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Communiqué of Africa Business Initiative Response to Ebola
At an historic meeting on 8 November 2014, the African Union together with African Development Bank, the United Nations Economic Commission for Africa and leading businesses in Africa committed to join forces to create and support a funding mechanism to deal with the Ebola outbreak and its consequences.
To date, the Ebola virus disease has devastated communities, infecting more than 13,700 people and killing over 4,900. While the global response to the current crisis has increased in recent weeks, there is still a critical need for additional competencies to care for those infected, strengthen local health systems and prevent the disease spreading.
African business leaders at the Roundtable comprised CEOs from different sectors, including banking, telecommunications, mining, energy, services and manufacturing, among others. They agreed to establish a fund under the auspices of the African Union Foundation through a facility managed by the African Development Bank, to boost efforts to equip, train and deploy African health workers to fight the epidemic.
At the meeting, participants saluted Governments, International Organizations, Institutions, NGOs and businesses that have been at the frontlines of the Ebola response, and agreed to urgently scale up the deployment of health workers in the three most affected countries: Liberia, Sierra Leone and Guinea. They also noted with appreciation that a number of African countries to date have pledged over 2,000 trained health workers to support the efforts in West Africa, with additional commitments expected.
Responding to appeals from these countries, leading companies in Africa, present at the Roundtable, committed logistical support, in kind contributions and over $28 million as part of the first wave of pledges. In addition, a number of businesses represented in the meeting undertook to immediately consult with their governance structures and will announce their pledges to this effort in the next few days. Roundtable participants further called on the private sector across Africa to join them in this effort. Businesses also agreed to leverage their resources and capacity to help galvanize citizen action around a ‘United Against Ebola’ campaign, and to provide individuals across Africa and globally with an opportunity to contribute.
These funds will be used to support an African medical corps – including doctors, nurses and lab technicians – to care for those infected with Ebola, strengthen the capacity of local health services and staff Ebola treatment centres in Liberia, Sierra Leone and Guinea. These resources will be deployed in the framework of the African Union Support to Ebola Outbreak in West Africa (ASEOWA), in close coordination with the national taskforces in the Ebola-affected countries and the United Nations Mission for Ebola Emergency Response (UNMEER). The resources mobilized will be part of a longer term program to build Africa’s capacity to deal with such outbreaks in the future.
Moreover, participants decided that the Africa Business Roundtable would become an annual meeting of the African Union to help solidify collaboration with the private sector in Africa on key development issues facing the region.
Business leaders agreed on a follow up mechanism to implement the commitments made at today’s meeting, reach out to other business entities, monitor the roadmap and agreed to act with urgency.
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Exports of poorest countries rebounded in 2013 but their trade share remains marginal
The exports of goods and commercial services from least developed countries (LDCs) increased by 5.2% last year but the total share of LDCs in world trade remains marginal, the LDC sub-committee heard on 6 November 2014.
The WTO Secretariat presented to the sub-committee its annual report on LDCs’ market access. The report notes that in 2013 the total value of LDC exports of goods and commercial services grew by 5.2%, more than twice the world average (2.5%). However, the total share of LDC trade still remains marginal at around 1.23% of the world’s total.
The LDCs also face a higher trade deficit as imports increased more than exports in 2013. Moreover, LDC exports are concentrated in a handful of products and sectors. Developing economies have also become more important as the destination market of LDC exports, receiving 55% of total LDC exports in 2013, up from 40% in 2000.
Evolution of LDC exports of goods and commercial services, 2000-2013
(Index, 2000=100)
Source: WTO Secretariat.
The report focuses in particular on LDCs’ trade in services. It notes that travel receipts, estimated at $14.2 billion in 2013, continue to account for the majority of LDC exports of commercial services. Transport exports, which reached US$ 7.5 billion in 2013, are an important source of revenue in particular for African LDCs.
Structure of LDC commercial services exports, 2013
(Percentage shares)
Source: WTO-UNCTAD estimates.
The report provides an overview of the market access for LDC products in developing and developed economies as well as the non-tariff measures that affect access to these markets.
Uganda (representing the LDC group) highlighted the challenges faced by LDCs, and called upon members to open up markets for LDC products and to increase aid for trade to LDCs. It also welcomed the report’s analysis of LDCs’ trade in services and urged members to put the WTO 2011 LDC Services Waiver decision into action. LDCs called for the full implementation of duty-free and quota-free market access for LDC products.
A number of members took active part in the discussion and provided specific comments on the report, which will be taken into account in a revised version.
Preferential rules of origin
The sub-committee heard a report by the WTO Secretariat on the first annual review of preferential rules of origin, which had been conducted by the Committee on Rules of Origin in line with the Bali Ministerial Decision.
Uganda and Nepal underlined the importance of simplified rules of origin to facilitate LDC exports. They also highlighted a document (G/RO/W/148) that the LDC group had submitted to the Rules of Origin Committee on the challenges faced by LDCs in complying with preferential rules of origin.
The Bali decision on preferential rules of origin provides a set of guidelines for members to formulate their rules of origin for LDCs in a transparent, simple and objective manner. Rules of origin are the criteria needed to determine the national source of a product. To benefit from duty-free and quota-free market access, exporters from an LDC need to comply with the criteria set by the importing country to determine where the product was made.
Standards and Trade Development Facility
The sub-committee heard a presentation by the Standards and Trade Development Facility (STDF), a global partnership that supports developing countries in complying with sanitary and heath standards. One project mentioned in the presentation was a joint study with the Enhanced Integrated Framework (EIF), the LDCs’ Aid for Trade programme, which analysed how sanitary and health standards are being considered in the assessment of LDCs’ export competitiveness and constraints.
Uganda welcomed the STDF’s work which has assisted many LDCs in articulating their development needs. It also welcomed the fact that over half of the STDF’s funding goes to LDCs.
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New global tourism initiative to ‘steer industry onto a truly sustainable path’ – UN
Tourism is one of the largest and fastest-growing economic sectors in the world contributing 9 per cent to global GDP, accounting for one in 11 jobs worldwide and for 6 per cent of global exports, the United Nations World Tourism Organization (UNWTO) reported on 6 November 2014 as it launched a programme aiming to catalyze a shift to more sustainable tourism.
The Sustainable Tourism Programme of the Ten-Year Framework of Programmes on Sustainable Consumption and Production Patterns (10YFP) introduced at the World Travel Market in London last week will be spearheaded by the UNWTO, the Governments of France, Morocco and the Republic of Korea, with the support of UN Environment Programme (UNEP).
“This important initiative is about steering the industry onto a truly sustainable path – one that echoes to the challenge of our time: namely the fostering of a global Green Economy that thrives on the interest, rather than the capital,” said UNEP Executive Director Achim Steiner in a statement.
It is estimated that by 2030, there will be 1.8 billion international tourism arrivals annually. If not sustainably managed, tourism can deplete natural resources leading to water shortages, loss of biodiversity, land degradation and contribute to climate change and pollution. Tourism’s contribution to global warming is estimated at 5 per cent of global CO2 emissions.
“As tourism continues to grow, so too will the pressures on the environment and wildlife. Without proper management and protection, as well as investments in greening the sector, ecosystems and thousands of magnificent species will suffer,” Mr. Steiner said.
UNEP’s 2011 Green Economy Report revealed that under a “business-as-usual” scenario, projected tourism growth rates to 2050 will result in increases in energy consumption by 154 per cent, greenhouse gas emissions by 131 per cent, water consumption by 152 per cent, and solid waste disposal by 251 per cent.
UNWTO Secretary-General Taleb Rifai said, “As the leading organization for tourism, the World Tourism Organization seeks to maximize tourism’s contribution to development while minimizing its negative impacts.”
Already, in the Galapagos Islands and Palau, visitors pay an entry tax to protected areas, which are sometimes referred to as ‘green fees.’ The revenues generated from these fees – which in Palau’s case is $1.3 million annually since 2009 – are used to support conservation and sustainable human development.
The 10YFP Sustainable Tourism Programme will aim to achieve major shifts in tourism policies and stimulate greater sustainability within the tourism supply chain. A collaborative initiative, the programme aims to improve resource efficiency, management effectiveness, and the use of new technologies to promote sustainable consumption and production patterns in this key sector.
Meanwhile, the three countries leading the initiative have already taken steps to promote sustainable tourism. As the most visited tourism destination in the world receiving 85 million tourists a year, France recognizes sustainable tourism as fundamental to preserving its heritage.
And Morocco is hoping to capitalize on its natural and cultural advantages in a way that will yield the most sustainable social and economic benefits to all Moroccans. The Government of the Republic of Korea has already integrated principles of sustainability into its tourism policies and is accelerating programme implementation nationally.
The 10YFP was established after Heads of State, meeting at the UN Conference on Sustainable Development (Rio+20) conference in 2012, agreed that sustainable consumption production was a cornerstone of development, and an important contributor to poverty alleviation and the transition to low-carbon green economies.
The Life Cycle Approach to Tourism Development
The Programme on Sustainable Tourism including Eco-Tourism will apply life cycle approaches to development, particularly to tourism planning, investment, operations and management, promotion and marketing, production and consumption of sustainable goods and services, and monitoring and evaluation.
