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Experts call for gender-sensitive strategies ahead of post-2015 development negotiations
As Africa gears up for the post-2015 development negotiations participants attending the experts segment of the 9th Regional Review of the Beijing Declaration and Platform for Action (Beijing +20) which started on Monday in Addis Ababa, said that the transformative agenda that African governments have been planning to implement to overturn Africa’s economic fortunes has to be gender sensitive across the key sectors of the continent’s economy.
“Despite the social progress made over the last 20 years and most notably between 2009 and 2014, there has been little progress made in lifting women out of poverty,” said Thokozile Ruzvidzo, Chief of the African Center for Gender, during her keynote address to the delegates. “It is important for governments to reflect on how gender-sensitive their industrial, broad-base educational, investment and trade, as well as social services strategies are. Putting women at the center of such plans would be crucial to lifting them out of poverty,” she said.
Participants underscored that most of the gains made in women’s and girls’ rights since the holding of the International Conference on Women in Beijing in 1995 have come under various threats and are facing persistent challenges. These stem from widening inequalities between the rich and poor and between men and women due to prioritization of macroeconomic policies that are driven by growth without equitable development and respect for human rights. Also posing a threat to progress are HIV, maternal mortality and morbidity; the rise of radical and extremist groups; as well as resources for civil society and macroeconomic policies that perpetuate inequalities as noted in the NGO Forum Declaration presented to the participants on Monday morning.
The regional review aims to discuss the progress made in the field of women’s and girls’ rights 20 years since the Beijing Declaration and Platform for Action (BPfA) was adopted. BPfA is a landmark visionary roadmap for achieving gender equality and women’s empowerment as set out by governments during the Fourth World Conference on Women held in Beijing 1995. The Regional Conference ends on Wednesday 19 November with a ministerial session.
» Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Women in Africa
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Africa’s skill gap affecting economic growth
Africa’s skill gap is preventing the continent from achieving its optimum economic growth, a pan African think tank said on Thursday.
Visiting Executive Secretary of African Capacity Building Foundation (ACBF) Emmanuel Nnadozie told Xinhua in Nairobi that there is a shortage of human capacity in the areas required to accelerate economic growth.
“There is need to set up mechanisms to ensure tertiary institutions producing enough skilled personnel to meet growing demand,” Nnadozie said.
He said that non utilization of available human resources is very common in Africa as a result of poor labor market structures.
“As a result there are a lot of graduates who are not gainfully employed,” he said.
According to Nnadozie, political and social instability has contributed to brain drain in the continent.
“Many Africans are working in developed countries yet their home countries have a shortage of skilled personnel,” he said. “This is partly because governments have failed to provide adequate opportunities to citizens to contribute to economic development.”
Nnadozie added that Africa must develop despite the emerging challenges such as terrorism and disease outbreaks.
“We don’t have to wait for optimum situations to develop because the continent can capitalize on the things that are working,” he said. “The issues of development also require that nations pay attention to what other successful countries have done.”
The Harare-based ACBF is a nonprofit agency aiming to be the leading African institution in building sustainable capacity for good governance and economic transformation in Africa.
ACBF urged Africa to pursue industrialization in order to reduce dependence on agriculture and export of raw materials.
“We are committed to help governments design, implement development policies that will address challenges in terms of capacity required to reduce poverty,” Nnadozie said.
The Pan African body will also commence helping the African Union Commission to assess the capacity needs necessary for the continent to achieve economic transformation.
Nnadozie said ACBF will also carry out a comprehensive needs assessment for some of Africa’s regional economic bodies in order to assist them to develop strategies to overcome bottlenecks of integration.
Currently, 39 African states are members of the ACBF. The think tank has disbursed grants worth 500 million U.S. dollars since it was founded in 1991, out of which, Kenya has received 43.4 million dollars.
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Ebola ‘led’ to slow trade in Africa
Inadequate port infrastructure and the recent Ebola disaster are among the top hindrances to trade in Africa, with Kenya being among the affected countries.
The Pan African Association for Port Cooperation said there has been real and potential negative impact of Ebola on trade.
The disease has seen a decline in trade in the African continent, especially West Africa countries.
Speaking during the tenth PAPC conference in Kwale on 17 November 2014, the association executive secretary Michael Luguje said the impact was much felt when some countries banned vessels from Ebola-stricken countries.
The conference was opened by Kenya’s Industrialisation Cabinet Secretary Adan Mohammed.
Among countries most affected include Sierra Leone, which according to PAPC, has reported 30 per cent deflation in the economy as a result of the crisis.
“The port of Conakry in Guinea also reported a decline in port traffics for cargo and vessels in the second and third quarters of this year,” Luguje said.
He said none of the ports in the three most affected countries of Liberia, Sierra Leone and Guinea has recorded any infection of port employees or users.
Luguje urged ports Africans to increase awareness campaigns and provide support in stopping the spread of Ebola.
Systematic administrative bureaucracies that hinders trade facilitation, poor hinterland connectivity and challenges with maritime and port security have also been blamed for affecting the African maritime industry.
The association said, however, that foreign direct investments in Africa increased by 50 per cent in five years, with hotspots particularly in West Africa
Trade with Africa’s traditional partners – the European Union and the US – has also remained strong with trade flows rising from $281.6 billion (Sh25.3 trillion) to $381.1 billion (Sh34.2 trillion).
“African countries are among the fastest growing in the world with economic growth in the continent forecast at 4.8 per cent for 2013 and 5.3 per cent in 2014,” Luguje said.
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Global trade increasingly obstructed, EU Report says
The tendency to impose trade-restricting measures remains strong among the EU’s commercial partners, fuelling continuing uncertainty in the world economy. These are the main findings of the European Commission’s annual report on protectionism published today 17 November.
“I regret to see that many countries still consider protectionism a valid policy tool. This goes clearly against the G20’s commitment to abstain from imposing trade restrictions and to remove existing ones. Protectionism damages global value chains; trade openness is what we need if we are to keep the recovery going, especially in times of global economic and political instability” said Cecilia Malmström, the EU Trade Commissioner. ”As acknowledged by the Summit in Brisbane, G20 members need now to give real proof of their collective commitment to openness in trade.”
In the 13 months covered by the report, G20 members and other key EU trading partners adopted a total of 170 new trade-unfriendly measures. The countries that have adopted the most such measures were Russia, China, India and Indonesia. At the same time, only 12 pre-existing trade barriers have been removed. This means that hundreds of protectionist measures adopted since the beginning of the economic downturn continue to hamper world trade, despite the G20 commitment.
The number of measures applied at the border and quickly obstructing trade – already high last year – continued to rise, with Russia applying the highest number of individual measures affecting imports. The number of new exports restrictions has also risen, a trend that is particularly worrying. All countries depend on each other’s natural resources and such practices can have detrimental consequences for global commodity markets and value chains.
Countries also resorted more frequently to discriminatory internal taxation, technical regulations or localisation requirements to shield their markets from foreign competition. China introduced the highest number of such measures.
Investors and service providers also continue to be affected by limitations in access to foreign markets. Finally, the tendency to restrict participation of foreign companies in public tenders remains strong, in particular in the United States.
