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Climate Change Conference kicks off in Dar es Salaam
Some of the world’s leading experts on Climate Change have joined the country’s decision makers and opinion leaders gathered today in Tanzania’s business capital to participate in a major two-day conference to deliberate on climate resilient economic growth.
Under President Kikwete’s leadership, Tanzania has been playing a leading role globally in defining the regional climate change agenda, and the country has recently consolidated its position with the 2013 adoption of the National Climate Change Strategy and the Zanzibar Climate Change Strategy in addition to other key interventions such as the 2014 Agriculture Climate Resilience Plan.
Coming on the heels of the New York Climate Summit in September and just prior to the next round of global climate negotiations, which will be held in Lima this December, the goal of the Dar es Salaam conference is to fast-track action on climate change here at home at all levels of society. The conference has attracted more than 140 participants including key decision makers, thought leaders, and innovators from around the world who will discuss and propose practical actions on what needs to be done to position Tanzania’s policies, plans, and investments towards an inclusive, resilient growth trajectory.
“This conference is a great opportunity for dialogue on how Tanzania’s development pathway can flourish despite the changing climate,” says Philippe Dongier, the World Bank Country Director for Tanzania. “It is tempting to imagine that we are located remotely from the climate change phenomenon but this is erroneous. Climate change will affect all Tanzanians – be they in the growing urban areas, where populations are expected to triple by 2030, and climate-related flooding is expected to increase; along the coast, where changing wind and temperature patterns are leading to erosion and marine impacts; or in agricultural areas where rising temperatures will affect crop survival and livelihoods.”
The poverty rate in Tanzania is currently estimated at about 28% of the population with the majority of the poor living in rural areas where they are entirely dependent on climate-dependent natural resources. As an example, agriculture, a dominant sector of the economy, generates 25% of GDP and 24% of exports and is the mainstay of 75-80% of livelihoods in the country – including the majority of the poor, who are largely smallholder farmers dependent on rainfed agriculture. Climate change is expected to result in changing weather patterns, which could have important impacts on this rainfed agriculture: rainfall decreases of 10% have been correlated with a 2% decrease in national GDP, and temperature rise of 2°C could reduce maize yields by 13% and rice by over 7%.
“Tanzania has begun to take important actions in addressing the risks associated with climate change. We are proud to be working with the Vice President’s Office Division of Environment and the UK Department for International Development in supporting this important conference, which highlights the work being done in the country and areas for future action,” said Ann Jeannette Glauber, World Bank Senior Environmental Specialist.
The conference was opened by His Excellency Dr. Mohammed Gharib Bilal, the Vice President of the United Republic of Tanzania, with closing remarks by PM Pinda and will feature several special guest speakers.
» Tanzania’s 2014-2025 Energy Reform Roadmap to Success (Africa Outlook Magazine)
» Powering Africa: Tanzania 2014 Conference (Dar es Salaam, 13-14 November 2014)
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Solid and adequate land policies, if implemented, could catalyze Africa’s transformation
The inaugural Conference on Land Policy in Africa opened Tuesday evening at the African Union Headquarters in Ethiopia with a strong call for a robust deepening of land governance on the continent and an appeal for promoting policy and regulatory environments that advance large scale agricultural production and productivity. Organized around the theme: “The next decade of land policy in Africa: Ensuring agricultural development and inclusive growth” the 11-14 November conference is in line with the 2014 African Union year of Agriculture and food security.
African Union Commissioner for Rural Economy and Agriculture, Rhoda Tumusiime, emphasized that Agriculture is still a key driver of Africa’s economic transformation, with the prime responsibility of providing employment opportunities for a rapidly growing and predominantly youth population, sustainable livelihoods and poverty reduction.
“We are proud that Africa is the only continent that has defined its own agenda for land policy. This conference is timely and allows us to track progress in the implementation of the AU declaration on land,” she said.
Ethiopian Minister of Agriculture, Mr. Tefera Debrew challenged governments on the situation of low productivity and food security in the midst of substantial land resources, stating, “it is not acceptable”. He called on AU member states to “diligently implement the African Union-led continental frameworks and guiding principles as they could reverse the situation if implemented”.
In his remarks, Stephen Karingi, Director of the Regional Integration and Trade Division at the Economic Commission for Africa (ECA) stressed the need to improve the governance of land resources on the continent. “Property rights need to be clarified, land rights of African people, including rights of women and pastoral communities need to be secured and Africa needs to enhance its land use planning and sustainable land management,” he said.
Karingi called on African governments and other institutions on the continent to promote effective and efficient land administration systems based on good governance of land resources. He cited examples from other parts of the world, where land development has allowed countries to have more productive agriculture and ensure food security and even food export.
Kafui Afiwa Kuwonu of Women in Law and Development in Africa (WILDAf) spelt out how civil society organisations intend to use the platform provided by this conference: to share experiences and to challenge policymakers, but also to inspire participants to forge ahead with implementation and to be part of the solution: “we commit to disseminate information on land policy and collaborate in efforts and to share best practices,” she promised.
Josephine Ngure, Resident Representative of the African Development Bank to Ethiopia reiterated that land policy development and accompanying policy frameworks are critical for Africa’s transformation.
“Land in Africa is not simply an economic and environmental asset but also a social, cultural, spiritual resource and a social identity.” She noted that land problems must be addressed, if sustainable development in Africa is to be realized.
For her part, Aisa Kirabo Kacyira, Deputy Executive Secretary of UN-Habitat declared, “Leadership is needed where the common good is in conflict with the private good – and land is such an area that calls for leadership.” She said that the engagements at this conference, between policy makers, practitioners, civil society and academics, are crucial for strengthening such leadership.
Ambassador Gary Quince, head of European Union Delegation to Ethiopia and to the African Union, emphasized the partnership and collaboration that has been forged between the EU and AU, with the EU now supporting land tenure programmes currently in ten countries. Quince pointed out that, since the AU Declaration was adopted five years ago, Africa has enjoyed good economic growth, and the importance of agriculture has been recognized.
She however stressed the need to look at the challenges that are emerging, such as the upsurge of conflict across Africa and the related displacement of many thousands of people from their land and livelihoods.
The conference is organized by the Land Policy initiative, a tripartite consortium comprising the United Nations Economic Commission for Africa, the African Union Commission, and the Africa Development Bank.
Background
About 60 percent of the population on the continent derive their livelihood and income from farming, livestock production, fisheries and aquaculture, agro-forestry and other agricultural related activities. Looking ahead, if Africa is to meet the challenge of feeding an additional 1.6 billion people by 2050, an integrated approach to addressing land problems, as well as other challenges that have negative impacts in the agricultural sector is essential.
The Guiding Principles on Large Scale Land Based Investment, endorsed by Heads of State in April 2014, are to be officially launched on the second day of the conference, on the morning of Wednesday 12 November 2014.
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West Africa ‘on brink’ of major food crisis in wake of Ebola outbreak – UN expert
As Ebola continues to ravage West Africa, leaving more than 4,000 people dead, the region is now on the brink of a major food crisis, the United Nations Special Rapporteur on the right to food warned on 11 November 2014.
“While the countries hardest hit by the Ebola crisis struggle to contain the devastating virus, they now face a new challenge with experts predicting that over a million people in the region need food aid to allay shortages,” Ms. Hilal Elver said in a statement.
Agriculture, the main economic activity in West Africa with two thirds of the population dependent on farming, has taken a severe toll since the Ebola outbreak hit earlier this year.
The closure of border and sea crossings, a reduction in regional trade, along with a decline in foreign investment has left regional countries in a precarious food situation and farmers in disarray.
“Farmers in West Africa have been severely affected by this crisis, with fear and panic resulting in many having abandoned their farms, this in turn has led to a disruption in food production and a soaring rise in food prices,” Ms. Elver noted.
Staple crops such as rice and maize will reportedly be scaled back due to shortages in farm labour with potential “catastrophic” effect on food security, she added.
Ms. Elver also expressed her deep concern at reports suggesting that, in some cases, communities are facing food shortages due to poor road accessibility, while others have been threatening to evade quarantine because of lack of food supplies.
