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Governing body of UNCTAD addresses tackling inequality through trade and development
UNCTAD Secretary-General Mukhisa Kituyi, speaking on the opening afternoon of the sixty-first session of the UNCTAD Trade and Development Board on 15 September said: “Today there truly is a broad realization by society as a whole that unsustainable economic practices leading to the over-accumulation of wealth are not only unfair, but can bring stagnation and conflict”.
Dr. Kituyi was addressing global inequality and how it can be tackled by the global development agenda that will replace the Millennium Development Goals at the end of 2015.
“The current proposal for the sustainable development goals, which will soon be taken up by United Nations Members in New York, also reflect this realization with proposed Goal 10 on reducing inequality within and among countries by 2030,” he said.
The Trade and Development Board – which oversees UNCTAD operations from year to year – opened its sixty-first session (15-26 September) with the election of Ambassador Ana Maria Menéndez Pérez of Spain as its new president.
The Board’s deliberations included presentations by Rob Davies, Minister of Trade and Industry of South Africa, Giovanni Andrea Cornia of the University of Florence and Sangheon Lee, senior economist at the International Labour Organization.
Mr. Davies said that inequality between and within developed and developing countries could be tackled by restructuring global economic relationships to allow for active policies for inclusive growth on the part of developing countries in Africa and elsewhere.
Dr. Kituyi said: “The new global economy has brought with it both immense hopes but equally immense inequities. [In the last 50 years] we have seen promising declines in inequality between countries as some developing countries have experienced strong growth and have begun to close the gap between themselves and the richest countries. But compared to 50 years ago, today inequality within countries has risen in a startling number of countries – both rich and poor.”
Earlier, Dr. Kituyi told the Trade and Development Board that he welcomed the fact that the emerging post-2015 agenda was likely to include trade as a means of achieving the sustainable development goals.
Dr. Kituyi emphasized that UNCTAD was as such well placed to make a contribution to the “ambitious and transformative” new agenda: “Our research can offer the facts needed to overcome differences, our consensus-building can facilitate dialogue and our technical cooperation can help us to work together to build capacities, particularly in support of the most vulnerable countries.”
This sixty-first session of the Trade and Development Board comes at the mid-point between UNCTAD’s most recent ministerial conference in Doha in 2012 and its next, to be held in Lima in 2016. That meeting, noted Ms. Menéndez Pérez, will be among the first international gatherings after the planned adoption of the post-2015 development agenda.
It will be essential for UNCTAD to be “poised to act” on the new development agenda in Lima, Dr. Kituyi added. Toward this end, Dr. Kituyi outlined reforms he had taken in his first year in office to ensure that UNCTAD remains fit for purpose.
Additional topics to be debated at the Trade and Development Board session include economic interdependence, development strategies in a globalized world, investment for development, the evolution of the international trading system, economic development in Africa, efforts to help the least developed countries and UNCTAD assistance to the Palestinian people.
In handing over the gavel to Ms. Menéndez Pérez, the outgoing Trade and Development Board President, Ambassador Triyono Wibowo of Indonesia, said that his presidency had been “one of the most satisfying experiences” of his professional life. As well as paying tribute to the UNCTAD secretariat, Mr. Wibowo appealed for more active involvement by member States in the deliberations of UNCTAD, which, after all, represent the collective development aspirations of humanity.
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Differences in EAC states’ customs systems impede progress
Two months since implementation, differences in custom systems across East African Community (EAC) partner states are reported to be undermining the region’s single window system (SWS).
Instated on July 1 this year, the Single Customs Territory (SCT) was ideally meant to ease trade and transport across the EAC borders, explains Acting Tanzania Revenue Authority (TRA) Manager of the Customs Unit Robert Nyoni.
Speaking to journalists over the weekend in Dar es Salaam he said it was envisioned that the SCT would among other things, standardise logistics at the single entry point where all import, export and transit-related regulatory requirements would be attended to.
“Since through the SCT information is shared electronically, then individual data elements would be submitted only once,” he explained.
“This way, the SCT spearheads the attainment of the much sought Customs Union and removal of duties and other restrictive regulations,” he added.
“It is meant to minimise internal border customs’ control on goods moving among Partner States towards the ultimate realisation of free circulation of goods,” he went on to say.
“However, differences in custom systems across the EAC are impeding the implementation,” he decried.
As an example he said, in Tanzania the country has implemented the Tanzania Customs Integrated System (TANCIS) but Burundi, Rwanda and Uganda use the Automated System for Customs Data (ASYCUDA) while Kenya uses the Simba system.
Nyoni reiterated that, while the ASYCUDA system is foreign based, TANCIS is a Tanzanian made system that allows integration of various sectors within a single sophisticated electronic system.
He went on to announce that TANCIS is to be rolled out in Tunduma and Zanzibar later this year where it is expected to arrest custom challenges.
“I suggest that member states adapt the TANCIS system to increase efficiency and cost savings in obtaining relevant clearance and permit(s) for moving cargo across borders,” he said.
On his part, the TRA Customs and Excise Deputy Commissioner, Patrick Kisaka, told journalists that the government plans to install four new one-stop border posts.
“The single custom state border will increase our capacity to control revenue collection,” he said.
“Cargo would be charged tax and released only after the required tax is paid at the respective country of origin,” he explained.
He also challenged state public authorities like the Tanzania Bureau of Standard (TBS), Tanzania Food and Drugs Authority (TFDA) and Tanzania Atomic Energy Commission (TAEC) and Tanzania Minerals Audit Agency (TMAA) to subscribe to the system.
“This will facilitate trade and effective implementation of the single custom union,” he noted.
“There would be no need for business people to physically visit government authorities but instead, they would use the web-based system,” he went on to explain.
In June this year, TRA said the East African Single Customs Territory (SCT) would commence as scheduled on July 1, 2014.
The TRA Commissioner General, Rished Bade said TRA is working on concerns raised by various stakeholders in relation to use of the new system and emphasised that the business community will benefit from the resulting seamless flow of goods in the region.
“The SCT is beneficial to all stakeholders because it will lower clearance costs of goods within the region by eliminating duplication because clearance procedures (declaration, collection and verification) will be done at the point of entry,” he said.
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Uganda to invest $20b into oil
Oil industry top officials believe that Uganda must look for between $15 billion to $20 billion if it wants to become an oil producing country.
Jimmy Mugerwa the Tullow Uganda Country Manager said the total investments required for Uganda’s oil to come out of the soil is approximately $20 billion, which is almost the country’s GDP.
“We have now concluded the exploration phase. We expect this development phase to take another three years that’s if the production licenses are issued fast enough. We expect the total investments required for the entire oil sector to be around $15 billion to $20 billion,” Mugerwa said, while addressing the 19th Institute of Certified Public Accountants of Uganda (ICPAU) Annual Seminar at the Imperial Resort Beach Hotel in Entebbe.
He said the investments will include among others, the setting up of an oil refinery, building of the world’s longest continuously heated and insulated 24 inch crude oil export pipeline, land acquisitions, the oil project will require more than 250MW of power when in full operations to heat the over 1400KM crude oil pipeline and over 1200 heavy duty trucks to transport over 800,000 tons of steel, pipes and other logistics.
