Search News Results
Azevêdo reports “excellent start” on efforts to put Doha Round back on track
Director-General Roberto Azevêdo reported to the General Council on 14 March 2014 that the chairs of the negotiating groups have completed the first round of consultations on Doha Round issues that might be taken forward. He said: “I have heard a lot of good feedback – and I think there is much which we can build on constructively. But, nevertheless, there remains a lot to do.”
Report by the Chairman of the Trade Negotiations Committee
This is going to be brief report, for two reasons in particular.
Firstly, because the Chairs of the Negotiating Groups will be issuing full written reports of their consultations at the end of this meeting which you will have time to read and consider – I think this will be more productive than me reading them out here.
And secondly, because I am planning to convene a meeting of the TNC on 7 April, which will provide an opportunity for a more detailed discussion on each of the negotiating areas. So I will not spend too much time on these discussions now.
Mr Chairman, since the Ninth Session of the Ministerial Conference in Bali, the TNC has held one informal meeting on 6 February 2014.
My statement at the meeting has been issued in document JOB/TNC/37, and I would request that it be included in the records of this meeting.
Since that meeting I have been listening to members here in Geneva and talking to the Chairs of Negotiating Groups – who have of course been conducting their own consultations.
I have also seized the opportunity, whenever I am visiting capitals around the world, to further our work and bring greater focus to our forward planning.
When we met here in February we discussed our next steps after Bali. And I highlighted the two priorities for our work in 2014:
The first priority is to deliver on the blood, sweat and tears that we put into the Bali Package by implementing the decisions and agreements that we reached there.
I know that this work is incredibly important for all members in demonstrating that not only can we reach negotiated outcomes, but we can also implement them – bringing real benefits to the people we are here to serve.
The second priority is to prepare a clearly defined work program to conclude the Doha Development Agenda – and we must do so by the end of this year.
At the TNC in February I asked the Chairs of the Negotiating Groups to start a dialogue with members on issues that we may be able to take forward – using a set of very simple parameters to guide the discussions.
A broad range of views were expressed at that meeting in February. Overall I felt that the tone was very positive – and I didn’t hear any member say that they were not ready to engage on the basis that I had outlined.
So we have done what we said – we have proceeded on this basis.
I met with the Chairs of the Negotiating Groups yesterday and they confirmed that they have held an initial round of consultations with members.
As I mentioned, the Chairs’ full written reports of their discussions will be made available at the end of this meeting – and I encourage you to study them in detail in the coming days.
I will give just a brief summary of progress in each of the respective areas.
It seems that some factors were common among some of the Groups.
For example in Agriculture, Market Access and Services, it came across strongly that our approach should be balanced across all three issues – and that all three should tackled together, simultaneously
There was also a clear emphasis on the parameters during the discussions – particularly on the importance of development, and on ensuring that we focus on outcomes that are doable.
Now, let’s look at each area in turn – starting with the Special Session of the Committee on Agriculture.
The Chair’s consultations so far have highlighted a range of views:
-
Most Members acknowledged the need for a balanced approach among the three key pillars of agriculture in the areas of market access, domestic support and export competition. Among the three pillars Export Competition is recognised as an important priority for a large group of Members.
-
Many Members highlighted the importance they attached to the draft modalities, while other members have placed less emphasis on this.
-
Ensuring that further discussions are assisted by appropriate updated data and information on member policies was highlighted by some Members.
-
The need to ensure a coherent approach to the work within the Regular Committee on Agriculture to implement Bali outcomes and the ongoing work in the Special Session was also mentioned.
Let me turn now to the Negotiating Group on Market Access.
In relation to “what went wrong?”, several factors were cited. These include negotiating approaches, the different expectations among Members regarding the NAMA outcome and the different perceptions about the balance in the current modalities text.
As to “what should be done?”, several questions were discussed including whether or not to continue where Members left off, the possibility of updating the technical negotiating base and whether to discuss in a more generic manner the question of what is doable in this area.
Some delegations express their views on the latest draft modalities, but, as I understand it, no common position was reached.
The Group’s discussions will need to continue in order to establish how Members can contribute to a meaningful result on market access.
The Chair has offered some personal conclusions and suggestions at the end of his report, as you will see.
Let’s move now to the Special Session of the Council for Trade in Services.
There was broad convergence that, in addition to balance across the three market access pillars, there would also need to be balance within the services agenda itself. And such an outcome would require the exploration of new approaches.