“In situations where Governments have imposed quarantine on communities or requested for self-quarantine, access to food should be strictly ensured,” urged the human rights expert.
The Special Rapporteur called on the international community to do everything in its power to ensure that the already existing food shortages in these countries, are mitigated, adding that immediate measures must be taken to ensure food security to stricken communities.
Ms. Elver, a Research Professor at the University of California, Santa Barbara, was appointed Special Rapporteur on the Right to Food by the Human Rights Council in 2014.
Special Rapporteurs are part of the Special Procedures of the Human Rights Council, the largest body of independent experts in the UN Human Rights system. They are not UN staff, do not receive a salary for their work and are independent from any government or organization.
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The pros and cons of SADC Gateway Port
Namport’s prospective N$30 billion ‘SADC Gateway Port’ will have enormous economic benefits for Namibia, but there are serious social and environmental consequences to be considered.
Logistics, economic and environmental experts last Thursday at Walvis Bay presented their opinions about the benefits and impacts of such a massive project during a business breakfast hosted by the Hanns Seidel Foundation in collaboration with the Municipality of Walvis Bay, the Economic Association of Namibia (EAN) and the Namibia Institute for Democracy.
The first phase of the project is expected to start in 2015, a year ahead of schedule. The new port, which will be the size of the current Walvis Bay harbour, will be situated five kilometres north of Kuisebmond, and is aimed at catering for commodity exports and importers from landlocked SADC countries.
It will include the largest, most modern ship and rig repair yard on the west African coast. It will have one of the largest gas and oil supply bases in the region; an undercover dry bulk terminal that can handle more than 100 million tonnes per year; a large vehicle import terminal; multi-purpose and break bulk terminal; liquid bulk terminals consisting of large tank farms and tanker berths; and a container terminal believed to be able to handle two million units per year. The port will also be linked to the municipal heavy industrial area behind Dune 7 with a new road and rail, as well as conveyer system.
Clive Smith of the Walvis Bay Corridor Group said the development of logistics in Namibia was key to Vision 2030 and crucial to the development of other key economic sectors.
The new port will result in the development of several ‘super hubs’ in key locations in Namibia along the main corridors linking Namibia to its SADC neighbours. These hubs will stimulate economic activity in the various regions, mitigating rural migration of the labour force to Windhoek and the coast.
Smith admitted that there will be impacts that need planning and management.
He said there was currently 700 000 tonnes of cargo transported from Walvis Bay to the interior. This required 170 trucks daily to transport the cargo. In about ten years, this volume could increase to 4,5 million tonnes, which will require 750 trucks daily using the road infrastructure, or 15 trains per day if the railway-lines are in place.
Social economic impacts could include influx of workers to Walvis Bay that will put pressure on town services and resources, while environmental impacts will come from large-scale dredging and construction; increased vessel and cargo traffic, and industrial operations.
EAN’s Matthew Mirecki said the construction of the port will boost the procuring of goods and services from local businesses, while in the long run the port will “open business in the region”.
He said the combined GDP of landlocked SADC nations that will use the port was about N$2,36 trillion while annual exports and imports from these countries are increasing between 5 and 7%.
Mirecki suggested that there was enormous economic potential for Namibia and that Namibia’s logistics infrastructure was better than most SADC nations.
“Namibia should however not compare itself to the rest of sub-Sahara but rather to the best in the world because that is what customers will be looking at,” he said.
Namibian Coast Conservation and Management (Nacoma) project coordinator Rod Braby said the environmental impact was a concern in the light of Namibia’s aim to be Africa’s top tourism destination.
“We have the tools to do this properly, and our government wants a win-win situation, but it’s not always possible. At least we can try and mitigate the impacts,” he said.
For Namibia to be the top tourism destination, it must keep its wide open spaces, pristine environment and its unique biodiversity, Braby said.
He said the impact of dredging, construction and vessel activity could impact on aquaculture and the behaviour of marine birds and mammals, which could put a dent on marine eco-tourism.
According to him it was crucial that the monitoring of activities be done throughout the development of the port to ensure that impacts are kept to the minimum.
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Politics, not economics, is at play... Indonesia wants more trade with Namibia
Indonesia, with a GDP of over US$1.3 trillion (N$15 trillion), believes it is inconceivable that its trade with Namibia is only worth N$37 million annually.
The Asian country says its political and diplomatic ties with Namibia are excellent, but this is not reflected in the trade volumes between the two nations.
Annual trade between the two countries currently stands at US$3.3 (N$37.2 million) with Namibia importing sardines, bath soap, hand-held tractors and wooden furniture while Indonesia imports fish oil, animal skins and distillate fuel.
Lasro Simbolon, the Indonesian Director for African Affairs, visited Namibia last week accompanied by a deputy director for economic affairs and a senior mines and energy official, among other Indonesian delegates.
The visit that included Aris Munandar (foreign affairs), Laode Sulaiman (mines and energy) and Gatot Sutrisno a delegate from CV Karya Hidup Sentosa, a hand-tractor maker, lasted from last week Wednesday until Sunday.
During the stopover, the Indonesian director and his delegation conversed with foreign affairs officials and also interacted with top officials from the NCCI.
“In the ministry of foreign affairs (in Indonesia) this visit is very important on our part,” declared Simbolon.
“The purpose is to push more and more concrete cooperation. Actually we have enjoyed an excellent and cordial bilateral cooperation,” he said.
“Ours is a relationship between two special friends, it’s very historic and it has a very strong political attachment,” he said in the wide-ranging interview that took place in Windhoek.
“Already we have a number of mechanisms in place in terms of policy instruments to enhance this cooperation.”
“But we feel there is a need to push it more and more to transform these political attachments into concrete and fruitful relations in the interest of our people here in Namibia and Indonesia.”
Responding to a question regarding the fact Indonesia has a GDP of over US$1.3 trillion but its economic footprints are not present in Namibia, he responded, “…this is a question to both Indonesian authorities and Namibian authorities and I think as I said in terms of political bonds our relationship is excellent, there is strong solidarity but economically we should do more.”
“I think Namibia and Indonesia should sit together to open the existing possibilities and I think more trade missions from Namibia should visit Indonesia – of course with the endorsement and facilitation by Namibian authorities,” further elaborated Simbolon.
He said the visit could see Namibia receive its share of Indonesian investments regarding the fact that about twenty Indonesian firms have already invested in soap and detergent making and in pharmaceuticals in Nigeria.
Already, Indonesian firms capitalising on their government’s business friendly trade policies have also invested heavily in numerous businesses in South Africa, in Mozambique, in Ethiopia and in Ghana among others.
Simbolon, whose government encourages Indonesian companies “to go international and to invest all over the world,” equally exhorted the government of Namibia “…to be more proactive and approach their Indonesian counterparts to tell them to invest here.”
After the weeklong visit, Simbolon wants the two countries to blot out the existing bottlenecks and challenges prevailing in the form of tariffs and non-tariffs so that trade is enhanced “because the potential is there and I think our economies are complimentary in nature.”
One of the existing choke points regarding two-way trade, according to him regards the image of Africa with some quarter of Indonesian society still using old benchmarks to assess the image of Africa.
“The image of Africa is still very much influenced by the image of the past which is not a true representation of the Africa today. Africa has made a lot of progress in terms of stability and good governance and Africa today is rising and there are a lot of business opportunities, it is a golden continent,” Simbolon told New Era on Friday.
Apart from strengthening the existing solidarity between the two countries, Simbolon says this process is two-way “because we also learn from our partners like Namibia.”
Indonesia is renowned for high quality fabrics and it makes Batik, the shirts that assumed global prestige after the late South African leader Nelson Mandela wore them.
Indonesia is the largest producer of crude palm oil (CPO) and its derivates such as cooking oil, lotion, soap and it also produces paper and high-quality electronics.
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Chifungula keen on mining audit
Auditor General Anna Chifungula says the extent of corruption in the mining industry requires serious intervention.
In an interview following a Millennium Development Goals (MDG) report which classified Zambian copper among three other African natural resources exploited in illicit financial flows amounting to a total of 57.9 per cent, Chifungula said illegality and high rates of illicit financial flows in the extractive industry need to be curbed.