About the Report
The 11th Report on potentially trade-restrictive measures focuses on the period between 1 June 2013 and 30 June 2014 and covers 31 of EU’s main trading partners: Algeria, Argentina, Australia, Belarus, Brazil, Canada, China, Ecuador, Egypt, India, Indonesia, Japan, Kazakhstan, Malaysia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, Russia, Saudi Arabia, South Africa, South Korea, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Ukraine, USA, and Vietnam.
The European Commission publishes the report annually to take stock of compliance with the anti-protectionist commitment made by G20 countries in November 2008. The EU is firmly committed to the pledge made at that time. The report complements the findings of the 2013-2014 monitoring reports issued jointly by WTO, UNCTAD and the OECD.
The G20 Summit held on 15 and 16 November 2014 in Brisbane reaffirmed that the fight against protectionism was a core commitment of the G20.
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G20 Summit can boost African agriculture
On the 10th anniversary of the adoption of the Comprehensive Africa Agriculture Development Programme (CAADP), the African Union (AU) decided to declare 2014 as the Year of Agriculture and Food Security in Africa.
There is much to celebrate: agricultural production in Africa has risen steadily over the last 30 years and its value has almost tripled, showing an increase that exceeds the growth rate for global agricultural production over the same period – almost identical to that of South America and below but comparable to growth in Asia, based on statistics from the New Partnership for Africa’s Development (NEPAD). More than 530 million Africans depend fully or partially on agriculture for their livelihood.
Africa’s agricultural opportunities are tremendous. Beyond the political will the AU decision represents, it stems from a widespread consensus among African policymakers, scientists, the private sector, civil society and development partners that Africa can – by adopting an agenda to transform agriculture – unleash its enormous potential to end hunger, create jobs and eradicate poverty. Not only has Africa the potential to feed itself, but also to become a major food supplier for the rest of the world.
Three figures clearly show the immensity of this unrealized potential:
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Firstly, it is estimated that Africa has around 600 million hectares of uncultivated arable land – roughly 60 percent of the global total.
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Secondly, agricultural statistics indicate that 80 percent of the cultivated land in Africa is rain-fed and not irrigated.
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Thirdly, according to recent data the productivity of agriculture in Africa is as low as one third of productivity in other parts of the world.
Therefore, by developing uncultivated arable areas, relying more on irrigation, and substantially enhancing agricultural productivity in a sustainable way, Africa can make a big leap in fighting hunger, unemployment and poverty. The World Bank estimates that Africa’s market for food could be valued at more than a trillion U.S. dollars by 2030, compared to $313 billion today. The private sector has an important role to play.
Nevertheless, many impediments hamper the achievement of these goals, particularly the huge deficiencies in infrastructure, the adverse effects of climate change, the mismatch between education outputs and the needs of economies, the disconnect between the primary sector and the rest of the economy, the low coverage of extension services, and the weakness of value chains.
Overcoming these constraints calls for a new holistic approach and a newly-designed partnership among all stakeholders. The Africa 2063 Vision – a global strategy to optimize use of Africa’s resources for the benefit of all Africans – and building on the CAADP will address these challenges.
Never before has the vision for African agriculture been clearer, the objectives smarter and the tools more handy. We are really on the eve of an unprecedented transformative shift in our agriculture, in which the participation of women and youth will be enhanced and the development of science and technology and skills will be instrumental.
In its role as the current Chair of the African Union, Mauritania has the determination to contribute actively to this endeavour. On the infrastructure side we have launched a “gas to power” regional project that will make it possible to generate electricity from a gas field in Mauritania and dispatch part of the production to the neighbouring countries of Senegal and Mali.
Furthermore, to enhance agricultural productivity in Africa, we are working on the development of a project that will leverage Mauritania’s abundant phosphate and gas resources to provide affordable and accessible fertilizers to farmers.
The launch of the Global Infrastructure Hub at the G20 Leaders’ Summit in Brisbane in the coming days should contribute to this agenda. The summit is an ideal occasion for developed countries and emerging economies to reaffirm their commitment to Africa’s transformation agenda and to give material backing to their support by fostering investments in Africa, improving global agriculture policy and strengthening global governance in agriculture, while sharing knowledge and developing skills.
The host country, Australia with its pioneering agricultural tradition and as one of the world’s most successful agricultural nations, is an inspiring example for Africa. Africa welcomes enhanced cooperation with Australia and other G20 countries to modernize its agriculture for the benefit of all.
Mohamed Ould Abdel Aziz is President of Mauritania and Chair of the African Union.
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Africa mulls over setting up giant co-operative bank
African governments are working towards establishing an association of regional co-operative banks that will represent the continent’s interests in the global financial sector as well as provide credit to saccos.
The proposed organisation is expected to strengthen the co-operative movement, which has been praised for boosting socio-economic development across the continent.
Speaking during the 11th International Co-operative Alliance Africa regional assembly on Monday, leaders drawn from across the continent said there is need to consolidate resources and strengthen the ability to address financial needs of citizens.
The association is modelled around the European Association of Co-operative Banks and is expected to be in place by 2016.
“Members will register their own co-operative banks that will then form a federation. The federation will get surplus funds that it will lend to the saccos when they run out of cash,” alliance president Stanley Muchiri said.
According to the group, Kenya has the biggest co-operative movement on the continent and is ranked seventh globally.
The country has offered consultancy services and expert training to several states such as South Sudan and Zimbabwe on varied issues related to co-operatives.
Co-op Bank owns 49 per cent of the co-operative bank in south Sudan, with the other 51 per cent owned by the state on behalf of the societies in that country.
RECORDED IMMENSE GROWTH
Other countries including Nigeria, Uganda, Tanzania and Namibia have also recorded immense growth in their local movements.
International Co-operative Alliance president Dame Pauline Green said the movement holds great hope for lifting many out of poverty.
“The co-operative movement is growing hugely and there is a renaissance among the youth. This is a model that cannot be overlooked.
“Africa should intensify its quest for the co-operative model of development. We shall engage the G20 meeting that decides on global economy when they meet in Australia,” she said.
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African countries ‘avoid SA’s costly ports’
There is a strong push on the continent to avoid South African ports and “lesson dependence” on the country, Africa Project Access MD Paul Runge said.
The move is driven by economic reasons and not political reasons, he said at the Africa on Track 2014 Summit in Johannesburg on Thursday.
SA’s port charges are among the highest in the world. A study by the regulator found tariffs for the port of Durban to be 874% above the global average for containers.
But if the government’s R1bn port tariff rebate is taken into consideration the tariffs decline to 721%.
A recent World Bank report on SA said lower port charges would improve competitiveness and encourage growth of small and medium-size exporters.
Mr Runge said it is cheaper to move goods through ports such as Maputo than Richards Bay in Kwa-Zulu Natal. But he said Richards Bay would be a good base port for the gas discoveries in the Southern African region.
Mr Runge said it would therefore make sense for Richards Bay to have a regional focus, like the port in Saldanha, as opposed to having only a domestic focus.
International Chamber of Commerce director Patrick Corbin said SA’s ports were very expensive and often had delays. He said the percentage of goods being moved by rail instead of road had declined to 20% from 60%.
He said the investment in the extension of ports should rather be put towards developing an efficient rail system and inland ports.