Many said that, with any outcome in services, the development dimension of the round will need to be fully reflected.
The need to avoid previous mistakes was also seen as crucial. Some wished to avoid the sequencing of DDA negotiations, which in their view had placed services at a disadvantage – while others stressed that progress in services must be contingent on progress elsewhere.
While further deliberations are needed, it was widely accepted that an appropriate level of ambition in services would have to be commensurate with those in agriculture and NAMA.
Regarding the plurilateral negotiations on services, which are taking place outside the WTO – some saw these as complementary to the WTO negotiations and emphasized the potential for cross-fertilization between the two tracks. Others took the view that such initiatives could undermine the multilateral process.
On the Negotiating Group on Rules, most members agreed that there needs to be serious horizontal reflection as to the overall scope and level of ambition of post-Bali activity – and that this should be the basis for determining whether any or all of the Rules issues will be included in the next phase of our work.
A substantial number of delegations were open to including Rules in the work program, but considered that this could only be addressed once clarity has been achieved on the level of ambition for the three “core issues”.
In contrast, a few delegations considered that Rules itself constitutes a “core issue”, and that outcomes on at least certain Rules issues will be essential.
Next is the Special Session of the Council for TRIPS. Based on the interim Chair’s consultations earlier this week, it seems that negotiations on a register for wine and spirit geographical indications would depend on the relationship of this work to other TRIPS issues and the wider Doha Round.
In addition, some Members have expressed interest in recommencing the consultation process on TRIPS implementation issues. We need to look into this further.
Moving on, let’s turn now to the Special Session of the Committee on Trade & Environment.
As this is his last meeting as chair of the Negotiating Group, Ambassador Selim Kuneralp will give his own personal update to Members when the Chairman of General Council opens the floor in a few moments.
So I will just say I understand that in these discussions members have reiterated the view that environmental negotiations remain an important element of the overall Doha mandate – and continue to be high on delegations’ political agendas.
Turning now to the Special Session of the Committee on Trade & Development.
The Chair has encouraged Members to review the three areas of outstanding work, specifically the remaining Agreement Specific Proposals – including the Cancún-28.
The indications are that delegations recognise the centrality of development in our post-Bali work and have an open mind on the possible elements in the development pillar of the post-Bali work program. Some Members observed that this work program will inevitably influence the contours of the work program on S&D.
The Chair reports that there is a sense of preparedness for serious engagement among the Members – and an acceptance of the need for creative approaches. However, for this to happen, Members will need a clear road map with tangible substance. A clear articulation of concerns and interests will help us to move towards a successful outcome in the work of the Special Session.
Finally, let’s look at the Special Session of the DSB.
Work has continued on the basis of the “horizontal process” launched in June last year, which is geared towards identifying achievable outcomes across the board. In three areas – namely: remand, post-retaliation and third party rights – some elements were presented as possible bases for solutions. This effort was very well received and will set the tone for further work.
Further progress now requires willingness to be flexible across-the-board to develop achievable outcomes that reflect the interests of all participants.
That concludes the round-up from the negotiating groups.
I would like to thank all the Chairs for their work. And in doing so, I would like to pay particular tribute to the outgoing chairs:
-
Ambassador Selim Kuneralp of Turkey.
-
Ambassador Fook Seng Kwok of Singapore, who unfortunately cannot be here today.
-
Ambassador Fernando de Mateo of Mexico.
-
And Ambassador Alfredo Suescum of Panama.
Thank you all for your contribution. I know that everyone in this room – and outside this room – has greatly appreciated your efforts.
I have also been considering how best to ensure that we advance LDC issues. These were key in Bali – and will only take on greater significance as our work progresses.
Following consultation with the LDC Group, I have asked Ambassador Steffen Smidt to continue as the Facilitator for LDC issues this year.
I am pleased to say that Ambassador Smidt has agreed to this request, and I would like to thank the Danish Government for allowing him to do so.
I think this is a very welcome development – and I trust members will extend to Ambassador Smidt the same support and co-operation that you gave him last year. So thank you Steffan.
In closing, Mr Chairman, I think we have made an excellent start.
I have heard a lot of good feedback – and I think there is much which we can build on constructively.
But, nevertheless, there remains a lot to do.
On the basis of the Chairs’ reports, and of my own conversations, I would like to instruct the Chairs to continue their work – and continue this process of consultation. And I will do the same.
We will all need to reflect on what we have heard today – and then to consider our next steps.
