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Launch of the East African Payment System (EAPS)
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The Secretary General and the entire East African Community Secretariat staff wishes to commend and congratulate the Governors of East African Partner States Central Banks following the launch of East African Payment System (EAPS) on 16th May 2014 in Nairobi, Kenya. We note with enthusiasm that the EAPS system went live on November 25th, 2013 between Kenya, Tanzania and Uganda and has operated smoothly and efficiently to date.
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The successful launch of the EAPS is a remarkable milestone and a key achievement by the Monetary Affairs Committee (MAC) towards the integration of the EAC region’s financial sector. We are aware that the initiative has been ongoing since 2001 pursuant to the Committee’s decision that required the EAC Central Banks to work out modalities to facilitate cross border funds transfer for the region and to the benefit of the community’s population.
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EAPS is a secure, effective and efficient funds transfer system that will enhance efficiency and safety of payments and settlement within the EAC region. The systems operates on a real time gross settlement basis by utilizing the linkage between the various Partner States’ Real Time Gross Settlement (RTGS) systems using SWIFT (Society for Worldwide Interbank Financial Telecommunication) messaging network for safe and secure delivery of payment and settlement messages to each other. EAPS will therefore increase efficiency and facilitate cross border transactions that is essential for boosting intra-regional trade among the East African.
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EAPS is currently operational between Kenya, Tanzania and Uganda successfully linking Kenya Electronic Payment and Settlement System (KEPSS), Tanzania Interbank Settlement System (TISS), and Uganda National Interbank Settlement (UNIS). Rwanda is in the process of testing the linkage between Rwanda Integrated Payment Processing System (RIPPS) and EAPS. RIPPS is expected to be fully linked to EAPS this month. Burundi is in the process of implementing the RTGS system and is expected to join EAPS once the system is in place.
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EAPS like any other real time gross settlement system has many benefits that accrue to users including; real time funds transfers, safe and efficient transfer of large value payments, enhanced safety of funds transferred through the utilization of SWIFT infrastructure, finality and irrevocability of payments, increased accessibility as EAPS is available in all the commercial banks’ branch networks, and same day settlement. EAPS uses local currencies of the East African countries including the Kenya Shilling, Tanzania Shilling, Uganda Shilling, Rwanda Franc and Burundi Franc. In addition, it reduces the cost of transactions as well as the cost of doing business in the region.
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The EAC Secretariat, therefore, takes this opportunity to encourage the business community and the public in the EAC region to use the EAPS system and benefit from the immerse attributes including safety and efficiency to boost the regional trade and intra-regional payments.
Dr. Enos S. Bukuku, Deputy Secretary General (Planning And Infrastructure)
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African leaders, business community push for financing of priority regional infrastructure projects
It is well-known that the poor state of infrastructure in Sub-Saharan Africa cuts economic growth by up to two percentage points and stifles business productivity by as much as 40 percent, putting a brake on growth and creation of jobs and wealth.
Less well-known are the concerted steps that the African Union Commission, New Partnership for Africa’s Development (NEPAD) and the Programme for Infrastructure Development in Africa (PIDA) are taking to improve infrastructure and meet the huge financing needs estimated at $93 billion annually. Adopting regional approaches and mobilizing the strengths of the private sector are essential for generating shared solutions.
In the latest bid to galvanize action, H.E. President Macky Sall of Senegal and current Chairperson of the NEPAD Heads of State and Government Orientation Committee is convening a Financing Summit in Dakar from June 14-15.
The Summit’s goals are to mobilize stakeholders around ongoing efforts and accelerate implementation of priority regional infrastructure projects. The Summit responds directly to the expressed demand for a pipeline of well-packaged infrastructure projects.
The World Bank delegation led by Makhtar Diop, Vice President for the Africa Region, will join African Heads of State, leaders from the AUC, African Development Bank, NEPAD, and others including potential financiers of infrastructure projects in Africa, government agencies, business leaders, development finance institutions, private equity investors, commercial banks, pension funds, bond market operators, and insurance companies. Their collective goal is to build a new consensus on the way forward.
As delegates gather in Dakar, showcasing the benefits of regional cooperation and public-private partnership for sustainable development of infrastructure in Sub-Saharan Africa is important, both to demonstrate successes and draw lessons that can benefit and guide the next generation of poverty-fighting infrastructure projects.
Taking a Regional Approach to Develop Shared Energy Solutions
Western Africa is in the grip of a chronic and sustained energy crisis that leaves only one in five Mauritanian citizens with access to electricity. In Mali, only one in three people has energy access. Senegal, host of the Dakar Financing Summit, fares slightly better, but only half of the population has power.
Against this backdrop, as this video shows, new gas finds in Mauritania are a potential game changer.
The recently-approved 300 megawatt Banda Gas to Power Project will enable production and harnessing of natural gas for generating electricity. It will provide affordable, reliable, sustainable power to Mauritania’s grid for homes, businesses and mines and for export to Mali and Senegal. Overall, 1.4 million households or 7 million people stand to benefit in the three countries.
The Banda gas-to-power project presents a new approach to developing energy resources on a regional basis. Combining power demands from multiple countries provides the scale at which gas field development becomes commercially viable at an acceptable cost for power consumers. The project’s first-of-its-kind combination of guarantees is helping to mobilize $950 million of private investment in gas extraction and energy generation by facilitating power trade among Mauritania, Senegal, and Mali.
Public-Private Partnerships for Roads
Capital cities are very special places and Dakar with its vantage location on the shores of the Atlantic, distinctive architecture and vibrant tapestry of people, culture and music is no exception.
Yet, this densely-populated capital city is prone to gridlock, suffers from traffic congestion that slows economic activity, trade and the movement of people and goods, exacerbates pollution and lowers the quality of life of residents. It also increases the cost of doing business.
The Dakar-Diamniadio Toll Highway project marks a major effort to improve transport in the crowded Dakar metropolitan area and restore the city’s luster as a driver of Senegal’s development.
Developed as a public-private partnership, the project is delivering dividends to the more than 100,000 cars and trucks that enter and exit Dakar. Transit times have been cut significantly, 20 minutes or so, down from a high of two to four hours previously. Most importantly, the resettlement of people, frequently the bane of infrastructure projects, was handled sensitively, and over 30,000 people living in a low-income, flood-prone area were successfully relocated.
As Africa’s urbanization takes root at an unprecedented pace with over 450 million new urban dwellers expected between 2010 and 2040, developing innovative solutions in the energy and transport sectors is a key priority. Mauritania’s Banda gas-to-power project and Senegal’s Dakar-Diamniadio Toll Highway project are good examples of the benefits of regional cooperation and public-private partnership geared toward improving infrastructure in Africa.
Download the outcome document from the Dakar Financing Summit for Africa’s Infrastructure below.
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Financial services off the table at next round of TTIP talks
Financial services will remain off the negotiating table in the next round of talks over the Transatlantic Trade and Investment Partnership (TTIP), according to a leaked draft of the European Union’s first offer to the US on trade in services and investment.
It said, “The EU considers that the ambition of the EU offer is closely linked to the progress of discussions on regulatory cooperation. Therefore, commitments on financial services will be included at a later stage.”
An attached note to member states, not for US eyes, said, “The draft TTIP offer does not contain any commitments on financial services. Given the firm US opposition to include regulatory cooperation on financial services in TTIP, it is considered appropriate not to include any commitments on financial services in the EU’s market access offer at this stage.
“The situation may change in the future if the US shows willingness to engage solidly on regulatory cooperation.”
That seems unlikely. The inclusion, or otherwise, of financial services in the free trade agreement negotiations, is a major point of disagreement between the US and the EU. While the EU insists financial services should be included in any deal, the US Treasury has argued firmly against working with the Europeans to regulate their financial sector.
The draft said the EU reserved the right to review any takeover of a company or the establishment of a new company on a member states territory on national security grounds. That exception, which holds under existing and future legislation, will be preserved through the whole TTIP text, it said.
The draft initial offer was circulated to member states for their comments between the fifth and the sixth round of negotiations in mid-July. The document was published online today (13 June) by the European Federation of Public Service Unions. The federation is concerned that public services such as water and health are not excluded from the initial offer. This could lead to US-headquartered multinationals tendering for contracts to run those services.
The position must be rubberstamped by the Council of Ministers. The EU said in the document it reserves the right to change its position during the negotiations with the US.
EU Trade Spokesman John Clancy said, “The EU approach on services is an ambitious one, both on market access and regulatory aspects. And we will put forward strong commitments to achieve the goal of creating meaningful new market opportunities in this negotiation. We believe that the level of ambition and real economic value of our respective offers will be comparable.
“In all agreements we do not put on the table public services such as public education, public health, water distribution,” he added.
The Federation said that by not specifically listing such services as exceptions in the initial offer, there was a risk they could become part of a deal in the process of negotatiations. Their exclusion should be made explicit, it said.
Accounting and auditing services will be part of the talks. The EU’s offer is to remove all limitation on market access on those two services, with some national conditions for certain member states.
Austria, Bulgaria, Cyprus, the Czech Republic, Denmark, Sweden and Portugal will keep existing conditions in their national law on auditing services. France, Austria, Cyprus, Denmark and France have similar exemptions for accounting services.
While financial services are excluded, services in health, water, tourism, maritime transport services , rail and road transport, real estate and education, among others, are included.
The text lists any national limitations on market access as well as at EU level and makes clear it expects a similar level of transparency from the US on state-level regulation in the American initial offer. The initial offers are circulated among the two sides before talks begin.
TTIP is touted by its supporters as the first 21st Century trade agreement, which will set a standard for all future agreements to follow, but it has been criticised by civil society organisations and politicians such as outgoing European Parliament President Martin Schulz for being clouded in secrecy (here). The negotiations themselves and documents such as the one leaked today are not public.
The European Commission has argued that the negotiations have been the must open and transparent international trade talks in history, pointing to regular press briefings and publication of updates.
EU/US split
Despite support from both US and EU industry bodies for its inclusion, the EU and US are at loggerheads over financial services in TTIP. Us Ambassador to the EU Anthony Gardner and EU Trade Commissioner Karel de Gucht clashed over the issue in Brussels at last month’s European Business Summit (here).
De Gucht said an agreement over broad principles in a free trade agreement for financial services would ensure that EU and US regulation would be finalised in a consistent manner.
“We are of the opinion that financial services should be part of TTIP, obviously the US side is very reluctant to do so,” he said.
Ambassador Garner answered, “The Treasury has been very clear on this issue and I don’t see frankly, much chance for a change in their position.”
In the case of banks, for example, the US has said its Dodd-Frank Act is sufficient. Dodd-Frank is the US interpretation of the global Basel III standards for banks. The US argues Dodd-Frank is moving at a faster pace than its EU equivalent, the Capital Requirements Directive IV.
Basel III is set of reforms for banks to strengthen their regulation, supervision and risk management. It was endorsed by the G20 in November 2010.
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WB lowers projections for global economic outlook, urges developing countries to double down on domestic reforms
Developing countries are headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, according to the World Bank’s Global Economic Prospects report, released on 10 June 2014.
Bad weather in the US, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of sub 5 percent growth for the developing countries as a whole.
“Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40 percent,” said World Bank Group President Jim Yong Kim. “Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation.”
The Bank has lowered its forecasts for developing countries, now eyeing growth at 4.8 percent this year, down from its January estimate of 5.3 percent. Signs point to strengthening in 2015 and 2016 to 5.4 and 5.5 percent, respectively. China is expected to grow by 7.6 percent this year, but this will depend on the success of rebalancing efforts. If a hard landing occurs, the reverberations across Asia would be widely felt.
Despite first quarter weakness in the United States, the recovery in high-income countries is gaining momentum. These economies are expected to grow by 1.9 percent in 2014, accelerating to 2.4 percent in 2015 and 2.5 percent in 2016. The Euro Area is on target to grow by 1.1 percent this year, while the United States economy, which contracted in the first quarter due to severe weather, is expected to grow by 2.1 percent this year (down from the previous forecast of 2.8 percent).
The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 percent in 2015 and 2016, respectively.[1] High-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40 percent in 2013.
The acceleration in high-income economies will be an important impetus for developing countries. High-income economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries.
Short-term financial risks have become less pressing, in part because earlier downside risks have been realized without generating large upheavals and because economic adjustments over the past year have reduced vulnerabilities. Current account deficits in some of the hardest hit economies during 2013 and early 2014 have declined, and capital flows to developing countries have bounced back. Developing country bond yields have declined, and stock markets have recovered, in some cases surpassing levels at the start of the year, although they remain down from a year ago by significant margins in many instances.