The investments will also see the setting up of an international airport in Hoima for both passenger and cargo planes and various road networks.
Mugerwa who addressed accountants about opportunities in Uganda’s oil and gas industry said some of the key challenges facing the sector are the large upfront investments, environmentally and socially sensitive areas where the pipeline route will pass, cross border complexities, the heating of the pipeline which will be very expensive and the different tax regimes with in the EAC.
“Oil companies are expected to take their final Financial Investment Decisions (FIDs) in December 2015. If they finally agree to invest, it will take another three years in the procurement of infrastructure and engineers. This means that even 2019 oil production dates may be ambitious,” Mugerwa told the over 1000 accountants.
He asked accountants to position themselves as investors because when the project finally takes off, the sector will require 170,000 cover rolls, safety boots and glasses.
He said they will also require buses to transport workers to the oil region, over 200,000 tons of cement, iron bars and 1200 heavy duty trucks.
“We shall need 1200 trucks to transport over 800,000 tons of pipes and steel from Mombasa for the pipeline and refinery. Accountants can go into PPP arrangements to take up such opportunities. Am I seeing investors in the room,” he asked.
The Institute of Certified Public Accountants of Uganda organizes the seminar yearly to help members familiarize themselves with various opportunities and aspects surrounding them.
Mugerwa said Uganda can reap over $63.5 billion from the 75% oil sharing agreement arrangement over a 25 year period. This will mean that on average, the government will earn $3.6 billion every year.
It is also expected that the total net revenues will hit $96b over the 25 years period.
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Canada-Africa 2014 Business Summit opens in Toronto
The first ever Canada-Africa Business Summit opened on Monday (September 15) in Toronto, Ontario.
The meeting focused on ways to explore Africa’s investment and business opportunities in areas including education, financial and insurance services, information and communications technologies, infrastructure, mining, and transportation. It also offers government officials, business communities, investors and other stakeholders from Africa and Canada an opportunity to exchange views on ways to fill the finance gap, explore key areas of investment, elevate the existing business and investment ties of Africa and Canada into a new and higher level, improve the efficiency of resource use through management of risk as well as find areas for a mutually beneficial cooperative partnership in legal, financial, operational, technical, institutional and human developments. Opening the Summit, Nola Kianza, Founder and Director of the Canadian Council on Africa, stressed that Africa was no longer a place where trouble, aid and disease preoccupied the minds of people. He said this first Business Summit highlighted the need for comprehensive partnership between Africa and Canada to secure a better tomorrow.
Canadian Senator, Don Meredith, expressed his hope that the Summit would showcase the untapped investment opportunities created in Africa for Canadian business firms. He said the engagement of Canadian investors would inject new impetus for poverty alleviation efforts and create enabling conditions for a more comprehensive and closer cooperation between African countries and Canada. He further underscored that the Canadian economic diplomacy would be a major driving force in deepening and cementing the business and investment ties of Africa and Canada and improves the future prospects and aspirations of young populations. The Senator noted the Summit had identified Ethiopia as one of four African Countries of Focus, adding that Ethiopia had become an embodiment of business and investment opportunities endowed with a trainable and young population.
He said the Government of Canada was committed to encourage and support Canadian firms to invest and benefit in Africa. Ethiopia’s Speaker of the House of Federation, Kassa Tekle-Berhan, said the Summit was a testimony to the collective desire and determination to broaden and strengthen Canada- Africa relations for the betterment of the two peoples. He emphasized that sound and well-crafted policies and strategies coupled with the determination of the people and the commitment of the Government had made Ethiopia a preferred destination for international FDI inflows in light manufacturing and agriculture. He said this Summit would help both Canada and Ethiopia advance their converging interests.
After the opening session, panel discussions, question and answer sessions and consultations considered Ethiopia as a Country of Focus. “Doing Business in Ethiopia,” and networking events, as well as a documentary “Ethiopia: the Promising Future” featured in the programme. The Summit was organized by the Canadian Council on Africa (CCAfrica), in association with the Government of Canada and the World Bank Group, bringing together nearly 1,000 business people and representatives of African and Canadian governments. It offers in-depth discussions, panels, plenary sessions and workshops on issues centered on business, investment and trade ties between Canada and Africa.
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Sambo: Ship turnaround time in Nigeria ports has improved
Vice President Namadi Sambo has said the turnaround time of ships in Nigerian ports has improved tremendously.
According to Sambo, ships now spent less time at the nation’s ports situated in Lagos, Calabar, Warri, Onne, Port Harcourt and Sapele.
In a message to commemorate the 60th anniversary celebration and inauguration of the permanent national secretariat of the Association of Nigerian Licensed Customs Agents (ANLCA) in Lagos, Sambo also said the cost of doing business in Nigerian ports was no longer high as it used to be in the past.
The vice president, whose message was delivered by Senior Special Assistant to the President on Maritime Services, Mr Olugbenga Oyewole, noted that the introduction of Pre-Arrival Assessment Report (PAAR) of the Nigeria Customs Service (NCS) had assisted in reducing the time which ships spent while waiting to discharge cargoes.
He said: “The co-operation of customs and other government agencies led to the tremendous change in port operations. This is the first time in the history of Nigeria that clearing agents will be moved out of the ports.”
He noted that the NCS was tasked to recover N1.2 trillion out of N4 trillion expected to be generated from all government’s revenues in 2014.
Sambo enjoined NCS to recognise and regulate the activities of ship chandlers at the port so that their services can be in line with international standards and practices.
In his remarks at the occasion the Minister of Transport, Senator Idris Audu Umar, lauded ANLCA for the effective role it played in the establishment of the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN).
According to Umar, who was also represented by the Senior Special Assistant on Marine Operations, Alhaji Tahiru Bala, the celebration of 60 years by the association was a landmark achievement. The federal government was aware of its contribution to revenue collection.
The Comptroller-General of Customs, Alhaji Inde Dikko Abdullahi said the 60th anniversary of ANLCA indicated that the association had come of age as a strong institution in the trade facilitation chain.
“The commissioning of the association’s permanent secretariat also symbolises its bold determination to establish ANLCA as a professional body. The NCS wishes to identify with you on this occasion and reaffirm our commitment to partner with you in attaining professionalism. We note with satisfaction the co-operation which customs has enjoyed from ANLCA over the years, particularly under the leadership of Olayiwola Shittu,” he said.
Abdullahi said the service had recorded tremendous progress in the implementation of its six-point agenda even as he pointed out that NCS had trained over 15,000 Customs officers in core areas of customs operations on tariff classification, valuation, enforcement and e-Customs.
National President of ANLCA, Shittu in his welcome address said it was the generous contribution of the CGC and his friends that helped the project come alive.
His words: “I cannot but mention with gratitude from my mind what the CGC contributed towards the success of this dream. When I whispered to him that we needed a permanent national secretariat, because I told him we could not continue paying rent, he said he had heard and I also told DCG Tahir about the dream and he told me not to worry.
