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World needs ‘paradigm shift’ towards sustainable agriculture, UN agency urges
In order to move towards more sustainable agriculture, a broader approach is needed to overhaul the world’s food system, the head of the United Nations Food and Agriculture Organization (FAO) said today, as he pressed for a global reduction in the quantity of chemicals and water in contemporary agriculture.
Speaking at the opening of the 24th session of the Committee on Agriculture (COAG) in Rome, Director-General José Graziano da Silva called for a “paradigm shift” in global attitudes on agriculture, adding that only by decreasing the amounts of “inputs,” such as water and chemicals, could the sector move towards a more sustainable and productive long-term path.
“We cannot rely on an input-intensive model to increase production,” Mr. Graziano da Silva declared. “The solutions of the past have shown their limits.”
Pointing to options such as agro-ecology, climate-smart agriculture, biotechnology and the use of genetically modified organisms, the Director-General emphasized that global food production would need to grow by 60 per cent by 2050 in order to meet the expected demand from an anticipated world population of nine billion.
“We need to explore these alternatives using an inclusive approach based on science and evidence, not on ideologies,” he continued.
Established in 1971 and with over 100 members within its ranks, the COAG’s biennial meeting is currently addressing a wide range of issues, including family farming, sustainable agriculture, food safety, water governance, soil management and agricultural heritage systems.
Addressing the Committee in his keynote speech, the President of the Dominican Republic, Danilo Medina, underscored his Government’s support of the principle that food be considered a universal right and noted that his country was on the verge of passing a law establishing said right.
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Mombasa to tax goods imported through port
The Mombasa county government has flexed its muscle by trying to control the stakes at the Kenya Ports Authority by introducing its own levies for all cargo passing through the facility.
In this year’s 2014/15 Finance Bill, the county government has proposed a Transport Infrastructure Development Levy of US$2 (Sh174) per metric ton to be remitted by all ships calling at the port.
The levies will be collected by Mombasa county through the port managers once the bill is ratified and implemented.
“Transport Infrastructure Development Levy of US$2 per metric ton or US$10 per shipment, whichever is higher, to be levied on all marine cargo through the harbours/port, to be collected through port managers,” reads part of the bill, which is still in its draft stages.
The bill has also introduced Port Health Fees and Charges for exports, imports, supervision and destruction of condemned goods, as well as the spraying and fumigation of vessels against vectors.
Port users will be required to pay US$20 (Sh1,740) per ton for Export permits and Import clearance respectively and shipping lines will have to pay $60 (Sh5,220) for vessel inspection each time they dock at the port.
The county argues that some vessels call into the country with diseases that must be controlled, and therefore the spraying of vessels against vectors will be $60 (Sh5,220) per square metre and fumigation will be $20 (Sh1, 740) per ton.
Mombasa County Trade executive Mohamed Abdi said all the shipping activities at the Mombasa port must be well-regulated for the county to also earn revenue.
“We are doing this for the benefit of the Mombasa residents and, also, if ships dock at the port and are not inspected against vectors, we might end up contracting diseases as a county,” he said.
He was speaking on Friday during the public participation session of the county finance bill at the Kenya School of Government in Kizingo, Mombasa.
The bill has also proposed that local ship’s chandlers supplies’ clearance fees will depend on the weight of the cargo being cleared.
Less than a ton, the chandlers will be paying Sh1,000 whilst for 2-5 tons they will pay between Sh2,000 and Sh5,000.
“Container verification charges will be US$40 (Sh3,480),” the new bill states.
This has already caused an uproar, with the Shippers’ Council of East Africa and Kenya Association of Manufactures saying that it will be double taxation, since there are other institutions in charge of regulation at the port.
Kenya Association of Manufactures’ Coast chapter vice-chair Jinal Shah, who was present during the public hearing at the KSG, said the move will lead to increases in the prices of imports and exports.
“We already have institutions that are in charge of revenue collection at the port. Taxation should be one-way because impositions of new port charges are not economically viable,” said Shah during the meeting.
Shippers Council of East Africa CEO Gilbert Langat yesterday opposed the new levies, saying they are unjustifiable and will increase the cost of doing business in the shipping sector.
“The cost of doing business in Kenya is already very high – by imposing such new levies, the county will lose business to the rival port in Tanzania,” said Langat.
He said the county government should cede the regulation and levy collection mandate to the national government and demand a certain percentage from the total revenue collected.
“We cannot have instances of everyone trying to regulate activities at the port. Let the county government agree with the national government that they will be getting a certain share from all the revenue collected,” he said.
Political observers said that the Mombasa government is trying to introduce charges at the port in an attempt to flex its muscle to try and control the facility’s operations.
Mombasa Governor Hassan Joho and Senator Hassan Omar have been in the forefront championing the devolution of the port facility to the county government.
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South Africa August trade gap widens to biggest in 7 months
South Africa’s trade deficit widened to the biggest in seven months in August as oil imports increased and iron-ore exports fell because of maintenance work on a rail line.
The trade gap swelled to 16.3 billion rand ($1.4 billion) from a revised 6.8 billion rand in July, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The median estimate of 14 economists surveyed by Bloomberg was for a shortfall of 8.7 billion rand.
Transnet Holdings SOC Ltd.’s freight-rail unit shut its export iron-ore line from Sishen in the Northern Cape province to the Saldanha port for 10 days for annual maintenance last month, leading to a drop in shipments of the metal. Exports of vehicles and transport equipment rebounded after a strike in the metals and engineering industry in July forced carmakers such as General Motors Co. (GE) and Ford Motor Co. to shut their plants.
The large trade gap is “indicative of the very slow improvements of the productive sectors of the economy,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said by phone. “South Africa’s trade deficit is likely to remain structurally high over the medium term and it suggests that the turnaround in the currency’s fortunes seem unlikely any time soon.”
Worst Performer
The rand reversed gains after the release of the trade figures, falling to the weakest level since January. It traded 0.4 percent lower at 11.3268 per dollar as of 2:36 p.m. in Johannesburg, extending its loss since the start of last year to 25 percent. That’s the worst performance of 16 major currencies tracked by Bloomberg.
The trade shortfall so far this year widened to 70.7 billion rand compared with 51.9 billion rand for the same period in 2013, the revenue service said.
Exports dropped by 9.6 percent to 77.2 billion rand in August as shipments of mineral products, which include coal and iron ore, fell by 5.1 billion rand, or 24 percent, and precious metals and stones decreased by 15 percent. Shipments of vehicles and transport components increased by 13 percent.
Imports rose by 1.4 percent to 93.5 billion rand as purchases of mineral products climbed 11 percent. Machinery and electronics purchases advanced 4.9 percent.
The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.
Trade Statistics for August 2014 (SARS)
The South African Revenue Service (SARS) on 30 September 2014 released trade statistics that includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS) for August 2014 and that recorded a trade deficit of R16.30 billion. The inclusion of BLNS country trade data was announced on 14 November 2013 and will be included in all future trade statistics.
The R16.30 billion deficit for August 2014 can be attributed to exports of R77.24 billion and imports of R93.53 billion.
Exports decreased from July to August by R8.19 billion (9.6%) and imports increased from July to August by R1.28 billion (1.4%). The cumulative deficit for 2014 is R70.74 billion compared to R51.88 billion in 2013.
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Africa: The surplus decreased from R14 179 million in July 2014 to R12 974 million in August 2014. Exports decreased by R 121 million to R24 970 million and imports increased by R1 084 million to R11 996 million.
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America: The deficit increased from R 838 million in July 2014 to R3 833 million in August 2014. Exports decreased by R1 596 million to R6 514 million and imports increased by R1 399 million to R10 347 million.
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Asia: The deficit increased from R14 927 million in July 2014 to R18 136 million in August 2014. Exports decreased by R4 187 million to R23 248 million and imports decreased by R 978 million to R41 384 million.
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Europe: The deficit increased from R8 645 million in July 2014 to R10 332 million in August 2014. Exports decreased by R1 943 million to R18 022 million and imports decreased by R 255 million to R28 354 million.
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Oceania: The deficit decreased from R 458 million in July 2014 to R 419 million in August 2014. Exports increased by R 319 million to R 933 million and imports increased by R 280 million to R1 352 million.
The trade data excluding BLNS for August 2014 recorded a trade deficit of R23.94 billion. The deficit for August 2014 can be attributed to exports of R67.02 billion and imports of R90.96 billion.
Exports decreased from July to August by R7.21 billion (9.7%) and imports increased from July to August by R1.23 billion (1.4%). The cumulative deficit for 2014 is R136.73 billion compared to R106.19 billion in 2013.
Trade statistics with the BLNS (only) for August 2014 recorded a trade surplus of R7.65 billion. The surplus can be attributed to exports of R10.22 billion and imports of R2.57 billion.