Markets remain skittish and speculation over the timing and magnitude of future shifts in high-income macro policy may result in further episodes of volatility. Also, vulnerabilities persist in several countries that combine high inflation and current account deficits (Brazil, South Africa and Turkey). The risk here is that the recent easing of international financial conditions will once again serve to boost credit growth, current account deficits and associated vulnerabilities.
“The financial health of economies has improved. With the exception of China and Russia, stock markets have done well in emerging economies, notably, India and Indonesia. But we are not totally out of the woods yet. A gradual tightening of fiscal policy and structural reforms are desirable to restore fiscal space depleted by the 2008 financial crisis. In brief, now is the time to prepare for the next crisis,” said Kaushik Basu, Senior Vice President and Chief Economist at the World Bank.
National budgets of developing countries have deteriorated significantly since 2007. In almost half of developing countries, government deficits exceed 3 percent of GDP, while debt-to-GDP ratios have risen by more than 10 percentage points since 2007. Fiscal policy needs to tighten in countries where deficits remain large, including Ghana, India, Kenya, Malaysia, and South Africa.
In addition, the structural reform agenda in many developing countries, which has stalled in recent years, needs to be reinvigorated in order to sustain rapid income growth.
“Spending more wisely rather than spending more will be key.Bottlenecks in energy and infrastructure, labor markets and business climate in many large middle-income countries are holding back GDP and productivity growth. Subsidy reform is one potential avenue for generating the money to raise the quality of public investments in human capital and physical infrastructure,” said Andrew Burns, Lead Author of the report.
[1] Using 2010 purchasing power parity weights, global growth would be 3.4, 4.0 and 4.2 percent in 2014. 2015 and 2016, respectively.
Regional Highlights
In the East Asia and the Pacific region, 2013 marked another year of moderating annual growth, mainly due to domestic adjustment aimed at addressing imbalances accumulated during the years of credit-fueled expansion. Adjustment is continuing into 2014 with real credit growth moderating from double digit rates, particularly in China, Malaysia and Indonesia. Prospects for the region are for a modest slowing in growth from 7.2 percent in 2013 to about 7.0 percent by 2016 – about 2 percentage points slower than the pre-crisis boom years but broadly in line with potential. Growth for China is expected to ease gradually from 7.6 percent in 2014 to 7.4 percent by 2016 reflecting continued rebalancing. Regional growth (excluding China) is projected to firm from around 5.0 percent this year to 5.5 percent by 2016 due to strengthening external demand, a reduced drag on growth from the political situation in Thailand, and an easing of the domestic adjustment elsewhere.
A modest recovery in the developing countries of Europe and Central Asia region remained on track in the first quarter of 2014, despite headwinds from global financial turbulence and the situation in Ukraine. Industrial output accelerated, boosted by rising exports to the Euro Area. In Central Asia, much weaker Russian growth (a major trade partner and source of remittances) and declining metal and mineral prices and domestic capacity constraints have slowed growth in 2014. Overall, the Ukraine situation is estimated to have knocked 1 percentage point off growth among low and middle-income countries in the region. As this effect eases, output is projected to accelerate from a weak 2.4 percent in 2014 (3.6 percent in 2013), to 3.7 and 4.0 percent in 2015 and 2016, respectively. Growth in Russia, now a high-income country, will be barely positive at 0.5 percent in 2014, rising to 1.5 percent and 2.2 percent in 2015 and 2016, respectively.
Activity in the Latin America and the Caribbean region has been weak, reflecting stable or declining commodity prices, the drop in first quarter US GDP growth and domestic challenges. The regional weakness carries over from 2013, weighing on merchandise exports in a number of countries. First quarter data for Argentina, Brazil, Mexico and Peru was weak, reflecting a variety of influences including the weather-related decline in US GDP, the recent tax increase in Mexico and slower Chinese growth. In contrast, Bolivia and Panama are expected to grow by more than 5 percent this year. Regional exports, including tourism receipts in the Caribbean, are expected to firm due to stronger growth in advanced countries, and improved competitiveness following earlier currency depreciations. This, coupled with continued robust investment growth along the Pacific coast of South America, and strong capital inflows should overcome first quarter weakness and generate a modest 1.9 percent increase in regional GDP in 2014, with growth accelerating to 2.9 percent in 2015 and 3.5 percent in 2016. Brazil, the region’s largest economy, is projected to grow at a weaker-than-expected 1.5 percent this year, strengthening to 2.7 percent and 3.1 percent in 2015 and 2016, respectively.
Growth in the developing countries of the Middle East and North Africa region is expected to strengthen gradually but remain weak during the forecast period following a 0.1 percent contraction in 2013. In oil-importing countries, economic activity is stabilizing. Exports in several Mediterranean economies are rebounding due to the recovery in the Euro Area. While activity has picked up from low levels in Egypt, in Lebanon spillovers from the conflict in Syria continue to depress activity, exports and sentiment. Output in the region’s developing oil-exporters show signs of strengthening following earlier disruptions, notably in Iraq. Nevertheless, aggregate production remains below the 2013 average. The outlook for the region is shrouded in uncertainty and subject to a variety of domestic risks linked to political instability and policy uncertainty. Growth in the developing countries of the region is projected to pick up gradually to 1.9 percent in 2014 and 3.6 percent and 3.5 percent in 2015 and 2016, respectively, helped by a rebound in oil production among oil exporters and a modest recovery among oil importing economies.
GDP growth in South Asia slowed to an estimated 4.7 percent in market price terms in calendar year 2013 (2.6 percentage points below average growth in 2003-12). This weakness mainly reflects subdued manufacturing activity and a sharp slowing of investment growth in India. Growth in Pakistan is estimated to have remained broadly stable, notwithstanding fiscal tightening, but remains significantly below the regional average, due in part to energy supply bottlenecks and security uncertainties. Firming global growth and a modest pickup in industrial activity should help lift South Asia’s growth to 5.3 percent in 2014, rising to 5.9 percent in 2015 and 6.3 percent in 2016. Most of the acceleration is localized in India, supported by a gradual pickup of domestic investment and rising global demand. The forecasts assume that reforms are undertaken to ease supply-side constraints (particularly in energy and infrastructure) and to improve labor productivity, fiscal consolidation continues, and a credible monetary policy stance is maintained. Growth in India is projected at 5.5 percent in FY2014-15, accelerating to 6.3 percent in 2015-16 and 6.6 percent in 2016-17.
In Sub-Saharan Africa strong domestic demand underpinned GDP growth of 4.7 percent in 2013, up from 3.7 percent the previous year. The regional aggregate was depressed by weak 1.9 percent growth in South Africa due to structural bottlenecks, tense labor relations and low consumer and investor confidence. Excluding South Africa, average regional GDP growth was 6.0 percent in 2013. Fiscal and current account deficits widened across the region, reflecting high government spending, falling commodity prices, and strong import growth. Medium-term prospects for the region remain favorable, with GDP growth projected to remain broadly stable at 4.7 percent in 2014, before rising moderately to 5.1 percent in each of 2015 and 2016, supported by firming external demand and investments in natural resources, infrastructure, and agricultural production. Growth is expected to be particularly strong in East Africa, increasingly supported by FDI flows into offshore natural gas resources in Tanzania, and the onset of oil production in Uganda and Kenya. Although growth will remain subdued in South Africa, it will pick up modestly in Angola and remain robust in Nigeria, the region’s largest economy.
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Kenya to host 100 ministers in key trade meeting
Kenya is next week set to host a big delegation of ministers from Europe, Africa and the Caribbean for two crucial meetings on trade and development.
Foreign Affairs Cabinet Secretary Amina Mohammed says the 98th Session of the African, Caribbean and Pacific Council (ACP) of Ministers will run from June 16 to 18. The second meeting which is the 39th joint session of the ACP – EU Council of Ministers will start on June 19 and end on June 20.
“The President will preside over the opening session of the joint ACP – EU Council of Ministers on 19th while the Deputy President will preside over the opening session of the ACP Council of Ministers on 17th,” she explained.
The two conferences will see about 100 ministers and 400 other delegates from ACP and EU countries attend. The ACP meetings will provide a platform for political and economic discussion with a view of promoting relation between ACP countries and the EU.
They will also discuss exports from ACP countries to the EU with a view of enhancing trade between the two continents. 60 percent of ACP exports are to EU markets with Kenya sending 34 percent of its exports there.
During the two conferences delegates will further seek to discuss strengthening of institutions in promotion of democracy, economic growth and general human and social development.
The delegates will also brainstorm on how ACP – EU can expand their trade relations by expanding the market and also providing a favorable business environment. ACP-EU cooperation has been beneficial especially in development of infrastructure and agriculture.
“Kenya attracts assistance mainly in budget support, infrastructure development as well as agriculture and rural development. Under the 10th European Development Fund, 2008 – 2013, Kenya was allocated Euro 399.4 million (approximately Sh30 billion) in the three support areas,” the CS explained.
Speaking when addressing the media with the EU Head of delegation at her office, she downplayed the closure of the British Consulate in Mombasa, saying although she was unhappy that the U.K had taken the step, it was not the first consulate to ever get closed.
She further assured that Kenya was addressing concerns of insecurity raised especially with the additional budget provided in this financial year.
On Friday, the British Government announced it had closed its consulate in Mombasa over security concerns.
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Trade Policy Review: Ghana
The fourth review of the trade policies and practices of Ghana took place on 26 and 28 May 2014. The basis for the review is a report by the WTO Secretariat and a report by the Government of Ghana.
Download documents from the review below.
Concluding remarks by the Chairperson
This fourth Trade Policy Review of Ghana has provided a timely opportunity to analyse developments in its trade and investment policies since its last review in 2008. I would like to thank H.E. Mr. Haruna Iddrisu, Minister of trade & industry; Ambassador Sammie Pesky EDDICO, Permanent Representative of Ghana to the WTO; and the rest of the Ghana delegation, for their full commitment to this exercise. I would also like to thank Ambassador Wiboonlasana RUAMRAKSA, Permanent Representative of Thailand to the WTO, for her insightful interventions as discussant.
Ghana’s political stability, its strong democratic foundations, and the strengthening of legal protection, including through the recent creation of specialized commercial courts, have improved its business environment and contributed to attracting large foreign direct investment. As a result, and also following exploitation of petroleum, Ghana has experienced impressive economic growth and social development in recent years. This has succeeded in halving the level of extreme poverty and placing Ghana in the group of medium income developing countries.
Recently however, serious macroeconomic imbalances have been a cause of concern, and have been jeopardizing Ghana’s continued expansion. Members thus asked about Ghana’s plans for macroeconomic stabilisation. In particular, clarification was sought about the newly introduced foreign exchange restrictions to address the recent depreciation of the cedi. Noting that the Ghanaian economy relies mainly on the export of primary commodities, namely cocoa, gold and, since 2010, crude oil, whose price volatility is a factor of instability for the economy, Members asked about its plans for diversification, and for a better governance in the oil sector. They urged Ghana to adopt a competition policy with a view to further improving its business environment.
On Ghana’s new investment law, many participants raised concern about, inter alia, the increase in the number of restricted sectors and in the minimum capital amounts to levels that exceed GATS commitments. Members also enquired about the general increase in local participation provisions in Ghana’s recent statutes in the shipping and energy sectors, including petroleum.
Members commended Ghana on its renewed commitment to the WTO, but urged Ghana to better meet its notification obligations and improve the transparency in its legal system by making acts and regulation available online. With respect to regional agreements, Members noted that Ghana had actively participated both in ECOWAS negotiations towards a common external tariff (CET), and in an Economic Partnership Agreement with the European Union; however, it was noted that the pace of intra-ECOWAS integration remains slow.
Specific subjects raised by Members during the review include:
- Trade facilitation: Members called for rapid and far-reaching reforms of border procedures, in particular inspection, scanning, and port clearance, so as to achieve the standards of a modern economy. They urged Ghana to reduce the numerous entities which intervene at the border and collect fees. We hope that Ghana would rapidly make the necessary commitments under the Trade Facilitation Agreement.
- Tariffs and other taxes: Members noted the very low level of tariff binding commitments by Ghana, at high rates, and stressed that the large gap between applied and bound rates had made possible the frequent recent tariff increases; they expressed the hope that the implementation of the ECOWAS CET would enhance the stability and predictability of Ghana’s tariff. Members also noted that Ghana maintains several other duties and charges, despite their binding at zero under the GATT, and stressed that numerous exemptions from border taxes further complicate the tax regime. More information was sought about Ghana’s incentive schemes, including under the Free Zone regime.