The 10YFP Sustainable Tourism Programme: Transitioning to the Next Decade
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IFC launches $450 million initiative to spur private sector trade and investment in Ebola-affected countries
IFC, a member of the World Bank Group, on 5 November 2014 announced a package of at least $450 million in commercial financing that will enable trade, investment, and employment in Guinea, Liberia and Sierra Leone. The private sector initiative will include $250 million in rapid response projects, and at least $200 million in investment projects planned to support post-epidemic economic recovery. The IFC initiative is part of the World Bank Group’s broad effort to provide support during the Ebola epidemic and prepare for economic recovery in the countries most affected by the crisis.
The initiative includes a $75 million Ebola Emergency Liquidity Facility to fund critical imports for Ebola-affected countries. This rapid response program was approved by IFC’s board last week. It will initially be made available to fund six existing IFC client banks, and could be extended to additional banks. The facility will support the import of basic goods, including energy, food and agricultural commodities, and other manufacturing goods.
“Ebola is a humanitarian crisis first and foremost, but it’s also an economic disaster for Guinea, Liberia, and Sierra Leone. That’s why in addition to our emergency aid we will do all we can to help support the private sector in these countries to build back their businesses,” said Jim Yong Kim, president of the World Bank Group. “The fear swirling around Ebola has the potential to do long-term harm to businesses globally, and especially in the Ebola-affected countries. Our private sector arm – IFC – will find ways to help boost trade and investment in West Africa, which will be essential to ensure that private companies continue to operate and sustain employment under difficult circumstances.”
In addition to the liquidity facility, IFC’s rapid response includes a program begun in October to reach 800 small and medium enterprises in Guinea, Liberia, and Sierra Leone to help ensure business continuity during the crisis. The program will provide medical and hygiene supplies; related literature; and training on preventive measures.
In another project Cordaid of the Netherlands will provide $4.6 million in new financing to IFC’s West Africa Venture Fund, focusing on small and medium enterprises in Sierra Leone and Liberia. Further rapid response projects are under consideration.
“IFC intends to take risks in an ambitious effort to provide commercial financing in the months ahead, and to support recovery as the Ebola epidemic comes under control,” said Jin-Yong Cai, IFC Executive Vice President and CEO. “IFC will find and create opportunities to encourage private investors to play a large role in the recovery of markets directly and indirectly affected by the ongoing Ebola outbreak in West Africa.”
The World Bank Group is mobilizing nearly $1.0 billion for the three countries hardest hit by the Ebola crisis, including $400 million announced in August and September 2014 for the emergency response, and another $100 million announced in October 2014 to help speed up the deployment of foreign health workers to countries. Of the previously announced $500 million, $117 million has already been disbursed. This support – coordinated closely with the United Nations and other international and country partners – will assist the affected countries in treating the sick, providing essential food and water to Ebola-affected households, coping with the economic and social impact of the crisis, and starting to improve their public health systems to build up resilience and preparedness for potential future outbreaks. The World Bank Group also recently released a report that said that if the virus continues to surge in the three worst-affected countries and spreads to neighboring countries, the two-year regional financial impact could reach $32.6 billion by the end of 2015.
To find out more about the World Bank Group’s Ebola response, visit www.worldbank.org/ebola.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, we provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development.
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WTO report says restrictive trade measures continue to rise in G-20 economies
Restrictive trade measures introduced by G-20 economies since 2008 continue to rise, according to the latest WTO report on recent trade developments issued on 6 November 2014. Given the continuing uncertainties in the global economy, the report stresses the need for countries to show restraint in imposing new measures and to eliminate more of the existing measures.
The report says that of the 1,244 restrictive measures recorded since the onset of the crisis in 2008, only 282 have been removed. Over the past year, the number of restrictive measures in place has increased by 12 per cent. However, the number of restrictive measures affecting exports declined significantly from mid-May to mid-October 2014. The report also underlines that the overall trade policy response to the crisis has been significantly more muted than originally expected.
Key Findings of WTO Report on G-20 Trade Measures
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This report shows that the stock of restrictive trade measures introduced by G-20 economies since 2008 continues to rise despite the pledge to roll back any new protectionist measures that may have arisen.
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Continuing uncertainties in the global economy underline the need for G20 economies to show restraint in the imposition of new measures and to effectively eliminate existing ones.
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Of the 1,244 restrictive measures recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. The total number of restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013.
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G-20 economies applied 93 new trade‑restrictive measures during the period between mid‑May and mid-October. This equates to over 18 new measures per month, which is unchanged compared to the previous period. A positive development saw the number of restrictive measures affecting exports decline significantly during the period.
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G-20 economies introduced 79 trade‑liberalizing measures during the period under review. Measured per month this figure is also unchanged compared to the previous period.
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Greater transparency is needed from G-20 members in order to improve the understanding of the operation and effects of non-tariff barriers to trade. These behind-the-border measures include regulatory measures and subsidies.
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While this report shows that the stock of new trade‑restrictive measures has continued to rise, it also supports the conclusion that the overall trade policy response to the 2008 crisis has been significantly more muted than expected based on previous crises. The multilateral trading system has acted as an effective backstop against protectionism.
Executive Summary of WTO Report on G-20 Trade Measures
This is the twelfth report on G-20 trade measures. With continuing global economic uncertainty and sluggish trade growth, it remains of concern that the stock of restrictive trade measures introduced by G-20 economies since 2008 has continued to increase during the period between mid-May 2014 and mid-October 2014. Prevailing global economic conditions mean that this is not a time for complacency in the international trading system. The G-20 economies must take decisive action to reduce this stock of trade restrictions by showing restraint in the imposition of new measures and by effectively eliminating existing ones.
Of the 1,244 restrictions recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. Thus, the total number of those restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013. Of course, this report does not capture the restrictive measures which were in place before the crisis and those subsequently removed. Nevertheless, the combination of the continuing addition of new restrictive measures and a relatively low removal rate runs counter to the G-20 pledge to roll back any new protectionist measures that may have arisen. An interesting question will also arise in the years ahead regarding how trade remedy measures will be affected by the operation of sunset clauses that provide for reviews of such measures after five years.
The report finds that the pace of introduction of new trade‑restrictive measures by the G-20 in the period between mid-May and mid-October remained unchanged from the previous reporting periods. More encouragingly, G-20 economies have adopted significantly fewer restrictive export measures. On a similar positive note, looking specifically at tariff measures, the number of import tariff liberalization measures introduced by G-20 economies during the period far exceeded the number of tariff increases.
G-20 economies applied 93 new trade‑restrictive measures during this five-month period, compared with 112 during the previous six months. As in previous periods, trade‑remedy measures account for more than 50% of these measures, followed by other restrictive import measures and restrictive measures affecting exports. In terms of trade coverage, the trade remedy actions and other restrictive import measures applied by G-20 economies during the period under review constitute 0.8% of the value of G-20 merchandise imports and 0.6% of the value of world merchandise imports. This amounts to around US$ 118 billion. Further, the import‑restrictive measures recorded since October 2008 that remain in place cover around 4.1% of the value of world merchandise imports and around 5.3% of the value of G-20 imports. This amounts to US$ 757.0 billion.
G-20 economies also applied 79 trade‑liberalizing measures, both temporary and permanent in nature, during the period under review. In terms of trade coverage, import‑liberalizing measures account for 2.6% of the value of G-20 merchandise imports and 2.0% of the value of world merchandise imports. This amounts to some US$ 370 billion – almost three times the trade value of the new trade‑restrictive measures. This relatively positive development in the area of trade‑liberalizing measures should not distract from the concerns about the accumulation of trade restrictions.
In addition, adequate information on behind-the-border measures, including regulatory measures and subsidies, is still lacking. Non-tariff measures applied by a number of G-20 economies have been the subject of recent debate in various WTO bodies. Some consider that these types of measures have become more prominent in recent years, compared to conventional border measures, and therefore the need to increase the quality of the information available is paramount. To deliver on this and enhance our understanding of the operation and effects of non-tariff barriers to trade, G-20 Members should look to provide greater transparency in this area.
Overall, this report supports the conclusion that despite the continuing increase in the stock of new trade‑restrictive measures recorded since 2008, the trade policy reaction to the 2008 global economic and financial crisis has been more muted than expected based on previous crises. This shows that the multilateral trading system has acted as an effective backstop against protectionism. However, it is clear that the system can do more to drive economic growth, sustainable recovery and development. World trade has grown more slowly than expected since the June 2014 report, due largely to slow and uneven economic growth in both developed and developing economies. On current forecasts trade growth will remain below average in 2014 and 2015. The removal of remaining trade‑restrictive measures combined with further multilateral trade liberalization would be a powerful policy response.
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Ministers of Central African countries are taking a decisive step toward the creation of a green economy
The ministers of Central African countries are taking a decisive step toward the creation of a green economy, with a focus on the timber industry
The government of the DRC announces a $3 million contribution to kickstart the Fund for the Green Economy in Central Africa
The organizers of the Conference of Ministers of ECCAS on the Fund for the Green Economy in Central Africa and the structural transformation of the economy of natural resources announced on 31 October 2014 that the ministers from the region have adopted a text establishing the Fund for the Green Economy in Central Africa.
At the opening of the conference, the Vice Prime Minister of Defense and Veterans of the Democratic Republic of Congo (DRC), Mr. Tambo Loaba, announced a $3 million contribution from his country to start the Fund for the Green Economy in Central Africa (FEVAC).
“Concerning the financing of FEVAC, the Democratic Republic of Congo supports its creation and commits $3 million for its establishment beginning in 2015,” said Mr. Loaba in his address.