Mr Corbin, who is also former president of the Johannesburg Chamber of Commerce and Industry, said the chamber was working closely with the United Nations on the Amalty programme to develop the 16 landlocked countries in Africa. Six of the countries are in the Southern African Development Community. The programme emphasises inland ports, which would also decrease transport costs, Mr Corbin said.
Last year the Ports Regulator of SA rejected the Transnet National Ports Authority’s tariff application for this year, blocking plans by the ports operator to boost revenue from bulk commodity exports to make up for cuts to charges on containers moving through the ports, and motor vehicle exports.
In 2012 President Jacob Zuma created a R1bn fund to provide relief for local exporters of manufactured goods after complaints from port users about Transnet’s high tariffs.
The Development Bank of Southern Africa is looking to invest in new ports being built in Africa. The bank’s investment in rail infrastructure is increasing, international division senior investment officer Stephan Bolling said.
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Sino-Africa cooperation brings more “made-in-Africa” goods
Every morning, more than three thousand workers in uniform do morning exercises before taking their places on a leather shoe production line.
As the largest shoemaker and a sizable job creator in Ethiopia, the factory, with investment and management by a private Chinese company, is part of the next wave of Chinese investment in Africa.
“When the plant opened in 2012, hundreds of locals queued in long lines to apply for jobs there. The sight was indeed a spectacle,” said Liu Guijin, former Special Representative of the Chinese Government on African Affairs on the Fifth Roundtable Conference on China-Africa Cooperation (FRCCC) held from Thursday to Saturday in south China’s Hainan Province.
China needs a new market to absorb its industrial overcapacity in the manufacturing sector, and Africa needs more labor-intensive projects to boost employment, Liu added.
JOB CREATION
China’s investment in Africa is no longer limited to natural resource exploration and infrastructure construction. More labor-intensive manufacturing enterprises are looking to the vast continent, which is eager for job opportunities.
Africa has a vast number of youth population, with over 200 million young people between the ages of 15 and 24 residing on the continent. However, about 60 percent of Africa’s unemployed are young people.
“History has taught us that many ‘tiger’ and ‘dragon’ countries have achieved economic prosperity, and hence minimized unemployment problems through industrialization. I feel Africa has no need to invent the wheel. It should follow the same route that others have passed,” said Amb. Seif Ali Iddi, the second vice president of Zanzibar, at the conference.
He added that he hopes China will shift more labor-intensive manufacturing industries to Africa to accelerate industrialization.
According to the Ministry of Commerce, there are over 2,500 Chinese firms operating in Africa. Hisense started manufacturing TVs and refrigerators in South Africa last year and Huawei and ZTE are rolling out base stations across Africa.
CAPACITY TRANSFER
The world’s second-largest economy, under pressure to upgrade its industries and facilitate economic restructuring, is increasingly eying the overseas market for solutions. More and more firms attached to China’s past three decades of growth will be looking to diversify into new markets such as Africa.
These construction companies, engineering firms, machinery exporters, and other Chinese firms that have built up scale and competitive advantages in building infrastructure will need to export capacity, find new opportunities, profits, and job creation. Africa is a key partner in this process, said Clive Tasker, CEO of the Standard Advisory (China) Ltd.
Tasker said that promoting the development of labor-intensive and manufacturing initiatives will be a key part of Sino-African ties over the next decade.
State-owned enterprises once led the wave of Chinese money flowing abroad, but now nearly half of China’s total outbound foreign direct investment (FDI) into Africa is from smaller private sector players. Meanwhile, Chinese individuals are pursuing their own enterprises in wholesale and retail trade, restaurants and manufacturing.
NO EASY MONEY
Despite the lure of low labor costs, the efficiency of African labor often lags behind other developing countries. According to a World Bank report, a Chinese worker can produce 4.5 chairs per day and a Vietnamese worker produces 1.9 chairs, while an Ethiopian worker can only produce 0.3 chairs.
Meanwhile, an unstable political environment, poor infrastructure and unsound legal system may also hinder Chinese enterprises’ ambitions to strike it rich in Africa, said Liu Guijin.
China Development Bank set up the China-Africa Development Fund (CAD fund) in 2007 to facilitate Chinese investments in Africa.
It is important that China-Africa Development Fund provisions be used diligently using a real market-based approach, said Julio Morais, Ambassador of Cape Verde in China.
Investment should cater to different African countries’ development priorities and focus more on technology transfer, local added-value and job creation, Morais added.
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European Union hesitates to import Kenya’s produce even as GMO war rages
Last week’s promise by members of the European Union (EU) that they would allow genetically modified foods from Kenya into their region may have been premature, with the European Parliament taking a new vote on Tuesday.
The new vote will give EU individual states the power to limit cultivation or importation of the controversial GM crops into their territory even if they have been approved by the 28-nation bloc.
Intense pressure
Last Friday, Dominique Davoux on behalf of the head of the European delegation to Kenya Briet Lodewijk, had said such crops would be welcome in the EU region provided they met the necessary requirements.
Lodewjik was recanting a statement he had made in June warning Kenyan farmers that the union would not allow GMO exports into the region.
But the new vote removes the decision making from the commission, meaning Kenya or any other country will have to engage with individual’s EU states, many of them opposed to GMOs.
Lodewijk’s retraction followed a five-month period of intense pressure from American-funded pro- GMO groups that saw them petition the EU headquarters in Brussels, Belgium.
The ambassador’s problems started in June when, in a local morning TV show, he warned that the EU would not accept GMO products from Kenya or from anywhere else in the region.
This prompted the International Service for the Acquisition of Agri-Biotech Applications (ISAAA) to lead a delegation to the EU headquarters in Belgium to petition that Lodewijk be made to retract the statement.
ISAAA, an International NGO, has three centres globally in Kenya, the Philippines and the ISAAA Ameri Centre located in New York, which serves as the global administrative and financial headquarters of the agency.
It is funded by the Americans through USAID, private seed giants of Monsanto, Bayer CropScience, Sygenta, Pioneer Hi-Bred, two European banks and a host of other sources.
Spill-over media
The delegation, according to a statement released by ISAAA Nairobi, was led by its director Dr Margret Karembu. Others were MPs Kareke Mbiuki, Florence Mutua and Pukose Satia.
The statement says the team had expressed their concerns to the EU Chief Scientific Advisor Prof Anne Glover over Ambassador Lodewijk’s comments.
The delegation seems to have won then, with Lodewijk calling them for a meeting last month that was also attended by Dr Wilson Songa, the Principal Secretary in the Ministry of Industrialisation.
“The way forward is for the ambassador to participate in a press conference where the same media house that aired the statement plus the spill-over media especially vernacular radio stations that aired the story would have an opportunity to develop a factual story on the same,” says the statement.
However, the ambassador seems to have managed to partially wriggle out of the trap at the last minute, choosing to be represented at the press conference last Friday by one of his officers, Mr Dominique Davoux.
Davoux said his boss had been quoted out of context and Kenya’s exports would be welcome into the region if they met set standards. The lobbyists also wanted the ban on GMO importation lifted against the advice of a Government task force, which has concluded that the country lacks a competent mechanism to regulate GMO products.
The task force led by Prof Kihumbu Thairu, a board member at the Kenya Medical Research Institute, concluded there is inadequate data to prove that indeed GMOs are safe for human consumption. But this may be just about to change.