- TBT, SPS and IPRs: Members welcomed the perspective for new legislation that would appropriately differentiate between standards and technical regulations, and rationalize the “high risk goods” statute. They noted the 2012 modernization of Ghana’s SPS framework; and called for better inter-ministerial coordination, for example via national TBT and SPS committees. Concerns were raised about the enforcement of IPR legislation.
- Agriculture: Members praised Ghana for the good performance of its agriculture, including food production and cocoa, supported by domestic policies and strong world prices. They praised ongoing land ownership reforms, but invited Ghana to notify the Cocoa Marketing Company to the WTO Committee on State Trading Enterprises. Members also sought explanations for the low growth of the fishing, livestock and forestry sectors.
- Mining: Members welcomed Ghana’s announced efforts to manage the new petroleum revenues in a transparent manner for the benefit of its citizens, including through the creation of wealth funds, but asked about implementation challenges. Efforts to deregulate the downstream petroleum industry were commended, as was the increase in electricity production with a view to curbing the still frequent power cuts.
- Services: Members commended Ghana’s efforts to accelerate the modernisation of its services sectors, in particular information and communication technology; and also the recent issuing of licences to foreign telecommunication companies. In financial services, Members commended the steps taken through new laws to facilitate access to credit by small operators.
Members appreciated answers to about 150 advance written questions and looked forward to written replies to the outstanding questions no later than one month after this meeting.
In conclusion, I hope that this review will be of use to Ghana to modernize its external trade regime in line with recent domestic achievements, and in so doing boost the competitiveness of its products and services. Economic prospects would be enhanced if Ghana also undertook macroeconomic reforms, and reviewed its investment regime. The participation of a sizeable number of delegations in this Review, despite the holding of concomitant meetings, and the large number of questions posed indicated the importance of Ghana as a trading partner for WTO Members.
In closing, I would like to thank the delegation of Ghana, all the other delegations, the discussant, the Secretariat and the interpreters; for this successful fourth review of Ghana’s trade policies.
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Sustainability of sugar industry to be under severe strain – SSA
Swaziland Sugar Association (SSA) Chief Executive Officer Mike Matsebula says the sustainability of the sugar industry will be under severe strain for the next few years.
He said this emanated from the fact that the forecasts in the two main markets namely the Southern African Customs Union (SACU) and the European Union (EU) were bleak.
Matsebula said it was therefore important for all partners to recognise this and play a constructive role.
The CEO said on its part, the industry has been continuously implementing cost-reduction measures ever since the announcement of EU sugar sector reforms in 2005.
“Cumulatively, the industry has invested more than E2 billion in expanding capacity and improving productivity as well as efficiencies at field, factory and administration levels.
“The EU has complemented this effort by allocating more than E1.8 billion (€120 million) most of which is targeted at smallholder sugarcane growers.
All of this forms one big part of what is necessary for the long-term sustainability of the industry. A second big part is the cooperation of all partners towards cost containment. Any partner who seeks to maximise own benefits to the neglect of long-term sustainability of the industry is taking a dangerous short-term view. A third big part is the protection of existing preferential markets and creation of new ones.
In this connection, efforts of government are most laudable,” he said in a press statement.
Matsebula said SSA would continue providing the necessary technical support for government to be successful in the protection of value in existing markets and creation of new markets, especially in the Tripartite Free Trade Area (encompassing COMESA, EAC and SADC).
He said because this would take some time before it generates the necessary revenues for the industry, it is of utmost importance that all other partners cooperate in cost containment.
The CEO said sales were equally split between the two markets and other markets are the Common Market for Eastern and Southern Africa (COMESA) and United States (US), whilst important in the long-term, are currently considered on a residual basis.
Matsebula said it all depends on relative prices among all the available markets. Because of extremely low and volatile prices, SSA tries as much as possible to avoid the “world market” (i.e. markets without preferential trading arrangements).
“The outlook on prices in existing markets is rather bleak. The only way in which the long-term sustainability of the sugar industry can be assured is if all relevant stakeholders come to the party in the protection of value in existing preferential markets, creation of new preferential markets, cost containment at all levels of the industry and finding other appropriate strategies,” he said.
Competition with India, Brazil hurts local sugar in SACU market
Local sugar had to be discounted so as to remain competitive at the Southern African Customs Union (SACU).
Swaziland Sugar Association (SSA) Chief Executive Officer Mike Matsebula said since April 2014, this market enjoys tariff protection, reversing a long period of being flooded with low-priced imports from countries like Brazil, Thailand and India.
She said the SACU market remained the most important one for Swazi sugar, since it offers relatively high and stable prices with no exposure to exchange rate volatility.
“Since April, 2014, the SACU market enjoys tariff protection, reversing a long period of being flooded with low-priced imports from countries like Brazil, Thailand and India. This has hurt the local industry because it had to discount its sugar to remain competitive, divert some of its sales to lower-paying destinations and hold larger than normal sugar stocks. What has ameliorated performance has been the depreciation of Lilangeni coupled with a sound foreign exchange hedging policy in the case of exports outside SACU,” he said.
Matsebula said the tariff effected in April, 2014 was expected to provide a temporary cushion for the industry since production costs would soon exceed the prices protected under the tariff system in use. He said the tariff was based on a Dollar Based Reference Price (DBRP) mechanism which provides for declining protection as world market prices rise; thus exposing Swazi sugar to external competition in SACU. The CEO said the current DBRP was at a level which would not cover industry cost increases into the medium term and will therefore soon become inconsequential in providing effective protection. Matsebula said this would occur as world market prices rise in response to global increasing production costs and the result will be the displacement of Swazi sugar in SACU by imports. He said the tariff decisions were not in the hands of government since they are presently made in South Africa.
“Therefore, the ability to increase the tariff in order to allow the industry to attain optimal prices in SACU to cover rising production costs is not in Swaziland’s control. It is also worth noting that there are conflicting interests of producers and consumers, including manufactures of sugar-based products when it comes to such tariff adjustment decisions. The EU market has undergone considerable reforms in the past eight years whose net effect has been the reduction in receivable prices to levels closer to the world market. No industry can survive on the basis of world market sales.EU prices today are about 30% lower than the levels attained in 2011,” he said.
Matsebula said such price reductions have, in the short term, been compensated by favourable movements in the exchange rate; but this cannot be counted upon going forward.
Therefore, there is a risk of EU returns being even much lower going forward if the downward price trajectory continues and/or the exchange rate strengthens. The CEO said the diversion of sugar to other markets, like the US and COMESA, is not a realistic prospect as these currently take limited quantities, not exceeding a combined volume of 50 000 tons (compared to annual sales of about 700 000 tons).
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Global manufacturing recovering but growth prospects for developing and emerging industrial economies remain fragile
World manufacturing has entered a phase of steady growth after a prolonged period of recession. Global manufacturing output rose 5.1 per cent in the first quarter of 2014, the highest rate in several years, according to a report released by the United Nations Industrial Development Organization (UNIDO).
The current growth can be attributed mainly to the improving financial condition of industrialized countries, especially in Europe. However, emerging industrial economies, except for China, are still experiencing low growth.
Industrialized countries account for almost two-thirds of world manufacturing value added and growth in these economies has significant impact on global manufacturing.
Manufacturing output rose by 3.3 per cent in industrialized countries and 9.4 per cent in developing and emerging industrial economies in the first quarter of 2014. However, excluding China, manufacturing growth in emerging industrial economies was just 1.4 per cent. China’s manufacturing output grew by 13.1 per cent.
The base of current growth in industrialized countries has considerably broadened. Manufacturing output rose in all industrial sectors, including such traditional sectors as the manufacture of food products, textiles and wearing apparel.
Higher growth in the production of durable goods, such as household equipment, electronic goods and motor vehicles, indicated rising consumer confidence in long-term stability.
The manufacture of machinery and equipment rose by 6.4 per cent in Canada, by 17.7 per cent in Japan, and by 6.0 per cent in the United States.
However, growth prospects for developing and emerging industrial economies remain fragile. Manufacturing output in Argentina fell by 1.8 per cent, in Brazil by 0.2 per cent and in India by 1.6 per cent.
The major risks to a recovery of these economies relate to the reversal of capital flows, as an external factor, and the rise in the cost of production as an internal factor.
As the market in industrialized economies stabilizes and the demand for consumer goods, as well as input items, rises, exports from developing countries may eventually increase, which should boost their industrial production. In this context, the current recovery is likely to have a positive impact on global manufacturing.
The full report is available below.
UNIDO regularly releases the statistics on current growth trends of global manufacturing at country and regional level.
UNIDO maintains an international industrial statistical database in accordance with the mandate of the United Nations Statistics Commission. Data can be downloaded through online access or obtained through CD products and publications.
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Africa, Brazil, China may back India on WTO caps
Food security subsidies are in danger
Commerce Secretary Rajeev Kher has said that India is eager to find permanent protection for its food subsidies from WTO caps.
The nation registered its annoyance at the unbalanced progress in the execution of the Bali Declaration at the Trade Ministers Meet in Paris in May, the WTO General Council Meet in Geneva in June and the Committee of Agriculture last week. In December 2013, the WTO Ministers adopted the declaration that proposed to revive the Doha Development Agenda and find permanent protection for the minimum support prices.
India has found support in Africa’s Least Developed Countries as “the fear is that the developed countries will harvest the Trade Facilitation agreement and run away,” the sources said. Brazil and China could rally behind India, as their food security subsidies are in danger of breaching the WTO limits too.
Following the rollout of the Food Security Act, India’s administered minimum support prices for foodgrains procurement run the risk of breaching the permissible subsidy levels under the WTO’s existing Agreement on Agriculture. As a developing country, the de minimis provisions entitle India to provide 10 per cent of the total value of production of a basic agricultural product as product-specific price support and 10 per cent of the total value of agricultural production as non-product-specific support.
Subsidies and support prices in excess of the cap are seen as trade-distorting, against which other WTO countries can initiate legal action.
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Obama’s high-risk Africa Summit
The president is breaking with tradition during a meeting with more than 50 African leaders.
In eight weeks, Washington, D.C., will see another historic event: the first U.S.-Africa Leaders Summit. All but a few of the heads of state of the 54 nations of Africa have been invited and most are expected to attend. It will be the most heads of state to ever be in Washington at one time, likely creating traffic jams Washington has seldom seen before as the Secret Service escorts the presidents and prime ministers across town several times a day.
The purpose of the program is ostensibly to bring Africa and the United States closer together economically and politically. While it is a program also designed to strengthen the legacy of the Obama presidency, it is not without significant risks and challenges, for this summit will be like none the African leaders have ever experienced.
The summit represents a shift in strategy in the administration. In the first term, the administration was adamant that it would work with the “like-minded” nations (read, democratically elected leaders) first, receiving selected leaders in Washington either alone or in small groups of three or four. There would be no massive summits with Africa. During this period, no African head of state was given a state dinner, a fact that did not go unnoticed in Africa.
During the same period, China, Japan, India and Europe have all had African summits, respectively, with China being the first. Nearly every African head of state flew to Beijing and met Chinese leadership one-on-one and dined at a state dinner in the Great Hall. No leader of Africa was uninvited and the Chinese entertained the leaders lavishly and made commitments towards the development of most of the countries attending. A $20 billion commitment of aid to Africa was made, and that has since been supplemented by another $10 billion.
Japan followed course, and Prime Minister Shinzo Abe gave each of 46 African leaders a 15 minute meeting over a three-day period. Japan, fearing a rising China, and also needing Africa’s trade and resources for its own economy, promised $30 billion in aid among several other means of support for African development, including 10,000 business internships for African students. India and the European Union also brought the African presidents together to pledge support and cooperation. There was little choice left at the White House but to also host nearly all African heads of state, but with some interesting wrinkles to the formula.
The White House has told African ambassadors and others that no African leader will be given a one-on-one meeting with President Obama during the August summit, a fact that has caused some African leaders to ask what is the utility of the trip. This breaks all protocol tradition as the Africans know it.
Instead, the African presidents received an invitation to “an interactive dialogue” with the American president on Aug. 6. What, many ask, is an interactive dialogue ? There will be a state dinner on the White House lawn for all presidents the evening before, but once the interactive dialogue is concluded the next day, so too is the summitt. There is to be no final document, another break with protocol. No doubt Obama will shake the hand of each president, but there will be little substantive dialogue.