“We were told at a meeting that I attended [recently] where Zambia was given one of the worst examples where we have really been exploited; in Zambia, you will find that even the bribes that those mining companies pay to government officials are regarded as ‘administrative expenses.’ Now, if administrative expenses are paid, we should know what type of administrative expenses they [mining entities] pay,” she said.
On Friday, Parliamentary Public Accounts Committee (PAC) chairperson Vincent Mwale called for involvement of the Auditor General’s office in the mining sector to validate reports they present to the government in a bid to enhance transparency.
But Chifungula said her office requires capacity and expertise to audit the mines.
“With the help of the Extractive Industries Transparency Initiative (EITI), a number of training interventions are taking place. I have around 22 officers in the revenue department who are learning how to carry out that process. Hopefully, around April 2015, we will definitely be competent and ready to start,” she said.
Chifungula said the involvement of her office in auditing mining houses will help reduce illegality in the sector.
The MDG report identified Zambia as one of four African countries whose natural resources remain continuously exploited through illicit financial flows that end up in some of the world’s top five destinations, including China and Saudi Arabia.
Meanwhile, PF chairman for mines, Wylbur Simuusa, said in a separate interview that the involvement of the Auditor General’s office in auditing mining houses is a progressive measure capable of receiving broad political support and acceptance.
“What is clear is that there is suspicion and counter-accusation, so for me, the only thing that can clear that is an audit of the mines,” said Simuusa who is also agriculture minister and Nchanga member of parliament.
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EU asks Nigeria to sign trade deal
A delegation of the European Union, EU, to Nigeria on Tuesday appealed to the Federal Government to sign the Economic Partnership Agreement (EPA) to enhance the export of Nigerian products to Europe.
The delegation’s Public Affairs Officer, Ugo Sokari-George, made the appeal while speaking with the News Agency of Nigeria at the ongoing Lagos International Trade Fair at the Tafawa Balewa Square, TBS, Lagos.
Mrs. Sokari-George said that signing of the agreement would be of immense benefit to the nation’s economy.
The EPA is a free trade agreement between countries in the EU and developing economies in Africa and Asia.
The aim is to foster mutually beneficial trade cooperation among the member countries.
According to her, developing countries that signed the EPA are enjoying various trade preferences on exports, as offered by the EU.
“Signing the EPA implies that trade restrictions will be relaxed to accommodate export goods from Nigeria.
“As a result, the increased exports will ensure the growth of the real sector and resulting in economic growth,” she said.
Mrs. Sokari-George, however, noted that there was a need for Nigerian entrepreneurs to upgrade the quality of their products to meet international standards.
“We can only explore the openness of the EU market to develop export opportunities for standard and quality products.
“The EU is available at the trade fair to guide entrepreneurs interested in exporting their products to Europe.
“We are here (trade fair) to advise you on how to meet the necessary requirements and documentations that will facilitate exports to Europe,” she said.
The fair which started on Nov. 7 will end on Nov. 16.
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Take advantage of factoring as trade finance tool, African businesses urged
Legislators and regulators should assist African businesses to take advantage of the benefits of factoring as a trade finance instrument by creating enabling environments for the flourishing of the instrument, the African Export-Import Bank (Afreximbank) has urged.
Speaking in Lusaka Saturday, at the end of a one-day seminar on factoring organised by the Bank for legislators and regulators from southern, eastern and northern Africa, Bank’s Executive Vice President in charge of Business Development and Corporate Banking Benedict Oramah said the legislators and regulators had a critical role to play in developing appropriate enabling laws to allow factoring to flourish on the continent.
Earlier, in an opening address read by Dr. Oramah, Afreximbank President Jean-Louis Ekra had said the absence of enabling laws and regulations was an important impediment to the expansion of factoring in Africa and had significant negative implication on the ability of SMEs to participate in Africa’s gradually expanding value chain.
“If we want SMEs to form the bulwark of the new Africa we are all looking forward to, we must work towards expanding factoring in the continent,” an Afreximbank statement made available to PANA Sunday quoted Mr. Ekra as telling the participants.
According to him, the seminar was aimed at creating awareness about the impediment posed by the absence of enabling laws and regulations and at introducing lawmakers and regulators to best practices in regulating factoring business.
He said that with recent socio-economic developments, Africa was gradually becoming the next frontier for factoring business, noting that despite volumes being significantly lower than in other regions, at only 1 per cent of the global total, the volume of factoring business in Africa had risen four folds from about five billion Euros in 2000 to about 23 billion Euros in 2012.
Declaring the seminar open, Dr. Michael Gondwe, Governor of the Bank of Zambia, had said given the challenging and highly competitive global trading environment and the evolving nature of international trade finance, better use of opportunities available for factoring could be achieved through acquisition of knowledge and skills.
That would, in turn, increase Africa’s share of global factoring business and enable factors to receive the full benefits provided by factoring.
Dr. Gondwe noted that because factoring helped corporate entities and SMEs that were performing well to gain access to credit without having to offer collateral or provide security other than the receivables generated in the normal course of their business, the instrument offered solutions for unlocking economic development and supporting African SMEs operating in export value chains.
The seminar, which was attended by about 80 legislators and regulators, sought to heighten awareness about factoring in Africa and to begin the groundwork toward a facilitative legal and regulatory environment across the continent.
Factoring is a trade finance tool under which a seller assigns his receivables (invoice) on a transaction to a factor who pays him an agreed value. The factor assumes ownership of the receivables and then collects the actual payment for the service/product from the buyer.
A similar seminar for regulators and lawmakers from West and Central Africa was organised by the Bank in Nigeria's economic capital city of Lagos in June.
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EU-Africa free trade agreement ‘destroys’ development policy, says Merkel advisor
German Chancellor Angela Merkel’s Africa Commissioner, Günter Nooke issued harsh criticism of the EU’s joint free trade deal with multiple African countries, claiming the EPA counteracts Europe’s development policy efforts, EurActiv Germany reports.
“Economic negotiations should not destroy what has been built up on the other side in the Development Ministry”, the German government’s Africa Commissioner Günter Nooke commented in an interview with German public broadcaster ARD on Tuesday (4 November).
Germany and Europe contribute large sums of tax money toward various development programmes in Africa, Nooke explained, but the economic agreement with African states cancels out these efforts.
The Economic Partnership Agreement (EPA) between the EU and several African states encourages African countries to open up to 83% of their markets to European imports. Meanwhile tariffs and fees are planned to be gradually eliminated.
In exchange, African states receive customs-free access to the European market. But many African countries are still resisting the EPA, amid concerns that they might lose their competitive trade advantage opposite European companies.
Kenya is among the countries that refused to sign. In response, the EU imposed import tariffs on multiple Kenyan products effective from 1 October. Media has reported that the measure led to numerous layoffs in several African firms.
Under this pressure, Nairobi finally snapped two weeks ago, and added its signature to the trade agreement.
Andrew Mold, the UN’s economic analyst for east Africa, said he sees the African economy as being threatened by the agreement in the long-term.
“The African countries cannot compete with an economy like Germany’s. As a result, free trade and EU imports endanger existing industries, and future industries do not even materialise because they are exposed to competition from the EU,” Mold commented.
MEP Gahler: “EPA strengthens African markets”
Meanwhile, centre-right MEP Michael Gahler defended the EPA, saying it offers African countries the chance to strengthen their own markets. In addition, the Christian Democrat pointed out, the agreement plans to create “flexible mechanisms”. African governments are not obliged to implement precise requirements until after 20 years, he pointed out.
For Kenya, the agreement is an opportunity to catch up with Europe, Gahler contended at the EurActiv Workshop “Europe+Kenya” in Berlin.
“Kenya should use this time to do its homework,” Gahler said, by building up its infrastructure, strengthening the rule of law and fighting corruption.
The European Commission has emphasised that 20% of domestic African products will remain protected in the long-term. In conjunction with development aid, the EPA could help partner countries create jobs and increase political dialogue with the EU, the Commission indicated.
MEP Gahler echoed the Commission’s opinion. “We Europeans have experienced, first-hand, how much prosperity is brought on by the free movement of goods. We want to help African regions take similar steps,” the centre-right politician said.