An international group with backing from Russia, the US and Europe is planning what will be the longest, largest and most definitive study of GMOs to date to try to settle the debate once and for all.
Security reasons
The group is planning a $25 million study that will involve 6,000 rats to be fed on GMO maize to understand their health consequences on animals. A statement from the study called Factor GMO says preparatory work started early this year and full experimentation will begin in 2015 and will last two to three years.
“The study will take place at undisclosed locations in Western Europe and Russia. The exact locations of the study must be kept confidential for security reasons.”
The organisers say the study will answer questions like those which led Kenya to ban the importation of GMOs in 2012. These include whether GMO food causes cancer, damages internal organs such as kidneys, causes birth defects and/or reduces fertility.
The organisers promise to provide a full list of funders at the start of the experimental phase in 2015. “Factor GMO has not and will not accept funds from the industry that manufactures GM crops and their associated pesticides.”
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Red tape chokes port growth, says minister
Inefficiency in most African seaports is to blame for the lacklustre economic performance of such countries.
Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed cited capacity constraints, undeveloped skills and security concerns as some of the impediments to development.
“Social and economic implications of epidemics such as HIV/Aids, Ebola, unstable political systems and technology are setbacks in the continent,” he said.
Mr Mohamed was speaking on Monday at the opening of the 10th Pan African Ports Cooperation meeting in Kwale County.
He called for an integrated approach in planning and execution of port and other infrastructural developments to spur not only economic but also social growth.
To address Africa’s maritime challenges, Mr Mohamed said, inter-agency collaboration at national levels as well as enhanced cross-border and sub-regional cooperation could lead to sustainable development and competitiveness.
“The cost of doing business in Africa is directly determined by the state of infrastructure. Transport system inter-connectivity on the continent is still poor and this cannot improve unless governments integrate it in their investment plans,” he said.
REGIONAL ECONOMIC BLOCS
To address the challenges, Mr Mohamed said, African countries were grouping into regional economic blocs to plan and execute infrastructural developments jointly.
Earlier, Kenya Ports Authority managing director Gichiri Ndua said that through sharing experiences, African ports could collectively deal with the challenges.
“We have seen ports within the continent work closely in a number of issues, especially in training and exchange of useful data, which have gone a long way in improving their efficiencies,” he said.
Kwale County Governor Salim Mvurya said ports had played a pivotal role in the economic growth of the developed world.
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Developing countries opting for social protection over fiscal consolidation – UN report
While the majority of countries around the world are expected to cut public expenditures in 2015 and beyond, others will be moving in the opposite direction to expand social protection measures, says a new policy paper released by the International Labour Organization (ILO) on 17 November 2014.
According to the ILO’s Social protection global policy trends 2010-2015, 120 countries will be slashing public expenditure in 2015. Of these, 86 are developing countries and the overall number is expected to rise to 131 countries in 2016.
But while many countries are making cuts to public expenditure, most middle-income countries are boldly expanding their social protection systems, with immediate impacts on reducing poverty and inequalities, thereby contributing to their domestic demand-led growth strategies.
“This presents a powerful development lesson,” Isabel Ortiz, Director of the ILO Social Protection Department said on 17 November 2014. “As this study shows, even in the poorest countries there are options available to expand fiscal space for social protection.”
Indeed, countries like Argentina and South Africa have introduced universal child benefits in recent years. Bolivia, Botswana, Brazil, China, Maldives, Namibia, Panama, South Africa, Swaziland and Timor-Leste have achieved universal or nearly universal coverage of pensions.
Many others have introduced social transfers for the unemployed, mothers, children and older persons. Some lower-income countries have also extended social protection mainly through narrowly targeted temporary safety nets with very low benefit levels.
The worldwide trends towards fiscal consolidation can be expected to aggravate the employment crisis and inequality trends, the report says.
“In many countries, policy responses to the global crisis have been taken behind closed doors, as technocratic solutions with limited or no consultation. This has often resulted in a lack of public ownership, civil unrest and adverse socio-economic impacts,” Ms. Ortiz said.
In Europe, these measures have contributed to increases in poverty or social exclusion, now affecting 123 million or 24 per cent of the population of the European Union.
And in developing countries that are not investing in social protection, adjustment measures are expected to negatively affect millions of households that have been coping with fewer and lower-paying job opportunities, higher food and fuel costs, and reduced access to public services.
The ILO paper – launched ahead of the meeting of Economic and Social Councils in Seoul, South Korea – shows that in the first phase of the crisis (2008-09), fiscal stimulus plans were launched in about 50 countries and social protection played a strong role in the response.
However, in the second phase of the crisis (2010 onwards), many governments in Europe and elsewhere embarked on fiscal consolidation and premature contraction of expenditures.
A fifth of countries are undergoing what is known as excessive fiscal contraction, meaning they are cutting public expenditures below pre-crisis levels. These include countries with major development challenges such as Eritrea, Sudan, Yemen, Sri Lanka, Ethiopia, Nigeria, Guinea-Bissau and Guatemala.
These measures include the elimination or reduction of food and fuel subsidies; cuts or caps on the wage bill, including for health and social care workers; narrower targeting of social protection benefits; and reforms of pension and health care systems.
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Building for development: Could infrastructure draw unexpected investors to Africa?
Only one out of every 40 dollars of foreign direct investment (FDI) since the 1990s has gone to Sub-Saharan Africa. This is dwarfed by the one out of every eight dollars that went to Latin America and the Caribbean, or the more impressive one out of every four dollars invested in Asian countries. Yet recent studies point to increasing levels of investor interest in African countries. In the last decade, the continent has experienced a notable expansion in the level of FDI inflows, which in 2012 were almost as high as Net Official Development Assistance levels. International investors seem to be noticing the opportunities offered by a rapidly expanding African market.
FDI and Development Assistance to Sub-Saharan Africa
Source: Authors’ calculations based on World Development Indicators
In an effort to boost trade and investment relations between Africa and the United States, President Barack Obama this summer hosted the first-ever US-Africa Summit in Washington, D.C. The meeting resulted in $33 billion of public and private commitments to expand trade and investment in the African continent. Remarkably, US companies accounted for half of these pledges, including commitments by General Electric, Blackstone Group (in a joint deal with the Nigerian firm Dangote Industries) and the Carlyle Group to invest in energy infrastructure and to complement the $300 million per year announced by President Obama for the expansion of his administration’s energy initiative, Power Africa. The World Bank and the government of Sweden announced an additional $6 billion in support for enhanced access to electricity in Africa.
This is good news for Africa. FDI inflows will undoubtedly contribute to the technological development, industrial diversification, and economic growth of host countries. And the specific target of these investments – infrastructure – is particularly heartening. The state of Africa’s infrastructure is an important constraint to the continent’s economic development.
Experts, including those at the African Union and the World Bank, have argued that an insufficient supply of electricity and the poor quality of highways, railways and other transport infrastructure – as well as outdated information and communication technologies – severely limit the productivity of firms and hinder intra-regional trade. Expanding and upgrading transportation and other trade-related infrastructure, therefore, will contribute to the longstanding goal of achieving trade and economic integration in Africa.