The African leaders have been asked to come to Washington for at least three days, with a Monday morning program focusing on civil society and an afternoon with Congress, organized by Sen. Chris Coons, D-Delaware, chairman of the Senate subcommittee on Africa. Currently, the White House has asked various cabinet secretaries to host African heads of state for private dinners that evening. This, too, is a very different approach to diplomacy. Cabinet secretaries and African government ministers rank below heads of state, of course, and protocol-sensitive heads of state may seriously question whether they should attend. Furthermore, who is hosted by the secretary of state or the secretary of defense will be noted by those hosted by less prestigious cabinet officers. It may be all too easy for some heads of state to take umbrage.
Economics and trade will have their day as well, as the administration plans a U.S.-Africa CEO summit, organized by the secretary of commerce and her staff. Three hundred CEOs will be invited to meet and discuss business and trade over six hours with African heads of state. The White House is strictly adhering to selected CEOs only. In some ways, this meeting may be the most critical of all to U.S.-Africa relations, as the U.S. private sector has been slow to respond to the new African market and is falling behind as an investor and trader in the world’s largest emerging market. The administration is hoping that this program will spark new interest in Africa from the corporate world. To help them, the White House called upon business and political titan Michael Bloomberg to add his name as co-convener, in order to better draw corporate peers to this meeting.
The program breaks many international protocol traditions. That it is also held on President Obama’s birthday has added fuel for critics who say that this more a legacy’ program than a working meeting with real results. It is too early to say. An innovative program is being planned. This is a program of high risk, ultimately to be judged by the results to come. We shall hope and then we shall see.
Stephen Hayes is president and CEO of the Corporate Council on Africa.
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Using trade policy to address renewable energy access challenges in Africa
What role can trade policy play in tackling the various challenges that prevent a large-scale deployment of renewable energy systems in Africa?
Estimates from the International Finance Corporation (IFC) show that close to 600 million people in Africa, around 70 percent of the continent’s population, did not have access to electricity as of September 2012. Various studies have clearly established the correlation between a country’s GDP and its per capita energy consumption. Affluent countries have a high rate of energy consumption, while a number of poor countries in Africa, for example, have very low GDP and energy consumption.
The Human Development Index (HDI) study run by the United Nations Development Programme (UNDP) suggests that no country with annual electricity consumption below 4000 kWh per person per year has an HDI value of 0.9 or higher, and similarly, no country above 5000 kWh per person per year has a HDI value lower than 0.8. The study has been conducted in the world’s 60 most populous economies, comprising 90 percent of the world’s population.
In case of Africa, with the exception of few countries like South Africa, almost every country shows some correlation between per capita electricity use per year and HDI. The lack of access to energy affects the rate of development in the country resulting in adverse impacts on general health and women’s health in particular, safety, education, environment, and finally results in loss of productivity. While energy access is recognized as an important component in improving the lives of the rural poor, high capital costs and the remoteness of sparsely populated habitats is a major hindrance in expanding centralised electricity grids and reducing energy poverty. On the other hand, some renewable energy sources such as solar and biomass, have the inherent advantage of being good sources of distributed energy with no need for centralisation. Critical energy access could therefore be provided without having to rely on a central grid. Solar products such as lanterns, solar home lighting solutions, and small-scale power plants are particularly suited for providing such access.
Challenges to renewables adoption
Renewable energy adoption is hindered by various challenges. Some of these include the high upfront costs of solar, lack of access to finance, lack of familiarity with the sector by the local banks and micro financing institutions (MFIs), lack of effective after-sales and maintenance structure for the product suppliers, market spoilage through proliferation of low cost, low quality products, and lack of consumer awareness. These problems are further aggravated by an absence of robust policy and regulatory mechanisms, distorted subsidy structures for fossil-fuel sources such as kerosene, high import duties levied on renewable energy based products and components associated with their manufacture and assembly, counterintuitive taxation regimes that favour import of prefabricated products as opposed to domestic manufacturing and assembly, local content requirements, and improper standardisation and quality control measures. Both trade and non-trade related options exist to tackle these barriers.
Non-trade related tools to address renewables barriers
As a first step, raising awareness vis-à-vis the end consumer around available choices between traditional and alternate energy, as well as the relevant financing opportunities, is critical to scale up informed decisions that catalyse the shift to clean energy sources.
Awareness creation as well as policy and regulatory reforms are also required in the case of imports where customs duties and taxes are levied on renewable energy based products even though they are, by law, exempt from such duties. In certain cases such levying of duties may be due to lack of awareness or understanding by customs authorities regarding the relevant internationally agreed Harmonized System (HS) codes under which the products are to be imported.
What’s more, quality assurance programmes that function through the employment of testing and certification mechanisms do not exist in various countries in Africa. Testing centres should be set up across the continent to help overcome this issue. Standardisation and product approval for sale in a territory could also be decided on a product-to-product basis rather than a blanket criterion. Policy and regulation should be formulated to encourage financing through MFIs due to high upfront costs associated with renewable energy products and low income among the potential consumers.
In addition, subsidy mechanisms in various countries in Africa are limited to provision of capital subsidy, as a percentage of total capital cost, on various products. Innovative business models such as the “pay as you go” would not benefit from an upfront subsidy since the payments under that model are spread over a period of time – the payments are made per unit of electricity consumed till the cost of the system is recovered after which the ownership is transferred to the consumer. Thus the subsidy in this case would have to be provided per unit of electricity consumed. Regulations would have to be revised to accommodate such innovative business models to help alleviate the burden on the end consumer. Finally, fossil-fuels such as kerosene are currently heavily subsidised, which can render renewable energy systems uncompetitive. The subsidy offered for these fossil-fuel systems could instead be channelled towards the development of renewable energy systems.
Tackling renewables trade barriers
Sustainable power generation is usually characterised by higher upfront equipment costs. While governments seek to bring down the costs of sustainable power through subsidies and various other fiscal incentives, they may also simultaneously try to meet other policy objectives. These objectives could include creating a manufacturing base for sustainable energy equipment and generating local jobs. While synergies are possible, it can become difficult for policymakers to balance sometimes seemingly conflicting objectives. It may be difficult, for instance, to seek sustainable power production at the lowest cost possible when power producers are facing import restrictions on technologies and equipment at the level of quality and prices they desire. These restrictive policy and regulations can also lead to trade disputes, which in turn may result in stalemates during negotiations related to climate change and sustainable development.
Given this scenario, it may be worth setting up a Sustainable Energy Trade Agreement (SETA) as a stand-alone initiative that could address such barriers, allowing trade policy to advance climate change mitigation efforts while also increasing sustainable energy supply. Such an agreement would cover all trade-relevant aspects of sustainable energy production, allowing for possible scale-ups. A SETA is also a way to bring together countries interested in addressing climate change and longer-term energy security while maintaining open markets.
Making a SETA work for Africa
It is desirable for countries that are important traders of Sustainable Energy Access (SEA) products to identify and clearly define these products including within their national tariff lines as well as agree to arrive at a common description for these products, and ensure consistent tax treatment upon importation.
High import duties, as well as taxes levied on renewable energy products and components for assembly of sustainable energy goods, are particularly problematic where African countries are concerned. While many of the continent’s economies may not be willing or ready to join a SETA immediately, they could consider voluntarily addressing high duties that hold back imports of these goods as well as simplify the duty structure for such products. Appropriate provisions for special and differentiated treatment for African countries could also be part of an eventual deal as well as enhanced provision of nontrade related technical assistance.
The importance of countries such as the US, EU, China, and India in manufacturing, exporting, importing products such as solar lighting equipment underscores the need and relevance for these countries to be part of an eventual SETA. And given the importance of addressing energy access issues for many African economies, it would be worthwhile these countries engaging either as observers or becoming involving in those provisions of a SETA that directly or indirectly affect their manufacturing, exports, or imports of SEA equipment.
The disbursal of government subsidies for consumer products such as solar lanterns or solar powered home power systems in certain countries requires that the product fulfil the local content requirement criterion. Such requirements can hold back dissemination of important equipment and restrict consumer choice. Standardisation policies as well as related capital subsidies and incentives, which may affect access to sustainable energy equipment such as solar lamps by constraining the sale of innovative or most-efficient models, should also be addressed. These should be designed in such a way that it ensures component choice based on performance rather than system design.
Trade facilitation related measures that speed up clearance of sustainable energy equipment at customs and ports could be also considered by a SETA. For instance, agreement could be reached that all SEA related goods would be subject to customs inspection and clearance in a certain number of hours or days, unless there is serious reason for an extension. An important aspect of this would be developing a classification system for relevant sustainable energy products based on clearly identifiable characteristics and the internationally agreed HS-codes, able to be easily understood by customs authorities.
Any technical cooperation or assistance mechanism that is set up by a SETA should take cognizance of measures that could help facilitate the dissemination of SEA products. For instance this article earlier pointed to a lack of awareness among customs officials regarding various tax and duty incentives eligible for SEA products as well as on relevant HS-codes under which the products are imported. This could be one of the areas where a SETA could create a fund for the training of customs authorities in countries where it may be felt necessary. Such awareness creation exercises could also include updated information on any changes to HS-codes or re-classifications agreed-upon by countries for SEA products.
Free trade is a very challenging issue for most countries trying to balance sourcing of solar components at minimised cost whilst encouraging a local manufacturing ecosystem. The latter can break down beneficial trade relations between countries. The creation of a SETA, and finding a way to include African economies, would likely help economies come together to reduce the trade tensions. Scaling up renewable energy diffusion in Africa would ensure that sustainable energy access is provided to the rural poor helping to improve their quality of lives.
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African states warned: Don’t rush to sign EPAs
Former President Benjamin Mkapa has warned African countries not to rush into signing the Economic Partnership Agreements (EPA) saying domestic industries will be affected and many will not survive the open market competition with Europe.
He pointed out that the side effect of EPAs is to reduce the revenue capacity of independent governments and increase dependence on the goodwill of donors (the EU) a goal which is not only untenable but excruciatingly humiliating.
Mkapa’s observation comes following growing pressure from the European countries over African countries pressing to ink the agreement before September this year. EU has gone further to threaten economic sanctions against African countries that will not sign the agreement before the set September deadline.
Giving a Public Lecture on: “EU Economic Partnership Agreements: What’s In For Africa?” Tuesday evening in Dar es Salaam and organized by the University of Dar es Salaam, the third phase president pointed out that EPAs will not support Africa in the docket of trade policy measures that it requires in order to develop.
Mkapa underscored that African countries must raise their collective voice to say: “The desire to cheat and the refusal to be cheated are the cause of the noise in the market.”
He said that the African economies will be set back for a long time to come if they choose to sign the agreement.
Mkapa cited an example of the Small Medium Entrepreneurs (SMEs) policy under the agreement, insisting that it will not be able to produce products that will compete with European products.
He said the EPAs are in effect ploys for ensuring that the value addition to African products continues to be located in Europe whereby the SME sector will be literally killed.
Mkapa said under the proposed EPAs, 80 percent of the African market will be opened to European goods and services “yet we surely know that their goods and services will likely to be cheaper and of better quality and in large supply”.
According to Mkapa, even if some sprinkling of icing is put on the EPAs, they will not remove the threats of profound liberalisation of the 80 percent or more and other conditions which are central to the EPAs. Mkapa described EPAs agreement as defying, dismissing and degrading many fundamental policy and development aspirations and goals of African countries.
He however added: “With the resources that African countries have, governments can find many possible ways to help the industries where preferences to the EU market will long be available so that these sectors can continue to thrive.”
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BRICS emerging nations close to launching bank; to start lending in 2016
The five BRICS nations will likely agree to fund their $100 billion development effort equally, giving them the same rights in a new multilateral bank that could start lending in two years, a senior Brazilian government official told Reuters on Thursday.
Capitalization of the bank was one of the main sticking points in the sometimes tortuous negotiations among the emerging powers to create a joint lender to finance infrastructure projects in developing nations.
The new bank would symbolize the growing influence of emerging economies in the global financial architecture long dominated by the United States and Europe through the International Monetary Fund and World Bank.
Negotiations to create the lender have dragged on for two years, with some members growing weary of China’s desire to have a bigger stake in the bank by putting in more capital. But this hurdle is being overcome.