Exports decreased from July to August by R0.98 billion (8.7%) and imports increased from July to August by R0.06 billion (2.2%). The cumulative surplus for 2014 is R66.00 billion compared to R54.31 billion in 2013.
For further information, visit the SARS website.
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Kenya: Highlights of the revision of National accounts
Kenya National Bureau of Statistics (KNBS) initiated the process of rebasing and revision of the National Accounts Statistics in 2010. Specific tasks were to implement some of the recommendations contained in 2008 System of National Accounts (2008 SNA), change the base year from 2001 to 2009 and, revise the annual and quarterly national accounts statistics for the period 2006 to 2013. In addition, the revision was to include for the first time the development of Supply and Use Tables (SUT) as an integral part of the National Accounts Statistics. The Supply and Use Tables gives detailed information on the production processes, the inter-dependencies in production, the use of goods and services and the generation of income in production. The SUT was used as a framework for the revision process. This was published in the 2014 Economic Survey report. Also presented in the same report were the preliminary revised GDP estimates for 2009 and have since been firmed up.
Broadly, the revision process involved use of a wide range of information obtained from surveys, censuses and administrative records. This was done in a coherent and consistent manner to achieve the overall goal of improved National Accounts statistics.
Rebasing of national accounts series means replacing the old base year used for compiling the constant price estimates to a new and more recent base year. It is essentially done to ensure that the principal measure of economic growth yields good estimates over the medium term following the base year. It is desirable to periodically rebase, to update the production structure; structural changes in relative prices of various products and; incorporate product changes due to developments and innovations. In addition, changes on the demand side like consumption patterns, utilization and acquisition of capital goods are all also updated through such a process. Rebasing is used to account for these changes, so as to give a more current snapshot of the economy.
This is the sixth time that Kenya has revised the National Accounts Statistics. The first official estimates of domestic income were prepared in 1947. The first revision was carried out in 1957 after a number of surveys were conducted to fill in the data gaps. Subsequent revisions were carried out in 1967, 1976, 1985, 2005 and 2014.
The revised GDP estimate translates to 20.5 per cent increase in the level of 2009 GDP and rises to 25.3 percent in 2013. The main contributing factors included improved coverage and revised input-output production structures which were lower in a number of sectors compared to the revised estimates. The use of new data such as 2009 Kenya Population and Housing Census (KPHC), 2005/06 Kenya Integrated Household Budget Survey (KIHBS) and 2010 Census of Industrial production (CIP) majorly contributed to the upward revisions.
Real estate, agriculture and manufacturing account for most of the change. Despite this, there are no dramatic differences in the structure of the economy in broadly defined categories. In contrast to many countries, the share of agriculture to GDP has remained relatively unchanged over the period.
Extracts taken from “Information on the Revised National Accounts”, published on 30 September 2014 by the KNBS.
Related media items:
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ECA welcomes the rebasing of the Kenyan economy - UNECA, 10 Oct 2014
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Principal benefits of rebasing economy - Mohamed Wehliye (Standard Digital, 2 Oct 2014)
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Middle-income mirage: New status won’t shelter economy from raging headwinds - Jackson Okoth and James Anyanzwa (Standard Digital, 30 Sep 2014)
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Forget the hype about Kenya turning into a middle-income economy soon - Rasna Warah (Daily Nation, 28 Sep 2014)
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World Bank Group finds regulatory reforms improving Nigeria’s business climate, yet challenges persist
A new report by the World Bank Group finds that most states across Nigeria continue to implement regulatory business reforms with Cross River, Ekiti, Niger, Ogun, and Rivers making the biggest strides. Yet challenges and hurdles to local entrepreneurs persist. The report finds that there is room to learn from each other, with good practices being implemented in some parts of the country that can benefit other states if applied.
Released today [29 September 2014], Doing Business in Nigeria 2014 benchmarks 35 Nigerian states in addition to Abuja, FCT. The report covers four indicators: starting a business, dealing with construction permits, registering property, and enforcing contracts. The report finds that 22 states have improved in at least one of the areas measured since the last benchmarking exercise in January 2010.
The findings show big strides achieved in the past few years by some states. Ogun, one of the lowest ranked overall performers in both 2008 and 2010, is one of the top reforming states in 2014. A concerted effort across federal and state authorities, and in collaboration with the private sector, helped improve Ogun on three of the four indicators benchmarked.
The report also finds that most of the reforms documented focused on streamlining the complexity and cost of regulatory processes. One-stop centers have improved the time to issue a building permit in Rivers, Delta, and Oyo, in some cases dropping by 50 percent or more since 2010. Findings show that the case management provisions introduced by Ekiti’s new civil procedure rules in 2011 helped reduce average trial time by nine months. Data shows that states continued to digitize land records and introduce geographical information systems making property registration more secure and efficient.
Despite these improvements, challenges persist, with no single state ranking at the top on all indicators. For instance Abuja, FCT and Lagos are among the top performing states on the ease of starting a business, but rank in the bottom two positions on the ease of dealing with construction permits. Similarly, Sokoto and Osun rank two and three in dealing with construction permits, but 30 and 33 in starting a business, respectively.
Additionally, Nigerian entrepreneurs face different regulatory hurdles, depending on where they establish their businesses. Varied state regulations and practices along with uneven implementation of federal legislation drive these differences and impact local entrepreneurs differently.
“The report results show the importance of close coordination between federal and state governments in implementing more streamlined and efficient regulatory frameworks for all Nigerians,” said Mierta Capaul, Lead Private Sector Development Specialist with the World Bank Group. “States in Nigeria stand to gain a lot from adopting good practices that are already implemented and are working elsewhere in the country.” Capaul added.
Doing Business in Nigeria 2014 is the third in a series of World Bank Group sub-national reports studying the ease of doing business in the country. The report was produced in partnership with Growth and Employment in the States (GEMS), an employment project supported by Nigeria’s Federal Ministry of Industry, Trade and Investment. The project is funded by the United Kingdom’s Department for International Development (DFID).
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How can the WTO better integrate the poorest countries into the growing knowledge-based economy?
In June 2013, the members of the WTO granted LDCs a second transition period extension for the implementation of the TRIPS Agreement of another eight years (until 2021). With an ongoing waiver alone, however, the integration of LDCs into the international system for the protection of intellectual property has merely been postponed, and the world’s poorest countries will remain cut off from the global knowledge-based economy. What is needed instead is a gradual and development-oriented approach for a properly sequenced IP reform in LDCs.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was concluded in 1994 and sets out international minimum standards for the protection of intellectual property (IP) rights (i.e. copyrights, patents, trademarks, geographical indications, industrial designs, integrated circuit layout-designs and undisclosed information). Most least-developed countries (LDCs) had neither a comprehensive domestic framework for IP protection nor much experience in negotiating international IP conventions when they became WTO members.
They mainly accepted TRIPS as part of a package deal in exchange for concessions in other areas of trade, and because they were concerned at the possibility of losing their ability to attract urgently needed foreign direct investment and technology transfer. In addition, the Agreement contains provisions that foresee technology transfer as well as technical and financial assistance in order to support the creation of a viable technological base in developing countries and LDCs (Articles 66.2 and 67 TRIPS). TRIPS also allows for certain "flexibilities” (e.g. regarding the method of implementation, the substantive standards of protection and the mechanism of enforcement) to accommodate particular national interests or resolve issues that are specific to LDCs. Most importantly, the Agreement did not entail any immediate economic cost and no direct action was required as it provided LDCs with a generous transition period of ten years to meet the bulk of their new obligations (Article 66.1 TRIPS).
Establishment of a priority needs assessment process for LDCs in 2005
When the transition period of ten years ended in 2005, expectedly, most LDCs had not made substantial progress in implementing the Agreement. Consequently, the TRIPS Council extended the transition period for LDCs for another 7½ years till July 2013. The WTO members also established a process in which LDCs were requested to provide information on what they considered as priorities for technical and financial assistance that would enable them to successfully implement the TRIPS Agreement. Based on these self-assessments, it was thought that developed countries should then have been able to provide effective technical and financial assistance to LDCs. Some NGOs and other commentators criticised the priority needs assessment process as being merely a delaying tactic used by developed country members to further postpone honouring their promises of assistance. These critics also claimed that LDCs would be forced to spend already scarce resources on collecting data and information regarding the status of their implementation of the TRIPS Agreement.