This decision marks a first giant step toward the effective initiation of a global restructuring of the Central African economy, based on the natural resource economy and the timber industry in particular.
“Today, for the first time, Central Africa has placed the environment within the core economic structure of the countries in the region,” emphasized Dr. Honoré Tabuna, Biodiversity Valuation and Environmental Economics expert and the conference coordinator. “We are finally reaching the final stages and practical implementation of a process that began in Rio in 1992. We must now talk about the economy in order to establish a new balance of sustainable development based on a green economy in Central Africa,” he added.
Held from October 27-30 in Kinshasa, the conference brought together the Central African Ministers of Finance, Foreign Affairs, and Forestry as well as several experts in green economy and the timber industry.
It was hosted by the ECCAS as part of the Program for the Management of Vulnerable Ecosystems in Central Africa (under ECOFAC), the result of a joint effort with the European Union, which provides financial support within the framework of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan.
“A Shift toward a Green Economy Represents a Positive Economic Turn”
Today, the timber industry serves as an example, showing the true decision makers in the countries of Central Africa that a shift toward a green economy represents a positive economic turn for the region’s economy as a whole.
The joint presence of the Ministers of Forestry and Finance of Central African countries provides a new opportunity to demonstrate that the green economy is not simply a concern for environmental experts, but also for the economists of each government.
It’s key to note that the move of major regional actors to create a new “motor” for the green economy provides support to countries combating illegal logging while also encouraging good forest governance. This important movement for the green economy, which depends on the progressive commitment of the Ministers of Finance, will bring regional changes and attract investments to help the countries working with the FLEGT and which have signed voluntary agreements with the EU.
The Voluntary Partnership Agreements (VPAs) are bilateral trade agreements between the EU and a timber-exporting country. The VPA is underpinned by the development and implementation of a timber licensing scheme by the partner country. All of the lumber exported to the EU must abide by the regulations of this scheme. Moreover, each EU country is responsible for keeping unauthorized lumber out of the market.
“The objective is to give a greater voice to the Ministers of the Environment who, thus far, have received only a small share of the budget, far less than the Ministers of Commerce or Energy who benefit from revenue generated by their activities. We must show that natural resources are much more lucrative,” said Aimé Nianogo, IUCN Regional Director for West Africa.
The Timber Industry and the Impact of Market Regulation Programs
Indeed, timber- and forestry-related issues lie naturally at the heart of the implementation of the Green Economy System in Central Africa: the timber industry, which has long represented a gateway to international markets, is currently benefiting from major advances provided by market regulation programs, such as the EU Timber Regulation, but also the Lacey Act in the United States and the Australian Illegal Logging Prohibition Act.
These regulations and agreements, like those of the FLEGT, open new, more reliable, and better-regulated markets, the revenues of which can be better distributed thanks to improved governance. Indeed, changing the economic system to allow for the development of the green economy requires fundamental governmental restructuring. “That is one of the major obstacles that still risks hindering the best intentions and positions of even the most sincere decision makers,” said Aimé Nianogo.
The Ministers of Forestry also had the opportunity to convince their own Ministers of Finance of the importance of paying attention to issues relating to the timber industry and its development. Clearly, these are not simply national but also regional concerns, as regional Ministers of Forestry met to discuss these issues with Ministers of Finance.
Transforming the Economic Model to Address Regional Issues
One of the major objectives for Central African countries is primarily to change an economic model that broadly relies on subsoil natural resources: minerals, oil, and gas.
These resources provide the region with significantly positive growth, at nearly 6%, but this growth does not benefit the entire population. Indeed, some regions are afflicted by a poverty rate of up to 70%.
“Our studies show that the timber industry could weigh 3% to 8% in the largest economies in the region and would generate a large number of jobs, which is a major concern for several countries in the region,” Nianogo said.
The conference provides the opportunity to vote on several projects meant to build a foundation for the green economy system to be financed by the new Fund for the Green Economy.
These projects fulfill regional objectives for the development of the natural resource economy in a framework that corresponds to the objectives and recommendations established over the past twenty years by the Rio and Rio+20 conferences. They allow for the development of local, national, regional, and international economic circuits that create job opportunities for populations that have been excluded up until now.
“The projects must be approved and distributed among the countries according to their interest in achieving the set objectives, not just according to their individual desires as a function of their capabilities and hopes of earning profits in the long term,” reminds Aimé Nianogo. “We’ll undoubtedly have to provide support for the less dynamic countries or those lacking the necessary expertise to establish solid projects so that they can also benefit from an evolution that must extend throughout the entire region.”
The text adopted at Kinshasa will be presented at the conference to be held in N’djamena, Chad, where the Heads of State will be able to express their commitment to the precise and concrete measures it contains.
» Read the Press Statement (French)
Distributed by APO (African Press Organization) on behalf of the Economic Community of Central African States (ECCAS).
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China topples India as main exporter to Kenya
China has overtaken India to become Kenya’s top source of imported goods, newly released data show.
The world’s most populous nation grew its exports to Kenya by 37.9 per cent to Sh178.6 billion in the first nine months of this year or 14.8 per cent of Kenya’s total imports, according to data from the Kenya National Bureau of Statistics (KNBS).
That growth allowed China to topple India from the position it has occupied for the past three years.
The KNBS data show that India’s share of Kenya’s total imports of Sh1.2 trillion in the nine months dropped to 13.8 per cent, with a slower growth of 4.4 per cent in the value of its merchandise to Sh166.3 billion.
The quarter three data also captures the falling fortunes of the United Arab Emirates given that the Middle East nation had also been a top source of imports.
It has now been relegated to position four behind the US, which has aggressively increased exports to Kenya since April.
Imports from the US including planes, energy equipment and health kits stood at Sh120 billion compared to UAE’s Sh79.9 billion.
The relegation of UAE has been linked to a decline in Kenya’s intake of petroleum products that form the bulk of Abu Dhabi’s exports and traders’ shift to Turkey and China as source of goods from Dubai.
China’s rise is expected to intensify its battle with its Asian rival India that has recently made major inroads into Kenya with big-ticket contracts in healthcare and energy sectors.
Kenya mainly imports textiles, pharmaceuticals, industrial machinery, vehicles, electronic, motorcycles, tuk tuks and semi-processed goods from India.
Key items imported from China include heavy machinery, electronics, vehicles, textiles and a range of household goods.
The two Asian nations entrenched their presence in country with intense economic diplomacy that started with President Mwai Kibaki’s election in 2002.
The rivalry has benefited Kenya in terms of foreign direct investments, a wider variety of consumer goods and opened new sources of technical and financial assistance.
Though the India-China rivalry has played out as a battle of the Asian giants, the biggest losers have been the traditional Western trading partners such as Britain whose share of the Kenyan market has been steadily declining.
India’s Exim Bank has, for instance, helped Indian companies export cement and sugar to Kenya with the provision of guarantees or letters of credit through PTA Bank.
China, the biggest beneficiary of Kenya’s massive infrastructure projects, has also been expanding its reach to broadcasting, telecoms, textiles and the general consumer goods markets.
Over the past decade, Chinese firms have won contracts to build some of the largest infrastructure projects in Kenya, including the upgrade of Thika Road at a cost of Sh27 billion and Sh447 billion construction of the new Mombasa-Nairobi railway.
Though the two Asian powers have realised steady growth of their exports to Kenya, Nairobi has only marginally expanded the value of trade with them, resulting in a huge trade imbalance.
This is because Kenya’s commercial engagement with the Asian nations is mainly pegged on low-value primary commodities like tea, coffee and hides.
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Africa’s transforming energy sector demands new approach from industry players
The global energy industry is undergoing a seismic shift, in part driven by development of new, unconventional sources of energy, such as shale gas, tight oils, coal seam gas and oil sands.
In turn, this is requiring logistics executives to rethink traditional energy supply chain models and implement a highly integrated approach, to drive down logistics costs and enhance profit margins. This is according to DHL, the world’s leading logistics company, who have released a white paper on the dynamics, challenges and opportunities that are shaping the current energy sector.
Jonathan Shortis, Vice President – Energy Sector EMEA (Europe, the Middle East and Africa): DHL Customer Solutions & Innovation, says that the need and desire to explore new geographies and develop new technologies to reach and extract unconventional gas reserves has become ever more apparent. “While growth in the conventional energy sector currently hovers around 1 to 2 percent per annum, the unconventional segment is booming.”
The BP Energy Outlook 2030 predicts that shale gas production will triple, and that tight oil production will increase more than six-fold by 2030. Unlike conventional oils though, unconventional extraction demands higher and continuous investment.
In terms of Africa’s energy sector, Shortis says that there has been significant growth in oil and gas exploration and production, on the continent in recent years. “There is no sign of Africa’s exploration activity slowing down, and the continent is expected to continue on its growth path as its attractiveness as an investment destination for the sector becomes ever more apparent due to its untapped resources and potential of new discoveries.”
He adds however that, as in many other parts of the world, the development of unconventional reserves in the region is still in its infancy. “While there is a view that reserves in areas such as North Africa (Morocco, Algeria, Libya) and South Africa are substantial, little development has taken place.”
The white paper explains that due to the ongoing shift in geographies of energy production and demand, energy companies are required to adjust their approach to supply chain management.