“But when it was dragging and I called DCG Tahir, he said I should not worry but, one day I went on an official visit and the CGC asked me to give some people in his office my card, I thought it was for bills of laden to start falling, but I never knew it was the beginning of the realisation of this dream.
“That was when the friends of CGC Dikko laid the foundation of this place by generous contributions. The man is a man with magic wand and I am happy that I became the president during his tenure.”
Shittu, who is also the Managing Director/Chief Executive Officer of Skelas Limited, stated that the actualisation of the project was the collective efforts of all members of ANLCA.
According to him, every member contributed in no small measure to make the project a reality.
He promised to work on a book on the evolution of ANLCA, where the contributions of its members over the years, will be appropriately captured for posterity’s sake.
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Nigeria targets $80b trade volume with Asia by 2016
The Federal Government has concluded plans to raise the volume of trade between the country and 14 Asian countries from the current $40 billion (N6.62 trillion) to $80 billion (N13.2trillion) within the next two years.
Already, the nation’s top government officials, including the country’s ambassadors in the targeted Asian economies had held a strategic meeting in New Delhi, India, for the first time in over 50 years, to brainstorm on a the synergy that would ensure the trade and investment ties, for the actualization of the trade volume target.
The Minister of Industry, Trade and Investment, Olusegun Aganga, told journalists at the end of the two-day meeting that “the Ministry and the ambassadors resolved to work on doubling the volume of trade between Nigeria and Asia to over $80billion (N13.2trillion) within two years.”
Currently, trade volume between Nigeria and the 15 Asian countries stands in excess of $40billion (N6.62trillion).
India is currently Nigeria’s largest trading partner with a trade volume of about N2.95trillion, followed by China (N2.143trillion); Singapore (N293.4billion); Indonesia (272.8billion); Japan (N263.5billion); and Bangladesh (N84.5billion), among others.
Fourteen ambassadors, including the Ambassadors of Nigeria to India, Japan, Hong Kong, Singapore, Indonesia, Thailand, Philippines, North Korea, Vietnam, China, South Korea, Sri Lanka, Guangzou and Pakistan, attended the meeting.
Key agencies of the Ministry of Industry, Trade and Investment, such as the Nigerian Export Processing Zones Authority, Nigerian Investment Promotion Commission, National Automotive Council, and the Oil and Gas Free Zone Authority, were also at the roundtable forum.
Aganga said the meeting was necessitated by the emergence of Asia as Nigeria’s major trading and investment partner, adding that there was an urgent need to maintain Nigeria’s current position as the preferred investment destination in Africa and globally.
The meeting also opened up fresh investment commitments by major Indian companies, who were not yet present in Nigeria.
The minister said: “Why is this important meeting happening in India, some may ask? Why not in one of the western nations with whom Nigeria traditionally had strong trading ties? The reason is that over the last decade, there has been a shift in the dynamics of how Nigeria does business globally. We have seen our nation move from a nation historically joined at the hips with the western world to one which is more and more eastward facing.
“This is evidenced by the fact that Nigeria’s biggest trading partner is now India, with China following closely behind. Nigeria also sells a large portion of its crude to India, while our traditional major buyer- the United States- has moved to 10th place. This scenario mirrors the shift in trading patterns.”
He added: “Whilst the Western world has been beset by economic instability, the fastest growing economies have been those in the African and Asian regions. We want to arm you with relevant information to help in your roles as Chief Marketing Officers for Nigeria in your various stations.
“That is why we have ensured that many of the parastatals and directorates under the supervision of MITI provide key information on the progress and policy thrust in key sectors of the Nigerian economy to guide you in this critical assignment.”
The minister stressed that there was the need for Nigerian missions abroad to key into and play active roles in promoting Nigeria’s investment opportunities and strengthening trade ties with their countries of assignment, in line with the Transformation Agenda of the President.
He said: “This administration has, within the last three years, been implementing far-reaching transformational policies such as the Nigerian Industrial Revolution Plan; National Automotive Industry Development Plan; National Sugar Master Plan and the National Enterprise Development Programme, among others.
“These policies are aimed at diversifying our economic base and achieving sustained, inclusive economic growth. The role of Nigeria’s Ambassadors in Asia is important in promoting and attracting Foreign Direct Investment into Nigeria. We have Nigeria’s best across all our missions and I am delighted that we are today laying the foundation for stronger collaboration in the collective struggle for an even stronger economy.”
In his speech, the Nigerian High Commissioner to India, Ndubuisi Amaku, said the country stood to benefit a lot by increasing the current level of economic partnership with Asian countries.
“It is only those who live in the past that still believe that the West can help us. The Asian continent has great regards for Nigeria as a country. We welcome this move and will do everything to support the Transformation Agenda of the President,” he said.
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CEOs in Africa are optimistic about growth despite setbacks, study says
Chief executive officers in Africa are optimistic about growth despite challenges in the continent, a PriceWaterhouse-Coopers study says.
The audit firm’s 17th Global CEO Survey states that 84 per cent of CEOs are confident of their company’s prospects for revenue growth while 40 per cent are “very confident.”
The study released last week compiles results from 260 CEOs in Africa and includes insights from business and public sector leaders from 18 countries.
“CEOs in Africa feel more positive about their ability to generate revenue growth and about prospects for the economy now that they are emerging from the global financial recession,” Mr Suresh Kana, senior partner for PwC Africa said.
The industry captains acknowledge that a lot more needs to be done to transform Africa’s potential.
“CEOs are looking on multiple fronts for growth opportunities – for many, the search for growth will not be an easy task,” Mr Kana said.
SCOUTING FOR PARTNERS
Majority of the CEOs are actively scouting for partners to steer revenue growth.
Almost half of them plan to initiate a new strategic alliance or joint venture in the next 12 months, and nearly a third are anticipating an acquisition, mainly in their home country or elsewhere in Africa.
China, US and South Africa are emerging as key countries for consideration in these prospects for partnerships and acquisitions.
The survey states that this is an indication of overall better economic prospects, higher availability of finance, and the growing presence of potential local and global partners attracted by Africa’s potential.
The CEOs estimate that innovation could push growth in their businesses by 31 per cent, increased share in existing markets would propel them by 27 per cent, and new markets would grow them by 20 per cent.
They have also put consumer spending and behaviour on their radar.
The report shows that these prospects have increased confidence in the CEOs who say that they are prepared to manage risks, despite some volatility and uncertainty.
Majority of the CEOs believe that urbanisation will transform their businesses over the next five years than shifts in demographics and in global economic power.
“Every day breakthroughs research and development are opening up new opportunities. As technologies progress, they will generate more improvements in efficiency and productivity. In turn, these advances are expected to trigger a strong acceleration in economic growth towards the end of the coming decade,” said Mr Kana.
However, they cite poor infrastructure, poverty, lack of skilled workforce and jobs to match them as key challenges.
Forty five per cent of African CEOs state that their governments are ineffective in improving basic infrastructure, such as electricity.
Sixty four per cent say skilled workforce is still insufficient while another 62 per cent say poverty and inequality is a big problem.
DEBT BURDENS
Whereas 79 per cent of the CEOs said their governments have responded to volatility, 78 per cent said there was a positive response to fiscal deficit and debt burdens.