Most WTO members, however, considered these self-assessments as a valuable exercise that allowed LDCs to table concrete and specific demands which could create the political momentum needed to mobilise potential international donors as well as raise awareness and commitment among the internal institutions and stakeholders in the beneficiary country. Unfortunately, the WTO members did not specify any formal requirements or a particular mechanism for the conduct and submission of these priority needs assessments by LDCs. Likewise, it was not specified who should be funding and conducting these stocktaking exercises. As a result, the priority needs assessments submitted thus far differ significantly in structure, quality, scope and analytical reasoning. From a development aid perspective, many of the proposed implementation plans did not meet the standards and principles of aid effectiveness that have been developed over recent decades (e.g. in the 2005 Paris Declaration on Aid Effectiveness). There also appears to be a certain disconnect, between LDCs and potential donors as to the overall objectives of the priority needs assessment. While the LDCs’ requests mainly focus on the establishment of a national IP system that is beneficial to the country’s socio-economic development, some donor countries believe that technical and financial assistance should be primarily targeted at bringing LDCs’ intellectual property laws and institutions into compliance with the obligations under the TRIPS Agreement.
The vagueness and ambiguity of the priority needs assessment process has hampered its effectiveness. Only nine out of a total 33 LDC WTO members have so far been in a position to submit such individual requests for technical and financial assistance (Sierra Leone, Uganda, Bangladesh, Rwanda, Tanzania, Senegal, Mali, Madagascar, and Togo). On the other hand, these previous submissions did not trigger substantial technical and financial assistance from the industrialised countries, which led to some frustration among the potential beneficiaries.
A second transition period extension for LDCs till 2021
Shortly before the deadline of 1 July 2013 was about to expire, a hard-fought debate took place in which LDCs requested an unconditional extension with an unlimited time frame. There was also widespread support among developed countries for a further extension, but concerns were raised about an open-ended time frame. In the TRIPS Council meeting of 11–12 June 2013, WTO members granted LDCs a second extension of the transition period for another eight years till 2021. Interestingly, no reference was made to the priority needs assessment process or to the provision of technical and financial assistance.
Although the LDCs did not succeed with their request for an open-ended extension of the transition period, agreeing on another extension of the transition period seemed to be the only pragmatic next step, given that neither side had considered LDCs’ TRIPS implementation as a priority. As most of the LDC WTO members have not yet addressed the issue domestically, it seemed premature to expect these countries to be ready to implement the TRIPS Agreement by mid-2013. Conversely, developed country members have to date mainly focused on shielding themselves from requests for unspecified technical and financial assistance (the first round of priority needs assessments has revealed the extent of their unpreparedness). Instead, they targeted their efforts on encouraging full implementation of the TRIPS Agreement in emerging markets where powerful economic interests are at stake and where they could reap significant benefits from having a functional IP system in place. Granting all LDCs an unconditional extension of the transition period for another eight years was therefore a convenient way for all parties to buy time and to avoid potential conflicts in other areas of trade.
Towards a more gradual and development-oriented IP reform in LDCs
An ongoing TRIPS waiver without considerable efforts to bring LDCs into compliance with the Agreement would lead to a further postponement of LDC’s integration into the international IP system. As a consequence, LDCs would be further excluded from international investment and technology transfer flows and continue to play a minor role in the global knowledge-based economy. Therefore, alternatives to simply offering further extensions of the transition period should be seriously discussed and adopted by the TRIPS Council.
WTO members should reinvigorate and refine the existing priority needs assessment process in order to make it more efficient, transparent and predictable. LDCs can only be expected to undergo such an internal stocktaking exercise if they have reasonable expectation to actually receive technical and financial assistance under Article 67 related to technical cooperation. There is still a need for greater coordination on the national and multilateral levels in order to provide further incentives for all WTO members to engage in this process and to trigger increased technical and financial assistance for LDCs. Most developed country WTO members seemed to recognise this fact, with many delegations expressing their concern that without adequate coordination there was the very real risk of duplication of effort and, ultimately, a lack of sustainable impact. The establishment of a coordination mechanism as well as the creation of a multilateral fund for IP-related technical and financial assistance would play a crucial role in this regard. The TRIPS Council has already identified the Enhanced Integrated Framework (a multi-donor initiative of the IMF, ITC, UNCTAD, UNDP, World Bank, and WTO), as a potential multilateral mechanism for the coordination of IP-related technical and financial assistance. It will now require much effort as well as some additional fine-tuning to further promote this promising avenue.
As the establishment of an effective national IP system requires a broad consensus among various national stakeholders, LDCs should align their national IP policies with their national development plans. While substantial IP-related technical and financial assistance has been provided to emerging economies in recent years, the track record in LDCs is still very limited. Additional studies on the socio-economic impact of TRIPS in LDCs and the development of best practices in technical assistance would be crucial in convincing national development cooperation agencies to redirect development aid to IP-related projects. Future research should also focus on collecting empirical data about the IP systems of the world’s poorest countries as well as on adapting existing IP policies to serve the needs of LDCs.
Taking into account that most LDCs do not have the resources to implement the TRIPS Agreement in its entirety, and the legitimate question of whether this would even be desirable given their limited innovative and administrative capacity, it is unrealistic to expect LDCs to establish a functioning fully-fledged IP system similar to the ones operating in developed or even middle-income countries. Hence, it might be more practicable to apply a gradual and development-oriented approach. IP-related technical and financial assistance should primarily focus on those areas that are essential for the countries’ socio-economic development and that pave the way to a more stable, innovative and productive economy. Several LDCs have already taken this into account in their national IP policies and these efforts should be further strengthened. Introducing a basic but efficient system for the protection of national trademark holders, for instance, would support the establishment of non-informal small enterprises in LDCs, while a basic mechanism for collecting and disbursing copyright royalties would strengthen the position of domestic artists. Given the limited resources of LDCs, the implementation cost of each reform step needs to be carefully considered as well. The management of a sophisticated patent examining system, for example, would overstretch the capacities of most LDCs.
A development-oriented and properly sequenced IP reform will reduce potential negative socio-economic effects and allow LDCs to integrate more smoothly into the global IP system. It will also contribute to a sound business environment and increase LDCs’ ability to attract foreign investment, know-how and modern technology. This would allow the poorest countries to increase their productivity, to build up their domestic technological base, to achieve market diversification and to shift towards higher value-added products and services.
Arno Hold is a Fellow at the World Trade Institute (WTI) of the University of Bern, Visiting Fellow at the London School of Economics and Political Science and Director of the WTI/CUHK Summer Programme on IP in Hong Kong.
This article is published under Bridges Africa, Volume 3 - Number 8 by the International Centre for Trade and Sustainable Development.
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A global deal to boost trade for developing countries, including in agricultural products, more important than ever
Against the background of an impasse over the World Trade Organization (WTO) Bali Package, UNCTAD’s Trade and Development Board kicked off its second week on 22 September with “Trade Day” discussions on international trade and a special focus on agriculture.
The meeting underscored that multilateral deals that address the need for developing countries to boost agricultural trade and consequently enhance food security are possible and remain desirable in light of the aims of the post-2015 development agenda.
UNCTAD Secretary-General Mukhisa Kituyi expressed support for “fair, predictable, equitable and functioning multilateral trade rules” at the meeting, which was also addressed by WTO Director-General Roberto Azevêdo who updated delegates on the status of the “Bali package” talks.
“At UNCTAD, we are worried that the trade winds have not been picking up at a global level and that, today, world trade in goods and services remains far below its pre-crisis dynamism,” Dr. Kituyi said. “Before the global financial crisis, trade was expanding more than twice as fast as the world economy. Today, five years after the crisis, trade is still growing slower than the world economy as a whole. This means trade has been unable to kick-start a global recovery and, as a consequence, the recovery from the crisis remains weak.”
Properly managed agricultural trade can contribute towards poverty eradication, food security, economic empowerment and maintaining ecosystems, Dr. Kituyi said. Elaborating on the role of trade in sustainable development and adequately anchoring trade in the post-2015 sustainable development agenda, Dr. Kituyi pointed out the need for closer dialogue between the ongoing Doha Development Agenda process (part of the WTO Doha Round) and the post-2015 goal-setting process.
Dr. Kituyi said he hoped that Doha Development Agenda negotiations would successfully conclude soon. He reiterated UNCTAD’s support to member States, through its regular programmes and the “soft rules making” approach facilitated by UNCTAD’s work in areas such as competition law and policy.
Mr. Azevêdo said that the Bali package, which aimed at meeting some of the goals of the Doha Development Agenda, had “delivered big gains for WTO members” but was “now at risk” after a 31 July deadline on its adoption was missed.
“At present, the future is uncertain,” Mr. Azevêdo said, adding that if the impasse was not solved, “many areas of our work may suffer a freezing effect, including the areas of greatest interest to developing countries, such as agriculture.”
“We must acknowledge that small countries are probably the ones who will suffer the most. Big countries have other options. The small and the vulnerable may be left behind if we stop WTO negotiations.”
“The agricultural sector has been and still remains a fundamental tool for sustainable development and for reducing poverty in most developing countries,” Mr. Azevêdo added. “But agriculture has been characterized for decades by policies that seriously distort trade and production.”