Shortis explains that from a supply chain perspective, both conventional and unconventional energy companies face an intriguing set of challenges. “Supply chains supporting conventional energy market, are still developing as companies have had to expand into ever more inaccessible and remote locations to support the growth in global demand. In such areas, conventional energy faces the same challenge as unconventional, and that is to establish and maintain a robust infrastructure to support production in undeveloped and/or remote geographies.”
Shortis says that executives quoted in the white paper admit that energy companies often struggle to deal with the complexity of the supply chain and that they are challenged by a lack of visibility and predictability when they are working with multiple stakeholders at numerous drilling locations.
“To address this issue, leading companies are adopting an end-to-end supply chain operating model, instituting a data-driven, integrated solution that connects all stakeholders in the chain. This solution blends state-of-the-art visibility and analytics with best-practice process management to achieve bottom line results,” concludes Shortis.
The white paper, titled Building the smarter energy supply chain, is based on research by Lisa Harrington, Associate Director at the Supply Chain Management Center of the Robert H. Smith School of Business, University of Maryland.
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Djibouti turns to its peers for advice on reaching its goals
Djibouti is preparing for the future. The small country on the Horn of Africa has outlined an ambitious set of goals it hopes to achieve over the next two decades. These goals are the result of careful research, assisted by the World Bank, to identify under-exploited sectors of the economy with the potential to generate sustainable growth. The results of the exercise were collected in a document, ‘Djibouti Vision 2035’ that serves as the government’s blueprint for development.
Ilyas Moussa Dawaleh, Djibouti’s Minister of Economy and Finance, in charge of Industry, recently recalled that at independence in 1977 his country had only one high school, one street and two doctors. Djibouti has since taken advantage of its strategic position at the mouth of the Red Sea, along one of the world’s busiest shipping lanes, to develop an important maritime port and establish the foundations for a burgeoning commercial hub.
Djibouti still faces high levels of poverty, and is committed to doing much more to promote economic growth and the job creation and shared prosperity that come with it. The World Bank study (“A new growth model for Djibouti”) that underpins ‘Djibouti Vision 2035’ highlighted the following promising areas: transport and logistics, telecommunications, tourism, fisheries, and light industry. “Djibouti needs to get over that ‘hump,’” observed Shanta Devarajan, World Bank Chief Economist for the Middle East and North Africa Region, “where you turn yourself from a natural resource based economy into a dynamic manufacturing and service center.”
It was precisely to get over that ‘hump,’ that Djibouti turned to its peers for advice. In assisting with the preparation of the report, the World Bank also identified a number of countries with similar characteristics to Djibouti that had success in achieving similar goals. The World Bank and the government worked together to host a south to south exchange of knowledge, in which representatives of Cape Verde, Dubai and Mauritius were invited to Djibouti to share their valuable experiences.
An event was organized that drew over 300 local and foreign participants from government, development partners, the private sector, civil society, and academia. The government used the opportunity to launch ‘Djibouti Vision 2035’. In his opening speech, the Prime Minister of Djibouti, Abdoulkhader Kamil Mohamed reaffirmed the commitment to reinforcing strengths and diversifying the economy as the key ingredients of the country’s development plan.
One of the most valuable lessons to emerge from the south to south exchange of knowledge, according to World Bank Resident Representative in Djibouti, Homa-Zahra Fotouhi was that countries not only share similar goals, but also face similar obstacles. Djibouti, she noted, is small country with high energy costs – but so too are Cape Verde and Mauritius. Yet Mauritius has made significant progress in diversifying its economy and Cape Verde has successfully developed its tourism sector. These were the lessons each came to share.
The level of attendance and engagement at the event was unprecedented for Djibouti. It reflected the interest on the part of the country’s private sector and civil society to learn from the experiences of other countries, and to be central players in the design and implementation of Djibouti’s development strategy. This resonated with another overarching lesson from the event, on the importance of building a broad consensus around specific goals.
The cases of Mauritius and Cape Verde – which recorded significant improvements in the space of a few years – particularly demonstrate the importance of transparency, good governance and competition to promote economic diversification and encourage job creation. These are the basic elements of a formula that could bring Djibouti a step closer to reducing poverty and achieving sustainable and inclusive growth for the benefit of the entire population.
The event also provided the government with specific advice on each of he areas it plans to focus on. The government will convert this advice into concrete actions for the realization of ‘Djibouti Vision 2035’, and for establishing a broad consensus around the goal of accelerated development.
“In the next 20 years we would like Djibouti to reach the level of Singapore or Dubai,” said Youssouf Moussa Dawaleh, President of the Djibouti Chamber of Commerce, “we can get there if we work together.”
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Africa on the rise, with trade set to be worth billions to Irish exporters
Trade between Africa and Ireland is expected to reach €24bn by the end of the decade, Trade and Development Minister Sean Sherlock told a conference recently.
The minister said the Government wants to complement Ireland’s traditional commitment in Africa, which has been focused largely on aid and development, with an economic commitment.
More than 300 business people, along with diplomats and members of the African community came together on 30 October 2014 for the Africa-Ireland Economic Forum.
Several Irish companies are already operating on the continent, including Kerry, Guinness, ESB International and Glanbia.
There are an increasing number of Irish chief executives targeting Africa as a potential export market, experts have said.
Enterprise Ireland’s Kevin Sherry told the forum that Africa has been home to eight of the world’s 15 fastest-growing economies since 2000, with GDP on the continent hitting $2 trillion (€1.6 trillion) last year – more than India’s. That growth is forecast to continue, but there are very real risks.
The International Monetary Fund (IMF) has forecast Africa will repeat 2013’s growth rate of 5.1pc this year and then accelerate next year as infrastructure investments boost efficiency, and the service sectors and agriculture flourish.
The 2015 forecast was an improvement on the 5.5pc growth for the overall region projected by the IMF in April. But the outlook is overshadowed by the dire situation in Guinea, Liberia, and Sierra Leone, where the Ebola outbreak is “exacting a heavy human and economic toll.”
Growth in South Africa, the continent’s most advanced economy, had been lacklustre, hit by strikes, low business confidence and tight electricity supply, the IMF said. But it believes a “muted recovery” could take hold next year. Nigeria, by contrast, is booming. It’s the continent’s top oil producer and overtook South Africa as the biggest economy this year.
Mr Sherlock said Africa, collectively, was on the rise.
“It is important now that we grasp opportunities and have the vision to see where they can take us and work toward developing strong and equal trade and investment partnerships with African countries,” he said.
President Michael D Higgins begins a three-week trip to the Continent tomorrow, visiting Malawi, Ethiopia and South Africa. In the last three years, Irish goods exports to sub-Saharan African has jumped by a quarter and is up 27pc for the entire continent. Exports by Enterprise Ireland-supported companies to Africa last year totalled €550m. That’s expected to increase to €800m by the end of 2016. To coincide with the forum, the Irish Exporters Association has established an African Business Forum.
Colm O’Callaghan, tax director with accountancy giant PwC, which is supporting the initiative, said 13pc of Irish chief executives confirmed that they are targeting Africa as an export market.
“Whether you are an large Irish multinational or an indigenous Irish SME looking for new markets, Africa holds the potential, scale and opportunity for growth,” he said.
“However, when internationalising your business to Africa, you need to do your homework. Proper advance market research and having the right structures and people in place will ultimately help equip the business to maximise the opportunities that Africa has to offer.”
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IMF supports Comesa to boost competition in regional market
The International Monetary Fund (IMF) on Monday said it will assist the 19-member Common Market for Eastern and Southern Africa (Comesa) to implement market competition guidelines.
IMF Competition Policy Sub-Saharan Africa Coordinator Tania Begato told a media briefing in Nairobi that the rules will prevent mergers of firms operating in the bloc that will negatively affect consumers.
“The objective is to protect consumers from being exploited by dominant firms through higher prices and reduced choices,” Begato said during the launch of the Comesa Merger Assessment Guidelines.
The guidelines will form a key component of the Comesa region’s merger control system and play a vital role in promoting competition.
“We will assist Comesa to create a transparent and predictable regulatory framework for firms seeking to engage in a merger,” she said.
The IMF official said mergers and acquisitions are an essential part of healthy markets.
“They benefit the economy by allowing companies to become more efficient by reducing production or distribution costs. However in some cases mergers can substantially weaken the incentives of firms to engage in competition,” she said.
Begato added that a robust merger control policy will be effective in blocking anticompetitive mergers that can have significant benefits for consumers.
“They also play a role in ensuring the efficient functioning of regional markets,” she said. World Bank Group East and Southern Africa Head of Investment Climate Catherine Masinde said her organisation will help Comesa align its merger rules with best international practices.
Masinde said an effective merger control policy should focus on mergers that are likely to affect a significant number of consumers, adding that with the deepening of regional integration, the volume of cross border transactions is set to grow.
“It is therefore becoming increasingly important that cross-border cooperation between national competition authorities and regional competition bodies is strengthened,” she said.
The World Bank official stressed that the size of markets of most African states is small and therefore not attractive to big global players. “We are therefore encouraging regional integration, through opening up of markets,” she said.
Comesa Head of Mergers and Acquisitions Willard Mwemba said Comesa Competition Regulations will be applied with the objective of single market integration in mind.
Mwemba said the regional integration can only be realized by through the proliferation of strong competition culture, noting that effective merger rules will help to reduce the cost of goods in the region.
Under the new Comesa rules, regulatory approval will be required whenever any firm that operates in two or more Comesa states mergers with another one that operates in two or more Comesa states, if both their annual turnovers are at least five million U.S. dollars.