The first quarter of 2014 is almost behind us. In the space of just nine months we must complete this work. It is essential that all members are fully engaged in these consultations.
As I said at the TNC in February: 2014 should be a defining year for the WTO – not just as the year that we implement our first negotiated outcomes, but also as the year that we put the Doha Round firmly back on track.
So let’s continue the work we’re in – and let’s redouble our efforts.
This is of course an ongoing conversation. As I have said, I will convene a meeting of the TNC on 7 April to report on further progress and provide for a fuller debate among members on the way forward.
Of course you are free to take the floor now, but I would suggest that we wait for this TNC meeting in a few weeks’ time as we will then be in a better position to have a more thorough and meaningful discussion.
Thank you Mr Chairman – that concludes my report.
Related News
Boosting industrial devt through Free Trade Zones
Revamping ailing economies presents huge challenges of industrialisation. Development of Free Trade Zones remains an attractive option, writes George Okojie.
Proliferation of Free Trade Zones (FTZs) in the country is part of renewed commitment towards realising the importance of an industrial economy in creating jobs and improving standard of living of the people. Thus, Brazil, Russia, India and China known as (BRIC) nations took cover in the platform provided in FTZs as a buffer to economic meltdown particularly in the wake of the most recent financial and economic crisis.
Amid the core of the growth attributed to emerging markets, maximum opportunities offered by the FTZs ameliorated the negative effects of the economic downturn of 2007-2009 leaving the BRIC nations to grow at the rates of seven per cent to 13 per cent.
Free Trade Zones Operations In Nigeria
FTZs establishment in Nigeria dates back to 1991. It was an industrial initiative embraced by economic pundits at that time to diversify nation’s export activity that had been dominated by the hydrocarbon sector. Available statistics showed that by 2011, there were nine operational zones; 10 under construction; and three in the planning stages.
Although Zones could be managed by public or private entities or a combination of both under supervision of the Authority, the governing legislation resides with the Nigeria Export Processing Zones Act (NEPZA) and the Oil and Gas Export Free Zone Act (OGEFZA). The FTZs idea has continued to blossom because Nigeria has a number of strength on which to build including the relatively large market. Exploring the FTZs initiative to boost its economic prosperity, the Lagos State Government established the Lekki Free Trade Zone.
The industrial cluster development started in May 2006 when the Chinese consortium in the name of CCECC-Beyond International Investment & Development Co., Ltd (CCECC-Beyond), now China Africa Lekki Investment Ltd (CALIL) as the majority shareholder, entered into a joint venture with the Lagos State government and the Nigerian partner “Lekki Worldwide Investment Ltd.” to establish the Lekki Free Zone Development Company (LFZDC FZC) in Lagos, Nigeria.
The initiative was authorised by both the Nigerian federal government and the Lagos State government as the sole and legally competent entity to develop, operate and manage the Lekki Free Zone project. Lekki Free Zone Development Company FZC (LFZDC) was registered in October 2006 under the NEPZA Acts and embarked on the Phase I Development of the zone.
One-stop Business Hub
As an emerging international market, the Lagos State government knew that the initiatives come with transfer of technology from the trans-national corporations (TNCs) and minimise capital flight, just as it would make the state a one-stop global business haven. It was designed to have a refinery, an international airport, seaport and high grade residential quarters, among other features that make free trade zones thick.
To realise its objectives, construction work has commenced at the development of Lekki Seaport located within the free trade zone. According to Lagos State Governor, Mr Babatunde Fashola, “Lekki Free Trade Zone is beginning to take shape. The Master Plan is being realised, investors are trouping in. Tank farms and major refineries are springing up to service the demands of the country and make room for export.
“The refineries create a major selling point and release of the opportunities that lie ahead in this zone, create opportunities for the local people and the potentials for Lagos and the Nigerian economy”. Fashola stressed that the speedy completion of the project is subject to availability of funds, while soliciting for the cooperation of the investors to ensure that the overall objective is achieved.
He said, “I cannot tell you the date when that port will be finished but work has started at the port and the contractor is on site. There are still a few issues in terms of getting funding and commitment from the private sector because clearly both the management and the private sector own the zone. They are not government-owned but government has an enabling role to play in the regulation of the Zones”, he said.
The governor said plans are on to effectively drive the zone on water transportation system considering that it is bonded on the side of Atlantic and lagoon. “This zone is located on a peninsula. That is why we are considering the need to transport our goods on the water. We have put the cart before the horse. This is peninsula that sits so strategically that it has access to its own transportation which is water transportation.