In addition, the announced pledges by U.S. companies promise to “crowd in” more direct investment not only from other developed economies, such as the EU and Japan, but also from large emerging economies. Indeed, transnational corporations from emerging economies, and in particular, from the BRICS (Brazil, Russia, India, China and South Africa) have become an increasingly important source of FDI inflows to the African continent. In 2010, the share of BRICS in FDI inward flows to Africa reached 25 percent, while their share in FDI stock was 14 percent. A significant proportion of this investment is in manufacturing and services, with only 26% of the value of FDI projects from BRICS countries being in the natural-resource-related sectors.
Investors from emerging markets have much to gain from enhanced infrastructure in Africa, as we show in our forthcoming book, “New Voices in Investment,” co-authored with Thomas Kenyon, Yotam Margalit and Jose Guilherme Reis. When we asked investors and potential investors from Brazil, India, Korea and South Africa what their main motivation was for investing in Africa, the majority said “accessing new markets.” Not only do they look at the size of the domestic host markets, but also at opportunities for gaining access to larger regional markets through trade. Infrastructure, given its importance in facilitating both foreign trade and in-country commerce, will be key for these companies.
Moreover, our analysis shows that firms that invest in Africa tend to be more internationalized and trade-dependent than those that don’t. For these trade-reliant firms to better tap into the potential of regional and domestic markets, they need the right transport and logistics infrastructure to reduce trade costs. Here lies an important complementarity between investment in infrastructure and more FDI.
Our study suggests that there is scope for increasing the attractiveness of the African market to both potential investors and to firms that, until now, haven’t considered cross-border investment. Less than 10 percent of the 713 companies included in the sample had investments in an African country. When asked about the specific factors discouraging them from investing in Africa, firms in our sample identified “inadequate infrastructure and logistics” as one of their top concerns. For almost 20 percent of respondents, the quality of roads, railways and other transport infrastructure, the limited availability of electricity, and deficient telecommunications infrastructure were the main constraints to investing in the African continent. In addition, 31 percent of respondents said that insecurity, institutional weakness, absence of political stability and problems with the rule of law were the main constraints to investing in an African country.
Obstacles to Investment in Africa
Note: This chart is based on firms that identified obstacles related to Africa-specific conditions (Total is 145 firms).
Source: Authors’ calculations based on Potential Investors’ Survey.
African countries are at a crossroads, with unprecedented chances for accelerating growth and development and upgrading their production and export baskets. Attracting high-quality foreign financing is crucial for these purposes. Policymakers should be ready to bring in the new players in the market for FDI: investors from emerging markets. To do so, a first step is to ensure that the announced boost in infrastructure investment materializes.
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Region starts realising benefits from Single Customs Territory
A surge in fuel imports and increased Customs revenues are the results of the rollout of the Single Customs Territory in February, reflecting the benefits of reduced trade barriers. However, the depreciation of the Uganda shilling has denied consumers price discounts.
Reduced turnaround times on the movement of fuel, cement and clinker, wheat, used clothes and beverages have spurred significant growth in import volumes.
“This Customs arrangement offers local businesses huge benefits in moving goods and raw materials across borders at a lower cost.
“But some of these cost savings have been eroded by the depreciation of the Uganda shilling against the dollar, and this has constrained local businesses from passing on new cost benefits realised in the Customs value chain,” said Richard Kamajugo Uganda Revenue Authority’s Commissioner for Customs.
The Uganda shilling fell by 2.9 per cent against the dollar during the first quarter of 2014/15.
Results from a survey conducted jointly by the Uganda Revenue Authority and the Rwanda Revenue Authority show that the average time spent clearing and transporting cargo from Mombasa to Kampala dropped from 18 days, two hours and 27 minutes to an average of four days and 15 hours after implementation of the Single Customs Territory system.
Similarly, clearance and transportation of cargo from Mombasa to Kigali dropped from an estimated 21 days to an average of five days and two hours.
The cost of transporting goods from Mombasa to Kigali decreased from an average of $5,200 to $4,200 per trip, and the number of trips made by cargo trucks between Kigali and the Hima border post rose from an average of four to eight per month.
The survey, compiled in August, covered 26 importers, 10 transporters, 25 clearing firms and 40 drivers based in Uganda and Rwanda.
The SCT system includes the use of pre-arrival declaration forms, reduction of multiple Customs declaration requirements by about 90 per cent, single declarations for bulk purchases such as fuel products and cement, payment of certain fees in the country of destination, and the introduction of a single regional bond that offers high cost savings to importers by replacing multiple guarantee bonds.
The latest figures on Uganda’s fuel imports between February and October show a substantial increase in volumes and Customs revenues. Total fuel volumes grew from 1.09 billion litres between February and October 2013, to 1,24 litres recorded in the same period this year, URA statistics show, representing a growth of 13.6 per cent over 12 months.
Petrol imports rose by 19.5 per cent to 503 million litres between February and October 2014, and diesel imports increased by 10.9 per cent to 569 million litres over the same period.
The high growth posted by fuel imports boosted Customs revenues during the first four months of 2014/15. International trade taxes grossed Ush1.38 trillion ($502 million) between July and October 2014, an increase of 19.6 per cent from the same period in 2013.
Whereas increased import volumes are good for revenue collections, observers claim that the smoother trade rules could spell doom for local sectors that are less competitive than their foreign peers.
Through faster inflows of cheap high quality goods, particularly consumer items, Ugandan firms producing similar products at a higher cost could be forced out of the market.
“Huge growth in import volumes tied to the Single Customs Territory has boosted tax revenues, and indirect losses attributed to this regime can be mitigated through strong export numbers in some sectors. For example, local cement producers have increased exports to neighbouring markets like the Democratic Republic of Congo, which could reverse trade-related economic losses over the medium term,” said Stephen Magera, URA’s Assistant Commissioner for Trade.
Other trade experts also say growth in the manufacturing sector could overturn economic losses.
“Fuel consignments take a shorter time because several trucks are consolidated into a single batch instead of clearing them separately. This has directly reduced the number of fuel shortages experienced,” said Moses Sabiiti, programme manager at TradeMark East Africa.
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DG Azevêdo urges rapid action on Bali Issues
Director-General Roberto Azevêdo on 16 November 2014 welcomed the strong commitment from G-20 Leaders to implement all elements of the Bali Package including preparing as quickly as possible a WTO work programme on the remaining issues of the Doha Development Agenda.
The Director-General also took advantage of the G-20 Summit to thank Indian Prime Minister Narendra Modi and US President Barack Obama for their leadership in reaching an understanding on two of the Bali Decisions: Trade Facilitation and Public Stockholding for Food Security Purposes. This understanding, which now needs to be discussed with all WTO members, was welcomed by G-20 Leaders as an important step in efforts to resolve the impasse which has paralyzed all multilateral negotiations in the WTO since July.
The Director-General said:
“We must now hold consultations in Geneva to ensure that this bilateral breakthrough helps to build consensus among all WTO members. This will help us get back on track so we can immediately start implementing all Bali Decisions and resume our talks on the post-Bali Work Programme. I urged the G-20 leaders in Brisbane, as I will urge all other WTO members in Geneva, to act with a sense of urgency and in strong support for the swift and full implementation of all elements of the Bali package.