He said that since the beginning of the year, the Comesa Competition Commission has received 57 notifications for mergers. He said that firms operating in Kenya, Swaziland, Egypt and Zambia are most active in mergers and acquisitions.
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Declining food prices ‘very good’ for importing countries – UN agricultural agency
The United Nations Food and Agricultural Organization’s (FAO) monthly food price index was stable in October, as sugar and vegetable oil prices rose to offset declines in dairy and meat prices, the Rome-based agency reported on 6 November 2014.
The FAO Food Price Index is a trade-weighted index monitoring five commodity group price indices – cereals, meat, dairy products, vegetable oils, and sugar. In October, it dipped to 192.3, technically its seventh consecutive monthly decline, but a marginal 0.2 percent drop from the revised September figure.
The ongoing slight decline in the index is “very good for food importing countries,” FAO senior economist Concepción Calpe said in a statement.
Dairy prices fell by 1.9 percent, as butter and milk powder prices dipped due to increased output in Europe, where many producers are grappling with Russia’s ban on cheese imports. The sub-index for dairy products dropped to 184.3, down 3.5 points from September, and 66.8 points, or 26.6 percent down from October 2013.
Meat prices also broadly declined, as pig production recovered in several countries hit by endemic porcine diarrhoea and growing cattle herds in Australia pushed down beef prices. FAO’s Meat Price Index fell by 1.1 percent or 2.3 points from September to 208.9, still more than 10 percent above its level a year ago.
The Cereal Price Index, which fell sharply over the recent months as global wheat and maize production appeared set for record harvests, was broadly stable at 178.4 points in October as maize harvest delays in the United States and deteriorating prospects for Australia’s wheat crop led to firmer prices.
Rice prices declined, however, as newly harvested supplies came to market. The cereals sub-index is now down 9.3 percent, or 18.2 points below the level of one year ago.
Overall, the Food Price Index is at its lowest levels since August 2010.
Meanwhile, the Sugar Price Index rose to 237.6 points, a brisk 4.2 percent increase from the previous month, due largely to drought in parts of Brazil, leading to reports that the sugarcane crop will be smaller than expected. Despite the month’s gains, international sugar prices remain more than 10 percent below their October 2013 level.
The vegetable oils sub-index rose for the first time since March, clocking in at 163.7 points in October, up 1.0 percent, or 1.6 points from September. Palm oil production slowdowns in Indonesia and Malaysia, combined with a revival in global import demand, sustained the increase.
FAO’s monthly Cereal Supply and Demand Brief also released today trimmed back the Organization’s forecast for 2014 world cereal production by about one million tonnes. At 2.5 billion tonnes, the full-year production figure would be 3.7 million tonnes below 2013’s record output.
Meanwhile, the forecast for global wheat production has been raised, as output from Ukraine is on track to be higher than previously expected. This growing season’s wheat crop is now expected to top last year’s record harvest with a total output of 722.6 million tonnes.
For rice, the forecast for global production remains unchanged at 496.3 million tonnes in milled rice equivalent. This would be 0.3 percent less than in 2013, and would mark the first decline since 2009.
Global inventories of all the main cereals remain on course to hit a 15-year high, although the forecast was marked down by 2.7 million tonnes from October’s projections to 624.7 million tonnes.
This figure is 8.0 percent above the level at the start of the 2014/15 growing season and would raise the global cereal stock-to-use ratio to a twelve-year high level of 25.1 percent.
Wheat reserves are projected to rise by 9.3 percent this year, while rice inventories are forecast to fall by 2.0 percent, reflecting expected inventory drawdowns, especially in major exporting countries such as India and Thailand.
FAO’s November brief also observed that global cereal utilization for direct human consumption is set to expand by 0.9 percent – in line with the global population, leaving per capita consumption stable – while utilization for livestock feed is expected to rise by 2.6 percent.
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Private sector can boost growth in landlocked developing countries – senior UN official
Private sector engagement is key to accelerating development in the world’s 32 landlocked developing countries (LLDCs), said delegates attending an event in the margins of the Second United Nations Conference on LLDCs, currently underway in Vienna, Austria.
In his opening remarks to the Business and Investment Forum, Secretary-General of the Conference, Gyan Chandra Acharya, said that the exchange between business and governments is “critical for partnerships and strategies to ensure a proper role for the private sector in the overall sustainable development of LLDCs.”
The day-long forum is an integral part of the Second UN Conference on LLDCs and brings together business leaders, government officials from landlocked countries and transit countries, as well as development partners.
It is important that the discussion consider the emerging post-2015 development agenda and the role that the private sector can play in successfully implementing the anticipated sustainable development goals, added Mr. Acharya, who is also the UN High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States.
Also speaking at the event, Ole Hansen, head of UN Global Compact LEAD noted, “Many LLDCs face unique and significant economic, environmental and social challenges. The long distances from world markets and absence of ocean ports literally take a toll on growth, on tax revenues and on standards of living.”
On average landlocked developing countries are some 1,370 kilometres from the nearest seaport – which is vast when compared to industrialized economies, such as those in Europe, which on average, are some 170 kilometres away from the nearest port. The reality is that the lack of access to the sea means that it is costlier for LLDCs to do business than it is for their maritime neighbours.
In her remarks the Permanent Representative of the International Chamber of Commerce to the United Nations, Louise Kantrow highlighted that, “Over the last decade, it has come to be understood that it is important for the private sector to be engaged in the early stages of policy development and partnerships [and] also for the dynamic role that it can play in transforming societies and being a driver of economic growth in LLDCs.”
During an open exchange of views, John Sullivan from the Centre for International Enterprise highlighted the need for an enabling business environment, where the registration of companies and intellectual property rights was simplified. Panelists also collectively emphasized the need to support small and medium enterprises and to view entrepreneurial set ups as key to the sustainable growth of the LLDCs.
Over 15 members of landlocked and transit countries were surveyed in the lead-up to the Conference to identify concrete proposals for how the private sector can effectively work with LLDCs.
Recommendations from this group have made up a committee survey to inform the intergovernmental deliberations on areas such as infrastructure, international trade, technological innovation and constraints on access to capital.
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LDCs encourage WTO members to design more effective preferential Rules of Origin
The Least Developed Countries (LDCs) Group at the WTO presented a report to the multilateral organisation’s Committee on Rules of Origin (CRO) on 30 October, calling for a more effective design of preferential rules of origin. The discussions are part of the work mandated by trade ministers at their last WTO ministerial conference in Bali, Indonesia in this area.
In the report, the LDC Group encourages WTO members to allow for changes in their rules of origin, or RoO, by taking into account the needs of low-income countries to source foreign inputs in today’s global value chains and the trade challenges faced by landlocked and island LDCs.
RoO confer an economic nationality on products traded across borders, defining how much processing must take place locally before goods are considered to be the product of the exporting country and benefit from preferential treatment.
LDCs have repeatedly voiced concerns that these preferential RoO are often too restrictive and impose onerous compliance burdens, making it difficult for LDCs to take full advantage of existing preferential margins. Furthermore, they say, such rules are currently designed on a unilateral basis, without any harmonised standard.
However, some experts say that even though well-designed rules of origin are a potentially powerful tool for LDC industrial development, there is a risk that the immediate benefits arising from more flexible rules are offset by longer term costs, specifically those associated with keeping LDCs in low value-added segments of production enjoying preferential market access.
In the report, the LDC Group underscores that existing preferential RoO are old and have not followed evolutions in world trade.
“The present rules were initially drawn up in the 1970s and they have not materially changed much since, whereas the commercial world has,” the paper says, while referring to the emergence of global value chains.
The report also explains that preferential margins have been eroded as a result of the proliferation of trade agreements, whereas the costs of compliance with RoO have increased significantly. These two factors combined render “preferences unattractive.”
EU, Canada as role models
In their paper, the LDCs use the examples of RoO reforms in Canada and the EU to illustrate how a shift towards more lenient and flexible RoO is conducive to development in preference-receiving countries.
“The results achieved by these two preference giving countries… show that a change in RoO reflecting global value chains generates a market response in terms of investment and trade flows,” the document states.
Consequentially, the paper calls upon WTO members, particularly the United States and Japan as major LDC trading partners, to review the substance and form of their RoO systems which “have not materially changed” since the 1970s.
In this context, the document states that “simple and transparent rules of origin for LDCs are those rules of origin permitting a full utilisation of trade preferences.”
In subsequent paragraphs, the report discusses how the EU and Canadian RoO reform efforts impacted trade with LDCs.
In the case of the EU, which upgraded its allowance for non-originating material to 70 percent in many sectors – from the previous 40 percent – and retained a single instead of a double processing stage for clothing in 2011, the paper finds that reform efforts helped increase the utilisation rates of preferential margins by LDCs from 89 percent in 2010 to 99 percent in 2013, excluding fuel and agricultural products.
With respect to Canada, where the government implemented more lenient RoO including greater opportunities for cumulation in 2003, the report argues that the LDC garment industry has reaped substantial benefits.
After the reform, utilisation rates are documented to have reached immediately 100 percent and, in the example case of knitted and crocheted garments, export volumes skyrocketed from US$17.8 million in 2002 to US$966 million in 2013, equalling a more than 50-fold increase.
Concerning US preferential RoO, the report highlights that “the US rules of origin seem to have been so far unable to trigger a diversification of exports and the value of trade covered by the US GSP is abysmally low.”