Mr. Azevêdo said that such policies could take the form of high tariff barriers, various domestic support measures – through subsidies or market price support – and export subsidies or other forms of export-related support.
“These trade distorting policies have a significant effect on agricultural producers in developing countries and especially in the most vulnerable ones,” Mr. Azevêdo said. “Because of these anomalies, those countries cannot fully benefit from their comparative advantages, and their agricultural revenues cannot properly contribute to gross domestic production, employment, rural development or livelihood security.”
Mr. Crawford Falconer from the Organization for Economic Cooperation and Development (OECD) and Mr. Jamie Morrison from the Food and Agriculture Organization of the United Nations addressed the current state of affairs in international agricultural trade, particularly the issue of subsidies. It was noted that, while the trend of domestic support for agricultural production in the form of subsidies in OECD countries points downward, few major developing economies had shown an upward trend in this respect in recent years. Speakers highlighted that, for developing countries, food security could be better achieved by increasing international trade and ensuring access to food rather than by pursuing food self-sufficiency.
The Trade and Development Board oversees UNCTAD’s operations from year to year and opened its sixty-first session on 15 September with the election of Ambassador Ana María Menéndez Pérez of Spain as its new President. The session runs until 26 September.
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Mo Ibrahim Foundation records improvement in overall African governance but highlights some concerning trends
The 2014 Ibrahim Index of African Governance, launched today, shows that between 2009 and 2013 overall governance improved on the African continent. However, over the past ten years, the main drivers of this overall positive trend have changed.
“The results of the 2014 IIAG challenge our perceptions about the state of African governance. Africa is progressing but the story is complex and doesn’t fit the stereotypes. Even if the overall picture looks good, we must all remain vigilant and not get complacent,” said Mo Ibrahim, Chair of the Mo Ibrahim Foundation.
At the country level, the 2014 IIAG highlights the potential of governance underperformers while revealing the weaknesses of current frontrunners. Countries in the bottom half of the rankings register the largest improvements over the past five years. Côte d'Ivoire, Guinea, Niger and Zimbabwe have changed course since 2009 from negative trajectories to become the biggest improvers on the continent. This progress has been driven in large part by gains in Participation & Human Rights. Meanwhile, the historically strong performers, Mauritius, Cabo Verde, Botswana, South Africa and Seychelles, have shown some deterioration in at least one category over the past five years, notwithstanding that all these countries remain on overall upward trends.
“The 2014 IIAG results show that high ranking countries cannot assume that future achievements will necessarily follow previous accomplishments. More generally, let us make sure that the Africa Rising narrative, that everyone is talking about, truly benefits all African people,” said Jay Naidoo, Board Member of the Mo Ibrahim Foundation.
At category level, the 2014 IIAG also reveals that the main drivers of the overall positive trend in African governance have changed. For the most recent five years, from 2009 to 2013, progress has been jointly driven by Participation & Human Rights and Human Development, whereas the main driver of gains in the previous period (2005-2009) was Sustainable Economic Opportunity, which has stalled in the most recent period.
Progress in the Participation & Human Rights category has gathered momentum, making it the most improved 2014 IIAG category over the last five years (+2.4). While in Rights and Gender the trends are both positive, it is in the area of Participation, particularly Political Participation, where the strongest gains in score have been achieved for this latest period.
“With a growing electorate that has demonstrated a desire to be heard, the results of the 2014 IIAG confirm that Participation & Human Rights is a crucial aspect of governance that governments cannot ignore,” said Mary Robinson, Board Member of the Mo Ibrahim Foundation.
In contrast, after an improvement of +3.4 between 2005 and 2009, the largest of any category in this time period, Sustainable Economic Opportunity has registered the opposite trend over the last five-year period, with a deterioration of -0.2. This is due to a reversal of trends in two of the four sub-categories, Public Management and Business Environment, and a slower pace of improvement in the other two sub-categories, Infrastructure and Rural Sector.
“Perhaps some of the low-hanging fruit of better economic management have been garnered. The challenge grows for the continent to become a fully competitive force in the global market at a time when commodity price trends are becoming less helpful to many countries on the continent,” said Lord Cairns, Board Member of the Mo Ibrahim Foundation.
Meanwhile, the Safety & Rule of Law category continues to expose concerning trends, with 12 countries showing their weakest performance since 2000, in 2013. Having shown a deterioration of -1.5 between 2005 and 2009, this dimension of governance registers another negative trend in the last five-year period, although to a lesser extent (-0.8). Safety & Rule of Law is the only category in the 2014 IIAG to have demonstrated two consecutive five-year period deteriorations in the last ten years. National Security is the only sub-category within Safety & Rule of Law to have shown progress over the past five years (+0.5), driven in large part by Cross-border Tensions, the most improved indicator in the 2014 IIAG. This aspect of improved citizen security is in contrast to the deterioration registered in Personal Safety (-1.1) in the past five years, driven by declines in four of the six underlying indicators.
“Even if overall governance trends are positive, contrasting performance in the 2014 IIAG is of concern. The strength and sustainability of Africa’s future prosperity will be defined by the continent’s commitment to all governance dimensions, including safety, security, and the rule of law,” said Salim Ahmed Salim, Chair of the Ibrahim Prize Committee.
On the other hand, Human Development has remained a consistent improver, showing positive movement of +2.3 since 2009, after a positive trend of +2.2 between 2005 and 2009. All sub-categories and 41 out of 52 countries have seen an improvement over the past five years, with a quarter of these having improved by more than +5.0 points. Health is the most improved sub-category within the 2014 IIAG. In the last five years, all of its underlying indicators, which measure issues such as maternal mortality, immunisation and undernourishment, have registered progress. However, this largely positive picture masks the poor performance of some countries, particularly in Welfare.
“The 2014 IIAG underscores the need to focus on building equitable and efficient institutions, such as health systems, accountability mechanisms and statistical offices. Without these, we will not be able to meet the challenges we face – from strengthening the rule of law to managing shocks such as the Ebola virus,” concluded Hadeel Ibrahim, Founding Executive Director of the Mo Ibrahim Foundation.
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Prime Minister Narendra Modi’s ‘Make in India’ plan welcomed by South African business sector
The ‘Make in India’ campaign launched by Prime Minister Narendra Modi has been widely welcomed by the South African business sector which is eager to create more bilateral trade opportunities.
Heads of Indian missions in South Africa shared the ambitious plan at a briefing in Johannesburg.
Addressing concerns that the South African government’s approval of an industrial development action plan could be seen as competition for India’s campaign, Consul General of India, Randhir Jaiswal said, “But then every country is looking for investment to grow, so the whole idea would be to determine which areas India and South Africa could collaborate on so that both countries could benefit.”
“For example, South Africa has an elaborate plan to stretch its renewable energy programme, while we in India want to see ourselves as manufacturing all the equipment that goes into creating renewable energy at a fraction of the cost.
“As the manufacturing sector in India grows, there will be many synergies which South African business can latch onto.”
Jaiswal added that the agricultural sector in Limpopo province had a lot of opportunity to cooperate with India in the small and medium enterprise food industries there, where India could add value.
Raman Dhawan, who recently retired after building up Tata’s presence in Africa for several decades, said it was “a great day” to hear about the “Make in India” plan.
“I believe that a company producing all-purpose vehicles here could easily do so in India as well and thereby we could reduce their cost and expand their market,” said Dhawan.
Robert Appelbaum, the Head of the South Asia Group welcomed the new plan to streamline the licensing and regulatory environment which had frustrated him in the past.
Explaining why he held up hope for the ‘Make in India’ plan and its shift from red tape to a red carpet for investors, Appelbaum related how he had personally experienced the administrators of Gujarat state achieving miracles in a short time in Gujarat.
“That for me was the start of the incredible economic revival in Gujarat and is now the story of India. I have met many Indian leaders, but the most direct and down-to-earth was Chief Minister Modi,” he said.
“The slow lawyers are now great lawyers; old Mumbai airport is now probably the best in the world for me today; and a succession of corrupt ruling coalitions has been stopped and finally been replaced by one single strong party with sufficient majority to get the things done;
“Prime Minister Modi has decided that India must become a serious manufacturing hub and all I can say is: God help the fool who tries to interfere with that,” Appelbaum concluded.
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Press release on the Meeting of BRICS Foreign Ministers
The BRICS Foreign Ministers met on 25 September 2014 on the margins of the 69th session of the United Nations General Assembly.
In the spirit of openness, inclusiveness and mutually beneficial collaboration, the Ministers reiterated the commitment of BRICS to comprehensive cooperation and a closer economic partnership.
The Ministers congratulated Brazil for organizing the VI Summit and noted that the Fortaleza Action Plan was being successfully implemented. They underlined that the decisions to establish the New Development Bank and the Contingent Reserve Arrangement taken at the Summit raise BRICS cooperation to a fundamentally new level. The Ministers reiterated the need to promptly convene a meeting to advance intra-BRICS economic, trade and investment cooperation, as stated in the Fortaleza Declaration.