“That was why we have decided to fast track the plan of accessing the zone and evacuation of cargo by using the lagoon. This lagoon goes as far as Ondo State. Most logs come into the state through water. I do not know any country where the haulage of its industrial cargo are transported by road. “It is not sustainable. The roads will not last. The water ways would be our immediate and short term focus. And before the end of the year, we would ensure the possibility of water transportation in the zone”.
He said the design for the construction of airport on the zone is also ready, adding that soonest the bid will be sent to the public for investors who want to build to indicate interest. According to him, the state was strategically positioned, citing the advantage of population and proximity to Europe, Middle East and South America, all of which the development of the airport would benefit.
He said the management would source private capital to develop Lekki International Airport, noting that the airport would be of international standard according to the plan already approved. “We have shortlisted bid for people who want to build the airport, for me my responsibility is that you want an airport through which you can run your business but I don’t have the money to build it but I can provide the land which is what we have done. It will be an airport that would drive business at all point like we have seen all over the world.”
He assured that the state government remained truly committed to providing infrastructure needed to make Lekki Free Trade Zone (LFTZ) functional as soon as possible. The Governor advised local manufacturers especially agro-based sector and investors to tap into the Lekki Free Trade Zone initiative phased into four quadrants, on a land mass of about 16,500 hectares.
FTZs As Job, Poverty Alleviation Solution
Giving credence to the fact that creating jobs and income is one of the foremost reasons for the establishment of FTZs, president of the Dangote Group of Companies, Alhaji Aliko Dangote said the Lekki Free Trade Zone would be the biggest of such zones in the African continent. The business mogul said, “By bringing this here, I can assure you that this is going to be the biggest free trade zone in the African continent and I know that the people will begin to show their appreciation”.
Expressing confidence that the Zone holds enormous economic benefits for Lagos State and the country, Dangote declared, “For instance, there is no way we can put down over $9 billion of our money here without making sure that the zone is going to work”, adding that his Group was going to work at a very high speed. Dangote assured that the communities stand to benefit enormously as over 8,000 engineers would be trained while jobs would be created for youths of the communities.
Challenges In Actualisation of Projects
For the Commissioner for Commerce and Industry, Mrs Sola Oworu, establishing a refinery in the zone has opened up enormous economic opportunities not only for Lagos but for Nigeria, adding that only about 35 per cent of the goods to be produced in the zone would be consumed in Lagos while the rest would be exported.
To accelerate development of the LFTZ, Lagos State government and the NNPC in collaboration with a consortium of Chinese investors known as China State had before now sealed a deal for the establishment of the refinery which capacity is put at 300,000 barrels of crude oil per day under a public private partnership (PPP) arrangement within the Lekki Free Trade Zone (LFTZ).
On completion it will in addition to the above crude output, produce 500,000 metric tons of liquefied petroleum gas (LPG) per annum and hopefully trigger the formal switch of domestic household fuel in Lagos and environs from firewood, charcoal and kerosene, to LPG if properly harnessed.
LEADERSHIP Sunday gathered that the proposed date for realisation of the $8 billion Greenfield refinery project may not be possible due to the challenges posed by national policies and frequent changes in the top management of the Nigerian National Petroleum Corporation (NNPC) by the federal government. Also said to be posing a challenge to the early take-off of the refinery is the continued delay in passing the controversial Petroleum Industry Bill (PIB) which is expected to redefine the operations of the oil industry in the country.
International investors that have showed strong interest in the project LEADERSHIP Sunday learnt are watching to see what becomes of the PIB which is now politicised and even polarising the national assembly. The investors in Lekki Free Zone as the state’s new business hub in the making have not been enjoying good relationship with the people of Idasho community in the Lekki area.
So many stakeholders before the last peace accord brokered with the community leaders had appealed to them to allow investors whose aim is to set up businesses at the Zone to commence the process of building industries that would provide employment for the people. They noted that there is no way an investor who has been driven away and has his equipments damaged can create or provide jobs.
The state governor specifically said, “The people in Idasho have not been receptive and have driven investors from the site, they have damaged investors’ equipments yet they want work. If the investor cannot build his factory, how does he create work? If there are issues with government, let us sit down and continue to engage. Let development start in the zone. That is the only way to prosperity”.