Preference-receiving LDCs such as African countries in the context of the African Growth and Opportunity Act (AGOA) reveal high utilisation rates only in a few sectors – particularly clothing – and would benefit from a revision of the US RoO scheme. The report makes a similar point for the preference-giver Japan, where LDC utilisation rates have stagnated.
The reform and policy changes witnessed in the EU and Canada “have yet occur in the case of the US and Japan,” concludes the LDCs Group.
Moving forward with the LDC agenda at the WTO
The continuation of work on preferential RoO in the context of the CRO was well received in the Geneva-based trade community, sources say, particularly given the persistent stalemate at the WTO on the implementation of two other Bali decisions relating to the Trade Facilitation Agreement and public food stockholding, respectively.
The identification of specific challenges facing LDCs in complying with existing RoO is part of a broader agenda launched under the WTO Ministerial Decision on preferential RoO in during last December’s Bali ministerial conference.
This Decision mandated the CRO to “annually review developments in preferential rules of origin applicable to imports from LDCs… [and] report to the General Council.”
In this context, WTO members also took note of the LDCs’ case for rules on a more generous sourcing of foreign inputs “in order for a good to [still] qualify for benefits under LDC preferential trade arrangements.”
In the report presented at the latest CRO meeting, the LDC Group reiterated its calls for more lenient RoO. Among other proposals, and in light of the increasing global fragmentation of value chains, it argued for greater flexibility for LDCs to source inputs from abroad.
Specifically, the group said that LDC exports should be conferred domestic origin by preference givers even when these exports feature a share of non-originating materials as high as 85 percent. In this context, the report states that “the LDCs will further engage in research to identify appropriate level of percentages.”
The LDC Group also argues that preferential RoO should take into account the costs of freight and insurance when it comes to determining the value of materials, particularly from landlocked and island LDCs, which have to ship goods through transit countries and overcome significant hurdles to integrate into global value chains.
Sources familiar with last week’s CRO meeting indicate that when presented with the report and the above-mentioned reform proposals, Brazil, India, Switzerland, Canada, and the EU were among those who welcomed the effort but asked for additional time to study the document in detail. Subsequently, Ken Chang-keng Chen of Chinese Taipei, who chairs the CRO, said that discussions in this regard would continue at the committee’s next meeting in April.
During last week’s meeting, the Swiss delegation reportedly affirmed that it is vital to move forward on least developed country issues at the WTO, without allowing the difficulties facing other areas of the organisation to slow down the committee’s work.
From Singapore to Bali
WTO negotiators first attempted to address the issue of preferential RoO in the context of the Duty Free Quota Free (DFQF) initiative, which was introduced at the WTO's First Ministerial Conference in Singapore in 1996.
Little progress was made in the following decade, although the 2005 Hong Kong Ministerial Declaration does feature a brief reference calling upon developed countries and developing countries in a position to do so to design “simplified and transparent rules of origin so as to facilitate exports from LDCs.”
The RoO debate gained momentum in the run-up to the Bali Ministerial Conference in December 2013 and culminated in the adoption of a set of guidelines setting out technical aspects of preferential RoO. The guidelines also discuss different methodologies to determine when substantial or sufficient transformation has taken place, as well as possibilities for cumulation of inputs that would enable LDCs to source material competitively and integrate into regional and global value chains.
Though being a “step in the right direction,” as some trade delegates have said, many observers were quick to mention that the Bali decision was mainly in in the form of non-binding guidelines, implying that developed country members are free to choose whether to adopt these guidelines.
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Azevêdo welcomes call to implement trade facilitation to benefit poorest landlocked nations
Director-General Roberto Azevêdo welcomed on 5 November 2014 a joint statement issued at the conclusion of a United Nations conference on landlocked developing countries which underlined the importance of the Trade Facilitation Agreement in helping reduce trade costs.
The “Vienna Programme of Action” (download below) adopted at the end of the Second UN Conference on Landlocked Developing Countries (LLDCs) includes trade and trade facilitation as one of its six priorities. It states:
“The Agreement on Trade Facilitation and its timely implementation in the context of the Bali package are important so as to facilitate trade for landlocked developing countries. The Agreement includes important provisions on technical assistance and capacity-building to help landlocked developing countries to implement it effectively.”
LLDCs are often prevented from participating fully in international trade by their very high transaction costs, as exports can have to cross multiple borders to reach their markets. A World Bank study found that, on average, it costs more than $3,000 to export a standard container of cargo from a landlocked developing country compared to just under $1,300 for a coastal country.
Once implemented, the Trade Facilitation Agreement, which was agreed by all WTO members in Bali last December, will help to speed up the transit of goods to and from LLDCs, while also reducing the costs involved.
However, since July WTO members have been unable to find consensus on the implementation of the Agreement. DG Azevêdo urged members on 31 October to continue talking about ways to resolve the impasse.
DG Azevêdo said:
“The landlocked developing countries had a prominent voice in the negotiations which led to the Trade Facilitation Agreement. Today they are calling once again for the Agreement to be implemented so that they can improve their economic prospects and lift their people out of poverty. The voices of the LLDCs must be heard – and others should listen carefully to what they have to say.”
DG Azevêdo attended the conference on 3 November to highlight what the WTO was doing for LLDCs, and the importance of implementing the Trade Facilitation Agreement in their interests. His speech is available here.
Mr Gyan Chandra Acharya, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said:
“This Trade Facilitation Agreement when it is fully implemented has the potential to address some of the fundamental transit policy issues that affect LLDC exports and will bring concrete benefits to these countries in terms of easier and faster cross-border trade.”
Ambassador Juan Esteban Aguirre Martínez of Paraguay, who coordinates the LLDCs at the WTO, said:
“The Trade Facilitation Agreement will bring concrete benefits to LLDCs in terms of easier and faster cross-border trade. Being able to facilitate the flow of trade making it quicker, easier and cheaper would allow LLDCs to benefit more fully from market access and significantly improve their competitiveness and integration into the world markets.”
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Biofuels remain an important and growing sector for developing countries, new UNCTAD report says
The report entitled: “The State of the Biofuels Market: Regulatory, Trade and Development Perspectives” offers a comprehensive snapshot of today’s biofuels market and how it contributes to enhancing access to renewable energy sources sustainably and improving the livelihoods of people in developing countries.
Biofuels now account for 1 per cent of global energy use, a new UNCTAD report on the state of the global biofuels market has found, with second-generation technologies, climate change concerns and economic pressures shaping the future of this increasingly important sector.
Nonetheless, “while alternative energy sources are growing faster than any other energy source, they still account for a very limited share of primary energy demand, therefore they are not expected to replace fossil fuels but to play a complementary role in satisfying the world energy demand,” the report says.
The State of the Biofuels Market: Regulatory, Trade and Development Perspectives was launched on 24 September at the World Bio Markets Brazil Conference in Sao Paulo, Brazil, and offers a comprehensive snapshot of today’s biofuels market and how it contributes to enhancing access to renewable energy sources sustainably and improving the livelihoods of people in developing countries.
The report is an update of a similar report produced by UNCTAD in 2006 and notes that as of 2014 bioethanol and biodiesel had already become established products traded daily in all continents thanks to their use in the transport sector, especially for road vehicles.
However, an important development has been the emergence of alternative markets for liquid biofuels, which are now used in commercial aviation, electricity generation, for cooking energy and even in maritime transport.
As well as offering analysis of the state of today’s biofuels market, the report contains policy recommendations for developing countries to make beneficial use of biofuels.
These include the creation of regulatory frameworks tailored to national resource endowments which do not antagonize food and energy supplies but rather enhance agricultural productivity, rural income and workers’ skills.
The development of competitive second-generation biofuels, which are made from woody crops, agricultural residues or waste (unlike first generation biofuels made from the sugars and vegetable oils found in arable crops), will pose a number of challenges to developing countries, the report says.
One key recommendation is a call for international strategies to avoid the emergence of a technological gap between land-intensive first generation and capital-intensive second-generation biofuels.
Developing countries also need to:
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Ensure that the cost of sustainability certification is spread along supply chains in a way that protects small farmers from undue cost burdens.
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Promote a continuous inflow of private investment and production and process technologies to developing countries, especially through predictable business environments.
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Prioritize research and deployment of advanced technologies that can convert non-edible biomass into bioenergy products, doing so in cooperation with other countries to reduce costs.
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Facilitate trade by engaging in consultations and adoption of regulations which are compatible with sustainability rules adopted in major markets.
The report represents a contribution to the wide-ranging global discourse on energy security, sustainable development and poverty alleviation.
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EU lifts decade-long economic sanctions on Zimbabwe
The European Union (EU) has lifted its decade-long economic sanctions on Zimbabwe in a move that will see the trading bloc extending 234 million Euros (about 300 million U.S. dollars) to support socio-economic programs in Zimbabwe in the next five years.
EU ambassador to Zimbabwe Philipe Van Damme told journalists at a press conference that President Robert Mugabe and his wife Grace, however, still remain on the EU restrictive measures which are due for review next February.
He said the lifting of the appropriate measures under Article 96 of the Cotonou Agreement which governs relations between the two sides will pave way for Zimbabwe to benefit from the 11th European Development Fund for the period 2015 to 2020.
The lifting of the measures which were imposed in 2002 following political differences with Harare is with effect from Nov. 1, 2014.
He said the funding will be channelled towards political and economic governance, health and agricultural sectors.