“The majority wants an equal sharing of the capital and there is no other specific proposal on the table,” said the official, who is directly involved in the negotiations. “This is not going to be a problem.”
Leaders of Brazil, Russia, India, China and South Africa are expected to sign a treaty to launch the bank officially when they meet at a BRICS summit in the northern Brazilian city of Fortaleza on July 15.
The bank, which will have start-up capital of $50 billion, will have to be ratified by the countries’ legislatures and could begin lending in two years, said the official, who requested anonymity because he was not authorized to speak publicly.
Of that start-up capital, the countries will put in a total of $10 billion in cash and $40 billion in guarantees, which will be used to raise capital on international markets.
The new development bank would help cover growing demand for project financing that has not been fully met by global multilaterals, which for years have been heavily criticized for meddling in the domestic policies of sovereign borrowers.
“The bank will look into the finances of borrowers, but never intervene in their economic affairs,” said the official. “Any country can join the bank with a $100,000 share. The idea is to provide them loans at a lower cost than what they would individually get in markets.”
The BRICS will also decide if the bank will be based in New Delhi, Shanghai, Johannesburg or Moscow. Brazil will not offer headquarters because of upcoming presidential elections that could delay negotiations, the official said.
Later, the group will have to choose an executive “with experience in the financial sector” to lead the bank in a five-year presidency that will rotate among the founding members.
In five years the bank’s capital should double to $100 billion through capitalization from funding members, debt emissions or contributions from new members. The BRICS will hold a minimum of 55 percent of the bank’s shares.
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New evidence on Africa’s integration into global value chains
This year’s African Economic Outlook shows that Africa’s integration into global value chains (GVCs) is greater than one might have expected – in fact, Africa is the world’s third most GVC-integrated region, ahead of North America and South East Asia.
This is calculated by looking at value added – the difference in price between the goods or services an industry produces and the sum of the intermediate inputs of goods and services it needs to produce its own product (intermediate inputs used by a car manufacturer for instance could include steel, software, or seats).
On the other hand, the greater part (about 60%) of the integration is due to Africa’s role as a source of inputs for other countries’ exports – of which a large part is presumed to be raw materials – rather than to its role as a production hub. (In technical terms, its forward integration is greater than its backward integration).
In fact, Africa’s share of global trade in intermediate goods is only 2.2%. But that percentage is nonetheless higher than Africa’s share of world GDP. What is remarkable, however, is that the increase in backward integration – the extent to which Africa imports goods or services, processes them and re-exports them – has increased at a rate greater than that of China and is second only to India since the mid-1990s. Africa did start from a relatively low base, but the rate of increase is nonetheless noteworthy. As an illustration of this, the average foreign value added (the value of imported goods or services used to make a product) in African exports increased from about 14% in 1996 to about 24% in 2011, which is fairly close to the world average.
Looking closer at the figures, Southern Africa and North Africa are contributing the most to this integration into GVCs. These two regions were responsible for around 75% of the total increase in exports of foreign value added in Africa over the period 1995-2011, with Southern Africa at 48% and North Africa at 27%. South Africa alone accounted for around a quarter of the total increase. Relative to their level of exports, however, the results are mixed. While Southern Africa still performs the best, North Africa actually does relatively poorly and East Africa and the Indian Ocean region much better.
The Southern African region also enjoys the greatest share of intra-African value added in its exports. In fact, the AEO 2014 presents new evidence that South Africa is playing the role of a “headquarter economy” in the Southern African region, much like Germany in Europe, the U.S. in North America, and Japan in East Asia – although the effect is somewhat less strong. By contrast, intra-African value added in North African exports is quite low, reflecting the region’s greater integration into the Euro-Mediterranean area.
What’s driving Africa’s integration in global value chains?
The African Economic Outlook 2014 suggests that Africa’s increasing integration into GVCs is due to a number of things. At a basic level, the predominance of dispersion forces (the division of production into ever smaller tasks that can be detached geographically, falling transport costs, etc.) that has been affecting the global economy as a whole seems to have finally reached Africa. Secondly, the growing African consumer market is making it more attractive to locate production facilities on the continent, thereby attracting market-seeking foreign direct investment (FDI). Indeed, the FDI that is flowing to Africa has been rapidly diversifying away from the extractives sector – in 2012, 73.5% of greenfield investment in Africa went to manufacturing and infrastructure-related activities. Thirdly, the pressure on manufacturing wages in other parts of the world, and China in particular, is reducing the cost advantage of Asia vis-à-vis Africa. And fourthly, greater political stability and better governance are making investment in Africa a less risky prospect. Nonetheless, there are still a host of obstacles to overcome – like the business environment, infrastructure and relatively uncompetitive labor costs – for Africa to be able to fully take advantage of GVCs. But the changes that are taking place are encouraging.
Is Africa turning the corner?
Overall, the African economy is clearly undergoing diversification and becoming more integrated into the world economy – not just as a source of inputs but also as a production hub. However, whether the current pace of change is sufficient to achieve lasting structural transformation is another question. Countries that have achieved structural transformation have tended to grow at significantly higher rates for a much longer period of time, so Africa may not be quite there yet.
In order for GVCs to contribute positively to structural change, policy also needs to adapt. Integrating GVCs at low value-added activities can be beneficial for countries – especially low-income ones – in terms of creating employment and spurring growth. But ideally countries will also want to be able to gradually move into higher value-added activities to avoid getting stuck at the bottom of the value chain.
To do so, countries need to adopt value-chain specific policies rather than merely national or sectoral ones. This is because value chains are firm-led and opportunities to grow depend crucially on the power of different actors within the value chain of which a country is a part, which in turn depends very much on the structure of the global market of the product in question. For instance, the global market in chocolate is highly concentrated and dominated by a handful of large firms, so producers of cocoa tend to be very dependent on the lead firms. On the other hand, the global market in apparel is relatively open and easy to access, but also highly competitive.
African governments have largely woken up to the potential of GVCs to affect their development: GVCs are now specifically addressed in the development strategies of a majority of African countries. Hopefully, today’s strategies will in turn translate into tomorrow’s success stories.
Useful links
Compare your country: The African Economic Outlook presents key economic indicators for Africa as a whole and for each country
Written by Kjartan Fjeldsted of the OECD Development Centre
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Nairobi plans budget around $1.5b Eurobond even as tourism suffers
Kenya is looking to speed up growth in the coming financial year with a slew of medium-term policy projects that will send the government on an unprecedented borrowing spree and raise the tax burden but hopefully consolidate economic gains.
Finance Cabinet Secretary Henry Rotich is on Thursday expected to unveil the country’s spending plan – concurrently with Uganda, Tanzania, Rwanda and Burundi – with a Ksh1.77 trillion ($20.34 billion) budget that is way above that of other EAC member countries.
Kenya expects economic growth to rise to 6.4 per cent in 2015 from an initial forecast of 5.8 per cent this year, as it implements phase two of medium term plans of the Vision 2030 blueprint that aims to propel the country to middle-income status in under two decades.
These strategic interventions are expected to help create one million jobs per year and lift at least 10 million Kenyans out of poverty, as well as expand social protection coverage to all vulnerable members of the society. At least half of Kenya’s population is considered poor.
According to its preliminary prospectus for the $1.5 billion sovereign bond, central to its spending plans, the country’s priorities for the fiscal year 2014/15 will focus on more investment in devolution, infrastructure, diversification and commercialisation of agriculture and food security.
Funding will also be directed to boosting the performance of the manufacturing sector, improving access to African and global markets, creating more jobs for the youth and improving access to education, water and healthcare.
To attract investors, the government says it will waive tax on interest payment.
The Eurobond document shows that Kenya has allocated Ksh116.7 billion ($1.33 billion) for ongoing and new road projects and Ksh43.6 billion ($505 million) to energy-related initiatives. Infrastructure and energy are critical to improving Kenya’s economic performance.
Analysts said they were optimistic the country would successfully raise the required amount from the Eurobond.
“The focus on the next budget should be on keeping an eye on debt levels. What is critical is the success of the Eurobond because it would help to stabilise the macro-economic environment, easing pressure on interest rates and the local currency. The Eurobond will also support government projects. By easing pressure on domestic borrowing, there will be room for the private sector to borrow to stimulate growth,” said Paul Mwai, Afrika Investment Bank chief executive officer.
According to the Treasury, the government expects to finance the budget by raising Ksh1.18 trillion ($13.56 billion) through taxes and non-tax revenues.
The balance is expected to be filled through foreign debt at Ksh149.8 billion ($1.72 billion), domestic borrowing at Ksh190.8 billion ($2.19 billion) and grants at Ksh57 billion ($655 million). But this ambitious plan could be compromised by shaky revenue collections.
John Mbadi, a member of the Parliamentary Budget and Appropriations Committee said, “Given the fact that the tourism sector is already struggling and insecurity has dented Kenya’s business competitiveness, it will be difficult to raise adequate revenue to finance the whole budget.”
Private sector players argued that the high tax targets could affect businesses adversely given the prevailing harsh economic conditions.
“We would like to see tangible revenue collection measures to meet the proposed expenditure. This should be done in a way that promotes, rather than impedes, growth,” said Betty Maina, chief executive officer at the Kenya Association of Manufacturers.
Mwendia Nyaga, CEO of Oil and Energy Services Ltd, said, “The budget needs to encourage investment in productive sectors for Kenya not to have service economy that depends wholly on imported goods. There should be no tax on capital goods or withholding tax on investment. This country needs to grow exponentially.”
The Eurobond document shows that as at the end of December, total revenue amounted to Ksh460.6 billion ($5.4 billion), against a target of Ksh489.6 billion ($5.7 billion) – an underperformance of Ksh28.6 billion ($305 million).
Recently, the shilling fell to an eight-month low exchanging at Ksh87.50 to the dollar, the lowest since August last year. Experts predict the shilling will touch the 88 mark before the end of the year, although the Central Bank of Kenya is optimistic the currency will soon regain its footing, arguing that the depreciation factors were temporary.
“There was increased volatility... mainly attributed to high demand for foreign exchange from corporates repatriating dividends... The bank therefore, sold foreign exchange and stepped up open-market operations to stabilise the exchange rate,” the CBK said in its May 30 update.
Kenya expects its inflation to stay within target despite the recent rally triggered by more expensive fuel and food items. Treasury estimates that inflation will remain in the upper limit target of 7.5 per cent in 2014. Inflation rose to 7.3 per cent in May, the highest in six months, from 6.4 per cent in April.
Economists fear inflation will rise beyond the government range of 2.5 per cent and 7.5 per cent before the end of the year, given the current economic conditions.
But some business executives are cautiously optimistic. “My outlook for the economy is positive. We are in a space of development with agriculture, wholesale, retail and financial services showing strong potential for growth. These will be significant in contributing to economic growth given the challenges we are experiencing with tourism and insecurity,” said Gachao Kiuna, CEO at TransCentury, the investment firm.
Insecurity concerns due to terrorism and violent robberies have seen the country’s tourism sector, one of the leading sources of foreign exchange, grind to a near-halt due to travel advisories issued by several Western countries.
Already hundreds of permanent and casual workers have lost their jobs as hotels cut costs following the decline in customer numbers. The loss of jobs will deny the government millions of shillings in direct and indirect taxes.
“The government must urgently address insecurity and manage the ballooning public expenditure, among other challenges,” said Kwame Owino, who heads the Institute of Economic Affairs. “For example, we need to do more on security to win the confidence of both local and international communities,” Mr Owino added.
Budget documents tabled in parliament on Thursday show the education sector will take the lion’s share of the budget at 29 per cent, followed by energy and infrastructure (22 per cent).
The Treasury projects that public administration and international relations will consume 14.9 per cent of the budget while the justice, governance, law and order sector will take up 9.9 per cent.
The government plans to spend at least eight per cent on national security while investments in agricultural, rural and urban development will take a combined 5.3 per cent of the budget. Health is budgeted to take 4.2 per cent, environment, water and natural resources a combined 4.4 per cent while social protection, culture and recreation will be allocated 2.1 per cent of the budget.
“Incoming investors must be factoring in the issue of security,” said Gitahi Gachathi, the chief executive officer of EY, the audit firm.
“Other key risks include bureaucracy, infrastructure, corruption and the high cost of doing business. The good thing is that at least there is a good story in what is being done about these risks,” said Mr Gachathi.
The country’s energy sector, which will be critical in uplifting the economy, has registered sluggish growth due to the high initial capital outlay and inability to mobilise adequate financial resources to undertake massive investments.