“In our view, one of the big challenges is for government to find new ways to form strategic collaborations and partnerships with people from other sectors, such as business. Tomorrow’s public body will need to act differently – governments of the future will need to embrace a lot of private-public partnerships,” Mr Kana noted.
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UN members weigh post-2015 development agenda progress
UN Secretary-General Ban Ki-moon last Thursday urged UN members to make a final push to achieve the eight Millennium Development Goals (MDGs) and to simultaneously work towards building a development roadmap for the years ahead.
“The coming year will be full of hard work, in-depth discussions and vigorous debate,” Ban told participants at a high-level development-focused event.
“We must build a framework that will sustain and finish what we have accomplished with the MDGs in our fight against poverty, hunger, ignorance and disease. We must rise to challenges old and new, not least climate change,” he continued.
In addition, the UN chief urged the international community to come through on a pledge to deliver a meaningful universal climate agreement, also by the end of next year.
The event, held on 11-12 September in New York, US, provided an opportunity for UN members and civil society to review the state of play in the various tracks feeding into a UN process known as the “post-2015 development agenda.” The new development framework is set to replace the MDGs when they expire at the end of next year.
Work undertaken in various tracks towards this end includes, among other efforts, the formulation of a proposed set of sustainable development goals (SDGs); a report on sustainable development financing; and identification of options for a technology facilitation mechanism.
John Ashe, President of the 193-member UN General Assembly, said that the new development agenda required an updated toolkit and that policies should take into account synergies between various sectors.
The proposed SDGs, delivered by a designated UN group in July, were intended to adopt this approach. For example, bids to eliminate harmful fossil fuel consumption and production subsidies would also be a win for the environment.
“The SDGs build on the MDGs and incorporate economic and environmental dimensions. They break new ground by including issues such as energy, economic growth, inequality, cities, sustainable consumption and production, as well as peaceful societies,” Ashe said last week.
The proposed SDGs are due to be forwarded for consideration later this month by the General Assembly. Last Wednesday the international body adopted a draft resolution confirming that the proposed goals would be the “main basis” for the final SDGs in the post-2015 development agenda. Statements by UN members, however, indicated a degree of difference around the extent to which the document will be re-opened for discussion.
Similar differences of opinion on the way forward were echoed at the high-level event on Thursday and Friday. Some countries cautioned opening up the much-discussed proposed SDG outcome document, while others said more work was needed to reduce the number of goals and targets, or that a greater focus was required in certain areas.
Some UN members have also expressed concern that 17 proposed goals will be too difficult to implement. Furthermore, while all participants agreed on the importance of effective means of implementation (MoI) for realising the post-2015 framework, some countries disagreed on the balance between various sources of financing in a draft report released in August by a UN group known formally as the Intergovernmental Committee of Experts on Sustainable Development Financing (ICESDF).
The proposed SDGs themselves include a stand-alone goal on various sources of MoI, which features a subsection on trade with three targets, as well as specific trade-relevant MoI included under some of the other goals.
Last week also saw the release of an advanced, unedited version of the UN Secretary-General’s report to the General Assembly on the post-2015 processes. Among other areas, the draft report suggests that member states should work on the design and function of the High-level Political Forum on Sustainable Development (HLPF). The forum has been given a mandate by governments to review and monitor, beginning in 2016, international sustainable development commitments.
During the high-level event last week UN members also said that the role of other existing accountability mechanisms was important such as the recently inaugurated UN Environment Assembly.
Realising the MDGs
In July the UN released a report indicating that many of the currently incomplete MDG targets can be realised by the 2015 due date.
Providing an update on progress made so far, the report emphasises that some MDGs are more on track than others, and variations exist across regions and population groups. Key targets such as reducing world poverty by half from 1990 levels have already been successfully met.
Further effort in the next 15 months is required, however, around access to sanitation, as well as reducing child and maternal mortality. Keeping up momentum in areas such as the hunger reduction goal is also flagged.
The report also warns of uneven efforts on the environmental sustainability goal and the threat this could pose to sustainable economic and social development.
Climate gathering
Later this month, as the discussion picks up again on the post-2015 development agenda and its sustainable development goals, world leaders will also gather at UN headquarters to discuss climate change at the invitation of the Secretary-General.
The UN recently confirmed that the Climate Summit, as the event is formally known, will be attended by 126 world leaders. This figure will make it the largest heads of state gathering on climate to date. The event is designed to ramp up efforts towards reaching the promised global climate deal under the UN Framework Convention on Climate Change (UNFCCC).
With approximately half a day dedicated to national announcements, many in the climate community are hopeful the summit will provide a positive boost to the UN climate talks.
Some civil society groups stressed the importance of acting on climate change in the SDGs. For example, in a recent report humanitarian group CARE welcomed the inclusion of a climate goal in the proposed framework.
The group, however, also said that the proposed climate goal is “vague” and that climate-related targets in other relevant goals are weak. The report argues that goals and targets related to industrialisation and economic growth lack substance in terms of environmental sustainability.
Work on refining this text and underpinning the targets with indicators will now mark the next challenge for the international community, the report says, and the post-2015 development agenda and UNFCCC process must be mutually supportive.
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Kenya told to review bilateral trade agreements
Former Trade Minister Dr Mukhisa Kituyi has urged the government to consider renegotiating decades-old bilateral agreements, arguing that they favour foreign investors at the expense of locals.
Dr Kituyi said Kenya needs to take a decisive position on ancient trade agreements that favour foreign investors over local investors.
Dr Kituyi currently heads the United Nations Conference on Trade and Development (UNCTAD).
“In some sectors, investors still enjoy zero-rated incentives that allow them to import items for free only to 'ship’ home their entire profits to tax havens.
“For instance, hotels import items duty-free only to ship out profits to tax havens because they say taxing them here is double-invoicing and against the signed agreements. Kenya must look at this issue as a revenue resource for its is mature enough with homemade equity firms that can invest in such industries and pay tax,” he said.
Lauding the government move on continued investment in infrastructural projects, Dr Kituyi said the gains made could best be realized if the country empowered its nascent industries to venture into mass production of key raw materials used in the manufacture of goods.
Dr Kituyi made the remarks during a trade facilitation seminar in Nakuru over the weekend.
He added that there is an urgent need to look at the national good in implementation of major projects instead of pushing for further decentralization of funds.
He said countries like South Africa had gone full-blown in throwing out decades-old agreements that favoured foreign investors thereby enabling it rethink the agreements in a way that favours local industries.
“If such a foreign company goes to the International Disputes and Arbitration Court to file a dispute, it is the Kenya taxpayer who is forced to settle the claim since as per the agreement, Kenya allowed investors to ‘ship’ out profits tax-free,” he said.
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Burundi rolls out new cargo tracking system
Burundi has started trials for electronic tracking of cargo on transit in a bid to prevent dumping of goods for which no taxes have been paid into the local market.
Burundi Revenue Authority (OBR) Director in charge of Customs, Border and Ports Leonce Niyonzima said the Electronic Cargo Tracking System (ECTS) will protect local industries and jobs.