“I also spoke to G-20 Leaders about another critical bilateral breakthrough in recent days between China and the US on the expansion of the WTO Information Technology Agreement. Once finalized by all participants, the agreement will cover up to $1.4 trillion in trade in information technology products that were not covered in the initial ITA deal implemented in 1997. Expansion of the ITA would be the first tariff reducing WTO agreement in 17 years – and it would benefit all WTO members.”
“If we can formalize both breakthroughs in Geneva in the next few weeks, then 2014 will have been a very good year indeed for the WTO and for multilateralism. It would provide a glimpse of what the WTO can do to support jobs, growth and development in the global economy.”
The Director-General is cutting short his current overseas travel so that he can return to Geneva in the coming days to begin immediate consultations with WTO Members aimed at translating this important new momentum into outcomes that can get the Bali package back on track.
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Informal Meeting of BRICS Leaders on the occasion of the G20 Summit in Brisbane
The BRICS Leaders met on 15 November 2014 on the occasion of the G20 Summit in Brisbane.
The Leaders commended Brazil for the successful Sixth BRICS Summit and noted progress in the implementation of the Fortaleza Action Plan.
They underscored that the signing of the agreements establishing the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) brought BRICS cooperation to a fundamentally new level with the creation of instruments to contribute to the stability of the international financial system. They expressed their commitment towards the expeditious ratification of both instruments.
The Leaders were informed about the progress in implementation of the Work Plan for the establishment of the NDB. They asked their Finance Ministers to designate the President and the Vice-Presidents of the NDB well in advance of the next BRICS Summit in Russia. The Leaders also announced the setting up of an Interim Board of Directors that will lead the next phase establishing the NDB.
The Leaders asked their Finance Ministers and Central Bank Governors to ensure that, by the next BRICS Summit, the CRA Working Group concludes the procedural rules and operational guidelines of the Governing Council and the Standing Committee of the CRA. They also asked their Central Bank Governors to ensure that the Inter-Central Bank Agreement foreseen in the CRA be concluded by the Summit in Russia.
The Leaders exchanged views and shared their perspectives on the main issues on the G20 Summit agenda as well as the expected outcomes, including measures to promote growth and job creation; investment and infrastructure; trade; strengthening of the financial system and cooperation on tax matters; and energy issues. They reaffirmed their willingness to work with other G20 members for a successful Summit in Brisbane.
As to the world economy, six years after the beginning of the international financial crisis, the Leaders noted that a strong and long-lasting recovery is yet to materialize. Emerging market economies have been contributing to global economic activity by sustaining high growth rates, despite adverse circumstances and spill-overs from policies of major advanced economies, especially monetary policies. The Leaders noted the G20 efforts, but underscored that more needs to be done to support global demand in the short-run, especially by advanced economies, and to promote an increase in investment and long-run growth potential. They underscored that investment and economic reforms are critically important to boosting demand and lifting long-term growth. Emerging market economies remain in general well prepared to face external shocks.
The Leaders also reaffirmed their disappointment and serious concern at the non-implementation of the 2010 IMF reforms, and its impact on the Fund’s legitimacy and credibility. Undue delays in ratifying the 2010 agreement are in contradiction with joint commitments by the G20 Leaders since 2009. In the event that the United States fails to ratify the 2010 reforms by the year-end, they called on the G20 to schedule a discussion of the options for next steps that the IMF has committed to present in January 2015. They also emphasized the need to continue the IMF reform processes.
Deeply concerned with the Ebola epidemic and its severe economic and social impact, the Leaders expressed their commitment to work with the international community in the response to this epidemic and supported efforts made by the United Nations and its agencies, including the World Health Organization, as well as other institutions.
As agreed at the Fortaleza Summit, the Leaders reaffirmed their commitment to reinforce full-fledged intra-BRICS cooperation, in the spirit of openness and inclusiveness particularly in the economic and financial domains and look forward to the formulation of a long-term economic cooperation framework to forge closer BRICS partnership.
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G-20 countries have political responsibility to tackle world’s greatest challenges – Ban
With the planet and its people facing serious security, developmental and environmental challenges, G20 countries possess not only the political power to set us on a better course, but a political responsibility to do so, United Nations Secretary-General Ban Ki-moon said on 15 November 2014 in Brisbane, Australia.
Speaking to reporters at a press conference on the margins of the G20 Summit, Mr. Ban highlighted the need for global action in three critical areas namely promoting inclusive growth and decent jobs, meeting the climate challenge and providing financing for sustainable development.
The determination of the G20 to raise growth by more than 2 per cent in the next five years is a step in the right direction. But the quality of growth is just as important as its quantity, the UN Chief said.
We must pursue an agenda that advances sustainability, addresses inequalities and generates decent jobs, especially for young people, he added.
On climate change, he commended the recent announcement by the United States and China of their post-2020 climate action, which comes on the heels of Europe's decision on emission reduction targets.
As the transition towards a low-carbon, climate-resilient future accelerates, other leaders and major economies, especially among the G20, should come forward with contributions that will sustain momentum.
The world also looks to the G20 to lead on climate finance, Mr. Ban told reporters as he urged G20 countries to make ambitious pledges towards the capitalization of the Green Climate Fund at next week's pledging conference in Berlin.
We must act quickly and decisively if we want to avoid increasingly destructive outcomes but we also have the means to limit climate change and build a better future, the UN Chief emphasized.
Growth and sustainable development agendas depend on financing public, private, domestic and international. Hence, the G20 must continue efforts to reform the global financial system, strengthen tax systems, fight corruption and reaffirm their commitment to meeting the target of 0.7 per cent of gross national income for official development assistance.
Turning to the Ebola epidemic, Mr. Ban stressed the need to intensify the international response in West Africa and also thanked front-line health-workers and countries that are making life-saving contributions. He commended Australia for being one of the first to contribute to the United Nations trust fund set up to combat Ebola in West Africa.
The rate of new cases is showing signs of slowing in some of the hardest-hit parts of Liberia, Guinea and Sierra Leone. But as rates decline in one area, they are rising in others. Transmission continues to outpace the response, Mr. Ban warned.
He urged the G-20 to step up efforts to meet the 70/70 goal: isolating and treating 70 per cent of all Ebola cases and providing safe and dignified burials to 70 per cent of those who have died.
Equally important is addressing the secondary impacts on healthcare, education and soaring food prices caused by a disruption in farming that could provoke a major food crisis.
On the war in Syria, he said the protracted conflict continues to destabilize the region and cause immense humanitarian suffering. In Syria, Iraq and northern Nigeria, extremist groups control territory larger than that of many countries.
Unilateral steps are making a solution to the Palestinian-Israeli conflict seem more elusive than ever. And in the heart of Europe, the Ukraine conflict has raised fear of Cold War-style divisions that can impede collective efforts to solve problems.
Across these arcs of crisis, we need more determined steps to end grave abuses of human rights, resolve the conflicts and address the underlying sources of instability, Mr. Ban said.
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B20 welcomes G20 commitments to accelerate growth, create jobs
The B20 has welcomed G20 commitments to implement an ambitious structural reform agenda which will lift global GDP by more than two per cent above expectations over the next five years and create millions of new jobs.
Mr Richard Goyder AO, B20 Chair, said the international business community welcomed commitments made by G20 leaders in the communiqué and Brisbane Action Plan on infrastructure, human capital, financial regulation, trade and anti-corruption.