Thanks to various foreign trade agreements, Europe’s former colonies have enjoyed preferential access to the European market for many decades. In turn, they barely had to open their own markets.
But the World Trade Organization (WTO) declared this one-sided market opening unlawful in 2000. In response, the EU concluded the Cotonou Agreement in 2007 with 79 African countries (AKP countries). Since then, Europeans have been in negotiations with Africans over the corresponding free trade agreements.
Ska Keller: “We are pointing a gun at their chest”
37 less developed countries receive customs-free access to the European market even without the free trade agreement. The EU concluded the so-called “Everything but Arms” Agreement with these states. Under the agreement, they are allowed to export all products, other than weapons, into the EU without having to pay tariffs. As a result, these countries do not face economic consequences if they choose not to join the EPA.
But according to Green MEP Ska Keller, the EPA hurts regional trade, and does not leave partner countries any room to develop their own industries, create jobs and thereby pull people out of poverty. “Developing countries have a gun pointed at their chest – either they sign or their market access to the EU is restricted,” Keller said, “the EPA is the opposite of development cooperation.”
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Time to upscale renewable energy
It is no longer a secret. The world is fast running out of traditional energy sources such as coal. Furthermore, emissions from these fossil fuels have increased climate warming and caused environmental damage.
Therefore, the global community needs to start preparing for the future by embracing the use of renewable energy services and sources.
In addition to being affordable, secure and reliable, renewable energy will not be depleted and is less polluting to the environment compared to fossil energy.
Meeting in Frankfurt, Germany for the International Conference on Solar Energy Technology in Development Cooperation, energy experts said it was time the world up-scaled the use of renewable energy sources to ensure that socio-economic development is sustained.
“To significantly decrease the greenhouse gas emissions, the only possible way is to rely on energy systems based on renewable energy sources,” Werner Weiss, managing director of the Institute for Sustainable Technologies, said.
He added that the world, particularly Africa, has an abundance of renewable energy sources, which needs to be tapped to improve access to energy for all.
According to the African Development Bank (AfDB), southern African alone has the potential to become a “gold mine” for renewable energy due to the abundant solar and wind resources that are now hugely sought after by international investors in their quest for clean energy.
For example, the overall hydropower potential in the Southern African Development Community (SADC) is estimated at about 1,080 terawatt hours per year (TWh/year) but capacity being utilised at present is just under 31 TWh/year. A terawatt is equal to one million megawatts.
The SADC region is also hugely endowed with watercourses such as the Congo and Zambezi, with the Inga Dam situated on the Congo River having the potential to produce about 40,000 megawatts (MW) of electricity, according to the Southern African Power Pol (SAPP).
With regard to geothermal, the United Nations Environment Programme (UNEP) and the Global Environment Facility estimate that about 4,000MW of electricity is available along the Rift Valley in Tanzania, Malawi and Mozambique.
Research coordinator for the Renewable Energy Policy Network for the 21st Century (REN21), Rana Adib said it was pleasing to note that Africa and most developing countries were fast embracing renewable energy.
She said exploring renewable energy sources is generally a complex and expensive process but is nevertheless important for socio-economic development.
There is, therefore, need for the private sector to partner with governments because the latter alone cannot improve access to energy.
“Partnership between the private sector and government is very critical in increasing the uptake of renewable energy,” Adib said.
Other energy experts attending the conference said it was also important for Africa to craft attractive policies that lure investors into the energy sector.
These incentives include a predictable and stable regulatory environment, access to finance, as well as economic stability.
In a separate interview, Technical Advisor to the SADC Secretariat Energy Division, Wolfgang Moser said efforts are underway to establish the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE).
The proposed centre would, among other things, spearhead the promotion of renewable energy development in the region.
SACREE is expected to contribute substantially to the development of thriving regional renewable energy and energy efficiency markets through knowledge sharing and technical advice in the areas of policy and regulation, technology cooperation, capacity development, as well as investment promotion.
The International Conference on Solar Energy Technology in Development Cooperation ran from 6-7 November in Frankfurt, Germany.
A number of energy experts from Africa and other developing countries took part in the conference that aims to discuss and share knowledge and experiences on how to boost the uptake of solar energy and technologies.
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Inaugural Conference on Land Policy in Africa to be held in Addis Ababa
The inaugural Conference on Land Policy in Africa (CLPA) will be held from 11 to 14 November 2014, at the African Union Conference Center, in Addis Ababa, Ethiopia. The CLPA 2014 is organized by the Land Policy Initiative (LPI), a joint initiative of the African Union Commission (AUC), the United Nations Economic Commission for Africa (ECA), and the African Development Bank (AfDB), under the theme “The next decade of land policy in Africa: ensuring agricultural development and inclusive growth”.
The overall goal of the Conference is to strengthen advocacy for comprehensive land policy, and to deepen capacity for land policy in Africa through improved access to knowledge and information.
The CLPA is intended to have a catalytic effect in creating a platform for presenting research activities and focusing the attention of Governments, parliamentarians, farmers, researchers, civil society, private sector, land practitioners (surveyors, mapping companies, administrators), and development partners on the issues and status of land policy development and implementation in Africa.
The Conference will thus meet the need of African stakeholders for a continental platform on land, and will complement existing global initiatives. This will support evidence-based land policymaking and implementation, including showcasing emerging and promising practices, and facilitating networking among land experts and land professionals in Africa.
The Conference adopts a scientific approach to capture a broad range of emerging knowledge, and generate interest in current land policy themes from a wide range of African policy actors - within academia and beyond.
The theme of the inaugural CLPA is in support of the declaration by the Africa Union of 2014 as “Year of Agriculture and Food Security in Africa”. The Conference proceedings will focus on related specific sub-themes, including: inclusive agricultural growth; development and implementation of land governance frameworks; women’s land rights; securing land rights under different tenure regimes; emerging best practices in developing and implementing land policies; and land administration.
The Conference will bring together key stakeholders including representatives of AU Member States, development partners, private sector, civil society, regional economic communities (RECs), researchers and academia, NGOs, and agencies with an established track record of engagement with land policy issues.
The CLPA 2014 is organized by the AU-ECA-AfDB Land Policy Initiative with support of the European Union (EU), the Swiss Agency for Development and Cooperation (SDC), UN-Habitat, the Food and Agriculture Organization of the United Nations (FAO), and the Forum for Agricultural Research in Africa (FARA). The event is organized under the guidance of a Scientific Committee comprising prominent experts on land policy from Africa and other parts of the world. The Conference benefits the support of the Government of the Federal Democratic Republic of Ethiopia.
The Land Policy Initiative was established in 2006 as a joint initiative of the African Union Commission (AUC), the United Nations Economic Commission for Africa (ECA), and the African Development Bank (AfDB). To date some of the key achievements of the LPI include the development of a Framework and Guidelines on Land Policy in Africa (F&G), adopted by the African Ministers responsible for land in April 2009, and further endorsed by African Heads of State and Government through the Declaration on Land Issues and Challenges in Africa during the Thirteenth Ordinary Session of the Assembly of the African Union, in July 2009. The F&G intends to facilitate the development and implementation of national land policies that foster economic growth and secure livelihoods of African people. The LPI is currently in the second phase of its activities, which focus on assisting Member States to implement the AU Declaration on Land in accordance with the F&G.
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Development billions channelled through tax havens
Public institutions providing finance to businesses in developing countries are channelling billions of euros through secretive tax havens, a report published today (4 November) has found.
Development Finance Institutions (DFIs) in Europe and the World Bank’s lending arm, the International Finance Corporation (IFC), are playing an increasingly dominant role in funding development.
DFIs support private companies in developing countries directly by providing loans or buying shares, or indirectly by supporting financial intermediaries such as commercial banks and private equity funds, which then on-lend or invest in enterprises.
But many of the intermediaries are based in the world’s most secretive tax jurisdictions, according to the report Going Offshore, published on 4 November by the European Network on Debt and Development (Eurodad).
Report author Mathieu Vervynckt said it was strange that DFIs route so much financial support through tax havens when developing countries lose hundreds of billions of euros every year through company tax evasion and avoidance.
“DFIs are essentially providing income and legitimacy to the offshore industry,” he said.