“We all know that there are always non-tarrif barriers which hinders the free movement of goods in the country, but with the electronic cargo tracking system we will be able to limit the number of times trucks are stopped for checking,” he said.
Mr Leonce said the new system will reduce the time goods spend on transit while checking dumping and deviation of goods from their final destination.
With the Single Customs Territory requiring importers to pay excise tax duty in their respective country of destination before they clear their goods at the port of entry, the ECTS will complement efforts to counter unfair competition in the region.
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SEC links $140bn illicit financial flows to lack of integrity
The $140 billion lost by Nigeria to illicit financial flows has been linked to lack of integrity and transparency among business organisations and government institutions.
Nigeria has lost more to illicit financial flows particularly between 2002 and 2011 than any other African country. It is listed as one of the top 10 globally in this ranking.
“Some people estimate that we need about $50 billion to ensure stable electricity, yet within nine-year period we lost $140 billion to illicit financial flows”, said Arunma Oteh, director general, Securities and Exchange Commission (SEC).
Oteh, who spoke at the 2nd annual Christopher Kolade Lecture on business integrity in Lagos, regretted that these illicit flows not only deprive the country of desperately debt capital but also being used to finance terrorism abroad and within Nigeria.
“Many companies have paid dearly for negating integrity and for not paying attention to it”. Using Halliburton as one of the examples of companies that have suffered losses due to lack of integrity, she said the company has suffered bans from government countries following various bribery scandals.
According to her, Nigeria ranked 132 out of 144 countries on a recently conducted study on ethical behaviours of firms. Meanwhile, South Africa ranked 35, China 55, India 58, while Brazil ranked 107.
She said Nigeria only performed better than two countries, Venezuela and Argentina, in diversion of public fund while the recently World Economic Forum (WEF) global competitiveness result for 2014/2015 period ranked Nigeria 127 out 147 countries.
SEC DG was concerned that with above result there is urgent need to focus on integrity while doing business in Nigeria.
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Dar gets Sh50b funding to compete with Mombasa port
Tanzania signed a $565 million deal on Friday with the World Bank and other development partners to expand its main port of Dar es Salaam, part of plans to boost its role as a regional trade hub. Tanzania wants to lift capacity to 28 million tonnes a year by 2020 from the 14.6 million tonnes it handled in the financial year 2013/14. The World Bank said in May that inefficiencies at the port cost Tanzania and neighbours up to $2.6 billion (Sh230 billion) a year.
The port, whose main rival is the bigger but also congested port of Mombasa in Kenya, acts as a trade gateway for landlocked states such as Zambia, Rwanda, Malawi, Burundi and Uganda, as well as the eastern region of Democratic Republic of the Congo.
World Bank Group managing director Sri Mulyani Indrawati advised Tanzania to invite private sector participation in major infrastructure projects, but said that should be done with transparency and with proper regulations in place. “It’s not only that all these investments should be done by the public sector – inviting more private sector participation can provide more investments,” she said at a news conference after the signing of the port financing agreement.
Tanzania’s Transport Minister Harrison Mwakyembe said investments in infrastructure projects would have a direct impact on creating much-needed jobs and expanding trade in East Africa. “The Dar es Salaam port handles about 90 percent of Tanzania’s trade, but port delays have been worsened by limitations in operational efficiency. We believe that this programme will turn around the port,” he said.
The World Bank teamed up with Britain’s Department for International Development (DFID) and Trade Mark East Africa, an organisation that aims to help regional integration. The estimated $565 million cost would come from loans and grants, the World Bank said.
Tanzania, like its neighbour Kenya, wants to capitalise on a long coastline and upgrade existing rickety railways and roads to serve growing economies in the heart of Africa. “Future growth of the economy depends on the port’s ability to improve, to become more efficient and to be able to handle more trade,” said Ros Cooper, acting head of DFID Tanzania.
The Dar es Salaam port handles $15 billion worth of goods a year, equivalent to 60 per cent of Tanzania’s GDP in 2012. Tanzania’s economy has been growing at a sturdy 7 percent a year, but analysts say poor infrastructure is a bottleneck.
Background
The cooperation will be delivered through the Dar es Salaam Maritime Gateway Project and includes the provision of financial support to facilitate the deepening and strengthening of berths 1-7, the dredging of the entrance channel and turning basin in the port, the construction of a new berth and roll on – roll off terminal, and improvements in the spatial efficiency and operational effectiveness of the Port of Dar es Salaam.
The overall objective of the co-operation is to support the Tanzania Ports Authority (TPA) to realize the objectives of the Government of the United Republic of Tanzania for the maritime sub-sector, as expressed in the Big Results Now (BRN) Initiative, Part of Tanzania Vision 2025, and increase the capacity of the port to 28 million tons by 2020 from current 14.6 million tons handled in 2013/14.
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Mozambique close to implementing customs exemption as part of SADC
Mozambique is expected in 2015 to conclude its implementation of customs tariff exemptions as part of the process to build a free trade zone in the Southern African Development Community (SADC), said the Director General of Customs, Guilherme Mambo.
The SADC free trade zone is part of efforts made by member countries for greater regional economic integration, which sets targets including such as a Customs Union, a Common Market as well as creation of a Monetary Union, ahead of a regional central bank and single currency.
The Director General of Customs told Mozambican daily newspaper Notícias, that Mozambique is on schedule for the removal of customs barriers, and the only barriers that have yet to come down are with South Africa, “because for the remaining members we have already completed the process . ”
The Director General of Customs was speaking in Maputo on the sidelines of a meeting on the introduction of trade facilities and coordinated border management, which brought together senior Mozambique Tax Authority officials and from other public and private institutions involved in the international trade process.
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Productive jobs necessary for Tanzania’s fast-growing workforce
With more than 800,000 job seekers entering Tanzania’s labor market each year, the country must transform itself from a labor force of unproductive jobs to one of more productive industries, according to the new World Bank Group (WBG) study.
The new country economic memorandum, Tanzania: Productive Jobs Wanted, highlights the importance of productive job creation, particularly in light of rapid urbanization and a labor force that will double by 2030. In rural areas, jobs are currently confined to farms, which are on average five times less productive than farms in other areas of the world, according to the study. In cities, the study notes that entrepreneurs are more focused on survival than growing their businesses. At the same time, Tanzania faces three main challenges to job creation; high poverty levels, a mostly young population, and people moving from rural areas to urban centers.
“Jobs, productive jobs, have to be created with a sense of urgency. Inaction is not an option for the country.”
Jacques Morisset
“The growth of productive jobs is vital for alleviating poverty and promoting shared prosperity, two important goals of Tanzania’s economic strategy,” said Jacques Morisset, WBG economist for Tanzania and one of the authors of the report. “Jobs, productive jobs, have to be created with a sense of urgency. Inaction is not an option for the country.”