After imposing the appropriate measures, the EU was channelling its support to Zimbabwe through multilateral and donor agencies and Van Damme said the EU will review each funding project to see how best it can channel the funds.
“With this decision of having Article 96 appropriate measures lifted, I think we have reached a very important step towards normalization of relations with Zimbabwe because what this implies is that we can once more re-engage in a more structured and formal way with government to have constructive dialogue on political and policy issues,” Van Damme said.
He said part of the EU funding will be used to enhance economic reforms in Zimbabwe so that it can create a conducive environment for investment attraction.
“With the lifting of the appropriate measures the EU will be able to support the Zimbabwe government in implementing the IMF Staff Monitored Program and engage government on essential economic reform programs,” he said.
The lifting of the measures comes as the EU, which has been gradually easing the measures since 2009, has begun efforts to re-engage Zimbabwe as evidenced by a British trade delegation currently visiting Zimbabwe while the Danish trade minister is scheduled to visit next week to explore areas of cooperation.
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COMESA-EAC-SADC: Technical Committee on Movement of Business Persons
The 3rd meeting of the COMESA-EAC-SADC Tripartite Technical Committee on Movement of Business Persons (TTC-MBP) is being held from 3 to 6 November 2014, at Le Méridien Hotel, in Pointe aux Piments.
Discussions are ongoing on a draft negotiating text on the Movement of Business Persons. Around 80 delegates from the 26 Tripartite Member States are participating in the meeting.
The first COMESA-EAC-SADC Tripartite Summit held in October 2008, in Uganda took major decisions in terms of moving towards a single market. One of the immediate priorities is to establish an enlarged Free Trade Area (FTA) encompassing the 26 Member States of COMESA, SADC and EAC. The Summit also agreed that negotiations to facilitate the movement of business persons should run in parallel with the negotiations on the Tripartite FTA, but on a separate track.
The issue of movement of business persons is very important to Mauritius with regard to its regional integration process. The mobility of business persons is a key factor of free and open trade. Facilitating access to our businessmen to move in the region provides benefits in terms of reduced delays, costs and burdensome administrative procedures, thereby leading to more efficient flow of goods, services, capital and people. Without an appropriate framework on the movement of business persons, the benefits of regional integration would be undermined.
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Poorest landlocked nations must be heard on trade facilitation, DG tells UN meeting
Landlocked least developed countries were vocal in negotiations on cutting red tape in customs and other border procedures – known as “trade facilitation” – and the support they continue to give should be heard, particularly now that the deal is at an impasse, Director-General Roberto Azevêdo told the second UN conference on these countries’ issues in Vienna, 3 November 2014.
I am delighted to be here today at this important event, and to have the chance to address this distinguished audience.
As we have already heard this morning, landlocked developing countries face some very specific challenges which can obstruct their integration into the global economy.
The poorer the country, and the fewer resources it has, the more difficult these challenges can be to overcome.
As a consequence, many LLDCs are less likely to reap the development benefits that trade and foreign direct investment can bring – and many millions of lives remain bound, needlessly by poverty.
This is not acceptable in the 21st century, when we have the technology in transport and communications to eliminate distance as an economic issue.
So, in the few minutes I have now, I want to talk briefly about two ways that the WTO can help to improve this situation.
The first area of our work that I’d like to mention is the Aid for Trade initiative.
LLDCs receive comparatively less foreign direct investment than coastal states – and of course they need more help to deal with their specific challenges, such as diversifying export markets, for example, or dealing with bottlenecks in transit.
The Aid for Trade initiative can help to fill this gap. The most recent figures available on Aid-for-Trade flows indicate that commitments to LLDCs stood at 8.8 billion US dollars in 2012, up from 7.2 billion in 2011.
In addition, all landlocked countries that are also Least Developed Countries, receive support through the Enhanced Integrated Framework.
The Enhanced Integrated Framework is an important Aid-for-Trade programme – of which the WTO is proud to be a key partner. It can do a great deal to support those LLDCs to build their capacity to trade.
I am currently working to ensure that this programme is continued into a new phase – so that it can provide more, and better, support to LLDCs, and others, in the future.
The second way that the WTO can help is by supporting efforts to facilitate trade across borders.
The WTO struck a major agreement on this issue in Bali last December.
The LLDCs had a very prominent voice in the negotiations which led to the Trade Facilitation Agreement along with a number of other important issues – and I want to take this opportunity to thank you for the role you played.
You rightly identified, very early in the process, the great potential that the Trade Facilitation Agreement would have to address many fundamental issues for the LLDCs.
And your efforts paid off. Once implemented, the agreement will cut the costs and delays at borders which can prove so prohibitive.
And, thanks in no small part to your influence, the agreement makes clear that countries should not apply their technical regulations and standards to goods in transit. This is crucial for LLDCs, as it will provide LLDC producers with significant cost savings, making their exports more competitive in foreign markets.
And Trade Facilitation does not just work in theory – we have ample evidence that it works in practice too – especially for LLDCs.
An excellent illustration of this is the corridor in East Africa linking Burundi, the Democratic Republic of Congo, Rwanda, Uganda and South Sudan to the Kenyan port of Mombasa.
The achievements here have been remarkable. For example, the cost of moving a container from Mombasa to Kampala has been cut by almost 50%. And the time taken for goods to complete this journey has been cut from 18 days to just 4.
Reducing costs and delays like this can be the difference between a business failing or thriving.
The WTO’s Trade Facilitation Agreement would apply this approach on a global level – and it would provide for capacity building support to help developing countries make the necessary reforms.
We know that the main challenge holding LLDCs back from increased participation in international trade continues to be their very high transaction costs. So it is essential for LLDCs that this agreement is implemented as soon as possible.
48 developing country members of the WTO have already taken practical steps to prepare for the Agreement by notifying us of the commitments they are ready to implement. Of those 48, 6 are LLDCs and 10 are transit countries. This is a technical point, but I raise it because it shows that transit measures would likely be put in place as soon as the agreement is implemented. This would be a crucial step for LLDCs.
However, I am sorry to say that WTO members are currently at an impasse on the implementation of the Agreement. This has been the case since July, and we continue to do all we can to ensure that a solution is found.
I have heard strong support for Trade Facilitation in Vienna today – and this is reflected in the draft Programme of Action for LLDCs (click here to download) that is before this conference.
It is vital that the Programme of Action sends a strong message about the importance which LLDCs attach to the Trade Facilitation Agreement.
The voices of the LLDCs must be heard – and others should listen carefully to what you have to say.
For the sake of the LLDCs – and all developing countries – I am determined that we will make progress.
CONCLUSION
In closing, I would just like to make one further point.
The adoption of this new Programme of Action for LLDCs comes at a crucial time in the development calendar, as the post-2015 development agenda and the Sustainable Development Goals are being discussed.
It will be important to build strong links between these two agendas to support development and poverty reduction in the LLDCs.
In addition, I believe any development agenda which is people-focused and forward-looking must have a strong emphasis on the economic aspects of human development. And therefore trade must also be central.
I look forward to continuing this debate with all of you in the weeks and months ahead.
Thank you very much for listening. I wish you a successful conference.
Address by the Minister of International Relations and Cooperation on Agenda 2063
Address by the Minister of International Relations and Cooperation, Ms Maite Nkoana-Mashabane, to the Special Joint Sitting of Parliament debating Agenda 2063 in Cape Town, 31 October 2014
“We must continue to promote the African Agenda. It remains the anchor of our foreign policy. We should thus continue to work closely in support of the African Union, and its agencies to build a credible, prosperous and peaceful Africa.”
This is what President Jacob Zuma told the 2014 Heads of Mission Conference about the tasks that must be executed effectively and efficiently by every South African diplomat.
Therefore, today we are gathered here to speak about the Africa we want for our generation and those who will inherit this continent from us.
Africa has undoubtedly transformed from where it was in 1963 when we formed the Organisation of African Unity (OAU) to chart a new path for the continent, and lay the foundation for the African Union we are proud Members of today.
Last year we celebrated the 50th anniversary of the OAU/AU “Moropa o llile kgorong tsa Addis Ababa”. We looked back with measured satisfaction at the road we have travelled. But we also committed ourselves to doing more and better in the next fifty years. In making this commitment, our leaders at their May 2013 Summit, undertook to prepare a vision and road-map of where Africa should be in fifty years, in the year 2063. This vision, now consolidated into a framework document, is what we know today as Agenda 2063. What we are talking about here is not a wish-list but a carefully thought our plan with identified drivers and an implementation strategy.
Agenda 2063 is about the Africa we want to build in the future. It connects the Africa of yesterday to the Africa of today and the Africa of tomorrow. The Africa of yesterday is the indispensable lessons we have learnt since the days of independence. The Africa of today is our destiny that is firmly in our hands with every action we take. The Africa of tomorrow is the future we are creating through what we do today.
However, Agenda 2063 is people-centered and people-driven. In this regard, the June 2014 Summit of the AU requested Member States to consult domestically, to ascertain the views of all our people, across all sectors, on Agenda 2063. This Joint Sitting is part of these consultations.
Other South African stakeholders are also being consulted. The Department of International Relations and Cooperation (DIRCO) has convened consultations with government departments as well as representatives of the Youth; Academics and Think-Tanks; Women; Civil Society; and the Business sector consultation process continues.