Imperative of Incentives In Free Trade Zones
To encourage investment in the zone, the state Commissioner for Energy and Mineral Resources, Engr Taofiq Tijani, said the state government will liaise with other arms of government to offer a number of policies and incentives such as complete tax holidays from all Federal, State and Local government taxes, rates, customs duties and levies to all investors patronising the Lekki Free Trade.
The waiver, according to him, will cover import and export licences, duty-free capital goods, consumer goods, machinery, equipment and furniture, duty-free, tax free import of raw materials and components for goods destined for re-export or permission to sell 100 per cent of manufactured, assembled or imported goods into the domestic market.
He said the present administration led by Mr Babatunde Fashola will continue to provide a thriving environment with exponential potentials to attract both local and foreign direct investment in the area of manufacturing, real estate, tourism, oil and gas. It is the belief of many economic pundits that if the potentials inherent in Free Trade Zones are fully tapped, the nation would experience rapid economic growth.
Related News
Science, ICT critical to Africa’s future – Kagame
The importance of science, technology, research and innovation in shaping the socio-economic transformation of nations cannot be overstated, President Paul Kagame has said.
In sub-Saharan Africa, he said, these “critical enablers” can drastically improve standards of living.
Kagame was speaking in Kigali yesterday at the closure of a two-day forum on higher education for science, technology and innovation.
The forum, which attracted senior government officials and other players from around the continent and beyond, was organised by the World Bank and Government of Rwanda.
Kagame, however, said there was need for the continent to build a critical mass of skills in these areas.
“To unlock this potential, Africa must have well-trained science and technology professionals,” he said.
“I am told only around 25 per cent of tertiary education students in Africa are enrolled in science, engineering and technology. In fast growing countries such as Korea, China, and Taiwan, this figure is close to 50 per cent.”
Kagame recalled that to address the gap, the Connect Africa Summit, held in Kigali in October 2007, recommended to establish five centres of excellence in each sub-region of Africa.
“These centres would support the development of a critical mass of science and technology skills required for the continent’s advancement,” Kagame said, explaining that for Africa to utilise and benefit from global scientific research, it needs scientists who communicate and collaborate with their peers around the world on specific regional and international projects.
He challenged Africa’s higher education sector to play “a unique and important role” in resolving the existing skills gap in Africa.
The Rwanda style
Sharing Rwanda’s experience, the Head of State said over the last two decades, his government has put in place governance and physical infrastructures to develop national science, technology and innovation.
“We know that harnessing their potential and integrating them into Rwanda’s development plans is critical to achieving our national goals”.
He cited the Kigali-based ICT Centre of Excellence, as well as the establishment in the capital of a Carnegie Mellon University campus that operates a master’s degree programme, including at its Kigali campus where it is expected to graduate students this year.
Kagame said these steps gave his government the belief that these seemingly difficult undertakings would deliver intended results.
The President also cited regional collaborative efforts in enhancing science and technology, singling out the partnership among the five East African Community partner states that has resulted in the establishment of the East African Science and Technology Commission, which is based in Rwanda.
“Leveraging opportunities in science and technology contributes to the building of capacity across many sectors, including health, agriculture, trade and industry, infrastructure, environment, and ICT, all of which are key to development,” he said.
“They will help us fight against infectious diseases, increase food production, promote industrialisation, add value to natural resources and arrest degradation of the environment.”
Participants at the conference resolved to strengthen and mobilise resources for building capacity in science and technology in pursuit of Africa’s socio-economic transformation.
Kagame called on the participants and stakeholders to follow up on their commitment, and hailed Brazil, China, India, and Korea for supporting this World Bank and AU-backed effort.
Jessica Alupo, Uganda’s education minister, said they had resolved to adopt a strategic investment in science and technology to accelerate Africa’s development to a knowledge-based society and also harness science and technology job-creation potential.
Related News
The impact of Infant Industry Protection on competition in Namibia
Recent reports have pointed to concerns over increases on consumer prices of basic foodstuffs and commodities, such as poultry, meat and dairy. Some critics have blamed this on the government’s Infant Industry Protection (IIP) policy.
Caution should however be taken when apportioning such blame on infant industry protection. The Minister of Trade and Industry in his recent ministerial speech indicated that the rationale for the adoption of the policy and regulatory measures such as infant industry protection and quantitative restrictions on imports of selected products entering our market are very important instruments to preserve and nurture our economic and industrial growth and in turn accelerate jobs and wealth creation and to equalize wealth distribution by cushioning and creating policy space for existing economic value chains to get off the ground and build the requisite competitive capacity.