Statistics from the Energy Ministry show that the national peak demand for power as at May 2013 had reached 1,347MW, against an installed capacity of 1,672MW, leaving the country highly exposed. The scenario is further blighted by the fact that Kenya experiences losses of close to 20 per cent on its national grid.
Kenya depends on hydropower for about 60 per cent of its energy but this has proved unreliable, especially whenever there are poor rains.
Food security has also been a challenge, with thousands of families living in arid and semi-arid areas facing the threat of starvation each year despite the country’s high potential for irrigated agriculture.
The second phase of Vision 2030 was announced in October 2013 and replaces the earlier round of policies that defined government operations between 2008 and 2012.
“The second medium term plan aims to build on the successes of the first MTP, particularly in increasing the scale and pace of economic transformation through infrastructure development, and strategic emphasis on priority sectors under the economic and social pillars of Vision 2030,” the Eurobond document says.
“Under the second MTP, transformation of the economy is focused on rapid economic growth in a stable macroeconomic environment, modernisation of infrastructure, diversification and commercialisation of agriculture, food security, and a higher contribution of manufacturing to GDP,” it adds.
In the initial year of the first MTP, Kenya focused on a number of projects that were aimed at national healing and reconciliation following the 2007 post-election violence that was triggered by disputed presidential election results.
Reported by Jeff Otieno, Joshua Masinde, Steve Mbogo and Kennedy Senelwa
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Doing Business 2014: Southern African Development Community (SADC)
Introduction
Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.
In a series of annual reports Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies, from Afghanistan to Zimbabwe, over time. The data set covers 47 economies in Sub-Saharan Africa, 33 in Latin America and the Caribbean, 25 in East Asia and the Pacific, 25 in Eastern Europe and Central Asia, 20 in the Middle East and North Africa and 8 in South Asia, as well as 31 OECD high-income economies. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why.
This regional profile presents the Doing Business 2014 indicators for economies in Southern African Development Community (SADC). It also shows the regional average, the best performance globally for each indicator and data for the following comparator regions: East Asia and the Pacific (EAP), Economic Community of West African States (ECOWAS), European Union (EU), Middle East and North Africa (MENA) and Organization for the Harmonization of Business Law in Africa (OHADA). The data in this report are current as of June 1, 2013 (except for the paying taxes indicators, which cover the period January-December 2012).
The Doing Business methodology has limitations. Other areas important to business – such as an economy’s proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders and getting electricity), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions – are not directly studied by Doing Business. The indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city.
Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policy makers in designing regulatory reform.
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Region moves towards harmonising mining policies
Seven nations from south and east Africa are moving towards adopting a uniform set of mining policies that would harmonise royalty charges on their minerals.
Kenya, Tanzania, Uganda, Mozambique, Ethiopia, Sudan and Angola, on Wednesday accepted a proposal which provides for a common model in the management of their mineral wealth to avert exploitation by mining firms and boost returns to their economies.
The countries are members of the Southern and Eastern Africa Mineral Centre (Seamic) – a United Nations-backed agency that provides information, research, training and technical assistance to the region’s mining sector.
Najib Balala, Kenya’s Mining secretary and Seamic’s chairman said that if the proposal is ratified, member states would domesticate a shared code that will guide the setting of royalties and fees paid by mining companies.
“We have today (Wednesday) forwarded the agenda that African nations need to harmonise their mining policies and royalties,” said Mr Balala during the 35th edition of Seamic governing council meeting in Nairobi.
“It has been accepted in principle as (Seamic) member states.” This, he said, paves the way for future discussions on the issue.
Only Comoros was not represented during the governing council meeting held in Kenya’s capital. Seamic consists of eight nations.
If the plan goes through, charges on minerals extracted in the region largely by foreign firms would be similar across the economies.
A harmonised legal and fiscal regulatory framework, the agency reckons, would help contain incessant switching of investors from African nations in search for markets that offer lowest royalties, which often results in unfair competition and less returns to home economies.
The move follows reports of several nations in the continent whose economies still lag behind despite having active multi-billion dollar extractive industries.
Uniformity in mining practices means investors would be guided by other factors such as the performance of the economy and investment climate as opposed to the rates of royalties and mining fees by nations as is currently the case.
This is especially so with precious minerals such as diamond and gold whose royalty rates and free-carried interest vary significantly in different nations.
It remains to be seen how the nations would integrate their different mining laws and practices.
“The bottom line is that we want to make the sector conducive enough for investors but at the same time ensure that the benefits are felt across the chain,” said the Mr Balala whose term as Seamic head was renewed on Wednesday for the second year.
The African Union Commission estimates that natural resources account for 33 per cent of sub-Saharan Africa's Sh148.75 trillion ($1.7 trillion) gross domestic product.
However, growth in earnings from the sector has been slowed down by lack of proper infrastructure to boost value addition in the industry. This is because setting up processing plants for minerals is a capital-intensive venture, which most African nations cannot afford.
The Seamic bloc is endowed with diamond and gold largely in Angola and Tanzania, copper in Uganda, rare earth, niobium and titanium in Kenya and base and precious metals in Mozambique.
“We need to have structures and policies that will ensure that investors support our local industries to develop and offer capacity building and technology transfer to local players for industrialisation,” said Frank Dixon Mugyenyi, a senior industry adviser at the African Union Commission.
The mining agency said that it would marshal the support of the African Union towards adoption of a common regime under Africa Mining Vision.
Mr Balala noted that Egypt, Zambia and Morocco have expressed interest in being part of Seamic, a move that would prompt rebranding of the outfit.
Seamic is established under the United Nations Economic Commission for Africa and has a research and training laboratory in Dar es Salaam, Tanzania.
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New bill puts SA in breach of treaties
The Private Security Industry Regulation Amendment Bill is of grave concern to foreign investors. Foreign investment is one of the most crucial mechanisms for South Africa to spur economic growth, but multinationals need a stable and predictable policy environment.
Take the contribution that our members, who form part of the American Chamber of Commerce in South Africa, have made to the country. Just 80 US companies, surveyed two years ago, contributed a combined total of R233bn to the South African economy, employing 150,000 South Africans.
They spent R445m on corporate social investment and invested more than R500m on skills development, putting another R320m into training. These companies are fighting poverty and reducing unemployment in South Africa.
But they need to protect their investment in the host country and so they need policies linked to an established legal and regulatory framework that will provide security for these investments.
South Africa is competing against other developing markets for foreign investment and we have to ensure that our policies are business-friendly and devised to attract investors.
The bill, although it does bring much needed regulation to the industry, includes a controversial clause that requires foreign-owned security companies and their suppliers to hand over 51% of their companies to South Africans.
The main reason, ostensibly, is that these companies collect security intelligence that puts South Africa at risk. This is absurd.
Foreign-owned security companies in South Africa make up less than 10% of the local security industry. And, it is already a legal requirement that the management and staff of foreign-owned securities companies are South Africans.
We should be up in arms about the impact this bill will have on foreign investors. This goes far beyond the security industry. Investors will be wondering what sector will be forced to hand over more than half of their businesses next.
Will companies continue to use South Africa as a foothold economy from which to expand operations to Africa?
We think not.
There are other explicit costs and risks associated with this bill. South Africa would be in violation of its international trade obligations. The country will infringe its commitments under the World Trade Organisation General Agreement on Trade in Services.
South Africa has undertaken to give full market access and national treatment commitments to “investigation and security” services.
This obligation requires that “private companies must be able to provide these services, without restriction, on terms no less favourable than those applicable to local firms”.
If South Africa ignores its obligations, aggrieved countries could win the right to retaliate against our exports.
Just as important is the bill’s implications for South Africa’s eligibility for the US General System of Preferences, which is the platform for the African Growth and Opportunity Act. These treaties give South African exporters unprecedented access to the US market, enabling more than 98% of South African exports to enter the US duty-free.
It is no exaggeration to say that many international companies have chosen South Africa as an investment destination precisely for this preferential access, contributing to the country’s rise as a manufacturing hub.
Let’s translate the importance to numbers, however.
US trade data show that South African exports to the US under the General System of Preferences and the Africa Growth and Opportunity Act were worth $3.6bn (about R38bn) in 2013.
The US was also the second-largest destination for South African exports after China, accounting for 7% of all exports. However, it was by far the largest destination for the vehicle sector (21% of all exports) and for passenger cars (42% of exports).
Overall, the US was the leading destination for South Africa’s most important industrial exports -vehicles, machinery and chemicals.
By comparison, all the Bric countries – Brazil, Russia, India and China – combined made up 17% of South Africa’s global exports, but only 3% of the vehicle sector and only 5% of top industrial exports.
South Africa’s preferential access to the US is important to our plans for industrialisation and absolutely critical for our strategic auto sector.
We cannot risk that access.
Although we do not provide the US reciprocity for the access we gain, the Africa Growth and Opportunity Act requires that any country that uses this law must have “a market-based economy that protects private property rights”.
The US Trade Act also says that a country would not qualify as a beneficiary developing country if it has “nationalised, expropriated or otherwise seized ownership or control of property, including patents, trademarks or copyrights, owned by a US citizen or by a corporation, partnership or association which is 50% or more beneficially owned by US citizens”.
And yet, the new bill would make South Africa ineligible on this score. So, overall, it puts at risk 44% of our exports to the US, or about 3% of our global exports.
We encourage the government to reconsider certain of the policies that have been proposed recently, including the Protection and Promotion of Investment Bill, the Expropriation Bill and the Mineral and Petroleum Resources Development Act.
These policies have made investors jittery and create the perception that South Africa is closing its doors to foreign direct investment.
If implemented, these laws will lead to many foreign-owned companies reconsidering their investment, costing South Africa jobs and economic growth.
O’Brien is executive director of the American Chamber of Commerce
This article was first published in Sunday Times: Business Times
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The Brussels G7 Summit Declaration
1. We, the Leaders of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, the President of the European Council and the President of the European Commission, met in Brussels on 4 and 5 June 2014. This Group came together because of shared beliefs and shared responsibilities. We are profoundly committed to the values of freedom and democracy, and their universality and to fostering peace and security. We believe in open economies, open societies and open governments, including respect for human rights and the rule of law, as the basis for lasting growth and stability. For nearly forty years, we have shown through our actions that collective will can be a powerful catalyst for progress. Our efforts to address major global challenges have also been guided by a commitment to transparency, accountability and partnership with other concerned members of the international community. We remain bound together as a group by these values and this vision. Guided by these shared values and principles, we will continue to work together to meet the challenges of our times. We thank the European Union for hosting this Summit and welcome Germany’s Presidency.
Global Economy
2. Supporting growth and jobs remains our top priority. The global economy has strengthened since we met at Lough Erne, downside risks remain which will need to be managed carefully. Advanced economies are recovering, but continued and sustained growth is needed to bring down unemployment, particularly among young people and the long-term unemployed.
3. We will take further steps to support strong, sustainable and balanced growth, with a common goal of increasing the resilience of our economies. We will present ambitious and comprehensive growth strategies at the G20 Summit in Brisbane, to include action across a broad front including in the areas of investment, small and medium enterprises, employment and participation of women, and trade and innovation, in addition to macroeconomic policies. We will continue to implement our fiscal strategies flexibly to take into account near-term economic conditions, so as to support economic growth and job creation, while putting debt as a share of GDP on a sustainable path.
4. We agreed that 2014 will be the year in which we focus on substantially completing key aspects of the core financial reforms that we undertook in response to the global financial crisis: building resilient financial institutions; ending too-big-to-fail; addressing shadow banking risks; and making derivatives markets safer. We remain committed to the agreed G20 roadmap for work on relevant shadow banking activities with clear deadlines and actions to progress rapidly towards strengthened and comprehensive oversight and regulation appropriate to the systemic risks posed. We will remain vigilant in the face of global risk and vulnerabilities. And we remain committed to tackling tax avoidance including through the G20/Organisation of Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting Action Plan as set out in the agreed timetable, and tax evasion, where we look forward to the rapid implementation of the new single global standard for automatic exchange of tax information. We call on all jurisdictions to take similar action.