In the consultations convened by DIRCO, the stakeholders welcomed the African Union’s decision to develop Agenda 2063. Amongst others, the consultations confirmed the urgency with which the stakeholders want the African Union and its Member States to strengthen the implementation of policies aimed at bettering the lives of ordinary Africans. Stakeholders emphasised that Africa should have the essential resources to attain the seven Aspirations of Agenda 2063.
What will be needed, the stakeholders told us, is sustained political will; as well as bold and transformational leadership across the sectors of our society and nation.
Government departments also had their say. Their input highlighted the need for strengthened cooperation and coherence in the formulation of policies at the national, regional and continental levels. This would ensure clarity and complementarity in resource allocation and management; and also for monitoring and evaluation purposes.
The phase of conceptualisation and consultations over the base programme of Agenda 2063 is expected to be concluded at next year’s January Summit of the AU where, among others, the first of the ten-year implementation plans for this vision will be considered. AU Member States and the Regional Economic Communities will be required to include the elements of Agenda 2063 Plan in their national and regional programmes, respectively. This Parliament will be expected to be an active part of the implementation of this Plan, including through its oversight role.
To jog our memories, the evolving Agenda 2063 is currently premised on seven aspirational pillars, which are:
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A prosperous Africa based on inclusive growth and sustainable development;
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An Integrated Continent, politically united, based on the ideals of Pan Africanism;
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An Africa of good governance, democracy, respect for Human Rights, Justice and the Rule of Law;
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A peaceful and secure Africa;
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An Africa with strong cultural values and ethics;
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An Africa where development is people-driven, relying particularly on the potential of women and youth; and
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Africa as a strong and influential global player and partner.
In highlighting the above Aspirations, the African people unequivocally expressed a collective desire to uplift the continent from the morass of underdevelopment and degradation. With Agenda 2063, the AU is rallying all African to continue the march for the rebirth of the African continent in all aspects – to extend our political liberation to economic and social liberation.
We once again commend Parliament for convening this Joint Sitting whose purpose is:
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To get Parliament’s insight and full participation in Agenda 2063 processes;
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Gather inputs for the finalization of the Agenda 2063 Draft Framework Paper which has been widely circulated;
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Validate and strengthen the seven Aspirations that will drive the continent’s transformation; and
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Determine how Africa should resource its transformation and continental institutions to reduce its dependency on donors, among others.
Agenda 2063 prioritises our unity and regional integration as key vehicles for Africa’s accelerated social and economic development. The Solemn Declaration adopted by AU leaders during the 50th anniversary celebrations held in May 2013 speaks to this determination, and the collective responsibility required in order to develop Africa to its fullest potential. Recognizing that Africa can achieve this potential, Agenda 2063 echoes the Pan-African call that Africa must unite in order to realize its Renaissance. The destiny of Africa is in our hands. We must act now to shape the future we want. This is what is at the heart of Agenda 2063 – that as Africans, we must define, shape and pursue the future that we want.
Agenda 2063 is thus a shared strategic framework for inclusive growth and sustainable development for Africa’s transformation. Importantly, it is a continuation of the Pan-African drive for self-determination, freedom, progress and collective prosperity – in order to, amongst others; galvanize and unite in action all Africans and the Diaspora around the common vision of a peaceful, integrated and prosperous Africa, driven by its citizens and taking its rightful place in the world.
Our government’s work for a better life for South Africans is intertwined with the country’s pursuit of a better Africa in a better world. The county’s destiny is inextricably linked to that of the Southern African region and the entire Africa. Regional and continental integration is the foundation for Africa’s socio-economic development and political unity, and essential for South Africa’s prosperity and security. Consequently, Africa is at the centre of South Africa’s foreign policy.
South Africa’s National Development Plan (NDP) already includes the key proposals in Agenda 2063, including a strengthened focus on regional cooperation and integration. The NDP highlights that South Africa needs to deepen its investment and promotion of cooperation and integration as means to enhance socio-economic development, both in Southern Africa, and in the rest of the continent. Amongst others, enhanced regional integration will expand regional and continental trade; and the sharing of experiences and technical cooperation across the sectors.
The realisation of Agenda 2063 will be influenced by where the world will be in 30 to 50 years. Several scenarios have been developed by experts and think-tanks for the world of the next five decades. Scenario planning is of course not an exact science but it is nonetheless helpful for planning purposes and projecting into the future. One thread running through the various scenarios for the future tells the story of the shift in the international balance of forces in the direction of the countries of the South. Therefore Africa has to ensure that is part of this shift; that it leverages it to attain the goals of Agenda 2063.
There are challenges in our current global system that will need to be overcome, and among them are:
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The untransformed and undemocratic nature of the global institutions that govern the world we live in;
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The uni-polarity and unilateralism which undermine our multilateral institutions and the multi-polarity required for Africa to have a greater voice in the world; and
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The continuing threat to international peace which affect our continent and other developing countries; whose objective, in many instances, is regime change and control over our natural resources.
A transformed international order is what we want as Africa. Indeed, one of the seven Aspirations of Agenda 2063 is about “Africa as a strong and influential global player and partner”. Africa will prosper better in a transformed world that is governed democratically. A better world will enable Africa to leverage its demographic dividend to claim its place in the 21st century. The Africa we see rising today must be in full flight in 2063.
But how high and fast we rise as a continent will depend on what we do today. The following principles should therefore inform our approach to the future, and these are:
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African ownership, including finding our own solutions to our problems;
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Silencing the guns once and for all;
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Self-reliance to reverse and eradicate our dependency including on Aid for fiscal support;
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Our people must come first, with the benefits of a prosperous Africa fairly shared among all of us;
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Industrialisation supported by a strong infrastructure, instead of dependence on commodities and other raw materials;
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African unity should remain paramount; and
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Africa should continue to be assertive in world affairs and not give in in its demand for a permanent presence on the UN Security Council.
The potential of our continent is not in doubt. The UN’s children agency, UNICEF, estimates that based on current trends, within the next 35 years, 25 in every 100 people in the world will be African; and that by then, 40 percent of the children in the world aged under five years, will come from our continent. Our people are our wealth.
One article in African Business Magazine of January 2013, caught my eye because of its title “Why Africa Will Rule The 21st Century”; which read as follows:
“According to the authors of a new book, The Fastest Billion – the story behind Africa’s Economic Revolution, Africa’ s current sustained growth level is set to not only continue but rise over the next four decades so that, come 2050, the continent’ s GDP will equal the combined GDPs of the US and the EU at current prices” (close quote)
Indeed, in his address to that historic gathering in Addis Ababa in 1963 which established the OAU, President Kwame Nkrumah of Ghana, speaking about Africa’s potential, highlighted that,
“The resources are there. It is for us to marshal them in the active service of our people. Unless we do this by our concerted efforts, within the framework of our combined planning, we shall not progress at the tempo demanded by today’s events and the mood of our people” (close quote).
Agenda 2063 seeks to provide this framework as we, today, seek to respond to the demands of our time for a better Africa.
Looking beyond into the future as South Africa, we take our guide and inspiration from the Freedom Charter. “There Shall be Peace and Friendship”, we said. With peace, we will seek no wars. With friendship, South Africa will have no enemy in the world’s community of nations but partners and friends.
The NDP is our roadmap to the year 2030; and happily so, resonates very well with Agenda 2063.
Between now and 2019, in our Medium Term Strategic Framework – and in creating a better South Africa, contributing to a better and safer Africa in a better world – our output priorities are:
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Advancing our national priorities in our bilateral and multilateral engagements;
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An economically integrated Southern Africa;
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Political cohesion within Southern Africa to ensure a peaceful, secure and stable Southern African region;
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A peaceful, secure and stable Africa;
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A sustainable, developed and economically integrating Africa;
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An equitable and just system of global governance;
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Strong, mutually beneficial South-South cooperation; and
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Beneficial relations with strategic formations of the North.
As South Africa we are clear of the task at hand. Agenda 2063 is a call to action.
President Oliver Tambo had us in mind when he addressed the 50th session of the OAU Liberation Committee in Harare in May 1988 when he said:
As we mark this historic occasion of the 25th anniversary of the OAU Liberation Committee and its 50th session, and cast our eyes west into the Caprivi Strip and Namibia and across the Limpopo into South Africa, we see the tree of freedom rising in all its magnificence, watered by the blood of our own peoples and nourished by the victories that the peoples of our continent have scored during the last quarter of a century.
There will be no 50th anniversary of the Liberation Committee to celebrate and no hundredth session, because long before then, we shall all meet in a liberated Namibia and liberated South Africa, together to attend to the urgent question of the rebuilding of our continent as a zone of prosperity, peace and friendship among the people. (close quote).
Two years after this address, Namibia got its independence. Ours followed four years later. Our freedom was just but the beginning of a more difficult struggle for a better South Africa in a better Africa and a better world. President Tambo was clear about the task for a free South Africa. As he put it: “together [we must] attend to the urgent question of the rebuilding of our continent as a zone of prosperity, peace and friendship among the people.”
The poignant message from Comrade O.R. resonates well with Agenda 2063.
This is what we have been doing since 1994. Prosperity, peace and friendship are critical to the attainment of the vision encapsulated in Agenda 2063.
Honourable Members, I encourage you today to propose, critique, and offer solutions and strategies on the Africa you want by 2063. We all know the challenges. The vision is clear. Of importance today is what must be done to achieve the Africa we want? Today’s Joint Sitting must help us answer this question.
Now is the time to contribute to the vison of our fore bearers to achieve the goals of the Africa we want.
I thank you!