While discussing the issues of the current UN agenda, the Ministers emphasized the following.
The Ministers recalled that 2015 is the 70th anniversary of the founding of the United Nations and of the end of the Second World War. They supported the UN to initiate and organize commemorative events to mark and pay tribute to these two historical moments in human history, and reaffirmed BRICS members’ commitment to safeguarding a just and fair international order based on the UN Charter, maintaining world peace and security, as well as promoting human progress and development. They also reaffirmed the need for a comprehensive reform of the UN, including the Security Council with a view to making it more representative, effective and efficient, so that it can adequately respond to global challenges.
They called upon the Israeli and Palestinian sides to do their utmost to preserve the ceasefire regime and to reach a steady truce in the Gaza Strip as well as to prevent further recurrences of the use of force. They highly appreciated the role played by Egypt in the cessation of hostilities.
The BRICS member states expressed their support for the immediate resumption of negotiations between the Israelis and the Palestinians based on international law and relevant United Nations resolutions with the final aim of an independent, viable and contiguous Palestinian State based on the 1967 borders and living side by side in security and peace with Israel and all its neighbours. They called upon the international community, in particular the United Nations Security Council, to intensify its efforts towards the realization of this goal.
They voiced concern over the grave humanitarian situation in Gaza. The BRICS member states supported Egypt and Norway’s plans to hold an international donor conference on the reconstruction of the Gaza Strip in Cairo this October. The Ministers underlined that the implementation of such initiatives should be backed by prompt steps towards lifting the blockade on Gaza and promoting Palestinian reconciliation in order to restore administrative unity to the Palestinian territories on the basis of the political platform of the PLO and the Arab Peace Initiative.
The Ministers welcomed the agreement reached between the two Afghan leaders and committed to support the new government of Afghanistan in pursuing the task of building a strong, developed and peaceful nation.
The Ministers voiced serious concern over the conflict areas in Africa that negatively affect the security and stability of some States. They expressed their common view that the main role in tackling African conflicts should be played by Africans themselves with active support from the UN and the international community, through the African Union and its Peace and Security Council.
The Ministers of Foreign Affairs of the BRICS countries expressed their interest in exploring ways of joining efforts for supporting the prompt establishment of the interim African Capacity for Immediate Response to Crises (ACIRC) and the subsequent establishment of the African Stand-by Force.
The BRICS member states expressed grave concern about the outbreak of the Ebola virus in and its impact on West African countries. The Ministers stressed the need to contain the spread of the disease. They called for an urgent and comprehensive support of all relevant UN system entities, including WHO, to assist the affected countries in responding effectively to the crisis, and in this regard, welcomed the establishment of the UN Mission for Emergency Ebola Response. In this context, they supported the High Level Meeting on response to Ebola outbreak, convened by the UN Secretary-General on 25th September 2014. Each of BRICS countries has contributed to the international effort against the disease.
The Ministers underscored the importance of ensuring peace and stability in Ukraine. They welcomed the Protocol on the results of consultations of the Trilateral Contact Group, signed on September 4, 2014, and the Memorandum on the implementation of the said Protocol signed on September 20, 2014, and expressed their hope that the provisions of these documents shall be complied with.
The Ministers supported the UN Security Council resolution of September 24, 2014, on foreign terrorist fighters and called on the international community to cooperate in efforts to address the threat posed by the foreign terrorist fighters, including by preventing their recruitment, movement across borders and disrupting their financial support.
The Russian side briefed its partners on the preparations for the VII BRICS Summit in 2015 in the city of Ufa. Russia stressed its willingness to ensure the continuity of strategic focus of the association, while enriching it with new areas and formats of cooperation, which will be shared by the Russian Chairpersonship during the preparatory process.
The sides discussed the possibilities of supporting each other’s initiatives at the 69th session of the UN General Assembly.
Click here to download BRICS Legal Texts and Policy Documents.
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Private sector agency to unveil new export guide
Most local business people struggle to make a breakthrough in export ventures due to lack of knowledge about potential markets, while others are not familiar with the legal regime in those countries.
However, this could soon end after the Private Sector Federation (PSF) and Trade Mark East Africa unveiled an Exporters Handbook that will act as a resource and guideline for local exporters on such issues.
Gerald Mukubu, the PSF acting chief executive officer, said the handbook will be a guiding tool for local firms interested in the export business or those that want to improve their export operations.
“PSF is determined to assist Rwandan companies to benefit from trade opportunities out there by providing existing and potential exporters with updated information on the different trading regimes for their products,” he said during a consultative meeting in Kigali on Thursday. The handbook is expected to be launched next month.
Annable Wittles, a research analyst who helped put together the handbook, noted that it will provide a clear insight into the export processes in Rwanda.
Wittles said the handbook will have five export processes, including how to venture into the export business, market research and getting goods certified, as well as guide exporters on packaging, clearing and shipment.
“The handbook will help exporters to get more knowledge on how to certify their goods before export by informing them about the required standards, how to get the requisite documents like certificate of quality, certificate of origin, procedures on how to obtain certificates from National Agricultural and Exports Board and Rwanda Standards Board,” Wittles explained.
It will also provide a clear insight about the available markets across the world, an overview of the key markets, like East African Community, the DR Congo, the EU and US, and the possible exports to these markets.
Mubuku said the guide will also contribute to existing support mechanisms to facilitate Rwandan exporters.
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FG moves to institutionalise Agric policy
Following achievements recorded in the agricultural sector, the Federal Government has decided to institutionalise the Agricultural Transformation Agenda, ATA, policy.
This was disclosed by the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, during the official inauguration of 15 member policy working group in Abuja recently.
Adesina said the move to institutionalise ATA was needful because government has positioned Nigeria’s agricultural sector on world stage, and whose policies had attracted massive investments and also attracted other countries within and outside the African region to adopt some of the policies for the growth and development of their agricultural sectors.
Adesina said: “For the inauguration of the 15 member policy working group is because we want to institutionalise the Agricultural Transformation Agenda, ATA, policy.
He said the ATA is driven by policies and what we have achieved today is by the policies put in place.
“As we continue our drive to transform Nigeria’s agriculture, spurred on by the major gains so far made, we must not lose sight of the need to avoid policy reversals.
“We must do all possible to ensure that the policies and institutional reforms are institutionalised and backed by legislations to secure the future of our farmers.”
He added that they will work very closely with the leadership of the National Assembly, especially the Committees of Agriculture, to ensure that legislations are passed to protect the policies driving the Agricultural Transformation Agenda.
“These are exciting days for Nigeria’s agriculture. Today, all States of the Federation are all working with the Federal Government in our drive to transform agriculture. Let us together arise and build, until our nation becomes once again a global powerhouse in food and agriculture. To this, we all must commit ourselves, so help us God.
The Minister said: “We have world class people who will look at the policy, make sure that there is legislation to protect ATA. I assure you that the report of your Committee will be presented to Mr. President and the Federal Executive Council for appropriate actions.”
He also expressed optimism about the competence and professionalism of the Professor Olu Ajakaiye led 15 member policy working group, adding that the committee was expected to produce a report within two months.
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Micro, small and medium businesses get $500 million boost from World Bank Group and Development Partners
In support of the Nigerian government’s effort to stimulate economic growth and create jobs for its citizens, the World Bank Group has approved a $500 million International Bank for Reconstruction and Development (IBRD) credit to fund the Development Finance Project. The project will help facilitate increased access and availability of financing for Micro, Medium and Small-Scale Enterprises (MSME) in agriculture, trade, light-manufacturing, services, and other areas.
The Development Finance Project will also provide a stable and predictable funding source through the establishment of a Development Finance Institution (DFI). The DFI will provide funding to eligible financial institutions to finance long-term lending to MSMEs, as well as funding to Micro-Finance Banks for on-lending and to expand their outreach.
“The proposed operation addresses the provision of finance, including long-term finance, through eligible Participating Financial Institutions to expand outreach to urban and rural Micro, Small and Medium Enterprises,” said Arnaud Dornel, Team leader for the Development Finance Project.
Following a period of turbulence, the Nigerian banking system is now well capitalized, liquid and profitable, according to financial soundness indicators. However, the banks are not in a position to give long-term loans, creating a major obstacle for Nigeria’s micro, small and medium-sized business owners. According to a 2014 survey, 6.7% of enterprises in Nigeria had a loan or active line of credit, compared to the Global Enterprise Survey average of 36.5%, showing that Nigeria is lagging far behind other countries.
Not only will the new DFI support the country’s dual objectives of stimulating more diversified and inclusive growth, it will also help alleviate the current financing constraints that have hampered the growth of domestic production and commerce by filling the current financing gaps.