5. Trade and investment are key engines for jobs and growth. We reaffirm our commitment to keep our markets open and to fight all forms of protectionism including through standstill and rollback. We are committed to strengthening the rules-based multilateral trading system. We will protect and promote investment and maintain a level playing field for all investors. International standards for public export finance are crucial for avoiding or reducing distortions in global trade. Since we met at Lough Erne, we have made substantial progress on major trade negotiations: Canada-EU; Japan-EU; Canada- Japan; EU-US; the Trans-Pacific Partnership; and the Trade in Services Agreement. We aim to finalise them as soon as possible. We are committed to liberalising trade in environmental goods and services, including through an Environmental Goods agreement. We will work to conclude an expanded Information Technology Agreement as soon as possible. These agreements and initiatives can help support and will be consistent with the multilateral trading system and act as building blocks for future multilateral deals. We welcome the successful outcomes of the 9th World Trade Organisation (WTO) Ministerial Conference. We will prioritise full and swift implementation of the Bali Package, in particular the Trade Facilitation Agreement. We will continue to provide, within our current Aid for Trade commitments, substantial support and capacity building to help implement this agreement, in particular to the benefit of the Least Developed Countries. We fully support efforts in the WTO to secure swift agreement to a balanced work programme for completing the Doha Round.
Energy
6. The use of energy supplies as a means of political coercion or as a threat to security is unacceptable. The crisis in Ukraine makes plain that energy security must be at the centre of our collective agenda and requires a step change to our approach to diversifying energy supplies and modernising our energy infrastructure. Under the Rome G7 Energy Initiative, we will identify and implement concrete domestic policies by each of our governments separately and together, to build a more competitive, diversified, resilient and low-carbon energy system. This work will be based on the core principles agreed by our Ministers of Energy on May 5-6 2014, in Rome:
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Development of flexible, transparent and competitive energy markets, including gas markets.
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Diversification of energy fuels, sources and routes, and encouragement of indigenous sources of energy supply.
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Reducing our greenhouse gas emissions, and accelerating the transition to a low carbon economy as a key contribution to sustainable energy security.
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Enhancing energy efficiency in demand and supply, and demand response management.
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Promoting deployment of clean and sustainable energy technologies and continued investment in research and innovation.
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Improving energy systems resilience by promoting infrastructure modernization and supply and demand policies that help withstand systemic shocks.
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Putting in place emergency response systems, including reserves and fuel substitution for importing countries, in case of major energy disruptions.
7. Based on these principles we will take the following immediate actions:
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We will complement the efforts of the European Commission to develop emergency energy plans for winter 2014-2015 at a regional level.
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Working with international organisations such as the International Energy Agency (IEA), the International Renewable Energy Agency, and the international financial institutions, we will supply technical assistance, including leveraging the private sector, and facilitate exchanges with Ukraine and other European countries seeking to develop indigenous hydrocarbon resources and renewable energies, as well as to improve energy efficiency.
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We will conduct assessments of our energy security resilience and enhance our joint efforts, including on critical infrastructure, transit routes, supply chains and transport.
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We will ask the IEA, in close cooperation with the European Commission, to present by the end of 2014 options for individual and collective actions of the G7 in the field of gas security.
8. We will also:
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Promote the use of low carbon technologies (renewable energies, nuclear in the countries which opt to use it, and carbon capture and storage) including those which work as a base load energy source; and
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Promote a more integrated Liquefied Natural Gas (LNG) market, including through new supplies, the development of transport infrastructures, storage capabilities, and LNG terminals, and further promotion of flexible gas markets, including relaxation of destination clauses and producer-consumer dialogue.
9. We ask our Energy Ministers to take forward this Rome G7 Energy Initiative and report back to us in 2015.
Climate Change
10. Urgent and concrete action is needed to address climate change, as set out in the Intergovernmental Panel on Climate Change’s Fifth Assessment Report. We therefore remain committed to low-carbon economies with a view to doing our part to limit effectively the increase in global temperature below 2°C above pre-industrial levels. We affirm our strong determination to adopt in 2015 a global agreement – a new protocol, another legal instrument or an agreed outcome with legal force under the convention applicable to all parties - that is ambitious, inclusive and reflects changing global circumstances. We will communicate our intended nationally determined contributions well in advance of the 21st session of the Conference of the Parties (COP21) in Paris (by the first quarter of 2015 by those Parties ready to do so) and call on others to follow our lead. We welcome the Climate Summit of the United Nations Secretary General in September and his invitation to all Parties to prepare for ambitious contributions and to deliver concrete action to reduce emissions and strengthen resilience. We look forward to a successful Summit.
11. We reaffirm our support for the Copenhagen Accord commitments to mobilise USD 100 billion per year by 2020 from a wide variety of sources, both public and private, to address the climate mitigation and adaptation needs of developing countries in the context of their meaningful and transparent mitigation actions. We welcome the adoption of the Green Climate Fund’s operating rules and the decision to commence its initial resource mobilisation in the coming months. We remain committed to the elimination of inefficient fossil fuel subsidies and continued discussions in the OECD on how export credits can contribute to our common goal to address climate change. We will strengthen efforts to improve measurement, reporting, verification and accounting of emissions and improve the reporting of international climate finance flows, consistent with agreed decisions of the United Nations Framework Convention on Climate Change. We will work together and with others to phase down the production and consumption of hydrofluorocarbons (HFC) under the Montreal Protocol. We will also continue to take action to promote the rapid deployment of climate-friendly and safe alternatives in motor vehicle air-conditioning and we will promote public procurement of climate-friendly HFC alternatives.
Development
12. The pursuit of sustainable and inclusive development and greater prosperity in all countries remains a foundational commitment that unites our people and our countries. We continue to implement the commitments we have made at previous Summits. To be accountable we will provide a report in 2015 on progress toward their attainment.
13. We commit to work with all partners to agree an ambitious and universal post-2015 agenda, anchored in a single set of clear and measurable goals. That agenda should complete unfinished business of the Millennium Development Goals. It should be centred on people and focused both on the eradication of extreme poverty, promoting development and on balancing the environmental, economic and social dimensions of sustainable development, including climate change. It should also promote peace and security, democratic governance, the rule of law, gender equality and human rights for all. We are committed to build a global partnership with shared responsibility and mutual accountability to ensure its implementation. We await the synthesis report of the United Nations Secretary General in the second half of 2014. We welcome the African Union’s common position.
14. We will continue to promote inclusive and resilient growth in Africa, working with governments and citizens in Africa to enhance governance and transparency, improve infrastructure, notably in the energy sector, eliminate trade barriers, facilitate trade and investment, and strengthen the responsible and sustainable management of natural resources and the revenues they generate. We welcome the active role of the African Union and the New Partnership for Africa’s Development in the process of reforming the Africa Partnership Forum.
15. Security and development are the prerequisite of a lasting peace in regions affected by the scourge of war, terrorism, organized crime, corruption, instability and poverty, notably the Sahel region, Somalia, Nigeria, South Sudan and Central African Republic. We welcome efforts by African partners and the African Union, supported by the international community, aimed at building their capacities to respond to crises and support stabilisation.
16. We confirm our strong commitment to the Deauville Partnership and our support to Arab countries in transition in their efforts to improve governance and stimulate inclusive growth and job creation, particularly for their youth and women. Our Foreign and Finance Ministers will meet in the margins of United Nations General Assembly, and the International Monetary Fund/World Bank Annual Meetings, to take forward the Partnership.
17. We remain committed to work towards common global standards that raise extractives transparency, which ensure disclosure of companies’ payments to all governments. We welcome the progress made among G7 members to implement quickly such standards. These global standards should continue to move towards project-level reporting. Those governments that are signing up to the Extractive Industries Transparency Initiative standard will voluntarily report their revenues. We confirm our commitment to implement fully the extractive partnerships launched in 2013.
18. We today announce a new initiative on Strengthening Assistance for Complex Contract Negotiations (CONNEX) to provide developing country partners with extended and concrete expertise for negotiating complex commercial contracts, focusing initially on the extractives sector, and working with existing fora and facilities to avoid duplication, to be launched in New York in June and to deliver improvements by our next meeting, including as a first step a central resource hub that brings together information and guidance.
19. We will continue to work to tackle tax evasion and illicit flows of finance, including by supporting developing countries to strengthen their tax base and help create stable and sustainable states. We renew our commitment to deny safe haven to the proceeds of corruption, and to the recovery and return of stolen assets. We remain committed to prevent the misuse of companies and other legal arrangements such as trusts to hide financial flows stemming from corruption, tax evasion, money laundering, and other crimes, ensuring that beneficial ownership information is available in a timely fashion to financial intelligence units, tax collection and law enforcement agencies, for example through central registries or other appropriate mechanisms, leading by example in implementing the Financial Action Task Force and other relevant international standards and our national action plans in line with the principles we agreed at Lough Erne. Greater transparency in this area will help developing countries.
20. Recent events illustrate that corruption undermines trust in governments and limits economic growth. We will build on existing efforts, including in the G20, to take additional steps to prevent this. We continue our engagement to and support of United Nations Office on Drugs and Crime and the World Bank's Stolen Asset Recovery Initiative. We welcome the outcomes of the Ukraine Forum on Asset Recovery and look forward to the third Arab Forum on Asset Recovery. The G7 remains committed to working with governments and global financial centres to follow up on asset recovery efforts.
21. We remain committed to the Muskoka Initiative on maternal, newborn and child health, and welcome the call made at the Saving Every Woman, Every Child Summit in Toronto to accelerate progress on this global priority. In addition we are committed to ensuring sexual and reproductive health and reproductive rights, and ending child, early and forced marriage and female genital mutilation and other harmful practices. The health and well-being of women and children are improved through ensuring universal access to affordable, quality, essential health services, strengthening health, education and child protection systems and improving nutrition and access to immunisation. We recognise the impact of the GAVI Alliance (Global Alliance for Vaccines and Immunisation) and welcome its efforts to expand access to vaccines to an additional 300 million children during 2016-2020. We welcome Germany’s offer to host the second replenishment in early 2015, reaffirm our commitment, and call on other public and private donors to contribute to the replenishment of the GAVI Alliance. We reaffirm our commitment to an AIDS free generation and to the Global Fund to fight AIDS, Tuberculosis and Malaria to reduce the burden of these three major infectious diseases on eligible countries and regions.
22. To address the threat posed by infectious diseases, we support the Global Health Security Agenda and commit to working with partner countries to strengthen compliance with the World Health Organisation’s (WHO) International Health Regulations and enhance health security around the world. We commit to working across sectors to prevent, detect and respond to infectious diseases, whether naturally occurring, accidental, or the result of a deliberate act by a state or non-state actor. That includes building global capacity so that we are better prepared for threats such as the recent Ebola outbreak in West Africa and working together, in close cooperation with WHO, to develop a Global Action Plan on antimicrobial resistance.
23. We continue to strongly support comprehensive approaches to achieve global food security and nutrition. We look forward to the second International Conference on Nutrition in November 2014 and the Expo Milan 2015, which will provide a platform for the global post-2015 debate on sustainability and food and nutrition security. We continue to support the New Alliance for Food Security and Nutrition under strong African leadership and the successful completion of principles for responsible agricultural investment by the Committee on World Food Security. These will better enable smallholder farmers, especially women, to benefit from sustainable rural development. We continue to support the consistent implementation of the Voluntary Guidelines on Responsible Governance of Tenure of Land, Fisheries and Forests, including by building on the land partnerships we launched in 2013 and the Global Agriculture and Food Security Programme.
Ukraine
24. We welcome the successful conduct under difficult circumstances of the election in Ukraine on 25 May. The strong voter turnout underlined the determination of Ukraine’s citizens to determine the future of their country. We welcome Petro Poroshenko as the President-elect of Ukraine and commend him for reaching out to all the people of Ukraine.
25. In the face of unacceptable interference in Ukraine’s sovereign affairs by the Russian Federation, we stand by the Ukrainian government and people. We call upon the illegal armed groups to disarm. We encourage the Ukrainian authorities to maintain a measured approach in pursuing operations to restore law and order. We fully support the substantial contribution made by the Organisation for Security and Cooperation in Europe (OSCE) to the de-escalation of the crisis through the Special Monitoring Mission and other OSCE instruments. We commend the willingness of the Ukrainian authorities to continue the national dialogue in an inclusive manner. We welcome the "Memorandum of Peace and Unity" adopted by the Verkhovna Rada on 20 May and express the wish that it can be implemented rapidly. We also encourage the Ukrainian parliament and the Government of Ukraine to continue to pursue constitutional reform in order to provide a framework for deepening and strengthening democracy and accommodating the rights and aspirations of all people in all regions of Ukraine.