The proposed plan identifies three key pillars to address the challenge of job creation; a focus on farms, on small non-farm businesses, and on business expansion into new markets such as the leather industry, high-value vegetables for arms and tourism for exporting services. For each of the three pillars, specific actions have been identified to create a climate for businesses to thrive and generate productive jobs. Key recommendations include:
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Build small business owners’ assets by promoting the development of skills and fixed capital
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Encourage urban mobility by reducing congestion costs in cities, which can absorb as much as a third of the income collected by a typical worker in Dar es Salaam
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Reduce the amount of resources spent by small firms on administrative and security costs so they can reallocate these resources to productive activities
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Create economies of scale to reduce operating costs by using external sources of labor of financing, and creating opportunities for cooperation
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Move firms out of the informality trap by providing incentives to potential exporters to formalize activities
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Enhance quality at production
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Improve connectivity and market access through improvements in hard and soft infrastructure and through the use of special economic zones
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Think regionally to promote exports given their contribution to employment over the past few years
This study is the culmination of 18 months of forums, business meetings, workshops and focused discussions in Tanzania and abroad with various formal and informal business owners, foreign investors, government ministries, policy makers and experts from the WBG and academia. The goal of the study is to contribute to the debate around job creation by proposing a direction for policy-making.
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‘Tight conditions hinder EA labour move’
Allowing only highly skilled workers, exorbitant work permit fees and the tedious process of documentation are part of the restrictive conditions stifling free movement of labour within the East African bloc, according to a new study report.
The study, carried out by the Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) Uganda, shows unemployment will remain high in the region unless member states create an environment that allows employment of the majority jobless youth who are not highly educated.
For instance, the research points out Article 10 (13) of the Common Market Protocol (CMP) which provides for only free movement of highly skilled workers such as corporate managers and science engineers, among others.
“…Contrary to popular assumptions, the free movement of workers under the CMP is not a right of all workers in East Africa but a privilege of only a few skilled workers,” reads the report entitled: Free Movement of Workers in East Africa: Implications on Youth Employment in Uganda.
According to the study, Kenya can only allow a person to seek employment in the country when he/she is above 35 years, which locks out majority of the youth.
The report analysed the free movement of workers in the East African Community, mainly focusing on its implications for youth employment in Uganda.
It involved private sectors, trade unions and government institutions to draw opinions.
Speaking at the launch of the findings in Kampala on Thursday, Mr Martin Wandera, the report author, said Ugandans are more likely to lose out in the EAC partnership if government fails to make necessary strategies.
“Uganda has many push factors compelling labour outflow, which is already attracting brain drain.Government needs to repossess some of the privatised state corporations to create jobs for youths,” Mr Wandera said.
Ms Jane Nalunga, SEATINI Uganda country director, said the region should reduce high levels of jobless growth, exporting jobs and an unfavourable legislative environment.
Read the Press statement for the launch of FMW Report from SEATINI Uganda here.
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Zimbabwe tightens taxation to prop up failing economy
Zimbabwean Finance Minister Patrick Chinamasa on Thursday unveiled new individual and commercial tax measures as the government increasingly turns to taxation to prop up falling revenues and a declining economy.
Due to poor performance in key sectors of the economy, Zimbabwe’s economic growth forecast in 2014 has been cut to 3.1 percent from the initial 6.1 percent.
While agriculture, the mainstay of the economy had recorded positive growth in the first half of 2014, the minister noted that this growth would be insufficient to offset poor performance in such sectors as mining that were now expected to register negative growth, down from 10.7 percent initially forecast.
Presenting his mid-term fiscal policy review statement Thursday (download below), the minister said the slowdown in the economy was being reflected in reduced revenue collections and depressed exports and imports.
In the six months to June, the government missed its revenue targets by 6.1 percent after it collected 1.735 billion dollars against a target of 1.847 billion dollars.
Exports during the period stood at 1.2 billion dollars against imports of 3 billion dollars, resulting in a trade deficit of 1.8 billion dollars compared to 2.4 billion dollars over the same period in 2013.
The minister bemoaned that the influx of nonessential imported goods, most of which were being manufactured locally, continued to undermine growth of the agricultural sector and recovery in the local industry. Manufacturing capacity utilization is projected to decline to 30 percent in 2014, down from more than 50 percent in 2011.
The minister therefore raised duties on some imported products including poultry, beverages, dairy produce and vegetables.
To enhance government revenue, the minister proposed a number of measures that include taxing fringe benefits of employees and increasing by 0.5 U.S. cents excise duty on fuel with effect from next week.
The minister also introduced a five percent duty on airtime for both voice and data from next week and a 25 percent customs duty on imported mobile handsets with effect from next month.
Chinamasa proposed limited amnesty to all taxpayers who disclose their tax obligations from 2009 to the end of this month within a period of six months and also pay within a period of six months.
The amnesty takes effect at the beginning of next month. The amnesty comes as many Zimbabwe businesses are reportedly evading paying corporate tax due to the harsh macro-economic environment prevailing in the country.
To boost viability in the gold mining sector that is threatened with low international prices, the minister reduced royalty by big gold miners to 5 percent from 7 percent, and scrapped presumptive tax by small scale gold producers.
Meanwhile, the central bank governor John Mangudya told journalists in an interview after presentation of the fiscal policy statement that the measures announced by the minister would boost confidence in the economy as well as production in the mining and manufacturing sectors.
The import duties were also necessary to contain unnecessary products coming into Zimbabwe and this would promote food production in the country, the central bank governor said.
He also commended reduction in gold royalties as a positive move that will boost gold production.
On new tax measures, the central bank governor said these were necessary to keep the government and economy running.
“Tax measures, as usual, are necessary to increase government revenue. We need to increase taxation at the moment because it is necessary to ensure government can balance its books,” he said.
The new tax measures, in a country ranked among the most highly taxed in the world, are set to further put a strain on the majority of Zimbabweans who are struggling to make ends meet in the poor performing economy.
The increase in fuel excise duty, in particular, will have ripple effects in the economy as prices of most basic commodities will go up as a result of the increase in transport costs.
In an effort to normalize relations with international creditors, Chinamasa said the Zimbabwe government had started making token payments towards servicing its debts to multilateral creditors.
He said token amounts of 900,000 U.S. dollars, 1.8 million U.S. dollars and 1 million U.S. dollars had been paid to the IMF, World Bank and the African Development Bank during the first six months of this year.
Zimbabwe’s total external debt now stands at 8.8 billion U.S. dollars, including 121 million U.S. dollars owed to the IMF and 314 million U.S. dollars to the European Investment Bank.
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WTO members return to Geneva, hoping to bridge TFA gap
A flurry of meetings is scheduled for the coming weeks as WTO members – having now returned to Geneva following their annual August break – try to pick up the pieces after missing a key implementation deadline this past July.
The 31 July missed deadline was for adopting a “Protocol of Amendment,” which would have incorporated the WTO’s new Trade Facilitation Agreement, or TFA, into the global trade body’s legal framework. The step is crucial in order to allow WTO members to take the trade deal – agreed in Bali, Indonesia in December 2013 – back to their domestic legislatures for ratification, particularly given the end-July 2015 deadline to bring the deal into force.
The process of adopting this Protocol had stumbled after India said that it would not be able to allow TFA to move forward unless it saw signs of movement toward a “permanent solution” on the issue of public food stockholding, another issue from the Bali 2013 meeting.