“The willingness of G20 countries to include structural reforms in their growth plans reflects calls from the business community for governments to create a conducive environment for businesses to invest and create jobs,” Mr Goyder said.
“But to ensure the full benefit to our communities, the focus must now turn to implementation. G20 countries need to hold each other to account and ensure their growth strategies are delivered.
“Only bold reform and timely implementation will drive growth and deliver better living standards and quality jobs for people across the world.”
Over the weekend, the B20 delegation impressed upon G20 leaders the importance of adopting growth-enhancing measures in their individual country growth plans, and the contribution B20 proposals could make.
Mr Goyder said the business community fully supports the G20 Global Infrastructure Initiative, a multi-year work program to lift quality public and private infrastructure investment, particularly the establishment of the Global Infrastructure Hub.
“The Global Infrastructure Initiative is a critical step in addressing the global growth and employment challenge and the business community strongly endorses the commitments of the G20 to increase quality investment in infrastructure,” Mr Goyder said.
“The establishment of the Global Infrastructure Hub will foster collaboration between governments, the private sector, institutional investors, development banks and other institutions.
There is also strong support for the Initiative from the Multilateral Development Banks and the International Monetary Fund (IMF) and we welcome their commitment to collaborate with the Hub.
“The B20 estimates that improving project preparation, structuring and delivery could increase infrastructure capacity by ~$20 trillion by 2030. The Global Infrastructure Hub could facilitate an estimated $2 trillion in additional capacity, and drive an additional $600 billion of economic activity and 10 million jobs per annum by 2030.
“The business community will look to be heavily involved in supporting the operations and projects of the Hub through involvement in the Hub's multi-stakeholder activities and by contributing project funding and expertise.
“On trade, we welcome the G20’s commitments to build a stronger trading system, based on a robust and effective World Trade Organisation (WTO).
“Accelerating commitments on trade facilitation was a core recommendation of the B20 this year. We welcome the breakthrough on the Bali Trade Facilitation Agreement which will deliver benefits to developed and developing countries alike. Just as important is the commitment to maintaining the standstill on protectionism.
“Improvements to global supply chains and the reforms outlined in individual country growth strategies to facilitate trade by lowering costs, streamlining customs procedures, reducing regulatory burdens and strengthening trade-enabling services will benefit society broadly – by reducing the cost of goods and transport, minimising food wastage and increasing trade.”
Mr Robert Milliner, B20 Sherpa, said the B20 supported G20 actions to address unemployment, raise participation and create quality jobs and welcomed the target to reduce the gender gap by 25 per cent by 2025.
“The G20 Employment Plans need to be implemented including specific measures to reduce global unemployment, particularly youth unemployment,” Mr Milliner said. “We must ensure that workforces are appropriately skilled and have the capability, flexibility, adaptability and mobility within and across labour markets to respond to our rapidly changing global landscapes.”
On the global financial regulatory agenda, the G20 Finance Ministers and Central Bank Governors made some substantial commitments in September.
“They agreed to resolve the treatment of globally systemically important banks, and welcomed the Financial Stability Board’s commitment to deliver the remaining core elements of its shadow banking framework, report systematically on the implementation and effects of its regulations and to better represent emerging market economies in its rule-making.
“We welcome the leaders’ endorsement of these commitments and will continue to work closely with the G20 to ensure this momentum continues into next year.”
Mr Milliner said the B20 was encouraged by the G20’s commitment to improve transparency in the public and private sectors as corruption is a major obstacle to sustainable economic, political and social development.
“We are encouraged by the commitments to a coordinated approach to beneficial ownership regulation, which will greatly assist legitimate companies to help governments tackle corruption.”
Mr Goyder congratulated the G20 under the leadership of Prime Minister Abbott and Treasurer Hockey for their work to address the core impediments to economic growth and said the G20 has taken a substantial step forward on a number of critical issues.
“The final communiqué and the degree to which it reflects B20 proposals reinforces our belief that business and government share common thinking about the economic challenges and the best ways to address them.
“We also acknowledge the significant commitments by the G20 to address other major global challenges.
“The G20 has made considerable progress this year and made a number of important commitments that will stimulate global economic growth and job creation. The focus must now be firmly on implementation to ensure communities realise the benefits of these commitments.
“If G20 governments implement their respective individual country growth plans and meet their commitments, business will play its part by investing and creating jobs,” Mr Goyder said.
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Report: Services sector excels in GDP
The services sector’s contribution to the Gross Domestic Product (GDP) in Tanzania is greater than that of other segments of the economy, including agriculture since 1998, a new report shows.
The Tanzania Services Sector 2013 report says the services sector and agriculture contributed 48 per cent and 27 per cent to the GDP respectively.
Based on the report, the services sector is growing faster than others, a trend predicted to continue. In 2012, the sector expanded by eight per cent, twice as fast as agriculture.
The report says Tanzania ranks among 20 fastest-developing countries in the world. Over the past two decades, the growth indicators have outpaced Tanzania’s neighbours and most sub-Saharan Africa countries.
The country currently enjoys the second biggest growth rate in the region.
Now stakeholders in the country’s services sector say there is a need to put in place a services platform to coordinate and represent their interests at national and regional levels.
The platform is expected to ensure regulatory and enabling environment as well as engage and participate effectively in consultations for negotiations affecting the sector at both levels.
A consultative meeting on the formation of a platform for Tanzanian traders in services was held in Dar es Salaam on Friday.
Speaking during the meeting, the permanent secretary in the Ministry of Industry and Trade Musa Uledi said there is an urgent need for developing a competitive services sector in Tanzania.
Referring to the October 4-5 steering committee meeting, he said it was agreed to set up a formal organization of services sector stakeholders.
“The meeting recommended the need to establish a services platform under the Tanzania Private Sector Foundation (TPSF) to leverage on the recognition, networks and influence of TPSF as the apex private sector study in Tanzania,” he said.
According to Uledi the meeting considered preliminary strategic issues on how to operationalize the platform. “Among these were the proposed mission and vision of the platform and the need to hold a stakeholders meeting to agree on the structure of the platform,” he added.
The platform is expected to be a tool for private sector as well as improve the sector through innovative ideas.
For his part, TPSF Chairman of Policy and Advocacy Committee Gideon Kaunda said despite Tanzania succeeding in various services sectors, providers must create applicable strategies to make needed improvements.
For instance, he said the hotel and tourism sector in Tanzania lags behind because the country has few or lacks reputable universities with curricula to pursue the studies.
Source: Statistical Abstract 2013 (Tanzania National Bureau of Statistics)
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Regional value chains to accelerate the diversification and sophistication of North African economies
The integration of developing countries in world trade happens increasingly through their participation in global value chains (GVCs). However access to GVCs involves many prerequisites, including logistics, institutional and legal environment, which require significant investment both in human and finance, and active public policies in this area. Moreover, even when integrated into the GVCs, many developing countries remain confined in the low value added parts of the GVCs, due to technical constraints, but also because of their non-participation in decision-making and strategic dimensions of products distributions through GVCs. The example of the textile industry in some North African countries is a very good illustration. One way to overcome this double constraint for countries in North Africa is to develop cooperatively Regional Value Chains (RVCs) that will create new dynamic comparative advantages and better overcome the inherent constraints of GVCs, and accelerate the strategic diversification and sophistication of their economies.