Supporters of the use of havens argue that they have a stable legal and regulatory framework designed for financial services and that their use prevents double taxation, when income is taxed twice by two jurisdictions.
Offshore financial centres are sometimes the only feasible way for pooling much needed capital for investment in risky regions such as Africa where there are weak legal and regulatory systems, they claim.
Tax evasion by multinationals has risen up the political agenda since the financial crisis. Cash-strapped EU countries are not willing to overlook much-needed revenue lost through tax dodging.
“The current political momentum towards tax justice presents DFIs with a great opportunity to set an example of best practice in establishing the highest standards of responsible finance,” the report said.
Report findings
The report examined 14 national DFIs and three international DFIs, the European Investment Bank, the European Bank for Reconstruction and Development and the IFC.
It also compared investments to countries on the Tax Justice Network’s Financial Secrecy Index, which ranks countries according to their tax secrecy and activities.
It found that:
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By the end of 2013, two thirds of the fund investments, 118 out of 157, made by the UK’s DFI, the Commonwealth Development Corporation (CDC), were through jurisdictions in the top 20 of the index
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Between 2000 and 2013, these funds received a total of $3.8 billion (€3.04 billion) in original CDC commitments, including $553 million (€442.56 million) in 2013 alone
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Of the 46 investment projects involving German DFI Deutsche Investitions- und Entwicklungsgesellschaft, as of 31 December 2012, at least seven were structured through major tax havens such as the Cayman Islands and Mauritius
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30 of the 42 investment funds used by the Belgian Investment Company for Developing Countries were domiciled in tax havens. As of 4 June this year, the investments were worth €163 million
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By the end of 2013, Norway’s Norfund invested $339 million (€267 million) through jurisdictions on the FSI’s top 20
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Between 2009 and 2013, the IFC supported financial intermediaries registered in tax havens listed in the top 20 FSI jurisdictions listed under the FSI, to the tune of €1.7 billion.
Eurodad criticised the European Investment Bank for not disclosing the countries where the companies it invests in are domiciled. That made it very difficult to judge the extent of its use of tax havens. The EIB was asked to comment yesterday and the story will be updated once a response is received.
A spokesman for the UK’s CDC said, "Businesses we support employ over one million people in developing countries and last year paid over €2.94 billion in local taxes.
“CDC requires the businesses we invest in to pay all taxes that are due of them and avoids making investments in jurisdictions that are not compliant with the OECD’s internationally agreed standards on tax transparency.”
Call for transparency and intergovernmental tax body
The report conceded that most DFIs have standards to govern the use of tax havens but said they were not easily accessible to the public
The standards are based on the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. Many developing countries were excluded from the forum, Eurodad said, and it mostly focused on bank secrecy rather than corporate tax dodging.
The NGO called for the creation of a United Nations intergovernmental tax body to ensure developing countries can participate equally in the global reform of tax rules. This should take over from the OECD as the main forum for international tax cooperation.
Eurodad wants DFIs to ensure the funds they invest in are registered in the county of operation. They should also only back companies and funds that are willing to publicly disclose information about their owners and report back to the DFI their financial accounts on a country by country basis.
Vervynckt said, “We are urging these institutions to stop supporting companies that use tax havens and make sure that details of all operations are open to the public. It’s only right to demand that [DFIs] should be accountable to the taxpayers that pay for them and the people in the developing countries that they are supposed to help.”
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Sitharaman sees hope for trade facilitation in WTO talks
Commerce minister makes strong case for food subsidy to poor
India on Sunday exuded confidence that the current impasse over the Trade Facilitation Agreement (TFA) and food security in the World Trade Organization (WTO) would be resolved but also indicated such a resolution might not come soon as it stood firm on its stance over food subsidy to the poor.
Commerce and industry minister Nirmala Sitharaman also castigated the Bali package, signed during the previous United Progressive Alliance regime, as distorted and imperfect, hurting the sovereign rights of India to feed its poor and procure from farmers living on subsistence farming.
Addressing the India Global Forum here, she rejected suggestions given by some countries in the October talks in the WTO that a resolution to the problem be found out by some countries, leaving others.
The forum was organised by the International Institute of Strategic Studies and Observer Research Foundation.
An implementation of the TFA, as agreed in Bali, was derailed in the July talks after India asked the WTO members to also ink an agreement on food subsidies given to the poor.
“I have seen that between July and now, there is greater understanding, there is greater appreciation, and engagement with the WTO. The Prime Minister’s visit to the US gives us a feeling that the US is also greatly appreciative of what we are narrating. I hope that there will be a solution because multilateralism will have to remain sustained and be empowered,” Sitharaman said.
After July, talks in October in the General Council also failed. Now, the council will meet in December. WTO director-general Roberto Azevedo had said in October that even if an agreement on the TFA was inked tomorrow, the deadline to implement it by December can’t be met.
For any resolution of the logjam, the US and Europe would have to agree to India’s stand on food security.
“We are with you on the TFA but be sure you understand our case. Otherwise, these very economies will come back to us and lecture us that the Government of India does not take care of the starving millions. We want no such lectures. We will take care of our starving millions,” Sitharaman said.
She added that India’s demands are legitimate, requiring peace clause to be extended and then permanent solution to the food subsidies problems be found.
“Therefore, please extend the peace clause and then find a permanent solution, then make us tweak it till 2017, these are legitimate demands.”
According to the WTO’s agreed formula, food subsidies have to be capped at 10 per cent of total agriculture production at 1986-88 prices for developing countries.
The UPA government had signed the TFA in Bali under a peace clause that gave developing countries exemption from the 10 per cent until 2017. It came at a time when India has been preparing to roll out the Food Security Act, which gives cheap food to 67 per cent of the population.
“We want you to understand that let the peace clause co-exist until such time that you don’t get us a permanent solution,” Sithraman said.
Pointing out that the 10 per cent cap on subsidies is based on 1986-88 prices, she said: “Is that right? Do you agree on that? Any sensible economist would think there is something wrong here.”
The commerce and industry minister also reminded the West that it also gives food subsidy, but doesn’t call it so and doesn’t bring it on the table.
“From the Uruguay round, the subsidy to farmers being given by the United States of America or the European Union are not on the table for discussion. We are not insisting to get them on the table but let us remind the world that it is a fact.”
Sitharaman reminded the WTO that decisions have to be taken on a consensus basis. “You are not going to isolate any one decision and isolate any one country. Decisions are not about one country but all issues. This is a principle which guides the WTO. How could you then isolate trade facilitation and say all of us want that trade facilitation?”
She reminded the developed world that after getting the TFA package in Bali, it forgot about the developing world. “After having got it, would you come back to us and say our problems are taken care of. I want to address yours, which is essentially feeding the poor or procuring from the poor farmers?”
The minister said these arguments are not intended to weaken the WTO, these are arguments to remind the WTO of its own stated principles. “You will not agree on any one thing, till you agree on everything. But in Bali, we forgot that golden principle.”
The minister also asked the WTO to change the way it engages with the emerging market economies and recognise the fact that solutions to the problems in advanced world lay in the hands of the Expanded Middle East. “Concerns emerging from different parts of the world are more important now because many of the solutions with which bodies have moved all the while are now fairly jaded. Economies elsewhere provide solutions not for themselves only but also provide hope for Europe and the US.”
Azevedo recently said some members sought the implementation of the TFA as a plurilateral pact as part of the three alternatives to end the impasse over food security.
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Obama says momentum building on ‘historic’ trans-Pacific trade deal
U.S. President Barack Obama said on Monday he sees momentum building for a Washington-backed free trade agreement in the Asia-Pacific, after arriving in Beijing on the first leg of an eight-day Asia tour.
U.S officials have ruled out a major announcement on the ambitious 12-country Trans-Pacific Partnership (TPP) in Beijing, where Obama will attend the Asia-Pacific Economic Cooperation (APEC) forum and hold talks with Chinese President Xi Jinping.
But business leaders attending the APEC forum have been looking for signs of progress on the TPP, especially as China is pushing for a separate trade liberalization framework called the Free Trade Area of the Asia Pacific (FTAAP).
Obama said the TPP, in a deadlock largely due to disagreement between the United States and Japan over how widely Japan will open its doors to farm exports, had the potential to be an “historic achievement”.