“The project is fully in line the priorities set out in the new Country Partnership Strategy which calls for focusing on increasing access to finance, including long-term financing for key sectors such as housing, SMEs, agriculture, and infrastructure, through various mechanisms involving both private sector and public sector partnerships,” said Marie Francoise Marie-Nelly, World Bank Country Director for Nigeria.
The Development Finance Project comprises four components, including technical assistance and capacity building ($12 million), line of credit facility ($445 million), credit guarantee facility ($35 million), and project management ($6.75 million.) A front-end fee of $1.25 million will be financed out of the proceeds of the loan. Project beneficiaries include private sector MSMEs and Participating Financial Institutions (PFI’s). MSMEs will benefit from improved access to term finance for investment and working capital loans, while PFIs will benefit from technical assistance, term funding, and partial credit guarantees aimed at enhancing their ability to serve MSME’s.
The project is a joint effort between the World Bank Group, African Development Bank (AfDB), German Development Bank (KFW), French Agency For Development (AFD) and the United kingdom’s Department for International Development (DFID), and will be implemented by the Federal Ministry of Finance (FMOF) for seven years.
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Kenya to unveil over 20pc GDP jump on Tuesday after rebasing
Kenya will on Tuesday release half-year economic data that show the size of the economy has increased by nearly a quarter following the completion of changing the base year for computing output.
The review of national economic data – commonly known as rebasing – is expected to increase the size of Kenya by between 20 and 25 per cent in the level of gross domestic product previously reported.
The government told investors in June during the debut Eurobond that the rebasing would increase the size by 20.6 per cent, earning the country a middle-income status.
Other African nations that have revised the year they use as a base to calculate output include Nigeria, which vaulted to the top of African economies by size earlier this year after it finished the exercise.
“We will be seeing new sectors appear with the most obvious being communications as a separate entity from transport, and real estate where we will be capturing rent data,” Terry Ryan, chairman of Kenya National Bureau of Statistics (KNBS) said Thursday.
“Some service sectors will be subdivided. None of the old sectors will disappear but some will, however, not carry less weight, such as transport, wholesale and retail. But the overall profile of economic growth is, however, unlikely to be much different as we have been capturing most of the information already.”
KNBS data is currently based on figures from 2001 which will now be recast to 2009 – the new base year and reference point – to present an accurate reflection of Kenya’s economy.
The new economic data is expected to cement Kenya’s position as East Africa’s biggest market and Africa’s fourth-largest economy after Nigeria, South Africa and Angola.
Analysts said although becoming a middle-income country is good for Kenya’s standing as an investment destination; it was bound to come with its own challenges.
As a middle-income economy, Kenya will no longer qualify for the many trade concessions it currently enjoys as a low-income country.
The country could also lose its eligibility for grants, concessional loans and debt write-offs when its GDP per capita rises above the $1,036 (Sh92,339) threshold that the World Bank has set for middle-income nations.
But it could raise the country’s profile to attract investors and creating room to chalk up more debt.
The Vision 2030 secretariat says the statistical review will have no impact on the welfare of households.
Prof Wainaina Gituro, acting director general at Vision 2030 Delivery Secretariat, said earlier Kenya must focus on flagship infrastructure projects like the Lamu Port and South Sudan Ethiopia Transport Corridor, standard gauge railway and Konza technopolis to deliver growth.
This, he says, is the only way the country could boost household’s disposable incomes and lift workers purchasing power through faster income rises.
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Economic diplomacy holds the key to Kenya’s growth
When Jubilee came to power, top on its agenda was a desire to improve the economy to the level of growing at a double-digit rate. While this still remains a key target, tough challenges have emerged. The good news is that the government has shown indications that it is prepared to surmount whatever challenge, however difficult, to ensure the economy grows at a rate that will make Vision 2030, which seeks to make Kenya a middle-income economy in 16 years, attainable.
President Uhuru Kenyatta has been at the forefront in leading an aggressive push for more trade opportunities across the globe but with notable focus on Africa. The President and his deputy William Ruto have made a whirlwind of tours across the continent to strengthen trade ties with several countries while initiating ties where none existed before.
One of the countries that have been particularly on Jubilee’s radar is Nigeria. The President has visited this country in a bid to ramp up trade with this Africa’s largest economy. President Kenyatta was accompanied by a powerful delegation of businesspeople cutting across all the sectors of the economy. With such a high-level team, Kenya sent a strong message that improving the economy is its number one diplomatic objective. President Kenyatta was reciprocating Nigeria President Goodluck Jonathan’s visit last year. President Jonathan was also accompanied by a powerful delegation of businesspeople who also brought the same message of economic cooperation.
About two weeks ago, Kenya and Nigeria signed a deal to enhance bilateral trade, particularly in agriculture. Few would deny that Kenya and Nigeria are economic powerhouses with the latter the largest economy in Africa. You can only then imagine what they two can achieve when they join hands.
Neighbouring countries, especially members of the East African Community, are also key trading partners of Kenya with Uganda being one of the country’s principal importers of goods globally. President Kenyatta has been strongly campaigning for a more integrated East Africa for obvious reasons.
A closely-integrated bloc is good for business. Movement of goods, people and labour will be greatly eased and barriers to commerce will be brought tumbling down, leading to increased volumes of trade. The ultimate prize of this is of course radical reduction in poverty levels.
As the region’s biggest economy, Kenya stands to gain if EAC is made more vibrant.
With its thriving manufacturing sector, the country will get ready and easily-accessible market for its array of goods. Needless to say, there is a lot of unexploited potential in the region in terms of market capacity. Furthermore, with the right mix of trade policies and incentives, there is no reason why Kenya cannot leverage its relatively stronger economy and be the hub of commerce and a financial centre in the region.
In its ambitious push to transform the country through a rapid economic growth, Kenya has embarked on forging new partnerships in Africa and beyond. In this grand project, traditional partners need not worry as Kenya has no plan to abandon them for newfound friends. In fact the country is looking to strengthen old economic ties as it explores new ones.
Unfortunately Kenya’s effort to expand its trade horizon has been erroneously perceived as jettisoning old friends like the West for new ones like the East. Nothing can be further from the truth. The US and UK, and a number of other Western nations, remain Kenya’s key trading partners. And just because the Jubilee administration is keen to expand the economy by hunting for more investments and trade in Africa and the Asian countries, does not mean the West cease to be our partner. Kenya will look for investors wherever they are and signs trade agreements wherever they can be obtained so long as these deals adhere to acceptable international norms.
Jubilee’s focus on Africa is informed by the fact that trade among countries on the continent has not been given the attention it deserves. The world is united in the belief that Africa is an economic giant that is currently in deep slumber.
Fingers have been pointed at leaders who have failed to craft appropriate strategies to awaken this giant. However, the current crop of young and energetic African leaders apparently appear on the right track if a raft of trade deals being struck between countries is anything to go by.
Regional trading blocs are also increasingly surmounting challenges that have been holding them back and now they look set to play the economic transformative role they have been promising for years. If things move at this pace, soon economic co-operations and not divisive politics will be the most defining feature on the continent.
Everywhere you go, there is a palpable feeling that this is Africa’s century. It is heartening to see that Kenya is increasingly becoming a key player in this grand plan with Jubilee’s top leadership among the key drivers.
It is particularly exciting because the newfound optimism regarding the continent’s fortunes are coinciding with Kenya’s robust initiative to step up its manufacturing sector as it briskly marches towards middle-income status.
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Can Africa move away from aid to trade? Carlos Lopes answers
What should it do to attract more private equity and how can it convert the illicit financial flows to funds for domestic resource mobilization, climate change and conflict resolution – these are pertinent issues which affect the long term development of the African economies. Financing developmental efforts in Africa has proved difficult in the past. Overreliance on overseas development assistance (ODA) was seen as the solution. Now we know better.
Lessons learned from the Millennium Development Goals (MDGs) have prompted a fresh wave of thinking. Africa needs a transformative developmental framework. However, a structural transformation agenda will require an adequate, predictable, sustainable and integrated financing mechanism geared towards financing developmental goals. Also, the continent must embark on reforms to capture currently unexplored or poorly managed resources. This includes curtailing illicit financial flows and rather transforming those funds into a powerful tool for enhancing domestic resource mobilization, as a way of furthering the continent’s development.
According to recent studies, from 1970 to 2008, Africa lost $854 billion to $1.8 trillion in illicit financial flows. The latest progress report of the High-level Panel on Illicit Financial Flows, where I deputize for President Mbeki, revealed that the annual average was between $50 billion and $148 billion a year (ECA, 2013). Commercial money such as tax evasion and trade and services mispricing through multinational companies, constitute the largest component followed by proceeds from criminal activities and public sector corruption.
