.
iii. To Identify areas for capacity building at the regional and national levels.
Expected Outcome:
i. Dialogue among EAC Member States and the private sector on the CFTA and the BIAT Implementation Strategy.
ii. Initiate a process of preparations in EAC for CFTA negotiations that could lead to the development of a Draft Action Plan and Strategy taking into account the regional dynamics and realities.
iii. Identification of capacity building needs of EAC Member States and the EAC Secretariat for effective participation in CFTA negotiations and agreement on a joint resource mobilization strategy.
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WCO welcomes G20 Leaders’ Communiqué
The G20 Leaders, after their Summit in Brisbane, Australia, issued a communiqué on 16 November 2014.
The Communiqué emphasized “trade” as a powerful driver for economic growth, job creation and increased living standards, noting the importance of global supply chains linking developed and developing countries in manufacturing and trading in products. The Communiqué highlighted the importance of the WTO’s Trade Facilitation Agreement with its focus on trade facilitation as a core component of any economic growth strategy to include “reforms to facilitate trade by lowering costs, streamlining customs procedures, reducing regulatory burdens and strengthening trade-enable services”.
The Leaders agreed to refocus their efforts against cross-border tax evasion and avoidance in order to ensure “the fairness of international tax system and to secure countries’ revenue bases”, reconfirming the agreed timelines for automatic exchange of tax information between jurisdictions.
The Leaders also endorsed the 2015-2016 G20 Anti-Corruption Action Plan, which mentioned Customs as a high risk sector that could potentially impede economic growth, trade, and development.
WCO Secretary General Kunio Mikuriya welcomed the G20 Leaders’ Communiqué, noting that the economic growth strategies elaborated in it are wholly compatible with the WCO’s strategic plan, instruments and tools. He underlined the importance of several WCO initiatives, including the Economic Competitiveness Package, the Mercator Programme, and the Revenue Package, which support trade facilitation and thus economic competitiveness, and also enable Customs administrations to collect revenue in a fair and efficient manner.
Mr. Mikuriya said that Customs administrations are an important actor in the fight against cross-border tax evasion, including by leveraging exchange of information (EOI) between tax authorities and Customs administration in parallel with EOI between tax authorities.
The WCO has long been a vocal leader on promoting Integrity by all public and private sector actors at the border. Mr. Mikuriya noted the innumerable efforts made by the WCO and its Member Customs administrations to mitigate corruption through instruments and tools such as the Revised Arusha Declaration and performance measurement contracts. He emphasized the importance of streamlining Customs processes and providing automated clearance environments for all international trade stakeholders.
He welcomed continued efforts to modernize trade processes, and encouraged all stakeholders to continue supporting the WCO in its work to improve the Customs environment for the ultimate benefit of all stakeholders and as a key driver of economic growth.