“During the past few weeks our teams have made good progress in resolving several outstanding issues regarding a potential agreement. Today is an opportunity for us at the political level to break some remaining logjams,” Obama said at a meeting of TPP leaders at the U.S. embassy.
“What we are seeing is momentum building around a Trans-Pacific Partnership that can spur greater economic growth, spur greater jobs growth, set high standards for trade and investment throughout the Asia-Pacific.”
Some see a proposed study on the FTAAP plan, which will be presented to APEC leaders for approval this week, as a way to divert attention from the TPP, which excludes China.
TPP leaders said in a statement issued after the meeting that they remained open to including “other regional partners that are prepared to adopt its high standards”.
Xi said FTAAP “does not go against existing free trade arrangements which are potential pathways to realize FTAAP’s goals”, state news agency Xinhua reported.
FTAAP can be an “aggregation” of existing free trade agreements, Xi said, adding that the aim was to consolidate regional integration and define long-term goals.
In a concession by Beijing, two sources with direct knowledge of negotiations said the APEC leaders’ declaration to be issued on Tuesday had been revised to drop a deadline for the completion of FTAAP negotiations, initially set at 2025.
Also, the declaration would call for a “collective strategic study” on FTAAP to be conducted within two years instead of a “feasibility study” which would have marked the start of FTAAP negotiations, the sources told Reuters.
Asked if this was a setback for China, one source said: “It’s too strong a word. They have to compromise... find consensus. It’s part of a process.”
STRIKING A BALANCE
Obama arrived in China seeking to show renewed commitment to his administration’s much-touted strategic ”pivot” toward Asia, widely seen as an effort to counter China’s rising influence. The TPP is at the economic core of that rebalancing effort.
His challenge will be to overcome scepticism among some Asian allies as to whether the United States can fully engage with the region at a time when it is preoccupied with global crises ranging from the fight against Islamic State militants in Iraq and Syria, the spread of Ebola and the conflict in Ukraine.
At the same time, the drubbing Obama’s Democrats took in last week’s midterm congressional elections will hardly strengthen his position in talks with China or with allies in the region. Many may see him as a diminished leader on the world stage in the final two years of his presidency.
Although negotiations on the TPP have been slow-moving, one of the areas where a new Republican-controlled Congress might actually help Obama is by easing passage should a trade deal be reached.
Some trade experts note that reaching agreement before U.S. presidential electioneering picks up next summer could be crucial to avoiding U.S. domestic political hurdles.
The TPP would establish a free-trade bloc stretching from Vietnam to Chile and Japan, encompassing about 800 million people and almost 40 percent of the global economy.
Obama’s focus on Asia business ties on the first day of his visit underscored his efforts to strike a balance between seeking deeper economic cooperation with a rising China while also challenging Beijing with the U.S. pursuit of the TPP.
For his part, Obama comes to China boasting a resurgent U.S. economy. This could give him added economic clout as he attends regional summits in Beijing and Myanmar and a G20 summit in Brisbane this week, even if his political capital at home appears to have waned.
» 2014 APEC Ministerial Meeting – Joint Ministerial Statement (Beijing, 8 November 2014)
» Remarks by President Obama at APEC CEO Summit (Beijing, 10 November 2014)
ECOWAS slammed over delay in adoption of single currency
Some analysts have slammed the Economic Community of West African States (ECOWAS) for its frequent postponement of the deadline for the adoption of a single currency.
The new deadline for ECOWAS for the adoption of a common currency is 2020.
The Head of ECOWAS national unit of Ghana, Bonaventure Adjavor, disclosed this in Nigeria during a meeting of the commission on strategic planning framework for 2016-2020.
But some analyst say this is close to impossible to achieve.
ECOWAS has on six occasions postponed the deadline because member states have not been able to meet the set criteria. First it was 2000, then 2005, 2010, 2014, 2015 and now 2020.
For the single currency to be achieved there are basically four primary convergence criteria, along with six secondary ones, that need to be achieved.
The primary criteria are a single digit inflation rate at the end of each year; a fiscal deficit of no more than 4 per cent of the GDP, central bank deficit financing of not more than 10 per cent of the previous year’s tax revenues, and having gross external reserves that can give a country import cover for a minimum of three months.
Until the recent economic turbulence, Ghana for example was on course having achieved a single digit inflation for a period.
Analysts argue that the dream of having a common currency may just be a mirage.
Banking analyst with Osei Tutu II Centre for Executive Education and Research, Nana Otuo Acheampong tells Citi Business News the 2020 deadline cannot be met.
“There is little that one can make of it than just to say that it is a pie in the sky. In my recommendation, it may be difficult to meet the criteria that we set.”
According to Nana Otuo Acheampong “the four primary criteria, none of the countries involved has met any of them. Then we have got the six secondary criteria which is going to be more difficult to meet. So unless there are some revolutionary of economic policies, it is going to be difficult.”
He said if history is anything to go by, the deadline may be postponed again. “It was 2000, postponed to 2005, then 2010, to 2014, 2015 and now to 2020. Where is the political will to be able to move things in such as a way that we meet the criteria?”
Meanwhile currency analyst and Head of Research at Group Ndoum, Samuel Ampah says ECOWAS is being over ambitious with its plan. According to him, member states should work at a number of fundamental issues before.
“There are so many things that we need to build up before we start thinking about the eco. One is infrastructure. If you look at the ECOWAS countries that are trying to get the single currency, infrastructure is a big problem.”
According to him, “Two is the issue to do with manpower, we really have to build our manpower systems very well. Three, we need to make sure that we don’t have political interferences. The issue that happened to Burkina Faso is a clear indication that if we should go with the eco, we might have a problem.”
Samuel Ampah also said trade among member states must be enhanced before ECOWAS gets the common currency.
“Talking about trade, we should look at removing all the trade barriers. We have a lot of trade barriers in Africa, and that is not going to help us.”
“I believe these are the key things we should look at before we will look at getting a single currency. In the European community, they were able to work at all these, before they were able to get the Euro”, he concluded.
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EU says Yes to Kenya biotech food exports
The European Union has rescinded its earlier statement that Kenyan farmers will find it difficult to find market in the EU if the country adopts genetically modified crops.
The Head of Rural Development and Agriculture at the EU Dominique Davoux Friday said they have no problem importing GM products from countries that meet the set guidelines.
The official, who spoke on behalf of the EU Head of Delegation to Kenya, Ambassador Briet Lodewijk, said the envoy had been quoted out of context when early this year, he reportedly said the trading bloc would not accept GM products from Kenya.
“The position of EU is that we have a list of GMO products to be imported into the EU space. If Kenya contributes there, it will have access to the market,” he said during a press conference in Nairobi.
Mr Briet said the EU has authorised the importation of 58 genetically modified crops including GM maize, soya, oilseed rape, sugar beet and cotton.
Friday’s forum was organised by The Kenya University Biotechnology Consortium in collaboration with the Open Forum on Agricultural Biotechnology in Africa and the International Service for the Acquisition of Agri-biotech Applications.
The meeting was attended by researchers, policy makers, MPs the private sector.
Busia Woman Representative Florence Mutua, who last month led MPs in a fact-finding mission in Europe, urged for an unconditional lifting of the ban.
“Why are developed countries that are able to feed their people coercing us to remain backward? In Spain we met farmers growing GM maize.”
Ms Mutua said lifting the ban would open the door for the commercialisation of BT cotton, which has been proved to be several times more cost-effective than traditional cotton.
“It is illogical to associate cancer with GM technology yet there are so many Kenyans dying now of cancer yet there is no genetically modified ones in the country. Even cellphones faced opposition due to myths when they came to Kenya,” she said.
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Failed Mozambican deal hits SA firms
South African blue-chip companies have ended up on the wrong side of a soured R3.7-billion Mozambican port deal, including Esor Franki and law firm Bowman Gilfillan.
South African taxpayers also look set to lose out as the Development Bank of SA has already sunk $1.5-million into the deal to construct a port at the Pemba oilfield terminal project.
The story is that the government of Mozambique awarded a South African company, Muyake SA, the contract to build the port in 2012. Muyake set up a company called Gingone Logistics, and began working on the project.