This loss undermines revenue generation and reduces the benefits from economic activities, particularly in the extractive sector. It is possible to redirect IIFs to increase domestic resource mobilization, finance the adaptation costs of climate change, and tackle conflicts in the region.
IFFs undermine Africa’s fiscal and policy space and deny its financial systems and Governments the opportunity to use domestic resource mobilization schemes. Tax evasion is a significant component of illicit financial flows as is aggressive tax avoidance and trade mispricing. Other means are unequal agreements and contracts by which resources are transferred from Africa. Examples include poorly negotiated resource extraction contracts, investment and double taxation agreements. For example some multinational companies take advantage of different double taxation treaties to shift profits from one country to another, exploiting the treaties with the lowest withholding tax rates.
Curbing illicit financial flows to finance the adaptation costs of climate change Illicit financial flows diminish resource capacity in the most vulnerable continent to the impact of climate change. Adaptation will cost African countries billions of dollars a year, increasing pressure on development budgets. Innovative domestic climate finance opportunities such as resource savings from curbing illicit financial flows could help in financing resilient policies.
Understanding illicit financial flows and conflict in Africa Illicit financial flows pose a threat to the stability and security undermine institutions and democracy, and jeopardize sustainable development and the rule of law. Many of the violent conflicts in the forest regions of Africa are tied to “lootable”commodities such as precious metals and rough diamonds that can be used to fuel conflict. Revenue from forestry are used by belligerents to purchase arms and other materials.
Clearly, to deal with the problems of conflict in Africa, it is imperative to curtail illicit financial flows and fight corruption and the institution of tax havens. Better taxation provide additional revenue to fund Government budgets. In line with this, Africa needs strong findings on mechanisms, strategies, and peer research to distinctly show the impacts of illicit financial flows on the different sectors of economic activity. Indeed, curtailing illicit financial flows could become a key delivery mechanism for sustainable development. Concerted efforts by countries of origin and destination are needed. The legal and financial approach must be transparent and the international asset recovery regime integrated, in an effort to curb these outflows and unlock the much-needed resources.
The better use of ODA nowadays should be to create the support mechanisms that would allow Africans to benefit from their own wealth, rather than providing aid.
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The Road from Rio+20: Towards Sustainable Development Goals
Over 20 years after the 1992 Rio Earth Summit, advancing sustainable development from the local level to the global level remains a major challenge and responsibility. In fact the development challenges, especially of poverty eradication, have become even more intractable.
The 2012 United Nations Conference on Sustainable Development (Rio+20) discussed these global imperatives and agreed, inter alia, to define sustainable development goals (SDGs) to serve as a guide for the international community in implementing actions to better advance sustainable development.
The agreement to develop SDGs came at a time when the UN community is also engaged in elaborating a new global governance framework to guide development discourse and efforts in the post-2015 period when the current UN Millennium Development Goals will expire. While distinctly separate, the two processes are more than likely to give rise to one set of post-2015 sustainable development goals. Such goals, as provided in the outcome document of the Rio+20 summit, should be action-oriented, addressing all three dimensions of sustainable development (economic, social, environmental) and their inter-linkages in a balanced way; they must be concise, easy to communicate and relatively few in numbers; and they must be relevant to all countries.
The emphasis that the new goals must reflect fully the three dimensions of sustainable development and ensure their balanced treatment is very important. It addresses some of the lacunae in the current MDGs framework, namely lack of integration among the different goals and weak emphasis on economic drivers of development with the result also that trade enablers received limited attention. Yet development experiences over many years and recently in many countries have shown that economic growth is critical to inclusive development and this can be sustained by an enhanced and qualitative participation in international trade, accompanied by financial including investment and technology flows and supportive institutional, regulatory and human capacities. Building competitive productive capacities to increase participation in trade in turn requires enabling policies and measures at national, regional and international levels.
UNCTAD, as part of the United Nations system, is contributing to the discourse among Governments with analysis and advice. Our efforts are squarely focused on fostering a process of trade-led development that is socially, economically and environmentally inclusive and also builds up culture and creativity.
This fourth issue of our Rio+20 Journal, which we termed the “The Road from Rio: Towards Sustainable Development Goals” articulates some perspectives on such goals and the contribution of international trade. We have invited several leading personalities to share their views on aspects of the development framework in the post-2015 period. We hope this contribution will help Governments and other stakeholders navigate the multitude of global issues facing the international community today and define a sustainable development framework that can have a major impact on poverty eradication across the globe in the years ahead.
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Zimbabwe launches Cotton-to-Clothing Export Strategy
Zimbabwe’s Cotton-to-Clothing Export Strategy was launched today [26 September 2014] by the Minister of Industry and Commerce, the Deputy Executive Director of the International Trade Centre (ITC) and Secretary-General of the Common Market for Eastern and Southern Africa (COMESA) Sindiso Ngwenya at the 5th Clothing Indaba trade fair in Bulawayo.
‘Given the abundance of the quality natural fibre cotton, as well as highly skilled manpower in Zimbabwe, I believe that implementation of this strategy will bear the necessary rewards in terms of not only generating the much needed foreign currency but repositioning Zimbabwe as a global competitor,’ said His Excellency M. C. Bimha, Zimbabwe’s Minister of Industry and Commerce.
Aligned with the Eastern and Southern Africa (ESA) region’s strategic goals, Zimbabwe’s Strategy sets out a roadmap to help the country regain its leadership in quality and value addition in the Cotton-to-Clothing sector.
Attending the launch in Bulawayo, Dorothy Tembo, Deputy Executive Director of ITC, highlighted the importance of the ITC-facilitated Sector Development and Export Strategy for Zimbabwe, which builds on COMESA’s regional Cotton-to-Clothing strategy facilitated by ITC in 2009.
‘The sector’s potential for broad-based economic growth as well as for value addition extends beyond Zimbabwe’s borders. It is, moreover, equally important for the region, which can only benefit from Zimbabwe’s economic recovery,’ Ms. Tembo told a gathering of more than 200 sector stakeholders from Zimbabwe and the ESA region.
The Cotton-to-Clothing sector extends from smallholder farming, which contributes to the livelihoods of more than 1 million Zimbabweans, to capital-intensive sub-sectors such as spinning and textiles that have played an integral role in the country’s industrialization and to the clothing industry. The sector also has important food-security implications – cotton seed processing by-products can be utilized as animal feed, while cottonseed oil is used for human consumption.
More than 100 stakeholders from the Cotton-to-Clothing sector, including representatives of the public sector, rural communities, small and medium-sized enterprises and civil society, were involved in defining a series of market-led development priorities to support the Strategy. It identifies key markets in Africa, Asia and Europe where the value, diversity and attractiveness of ‘Made in Zimbabwe’ products have not yet been tapped.
The Strategy also targets domestic production. The ambitious targets that stakeholders have negotiated include a 71% increase in yields to the benefit of some 250,000 smallholder farmers, and an increase in yearly seed-cotton production to 450,000 tons, as well as a target for exports of textiles and garments to reach US$ 110 million by 2019, when the Strategy’s implementation is expected to be completed.
With the launch of the Strategy, the focus shifts to implementation, and international and regional development partners have already expressed interest in financing and supporting activities elaborated in the Strategy’s Plans of Action. In addition, ITC will continue to extend its technical assistance during the implementation phase.
‘Successful implementation will help the sector to once again become a major driver of broad-based economic growth in Zimbabwe,’ said Ms. Tembo. ‘This would also help ensure that the Cotton-to-Clothing value chain of the subregion will be better placed to foster regional integration and economies of scale.’
Developed by Zimbabwe’s Ministry of Industry and Commerce, with the support of ITC, the Strategy was funded by the European Union (EU) under the EU-Africa Partnership on Cotton, and the African, Caribbean and Pacific Group of States (ACP).
Read more about the ITC’s Trade promotion and value addition for African cotton project.
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Regional trade agreements “cannot substitute” the multilateral trading system – Azevêdo
Director-General Roberto Azevêdo, in closing the WTO Seminar on Cross-Cutting Issues in Regional Trade Agreements (RTAs) on 25 September 2014, said that RTAs “are important for the multilateral trading system – but they cannot substitute it”. He pointed to “big issues” such as trade facilitation, financial or telecoms regulations or farming and fisheries subsidies that “can only be tackled in an efficient manner in the multilateral context through the WTO”. This is what he said:
Good afternoon everybody. I trust that you have had a productive day discussing what is a very complex issue.
I am pleased to have the chance to speak to you on RTAs and the many cross cutting issues that they give rise to.
Clearly RTAs are not a new phenomenon.
In fact they pre-date the multilateral system because, in a sense, they were the seeds which grew into the General Agreement on Tariffs and Trade. You can argue that the GATT was effectively a multilateralisation of the network of reciprocal trade agreements that countries had been pursuing for some years previously.