Indeed, until the 2000s, the North African countries have not implemented appropriate strategies to organize and plan a diversification that has usually remained the result of the efforts of the private sector focused on labor-intensive activities. Indeed, few countries have accompanied these diversification efforts through active public policies, especially in the field of finance, research, access to external markets, or the integration of global value chains. Furthermore, the competitive advantage of the North African countries in terms of cost and labor has gradually eroded with social changes and the strengthening of the middle class resulting in an increase in the cost of labor. This competitive advantage has also weakened due to the liberalization of international trade with the advent of the WTO and the gradual displacement of the center of gravity of the global economy from Europe to East Asia.
In the 2000s, the North African countries, aware of the importance of industrialization for the development of their societies, registered to an industrial modernization process at different levels. Some countries in the region have developed policy instruments which include the development of multisectoral industrial strategies in the medium and long term, as well as the establishment of Special Economic Zones. The different national strategies aimed to place the countries of the region in the process of global industrial production and take advantage of the international value chains.
However, this national based approach is constrained by the size of the economies of the region and their weak capacity to integrate the most profitable segments of GVCs. It also ignores the territorial dimension of development and barely exploits the potential of an integrated approach to development in the North African region. Indeed, the low level of trade integration in North Africa, coupled with the relatively significant infrastructure development, suggests significant potential for development of RVCs.
Therefore, it is necessary to better prioritize different aspects of RVCs in North Africa in order to establish a concrete strategy for the development of RVCs in the region and also between North Africa and its immediate neighbor, West Africa. Many lessons could be learned from other regional experiences on the continent or elsewhere in the world.
A clear diagnosis of the area was developed by the ECA in this regard:
(i) Industrialization is central to fostering effective structural transformation in North Africa,
(ii) the countries of the sub region are only marginally active in world trade, they are hampered by growing structural deficits, in large part as a result of limited diversification of their production systems, and they face many challenges requiring stronger and more sustainable and inclusive growth;
(iii) the participation of countries in world trade increasingly takes place within global value chains and access to these chains involves many prerequisites, particularly in terms of logistics and the institutional and legal environment, which requires significant human, financial and public policy investments;
(iv) regional trade makes up only 4.8 per cent of overall North African trade and the share of manufactured goods in trade flows is falling,
(v) the development of regional value chains can be an important lever for addressing challenges through:
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accelerating the sophistication and diversification of economies,
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promoting the development of new dynamic comparative advantages and,
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facilitating participation in higher added-value segments of global value chains.
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By bringing together experts around two events on this issue (expert meeting on 19-20 and academic colloquium on 20-22 November 2014) the ECA North Africa office is to deepen the analysis and promote knowledge generation of to:
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identify the growth sectors in RVCs by “mapping” the strengths and comparative advantages of each country in the sub region and identifying the levers and challenges to be overcome in order to set in motion truly effective regional cooperation;
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adopt a systematic approach that will establish priorities between the various value chains; to identify the various actors and their linkages and interactions; to analyze the technological capabilities and economic performance; and to formulate a strategy for the upgrading of selected value chains, while considering the regulatory and institutional dimensions;
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develop partnerships between ECA and other international and regional organizations in order to improve the availability of statistical information and to increase the real impact of efforts to create and manage knowledge and formulate programmes and projects that will conduct to sustainable positive impact on the transformative agenda that ECA is promoting in the sub-region.
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APEC summit advocates for free trade
The week-long APEC Economic Leaders’ Meeting ended at Yanqi Lake on Tuesday with the leaders of the 21 APEC member economies issuing the 22nd APEC Economic Leaders’ Meeting Declaration – Beijing Agenda for an Integrated, Innovative and Interconnected Asia-Pacific.
Yanqi Lake lies at the foot of Yan Mountain in the Huairou District, some 60 kilometres north of Central Beijing.
The declaration was accompanied by four annexes: the Beijing Roadmap for APEC’s Contribution to the realisation of the Free Trade Area of the Asia-Pacific (FTAAP), APEC Strategic Blueprint for Promoting Global Value Chain Development and Cooperation, APEC Accord on Innovative Development, Economic Reform and Growth and lastly the APEC Connectivity Blueprint for 2015-2025.
It outlines new far-reaching measures for advancing regional economic integration as well as promoting innovative development, growth and economic reform and strengthening comprehensive connectivity and infrastructure development, with a view of expanding and deepening regional economic cooperation, as well as achieving stability, peace, development and common prosperity of the Asia-Pacific region.
Ministers and senior officials from 21 APEC member economies have been meeting in Beijing since last week to take forward a series of new measures to reinvigorate trade, productivity and sustainable development, intent on delivering the next generation of Asia-Pacific growth needed to boost prosperity across the region and ensure global economic recovery.
The leaders of the various countries only joined the meeting on Monday and Tuesday to endorse what the ministers and senior officials had proposed.
The 2014 APEC Economic Leaders’ Week, which was hosted by China and chaired by President Xi Jinping, commenced on Wednesday 5 November under the theme “Shaping the Future Through Asia-Pacific Partnership” and it coincided with the 25th anniversary of APEC’s founding.
On Sunday, President Xi Jinping offered the Asia-Pacific region a vision of a Chinese-driven “Asia-Pacific dream”. Speaking at the China National Convention Centre on Sunday morning, Xi said, “We have the responsibility to create and realise an Asia-Pacific dream for the people of the region.”
During this year’s APEC, the main focus was deepening regional economic integration, promoting economic reform and innovative development, and building infrastructure investment and comprehensive connectivity.
With the current, global economic recovery still facing many unstable and uncertain factors, Xi said that they should promote regional economic integration further and create a pattern of opening up that is very conducive to long-term development. Xi said, “We should vigorously promote the Asia-Pacific Free Trade Zone, setting the goal, direction and roadmap and turn the vision into reality as soon as possible.”
Xi urged members to fast-track talks on a trade liberalisation framework called the Free Trade Area of the Asia Pacific (FTAAP) that is being driven by Beijing to be realised sooner. However, APEC had approved work towards the establishment of FTAAP, which, according to Xi, was a “historic step”.
Injecting energy towards the APEC goal of an FTAAP, a comprehensive free trade agreement to build on emerging regional undertakings such as the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, is among the priorities.
Guided by President Xi, leaders assembled for the 22nd APEC Economic Leaders’ Meeting on 10 and 11 November to chart the roadmap for achieving an FTAAP.
APEC currently has 21 members, including most countries with a coastline on the Pacific Ocean. However, the criterion for membership is that the member is a separate economy, rather than a state. As a result, APEC uses the term member economies rather than member countries to refer to its members. One result of this criterion is that membership to the forum includes Taiwan (officially the Republic of China, participating under the name “Chinese Taipei”) alongside People’s Republic of China, as well as Hong Kong, which entered APEC as a British colony but it is now a Special Administrative Region of the People’s Republic of China. APEC also includes three official observers: ASEAN, the Pacific Islands Forum and the Pacific Economic Cooperation Council.
The Philippines will chair APEC in 2015 and host the 23rd APEC Economic Leaders’ Meeting.