It hired SA firms to do the work – including Johannesburg-based project managers Prop 5 Corporation, Esorfranki, NRM Consulting, Hatch Goba, DDJ Law, Bowman Gilfillan and AS Nonyane.
But Muyake then discovered that ENH Integrated Logistics had swooped in and grabbed the contract. ENH is 51% owned by Mozambique’s government. The other 49% is owned by a murky entity called Orlean Invest Nigeria, in partnership with Sonangol Integrated Logistics Services, according to the Mozambique Mining & Energy Post.
The South African firms were then booted off the project, according to a court order.
Now Muyake has filed papers in Mozambican courts demanding $143.9-million from the government, arguing that the state-owned port authority Portos De Cabo Delgado SA was reneging on an out of court deal that was agreed after Muyake discovered it had been sidelined.
According to that “settlement”, Muyake was to be included in the new concept with ENH, and refunded its costs.
Muyake’s claim includes $8.8-million for services performed in the “promotion and implementation” of the project, $25-million for services performed in line with contracts between Muyake and the South African firms, and $110-million for future profits that have now been lost.
In all, Muyake owes the other SA firms $63.2-million, of which it has already paid just more than $25-million.
Prop 5 CEO Mbali Swana says in a letter to Muyake CEO Simao Muhai dated July 25 that Muyake owes other SA firms $63.2-million but has not yet paid $36.5-million, which excludes the costs of winding up the contracts.
Said Swana: “The sudden termination of the contracts and suspension of the project has the undesired effect of terminating the cash flow provided by the Development Bank of Southern Africa. Service providers and contractors are out of pocket.”
“They have not been paid for a long period, and there is no indication that you are ready to make such payments. You have therefore left us with no option but to demand that you honour your payment obligations.”
The Development Bank of Southern Africa, which is funded by South African taxpayers’ money, released $1.5-million as a “project preparation facility” out of a total $6.6-million it had committed to give, according to a letter of demand seen by Business Times.
The project would have been a big deal for the South Africans as the port authority has a lease to run the terminals at the Bay of Pemba and in Palma for over 30 years – which is expected to become a regional hotspot for Mozambique’s booming natural gas industry.
Mozambique has one of the world’s largest natural gas reserves with 170-trillion cubic feet discovered already, while the natural gas sector is expected to attract capital inflows worth over $70-billion in the next decade, according to Esperança Bias, minister for mineral resources.
Extensive documents confirm that Muyake had got the contract, but a statement was released to the media in April saying “the licence would be issued in favour of a foreign third party with prejudice to the complainant”, Muyake said.
Swana said in an interview the business was worth $330-million, and two private equity players had been approached to take up stakes in Gingone Logistics, a special purpose vehicle, created for the project.
“In April, we suspected that something was not right,” he said. The project was stymied a month and a half from financial close.
“We never got to draw the [DBSA] loan. [The port authority] understood there was a time limit. They frustrated the project for six months from December to June,” Swana said.
But the South African companies, perhaps wary of offending a foreign government, are treading lightly. Muhai referred enquiries to Prop 5.
Bowman Gilfillan, which conducted a legal review which determined that Gingone still legally had the rights to the project, was also not keen to comment.
Anne McAllister, a director at Bowman Gillfillan, said she could not discuss client matters.
The DBSA was also initially reluctant to comment.
It has since confirmed its involvement but said less than a quarter of the approved funds were disbursed.
Its current exposure to the project was less than 0.025% of DBSA’s total assets, it said.
The DBSA had also reviewed agreements between the parties and was comfortable that Muyake was considered the preferred bidder.
But it said that the government of Mozambique held the right to award the concession to whomever. The DBSA had reviewed the settlement agreement.
“It goes without saying the costs incurred by Muyake would include the facility provided to it by the DBSA.
“The DBSA will continue to monitor this matter and seek repayment of the funds disbursed to Muyake as and when it is appropriate to do so,” the bank said.
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Kenya to sign convention that curbs tax fraud
Kenya plans to pursue individuals who use offshore companies to evade taxes and commit other economic crimes, after the government announced it will endorse an international convention that targets such offenders.
The government said the decision to sign the Organisation for Economic Co-operation and Development (OECD)-Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters is aimed at promoting transparency in tax matters.
The announcement was made at the recent 7th meeting of the Global Forum on Transparency and Exchange of Information for Purposes held in Berlin.
The meeting sanctioned the inclusion in the terms of reference of a requirement for tax authorities to maintain beneficial ownership information.
Kenya Revenue Authority Commissioner-General John Njiraini was among the officials who represented government in the meeting.
Keeping records
“The convention facilitates international co-operation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers,” Mr Njiraini said.
Keeping records of who holds beneficial interest would lift the veil on shadowy figures behind cross-owned companies that abet tax evasion and illicit activities like drug and human trafficking.
A statement from the KRA said Finance Cabinet Secretary Henry Rotich has pledged to sign the convention.
The Convention will not only make it possible to reveal the names of tax evaders, but also make it easier for the government to pursue them within and outside the country.
The agreement is the most comprehensive multilateral instrument available for all forms of co-operation to tackle tax evasion and avoidance.
Exchange of information
Mr Njiraini said Kenya has joined a continental initiative designed to create awareness among African states on the benefits of the current international co-operation on the exchange of information that would help governments to collect revenue domestically.
Kenya has in the past found it difficult to pursue offshore companies accused of involvement in questionable deals. In addition, getting information on the real owners of some holding companies doing business in the country has been difficult.
A case in point that caused controversy a few years ago is the ownership of Mobitelea Ventures, a company that previously owned 12.5 per cent of Vodafone Kenya Ltd, a 40 per cent shareholder of Kenya’s largest mobile company Safaricom.
In 2007, an investigation by a parliamentary committee failed to establish whether the Guernsey registered company’s owners included local politicians who may have used their influence to facilitate Vodafone’s original $20 million investment in Safaricom in 2000.
At the time, Vodafone refused a formal request from the parliamentary committee to reveal who owned Mobitelea, insisting that the company was its chosen partner in Kenya.
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World Bank supports new actions to improve connectivity of Land-locked Countries
Landlocked countries can improve their connectivity by strengthening cooperation with their transit neighbors and other global partners, as well as pursuing specific actions to reduce trade and transport costs while expanding broadband coverage.
This was one of the main conclusions of the Second United Nations Conference on Landlocked Developing Countries (LLDCs), hosted by the government of Austria in Vienna from November 3-5. The UN Conference also adopted a new Program of Action for LLDCs to be implemented over the next decade.
The Program of Action establishes six priorities, including:
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Fundamental transit policy issues
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Infrastructure development and maintenance
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International trade and trade facilitation
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Regional integration and cooperation
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Structural economic transformation; and
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The means of implementation
The World Bank’s delegation was led by Senior Director for Transport and ICT Global Practice, Pierre Guislain, who strongly welcomed and supported the new Program of Action for LLDCs.
“The World Bank will actively support LLDCs and their transit neighbors through programs that work towards the reduction of transport and trade costs along the main trade routes important to LLDCs,” Guislain said in a statement delivered at the plenary of the conference.
Guislain also mentioned the importance of strengthening the transport and logistics sectors by phasing out anti-competitive practices; improving intermodal connections, especially at the interface between ports and rail or roads, as well as in the aviation sector; and expanding broadband coverage.
Landlocked developing countries are home to 440 million people, but represent only about one percent of world trade, due to inherent geographic disadvantages compared to countries with seacoasts and deep-sea ports.
“Despite some gains in the past decade, these 32 countries remain marginalized in the global economy, facing costs of trade that are 70 percent higher than transit coastal countries,” Guislain explained at the conference’s plenary. “Most LLDCs are also in the ‘bottom billion’, with an average real GDP per capita of $800, compared with $2,800 for transit countries.”
In order to help address some of the challenges land-locked countries face, the World Bank Group provides more than $2 billion per year in investments and technical assistance projects. Some of these projects, for example, include major regional transport corridor programs in Central Asia or broadband fiber connectivity for landlocked countries in Africa.