So the system as we know it today has its roots in these agreements – and we have always allowed for new agreements to be created. Both the GATT and now the WTO have specific rules providing scope for this.
So these initiatives are important – they co-exist with the multilateral system – and they can bolster it in a significant way.
RTAs are blocks which can help build the edifice of global trade rules and liberalization.
But of course things have changed in recent years.
RTAs have grown much more rapidly since the WTO came into being compared to the days of the GATT.
The WTO has been notified of 253 RTAs that are in force today.
On average this has meant 24 notifications per year since the formation of the WTO, compared to 3 on average during the GATT years. This is a considerable increase.
And these agreements are not only more numerous, they are becoming increasingly complex.
While over 80% of RTAs notified are bilateral agreements, we are seeing more and more large regional agreements.
And we are seeing more agreements between countries in different regions, rather than between neighbours. This is very different from the pattern we saw during the GATT years.
In addition we see many more developing countries negotiating RTAs today.
This proliferation of agreements, each with their own sets of rules, has been dubbed a “spaghetti bowl” – and I would certainly agree that we are seeing a significant increase in the level of complexity inside the agreements and in their relations with each other.
Most RTAs of today make deeper and more extensive commitments, and have moved beyond commitments only in market access in goods.
Research by the Secretariat based on RTAs notified since 2000, shows that:
- Around 60% of these RTAs contain commitments in both goods and services.
- Over half contain rules on investment.
- Other issues such as provisions on government procurement, competition, SPS, TBT, trade defence measures and intellectual property rights are also found in over half of the RTAs notified.
- A smaller proportion also include other issues such as environmental and labour standards and electronic commerce, which are not covered by the WTO.
A question which requires further consideration is how RTA provisions can be complementary to the multilateral trading system.
The papers that were presented today are an attempt to fill that gap in our knowledge.
The papers address similarities and differences between the provisions in RTAs and the WTO agreements.
And, as you saw, it is a very mixed picture.
For some issues such as market access in goods and services, most RTAs grant their partners a higher level of market access than that available through the WTO.
For other issues, the picture is less straightforward.
For example, RTA provisions on anti-dumping rules. In general RTAs do not appear to have gone much further beyond where we are in the WTO today.
Similarly, for provisions on intellectual property rights, almost half of all RTAs examined simply reaffirm existing rights under the TRIPS Agreement.
While for issues such as investment, which is touched on by some RTAs, there are no WTO rules.
Furthermore, although some RTAs have provisions on disputes, most of the dispute settlement mechanisms provided are rarely used. Meanwhile the level of activity in the WTO’s DSB is rising very rapidly – and one in five of the disputes brought to the WTO involve parties who are also themselves part of an RTA.
Another trend that has been noted in the past few years is negotiations that could potentially bring together a number of existing RTAs, in so-called “megaregional” negotiations.
These negotiations aim to consolidate existing preferential relationships – so their potential effect on the overall level of complexity will be a topic for further research and analysis.
While the trend to negotiate new RTAs continues, liberalizing trade bilaterally or regionally is only a part of the picture.
As I have said many times – these initiatives are important for the multilateral trading system – but they cannot substitute it.
I would point to a number of factors.
To start with, there are many big issues which can only be tackled in an efficient manner in the multilateral context through the WTO.
Trade Facilitation was negotiated successfully in the WTO because it makes no economic sense to cut red tape or simplify trade procedures at the border for one or two countries – if do it for one country, in practical terms you do it for everyone.
And this is not the only issue that’s inherently multilateral.
Financial or telecoms regulations can’t be efficiently liberalized for just one trade partner – so it is best to negotiate services trade-offs globally in the WTO.
Nor can farming or fisheries subsides be tackled in bilateral deals.
Disciplines on trade remedies, such as the application of anti-dumping or countervailing duties, cannot significantly go beyond WTO rules.
The simple fact is that very few of the big challenges facing world trade today can be solved outside the global system. They are global problems demanding global solutions.
Another important aspect, leaving aside the content of the agreements for a moment, is their geographical scope. RTAs tend to exclude the smallest and most vulnerable countries. That’s a major source of concern.
And as our economies become more interconnected across borders and regions, RTAs do not – and probably cannot – fully address the gains from trade that can be obtained through global value chains. Indeed, the strict, product specific rules of origin that often accompany RTAs may actually be detrimental to value chains and therefore exclusionary for some. The smaller the country, the smaller the company, the smaller the trader, the bigger the likelihood is that they will be excluded.
There is also concern that by creating different sets of rules and regulations, RTAs may be burdensome for traders and business. This is the complexity point that is a concern for many.
Finally, although these initiatives show that WTO Members continue to liberalize trade, fragmentation of the trading system cannot be a substitute for the benefits of negotiating one set of rules for all.
Ideally, this is where we should be putting our focus.
But in order to ensure this clearly one thing we need to do is to deliver on what we agreed in Bali.
We are now halfway through an intensive consultation period to resolve the current impasse on this – but as things stand today, at this point in time, we don’t have a solution.
While this situation persists I think the risk of disengagement increases exponentially. And this point is underlined by the proliferation of these other approaches which you have been examining today.
For the sake of the multilateral system, and all those who stand to benefit from it, I think we have to find a solution to our current problems and put our work here at the WTO back on track. And we have to do it quickly. Time is not on our side.
To conclude, I hope today’s meeting has given you the opportunity to look at some of these issues in detail – and provide some food for thought. I hope it has been a very interactive exercise.
As I have said, RTAs are not new, but they are growing and spreading at an unprecedented rate – and it is clear that there remain some considerable gaps in our knowledge.
One fundamental point is that very little information exists on the benefits of RTA preferences.
So I cannot emphasise enough the importance of the WTO’s Transparency Mechanism for RTAs. I commend you for the important information you have provided. It is this information that enables the kind of research that you have seen presented today.
The information, however, is not complete. A number of RTAs that are in force have not yet been notified. So we need to fill that gap as well.
Therefore I very much hope for your continued cooperation through timely notifications of RTAs as this will help us to address this issue.
In this way we will be able to gain a better understanding of the impact that RTAs have – how they work together amongst themselves, how the complement the multilateral system, or not – and what that means for us all.
So it with a sense of gratitude that I join you today.
When I visit a country – and I visit a great many as part of this job – every single time I hold a press conference or public event, the one question I always get is: “what do RTAs mean for global trade – how do they impact the multilateral system?”
So this is a big issue. And I am thankful for your time in tackling it today.
Thank you for listening.
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Tanzania seen luring IPOs as State scraps foreign caps
Tanzania, which has Africa’s best-performing stock market, lifted controls on foreign-share ownership, making it more enticing for companies to consider initial public offerings.
The removal of restrictions on foreigners owning more than 60 percent of companies that trade on the Dar es Salaam Stock Exchange was published in a Government Gazette dated Sept. 19, Charles Shirima, spokesman for the Capital Markets and Securities Authority, said by phone today from the commercial capital, Dar es Salaam. Investors from the East African Community will also be allowed to buy as much as 40 percent of Tanzanian government securities, he said.
The 11-member Tanzania Share Index gained 73 percent in 2014, the most among 17 African gauges tracked by Bloomberg. Tanzania’s $33 billion economy, the largest in East Africa after Kenya, will expand 7.2 percent this year, according to World Bank estimates. The country has the most gas reserves in the region after Mozambique, spurring an investment boom, while its mobile-phone penetration rate of 60 percent leaves room for growth for operators, according to Renaissance Capital.
“We’re going to see more IPOs for sure because now companies are going to have access to international capital markets, which they haven’t had before,” Kwame Narh-Saam, head of sub-Sahara trading at Renaissance Capital, said by phone from London. “It’s quite a good story, they’ve got good growth that’s expected to be stable.”
The Dar es Salaam Stock Exchange, which has a market capitalization of 21.9 trillion shillings ($13 billion), is targeting a market value equal to 50 percent of Tanzania’s gross domestic product by 2017, Chief Executive Officer Moremi Marwa said in an interview last month. Finance Ministry Permanent Secretary Servacius Likwelile didn’t answer a call to his mobile phone seeking comment.
‘Something Big’
The bourse is targeting five IPOs by June, with one set for October or November and another two during the first quarter of 2015, Marwa said in a Sept. 10 interview. Three of the companies are in financial services and banking, one in manufacturing and the other in mining, he said, declining to identify them because details aren’t public.
“It seems like the government is putting pressure on the telcos in particular to list,” Narh-Saam said. A share sale by the local unit of Bharti Airtel Ltd. would set a precedent for other mobile-phone companies to follow, he said.
Commodity companies may also seek listings with the country’s gas reserves “set to propel the economy into something big,” Narh-Saam said. “The infrastructure developments that are happening on the ground, you can just see it’s the start of something that’s going to be difficult to ignore.”