An “interim solution” on the latter subject was adopted in Bali, effectively committing members to refrain from challenging subsidised purchases of farm goods under public food stockholding schemes, in return for more information on the scale and type of support being given to farmers.
The interim solution is set to last until at least 2017, in order to give members time to negotiate a permanent solution. However, India had asked in July to see a permanent solution by 31 December 2014, and refused to back the TFA Protocol without it.
The prospect of re-negotiating the Bali timelines – and thus potentially re-opening the hard-won deal – was deemed untenable for many WTO members, with the US being among the most vocal in this regard.
“We have not been able to find a solution that would allow us to bridge that gap,” WTO Director-General Roberto Azevêdo said shortly before midnight on 31 July, when it was clear that meeting the Protocol deadline was no longer possible.
“This will have consequences,” he warned at the time. “And it seems to me, from what I hear in my conversations with you, that the consequences are likely to be significant.”
Informal HoDs meeting next Monday
Before WTO members adjourned for the August break, the Director-General urged them to use the holiday as an opportunity to “think carefully” about potential next steps, asking them to “reflect long and hard on the ramifications of this setback.”
Negotiating group chairs, along with those of the regular WTO bodies, would also be directed to consult with members on what to do next, he said.
Little seems to have happened over the summer, sources indicated recently, with some noting that both sides appear to be awaiting the other’s next move. “It’s still a bit early,” one delegate acknowledged.
Since WTO members returned to Geneva earlier this month, ambassadors have reportedly been meeting one another in small groups to discuss the situation further.
All WTO members are then set to meet next Monday, 15 September for a meeting at the level of Heads of Delegations (HoDs), which is expected to serve as an opportunity to kick off the consultations process and review any discussions that have been held, informally or otherwise, over the August break.
The following day, an informal meeting of the Committee on Agriculture is scheduled, with sources confirming that the chair’s goal for those discussions is to “take stock of members’ positions on the implementation of the Bali outcomes and to exchange views on the way ahead.”
The “special session” of the Committee on Agriculture, which specifically deals with agriculture-related negotiations, is then set to meet the following Tuesday on 23 September, with the same stated purpose.
On 29 September, the Preparatory Committee on Trade Facilitation will then meet. While the same stocktaking exercise is planned informally, the meeting will also formally review the notifications that developing country members have sent in of their Category A commitments – in other words, those commitments that will take effect once the TFA does enter into force.
Trade sources say that 32 new notifications on Category A commitments have been received since the last meeting of the Preparatory Committee, which was held in early July.
Some sources have indicated that special sessions on all other negotiating issues could be forthcoming, and that the Trade Negotiations Committee – tasked with the Doha Round trade talks – may meet in early October, ahead of the scheduled General Council meeting later that same month.
Chair’s statement versus General Council decision
In the weeks since the 31 July deadline passed, more details have emerged about how close members actually were to a deal that day.
The difference, sources say, was between whether to adopt a chair’s statement, versus a formal General Council decision on the public food stockholding subject. While the US had wanted the former, unwilling to adopt anything that might potentially reopen the Bali deal, India had sought the latter, which ostensibly would have carried more legal weight.
Sources say that negotiators had also explored options for a clear process for moving towards a permanent solution. Dates for meetings of the Committee on Agriculture and specific topics had been mooted as part of a possible deal.
Meanwhile, the US had also effectively clarified that the interim agreement announced in Bali would be effectively “open-ended.” The issue had been “fudged” through constructive ambiguity at the Bali conference, leaving open the question of whether the interim solution was temporary – and thus with a 2017 expiration date – or if it would last for however long it takes to reach a permanent solution.
Meeting at the White House
One potentially pivotal event on the international trade calendar is a planned meeting on 29-30 September in Washington between new Indian Prime Minister Narendra Modi, who took office in late May, and US President Barack Obama.
According to a White House statement on the event, the two leaders will discuss “a range of issues of mutual interest,” such as ways to ramp up economic growth and improve cooperation on security issues.
Sources speaking to Bridges noted that some members are pinning their hopes on the leaders’ meeting as a chance to resolve the stalemate. Others, however, have questioned whether the WTO issue is likely be given priority within the much more wide-ranging agenda that the two leaders are set to address.
Work programme timeline
What effect the TFA situation will have on another key WTO front – that of preparing a work programme aimed at resolving the various outstanding issues in the Doha Round talks – is another significant question for negotiators as they resume their work.
Trade ministers had agreed in Bali that this work programme should be agreed by December of this year, and would build both on the decisions taken during last year’s conference as well as the other issues “under the Doha mandate that are central to concluding the Round.”
Furthermore, ministers said at the time, those issues in the Bali deal where legally binding outcomes were not possible must take priority, while work on issues not addressed during the end-2013 event would need to resume in the relevant WTO committees or negotiating groups.
However, various WTO members, particularly the US and EU, have made clear that unless the Bali deal is implemented, there is no point in trying to craft a post-Bali agenda.
“Many members, including developing country members, have noted that, if the Bali package fails, there can be no post-Bali,” said US Ambassador Michael Punke in July. “It is with regret that we agree with them.”
Whether these issues can be resolved in time to meet the upcoming deadlines is an open question, and has fuelled much speculation and commentary since 31 July. The WTO has already struggled for years to convince a sceptical public that it remains capable of reaching multilateral agreements on international trade, with the Bali package being seen as a potential turning point for the organisation’s troubled negotiating function.
This article is published under Bridges, Volume 18 - Number 29
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Government of Mozambique revises natural gas reserves of the Rovuma Basin upwards
The government of Mozambique has its projection for the amount of natural gas contained in the Rovuma Basin from 170 billion to 200 billion cubic feet, according to figures presented Tuesday in Maputo by the Mozambican President.
Pointing out some of developments over the past two years in the country’s natural resources sector, Armando Guebuza said that natural gas had been discovered in Areas 1 and 4 of the sedimentary basin, whose concessions are led by US group Anadarko and Italy’s ENI, respectively, without specifying the amounts contained in each project.
Guebuza, who was speaking at the launch of the 2nd Mozambique Geology Congress, also said that the amount of taxes from production and surface work paid by companies that explore natural resources in Mozambique rose from US$1.44 million in 2012 to US$15.8 million in 2014.
“We found world-class graphite in Balama in the province of Cabo Delgado, and confirmed commercial reserves of iron and palladium, in Tete, and heavy minerals in Inhambane,” said the Mozambican President, adding that a review of the Mining and Oil laws, approved Tuesday, would promote Mozambique “as a safe destination for investments.”
In terms of oil and gas projects in the Rovuma area Natural Resources Minister Esperanca Bias, pointed to a minimum investment of US$5 billion for their launch, which, “will increase with the planned factories [for liquefaction of natural gas] in Palma. ”
Bias also said that the Mozambican government was studying the development project for a floating natural gas liquefaction platform that ENI presented for its concession and said she believes that this would not interfere with the planned LNG units in the province of Cabo Delgado.
“It is probably better to have a floating rig for those deposits [in deep water] that are a great distance [from the mainland] and that may make their exploration unfeasible,” Bias said.