26. The G7 are committed to continuing to work with Ukraine to support its economic development, sovereignty and territorial integrity. We encourage the fulfilment of Ukraine's commitment to pursue the difficult reforms that will be crucial to support economic stability and unlock private sector-led growth. We welcome the decision of the International Monetary Fund (IMF) to approve a $17 billion programme for Ukraine, which will anchor other bilateral and multilateral assistance and loans, including around $18 billion foreseen to date from G7 partners. We welcome the swift disbursement of macro-economic support for Ukraine. We support an international donor coordination mechanism to ensure effective delivery of economic assistance and we welcome the EU’s intention to hold a high-level coordination meeting in Brussels. We welcome ongoing efforts to diversify Ukraine's sources of gas, including through recent steps in the EU towards enabling reverse gas flow capacities and look forward to the successful conclusion of the talks, facilitated by the European Commission, on gas transit and supply from the Russian Federation to Ukraine.
27. We are united in condemning the Russian Federation’s continuing violation of the sovereignty and territorial integrity of Ukraine. Russia’s illegal annexation of Crimea, and actions to de-stabilise eastern Ukraine are unacceptable and must stop. These actions violate fundamental principles of international law and should be a concern for all nations. We urge the Russian Federation to recognise the results of the election, complete the withdrawal of its military forces on the border with Ukraine, stop the flow of weapons and militants across the border and to exercise its influence among armed separatists to lay down their weapons and renounce violence. We call on the Russian Federation to meet the commitments it made in the Geneva Joint Statement and cooperate with the government of Ukraine as it implements its plans for promoting peace, unity and reform.
28. We confirm the decision by G7 countries to impose sanctions on individuals and entities who have actively supported or implemented the violation of Ukraine’s sovereignty and territorial integrity and who are threatening the peace, security and stability of Ukraine. We are implementing a strict policy of non-recognition with respect to Crimea/Sevastopol, in line with UN General Assembly Resolution 68/262. We stand ready to intensify targeted sanctions and to implement significant additional restrictive measures to impose further costs on Russia should events so require.
29. The projects funded by the donor community to convert the Chernobyl site into a stable and environmentally safe condition have reached an advanced stage of completion. While recognizing the complexity of these first of a kind projects, we call upon all concerned parties to make an additional effort to bring them to a satisfactory conclusion and call upon project parties to keep costs under control. This remains a high priority for us.
Syria
30. We strongly condemn the Assad regime’s brutality which drives a conflict that has killed more than 160,000 people and left 9.3 million in need of humanitarian assistance. We denounce the 3 June sham presidential election: there is no future for Assad in Syria. We again endorse the Geneva Communiqué, which calls for a transitional governing body exercising full executive powers and agreed by mutual consent, based on a vision for a united, inclusive and democratic Syria. We strongly condemn the violations of international humanitarian law and human rights and indiscriminate artillery shelling and aerial bombardment by the Syrian regime. There is evidence that extremist groups have also perpetrated grave human rights abuses. All those responsible for such abuses must be held to account. We welcome the commitment of the National Coalition and Free Syrian Army to uphold international law. We deplore Russia and China’s decision to veto the UN Security Council (UNSC) Resolution draft authorising referral to the International Criminal Court and demanding accountability for the serious and ongoing crimes committed in Syria.
31. We are committed to supporting the neighbouring countries bearing the burden of Syrian refugee inflows and deplore the failure to implement UNSC Resolution 2139 on humanitarian assistance. We urge all parties to the conflict to allow access to aid for all those in need, by the most direct routes, including across borders and conflict lines, and support further urgent action by the UNSC to that end. In our funding we decide to give particular support to humanitarian actors that can reach those most in need, including across borders. We call for the international community to meet the enormous funding needs of the UN appeals for Syria and its neighbours. We resolve to intensify our efforts to address the threat arising from foreign fighters travelling to Syria. We are deeply concerned by allegations of repeated chemical agent use and call on all parties in Syria to cooperate fully with the Organisation for the Prohibition of Chemical Weapons (OPCW) fact-finding mission. We call on Syria to comply with its obligations under UNSC Resolution 2118, decisions of the Executive Council of the OPCW and the Chemical Weapons Convention to ensure the swift removal of its remaining chemical stockpile for destruction, and to destroy its production facilities immediately and answer all questions regarding its declaration to the OPCW.
Libya
32. We reaffirm our support for a free, prosperous and democratic Libya which will play its role in promoting regional stability. We express serious concern at the recent violence and urge all Libyans to engage with the political process through peaceful and inclusive means, underpinned by respect for the rule of law. We urge continued and coordinated engagement by the international community to support the Libyan transition and efforts to promote political dialogue, in coordination with the UN and with the UN Support Mission in Libya fulfilling its mandate in that respect. We ask all in the international community to respect fully Libyan’s sovereignty and the principle of non-intervention in its affairs. In this framework, we commend the proposal of the High National Electoral Commission, endorsed by the General National Congress, to convene the elections on June 25. We emphasise the importance of these elections in restarting the political process and appreciate the vital work of the Constitution Drafting Assembly. Mali and Central African Republic
33. We welcome the ceasefire signed on May 23 by the Malian Government and armed groups in the North of Mali, thanks to efforts by the African Union, through its Presidency, and the UN. We reaffirm our strong commitment to a political solution and to an inclusive dialogue process that must start without delay, as prescribed by the Ouagadougou agreement and UNSC decisions. We fully support the United Nation’s Multidimensional Integrated Stabilisation Mission in Mali efforts in stabilising the country and, with the commitment of neighbouring countries, including Algeria, Mauritania and the Economic Community of West African States, in working for a durable settlement respectful of the unity, territorial integrity and national sovereignty of Mali.
34. We commend the role played on the ground in the Central African Republic by the AU-led International Support Mission to the Central African Republic, together with the forces sent by France and the European Union, to support the transition and encourage the Transitional Authorities to take urgent concrete steps toward holding free, fair, transparent and inclusive elections. We fully support the UN efforts in the areas of security, reconciliation, preparation of the elections, and humanitarian assistance.
Iran
35. We reaffirm our strong commitment to a diplomatic resolution of the Iranian nuclear issue and welcome the efforts by the E3+3, led by High Representative Ashton, and Iran to negotiate a comprehensive solution that provides confidence in the exclusively peaceful nature of Iran's nuclear programme. We underline the importance of the continuing effective implementation by the E3+3 and Iran of the Joint Plan of Action. We call on Iran to cooperate fully with the International Atomic Energy Agency on verification of Iran's nuclear activities and to resolve all outstanding issues, including, critically, those relating to possible military dimensions. We strongly urge Iran to fully respect its human rights obligations. We call on Iran to play a more constructive role in supporting regional security, in particular in Syria, and to reject all acts of terrorism and terrorist groups. North Korea
36. We strongly condemn North Korea's continued development of its nuclear and ballistic missile programmes. We urge North Korea to abandon all nuclear weapons and existing nuclear and ballistic missile programmes and to comply fully with its obligations under relevant UNSC resolutions and commitments under the September 2005 Joint Statement of the Six-Party Talks. We call on the international community to implement fully UN sanctions. We reiterate our grave concerns over the ongoing systematic, widespread and gross human rights violations in North Korea documented in the report of the UN Commission of Inquiry, and urge North Korea to take immediate steps to address these violations, including on the abductions issue, and cooperate fully with all relevant UN bodies. We continue to work to advance accountability for North Korea's serious human rights violations.
Middle East Peace Process
37. We fully support the United States’ efforts to secure a negotiated two-state solution. We regret that greater progress has not been made by the parties and urge them to find the common ground and political strength needed to resume the process. A negotiated two-state solution remains the only way to resolve the conflict. We call on both sides to exercise maximum restraint and to avoid any unilateral action which may further undermine peace efforts and affect the viability of a two-state solution.
Afghanistan
38. We renew our long-term commitment to a democratic, sovereign, and unified Afghanistan and our enduring partnership with the Government of Afghanistan based on the principles of mutual respect and mutual accountability. The first round of presidential elections and the provincial council elections marked a historic achievement, especially for the more than 2.5 million women who voted, and we look forward to the completion of the electoral process. We continue to assist the Government of Afghanistan to strengthen their institutions of governance, reduce corruption, combat terrorism, support economic growth, and counter narcotics. We continue to actively support an inclusive Afghan-led and Afghan-owned process of reconciliation.
Maritime Navigation and Aviation
39. We reaffirm the importance of maintaining a maritime order based upon the universally agreed principles of international law. We remain committed to international cooperation to combat piracy and other maritime crime, consistent with international law and internationally recognised principles of jurisdiction in international waters. We are deeply concerned by tensions in the East and South China Sea. We oppose any unilateral attempt by any party to assert its territorial or maritime claims through the use of intimidation, coercion or force. We call on all parties to clarify and pursue their territorial and maritime claims in accordance with international law. We support the rights of claimants to seek peaceful resolution of disputes in accordance with international law, including through legal dispute settlement mechanisms. We also support confidence building measures. We underscore the importance of the freedom of navigation and overflight and also the effective management of civil air traffic based on international law and International Civil Aviation Organization standards and practices.
Other issues
40. We reaffirm our commitment to the protection and promotion of all human rights and fundamental freedoms, including religious freedom, for all persons. We recognise the need to show unprecedented resolve to promote gender equality, to end all forms of discrimination and violence against women and girls, to end child, early and forced marriage and to promote full participation and empowerment of all women and girls. We look forward to the Global Summit to End Sexual Violence in Conflict taking place in London later this month.
41. We reiterate our condemnation of terrorism and our commitment to cooperate in all relevant fora to prevent and respond to terrorism effectively, and in a comprehensive manner, while respecting human rights and the rule of law. We condemn the kidnapping of hundreds of schoolgirls by Boko Haram as an unconscionable crime and intend do everything possible to support the Nigerian government to return these young women to their homes and to bring the perpetrators to justice.
42. We confirm that non-proliferation/disarmament issues remain a top priority and welcome the G7 Non-proliferation Directors Group statement issued today.
Conclusion
43. We look forward to meeting under the Presidency of Germany in 2015.
Related News
Nigeria is AfDB’s largest shareholder, Okonjo-Iweala says
The Minister of Finance, Dr Ngozi Okonjo-Iweala, says Nigeria is the largest shareholder in the African Development Bank (AfDB) with the highest voting power of 9.2 per cent.
Okonjo-Iweala said this at the 50th Anniversary Dinner of the bank organised by its country office in Abuja on Wednesday night.
The minister also said that the Federal Government had a 1.6 billion dollars loans portfolio from the AfDB for 28 projects that cut across private and public sector activities in the country.
She explained that Nigeria had been a principal beneficiary of AfDB’s assistance, having received nearly five billion dollars in net investments since the bank commenced its operation in 1972.
Okonjo-Iweala said that the country had been committed to the development course of the bank since 1986 when the country established a Nigeria Trust Fund (NTF) within the institution.
“We set up this money as a means of helping countries that were less fortunate and ourselves at the height of the oil boom of the 1970s,” she said.
The minister said that the trust fund started with about 80 million dollars, adding that the fund grew to more than 600 million dollars in few years.
Okonjo-Iweala said that the fund had serviced and benefited so many countries with 88 key operations among 34 regional member countries.
She said the country also accompanied the fund with a trust fund called the Nigerian Technical Cooperation Fund (NTCF) of 25 million dollars of grant resources.
“This fund is to assist in the preparation and implementation of development projects and programmes of countries that are less fortunate than ourselves and poorer countries within the continent,” she said.
Okonjo-Iweala said the country maintained a strong macro-economic stance which had given her a platform within which to leverage the needed structural and sectoral reforms in key sectors.
She said that the diversification of the economy really showed off in the rebasing exercise which showed that the service sector was the leading sector of at 51 per cent.
According to her, the economy is well diversified in agriculture, manufacturing and even sectors that Nigeria did not feature earlier like creative industry at 1.2 per cent and telecommunication at seven per cent.
The coordinating minister for the economy disclosed that the Federal Government was building its own Nigerian Development Bank (NDB), adding that the AfBD was a full partner.
She said the AfDB and the World Bank formed the anchor supporters and investors of NDB.
According to her, the AfDB is putting in 400 million dollars with an equity stake, which means both loans and equity.
“The World Bank is putting in 500 million dollars, Germany 500 million, and we are still raising both debt and equity. So, by the beginning of 2015, Nigeria will have its own development bank for the first time in this country,” she said.
Okonjo-Iweala said that small and medium size enterprises, manufacturers and other businesses would be able to get resources at seven to 10 years tenor at reasonable terms of interest.