In addition to funding ‘hard’ infrastructure, the Bank also works with clients on the policy interventions that underpin many of today’s LLDC success stories: from customs reform to better regulation of trucking and other transport segments.
The World Bank also encouraged landlocked and transit countries to follow the UN Broadband Commission’s recommendations, in particular the adoption of a national broadband strategy and making broadband affordable to all through adequate regulatory and market reforms.
“Allow me to reiterate our strong commitment to work with you as clients and partners of the World Bank Group towards our common goal of ending extreme poverty and bolstering shared prosperity in the landlocked developing countries of the world,” Guislain concluded.
Report: Improving Trade and Transport for Landlocked Countries
Context: The Almaty Programme of Action
Most landlocked developing countries (LLDCs) face specific constraints imposed by geography. They remain on the periphery of major markets. They exhibit lower per capita income compared to their transit neighbors, and they are usually dependent on their transit neighbors’ markets, infrastructure and institutions.
The Almaty Programme of Action, adopted by the United Nations in 2003, recognized that landlocked developing countries have specific needs in reducing their trade costs and promoting growth. The program and its implementation, including the support of international agencies like the World Bank, have been very much focused on connecting LLDCs to markets and the promotion of infrastructure complemented by “soft” investment, especially in measures facilitating trade, transportation, and transit.
This publication, Improving Trade and Transport for Landlocked Developing Countries: A Ten-Year Review, anticipates a renewal of the Programme of Action in November 2014. It reviews the progress to date of the initiative and provides an analysis of the current situation, constraints, and priorities of LLDCs. It also discusses potential solutions to reducing LLDCs’ access costs, and the contributions of the World Bank Group to that effort.
Priorities Going Forward
For the next decade, policy makers and development practitioners need to maintain focus in several areas to reduce trade costs and promote growth.
Infrastructure
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To ensure the most efficient infrastructure cost recovery and maintenance of roads, LLDCs should adopt a vignette toll system.
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For the railway system, one of the potential solutions is to connect railway infrastructure efforts with the extractive industry and require mining companies to raise capital for infrastructure buildings and maintenance. This would help LLDCs to achieve greater economies of scale.
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Scheduled maintenance is highly desirable to prevent higher costs of deferring repairs.
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It is important to explore innovative means to mobilize additional funds to build and maintain existing transport infrastructure, e.g. concessions or cross-border investment packages. Overall, LLDCs should make investments only when traffic is expected to achieve economies of scale to cover the operating costs.
Trade Facilitation
Despite significant progresses in trade facilitation, many challenges remain, especially in better integrating border management and facilitation of procedures beyond customs (interventions of other control agencies). The Bali Trade Facilitation Agreement offers help to LLDCs that rely on transit through third countries to access ports. However, it offers only a partial solution because its main focus is limited to customs administration, use of an IT system, and access to information. The Bali TF Agreement describes some aspects of the governance mechanism including establishment of a new Trade Facilitation Committee and possible subsidiary institutions, but much of it still needs to be finalized. The actual benefits of this FTA package will depend on the swift ratification of the agreement.
Reform of the Trucking Sector and Implementation of Transit Regimes
Finally, a push is overdue in two related areas, which are by nature regional and cross border: reform of the trucking sector and implementation of transit regimes. In most LLDCs, trucking remains a main mode of freight transportation so a system similar to an International Road Transport (TIR) system, in which customs control is operated in an internationally harmonized manner, would benefit many LLDCs. There have been some reforms to transit regimes, including initiatives to govern the cross-border movement of transport vehicles, but these have only achieved partial success. The new efforts should focus on improving the transit regime, reforming transport market regulation, optimizing multimodal and railroad potential, and exploring air cargo transportation.
More decisive action is needed to seriously address implementation barriers and to improve efficiency of transit systems, following the TIR or European transit principles. These should include:
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Removing market distortions for international trucking and promoting incentives for quality and compliance (such measures can be complemented by capacity building);
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Implementing a single international transit document (“carnet”) within a region, without resubmission at each border;
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Developing a proper regional IT system that allows initiation, tracing, and termination across border of transit operation (Central America has implemented such as system recently, the TIM); and
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Enacting a common guarantee system, the details of which would depend on the regional architecture of financial services.
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Treasury seeks reforms to deal with weak economy, low budget spend
Kenya’s rebased economy will not grow as fast as initially projected, a paper tabled by Treasury Secretary Henry Rotich shows.
Instead of the 5.8 per cent growth rate on which the national budget was based, Treasury now expects the economy to grow by between 5.0 per cent and 5.5 per cent.
This drop will impact revenue the government expects to raise as well as spending allocations for various sectors; the Treasury generally relies on growth assumptions to set the revenue it expects to raise for government spending.
In a memorandum to the Cabinet in September, Rotich expressed concern about the weak economic performance in the first quarter of the year, which he blamed on poor rains and the impact of insecurity on the tourism sector.
The Budget Review and Outlook Paper (BROP) will be submitted to Parliament on Cabinet approval. The paper has three objectives.
One is to inform Parliament how government spent public money in the previous year, including whether the targeted revenue approved was raised and expenditures made as promised.
Budget implementation
Two, it will inform Parliament how the implementation of the last budget and today’s economic landscape are affecting the implementation of the current budget and makes the case for revisions in the Supplementary Estimates.
Lastly, it sets spending limits for the various sectors and ministries to be considered by the planners of the 2015/16 budget.
In the paper, Mr Rotich has asked the Cabinet to direct relevant bodies to respect the proposed limits to ensure that projects included in the budget are have the lowest cost but the greatest impact.
Rotich’s memorandum also seeks approval for a raft of new measures meant to generate greater tax revenue, cut wasteful spending and require ministries and counties to implement, at the very least, 80 per cent of their budgets.
Among measures likely to be adopted before the next budget is implemented are tax reforms.
Rotich is seeking the complete automation of KRA’s services and the introduction of two new tax bills to Parliament to strengthen tax administration.
Duplicated roles
Once biometric registration of civil servants is complete, the government intends to eliminate duplicated roles and redundancies to free cash to be spent on other essential services.
Ministries, departments and agencies as well as county governments have shown poor absorption rates of their allocated budgets.
Counties, for example, only used 58 per cent of their allocation; most of it was spent on wages. Only 21 per cent was reported spent on development, which goes against government policy that at least 30 per cent or revenue should be spent on development.
“There will be enforcement of a project implementation performance benchmark of at least 80 per cent, expenditure tracking and a value-for-money audit,” Mr Rotich notes in the paper.
Lastly, the CS intends to implement a government payment gateway and the use of the IFMIS (Integrated Financial Management Information System) as the sole end-to-end platform used by government for its financial operations.
The BROP indicates the government missed its target on both revenue and expenditures and identifies those responsible for the under-performance.
While the Kenya Revenue Authority raised its targeted Sh917 billion, ministries, departments and agencies that were supposed to come up with appropriations-in-aid of Sh63 billion booked only Sh28 billion.
Under-spending
The difference is attributed to under-reporting by ministries, especially Education, under which universities fall.
Government ministry under-spending by Sh150 billion has been attributed to the lack of capacity, procurement issues and delays.
The ministries of Education and Health, as well as the Teacher’s Service Commission, gobbled up 42 per cent of recurrent expenditure.
The Defence and National Coordination ministries took another 27 per cent.
Transport and Infrastructure was the biggest spender of development funds, followed by Energy and Petroleum, and Devolution and Planning. Nonetheless, money spent on development projects at the county level was not captured in the review.
While noting that this year’s economic performance has been weak, Treasury projects much higher growth from 2016 upwards of 6.3 per cent.
Higher budget
It identifies irrigated farming, geothermal power, affordable house loans and ICT among the drivers of this growth, with the petroleum sector contributing to growth further down the line.
Rotich in his memorandum warns that poor budget execution means the base for the next budget is reduced.
The next budget is expected to be Sh1.67 trillion, up from the Sh1.59 trillion allocated in the current budget, with government revenues expected to Sh1.35 trillion.
Recurrent expenditure will rise to Sh914 billion while development expenditure will rise to Sh505 billion.
The deficit of Sh250 billion will be financed through borrowing Sh114 billion (external) Sh133 billion (internal). There is no mention of privatisation of government entities.