Apart from Anadarko Petroleum (26 percent), Area-1′s concession is in the hands of Mozambican state company ENH (15 percent), Indian groups ONGC Videsh (20 percent) and BRPL Ventures (10 percent), Japan’s Mitsui & Co (20 percent) and Thai group PTT Exploration and Production (8.5 percent).
The consortium led by Eni (50 percent) also includes the China National Petroleum Corporation (20 percent), Korea Gas, Galp Energia of Portugal and ENH, with 10 percent each.
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Tunisia is ready for its economic revolution
Following the revolution, Tunisia revealed two extraordinary assets. The first was the capacity to reconcile between different political, social and religious beliefs to reach a political consensus that respects the society’s pluralism. This stands in stark contrast to the recent turmoil across much of the Arab world.
The second, and perhaps less well-known, is that Tunisians now have an understanding of how even well-intentioned economic policies can get captured by political elites to the detriment of jobs, growth and the welfare of the Tunisian people.
These assets are important to bear mind as heads of state and business leaders gather in Tunisia this week to pledge support for the country’s ongoing transition. Quite apart from its many comparative advantages, such as a young and well educated population and its geographic location, Tunisia has the raw ingredients that could be transformed into a magnet for investments.
It is critical that Tunisia succeeds. Tunisia is a beacon of hope for the Arab region and shows the world that democracy can be successful. It is time to consolidate and to count on a vibrant private sector to deliver jobs as well as on international businesses willing to invest, seek opportunities and support growth. Building on its young and educated population, we call for increased private sector investments to support Tunisia. The World Bank Group has continued and even increased its support at this critical time. Let the world step up to the challenge.
Investors, be they domestic or foreign, typically look for a combination of political stability and economic policies that are conducive to competition and dynamic growth. Tunisia could provide both by drawing on the same vision that forged a groundbreaking constitution to undo the economic legacy of the past.
Three years after the revolution, the economy – and its transition – remains a high priority. Young people continue to face unemployment rates above 30 percent, with rates especially high among college graduates. Tunisia has struggled to bring back investors, restart its tourism industry, and provide the credit needed by the country’s businesses to grow and create jobs.
These are not just short term problems caused by the instability that followed the 2011 revolution. Rather they are result of an economic system inherited from the previous regime that needs to be significantly rethought.
A new report to be released soon by the World Bank shows how the previous regime used industrial policy and business regulations to protect a web of connected firms from competition. This resulted in higher prices for services such as telecoms, transport and banking, which in turn made it difficult for the exporting sectors – which could potentially employ a lot of people – to compete in world markets.
In so doing, the firms connected to the Ben Ali regime earned about 20 percent of the profits in the economy while they provided employment to only one percent of the workforce. While the regime and those who benefitted directly from this system are not in power anymore, some of the laws, regulations, and administrative practices that allowed them to capture key sectors of the economy are in need of urgent reform.
The knowledge of how the previous regime operated will help the new government design policies to reform the system and minimize the risk of capture. The transition governments have embarked on the reform path, but the urgency of the political transition has until recently delayed substantial economic transition. The pace of reforms will now have to accelerate, as the macroeconomic situation is precarious, and a recovery in private investment is needed to reach the dynamic growth that the country is capable of; one that provides opportunities for the many rather than the few.
Reforming the economy is a vital step toward unleashing the country’s immense potential. Our analysis identifies a range of activities that remain underexploited. These include the export of labor-intensive goods and services in fields like health and education, and for European firms to offshore accounting and customer services to Tunisia. The country has comparative advantages in the production of Mediterranean agricultural crops, such as durum wheat, dried fruits, and its world class olive oil, yet currently uses only a small fraction of its export quota to the European Union.
Our report calculates that reforms to streamline regulations and increase competition would generate an additional 50,000 jobs per year. An additional 38,000 jobs per year could result from reforms in the banking sector. And changing economic policies to boost agriculture and the export of wage-intensive goods and services would benefit an array of economic actors from farmers to entrepreneurs and college graduates.
Tunisia does not have to settle for the old economic model. Inclusive politics must now be matched by an inclusive economy. They are the essential ingredients for stability and growth, and the investments that will reinforce both. Tunisia and Tunisians have demonstrated remarkable political courage and determination in the pursuit of a more just, democratic and inclusive society. I have every confidence that if this same determination is placed in the economic field, Tunisia will see not only a successful political revolution, but also a successful economic revolution with a booming economy generating jobs and based on a vibrant and transparent economy, with opportunities for all.
Inger Andersen is the World Bank Regional Vice President for the Middle East and North Africa.
This editorial was originally published in La Presse on Wednesday, September 10, 2014 (French).
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EAC boss decries non-tariff barriers within Community
There is still slow progress in the removal of Non-Tariff Barriers in the East African Community (EAC) despite efforts in implementing commitments made in the customs union and common market protocol.
The EAC Secretary General, Dr. Richard Sezibera said that despite the coming into force of the common markets protocol, challenges still persist in trade facilitation and movement of people, goods, capital and labour across the EAC partner states.
According to Sezibera, this is not made better by the poor state of infrastructure, the slow pace of harmonization of work permits, who called for more efforts from regional governments, private sector, and civil society.
Sezibera was on Friday speaking at the third annual Secretary General’s consultative forum at Imperial Resort Hotel in Entebbe. The forum aims to provide a platform for dialogue between the private sector, civil society and other interest groups with the EAC Secretary General on how to improve the regional integration process.
The Secretary General’s remarks resonate with a study released in August by the East Africa Policy Centre which noted that formal and informal trade barriers remain major obstacles to economic growth and social development in the EAC (download the report here).
Mike Rotich, the EAPC executive director said high transportation costs due to corruption, bureaucratic delays and poor infrastructure are an impediment despite the measures put in place to drive business.
The study found that overheads and bribes account for almost 19 per cent of the companies’ total operation costs.
Drivers who were interviewed claimed that many unexpected overcharges and bribes have to be paid at check points and weighbridges on the borders.
Sezibera however noted that the private sector has contributed to the elimination of NTBs through monitoring and advocacy. For instance, to date 55 non-tariff barriers have been resolved, although 22 remain unresolved with 6 have been recently identified.
Speaking on behalf of the business community during the forum, John Bosco Rusagara the board member of the East African Business Council (EABC) pointed out that work permits are highly priced within the region, and with the heavy paper work issuance of work permits takes long.
The two-day forum held under the theme, “EAC: My home, My Business,” was attended by over 100 participants drawn from regional professional bodies of Burundi, Kenya, Rwanda, Tanzania and Uganda. There were also academia, media and EAC organs and institutions, development partners and other interest groups.
Prof. Tarsis Kabwegyere, the minister for general duties in the office of the Prime Minister said that Uganda had made progress in implementation of the common market protocol, citing the issuance of national IDs to facilitate movement of people in the region.
Kabwegyere also cited the removal of road blocks along the northern corridor within Uganda, the adoption of 352 of the 1,250 regional standards, and the setting up of a One-Stop Border Post at Malaba scheduled to be completed in November this year.
“With respect to the movement of workers, the key milestones are abolition of fees on work permits but on a reciprocal basis and the finalization of arrangements to pilot the national manpower survey,” said Kabwegyere.