Infant Industry protection usually takes three forms, namely that it protects and nurtures local industries such as the imposition of an import duty levy on imported goods, a quantitative restriction on imports, and granting of targeted and performance based incentivized subsidies to stimulate local production and ensure market supply.
Factors affecting basic food prices
It is however undeniable that the prices of basic foods are increasing worldwide. Food prices are expected to rise 3 to 4 percent in 2014 and will continue rising till the year 2018, representing a 12-15% increase over a four year period. There are global factors at play that can have repercussions on food prices. The El Niño drought impact of 2012-2013 withered crops in the fields. As a result, prices for agricultural goods and agro-processing products will tend to rise and since it usually takes several months for these commodities’ prices to translate to the food we buy, most of the price effect of the drought will occur in 2014 as it is happening currently in Namibia.
Higher prices of agricultural inputs will directly affect the cost of meat and any other animal-based product. Also hardest hit will be cereals, baked goods and other grain-based food. The current exchange rate depreciation from around 8-plus to the US Dollar in 2012 to around 10 plus in 2014 will also cause the price of imported food to increase in line with the depreciation impact of the exchange rate. There is therefore cold comfort that Namibians will have to dig deeper into their pockets to meet the rising prices of foodstuffs. According to data and inflation reports by the Namibia Statistics Agency, food price inflation is on an increasing trend and this trend, based on forecast data worldwide, will continue until 2018.
This situation will worsen if the Rand/Namibia dollar depreciates against the currencies of its trading partners, as is the case currently where food imports rise in local currency against foreign prices. The squeeze on many Namibian consumers’ finances will continue for at least the next four years as many experts warn food prices will continue to increase significantly in the world. Rising food prices will result in the annual food bill for the average family tripling over the coming years, heaping further pressure on already overstretched household incomes of the Namibian consumer.
Namibia is not alone!
Namibia is not alone in this since all countries would be affected. The rising food prices are exacerbated by rising global civil and military unrests in countries across Europe and Asia, Ukraine, Turkey, Egypt, Nigeria, Egypt and the Central African Republic. These unrests do cause interrupted supplies and global food shortages along the global distribution chains and cause prices of basic food items to rise. Namibia is a net importer of most of the food we buy from different supermarkets and grocery stores and as a result, rising food prices in global markets will be transmitted into Namibia automatically. In Namibia, food price increases are being driven by rises in key inputs such as maize and wheat, as well as commodities of administered prices such as energy, fuel and water. This implies rising cost structures across the firms involved in the food value chains, prompting them to either seek productive efficiencies and financial viability through assimilations and integrations in terms of mergers and acquisitions.
How does this impact on competition in Namibia?
The Competition Commission as established by the Competition Act, 2003 considers competitive pricing and wider product choices as a form of consumer protection for the Namibian consumer. It is in this regard that it necessitates that the commission informs the consumer on the recent food price increases and that it is not directly attributed to the infant industry protection measures as a policy instrument by the Ministry of Trade and Industry. The commission is considerate of higher price increases, which have an impact on consumer welfare in Namibia. Consumers are informed that the Namibia Competition Commission has announced measures as part of ensured micro-economic stability to monitor prices of selected consumer products to assess their pricing trends in terms of input costs, margins, retail pricing strategies and to inform the Ministry of Trade and Industry as competition advisor on such pricing formations. The constitutional dispensation of Namibia is such that prices are set in the context of the market economy in accordance to demand and supply conditions. The role of the commission is to ensure that consumers are not overcharged for items such as poultry, meat, and dairy products.
Where excessive pricing would be proven in court, the commission would be in a position to penalize businesses and companies that are engaged in predatory pricing i.e. charging so low as to drive other businesses such as SMEs out or excessive pricing i.e. charging so high, way above to make super normal profits at the expense of consumers.
The commission also wants to ensure that members of the public understand their consumer rights, as well as the avenues of recourse available to them and the infant industry protections granted that are in the best interests of industrial development and manufacturing expansion. There is further evidence of higher propensity of mergers in the retail and commercial businesses in Namibia, mainly from South Africa. Such mergers could impact on further consolidation of the food sector, pushing the dominance and monopolisation of certain firms further.
The commission has recourse under the Act to penalise, through the courts, the abuse of dominance and monopolistic behaviours. The commission is also cognizant of these structural changes on the economic landscape and has finalised a merger impact study that would propose guarding against mergers of foreign owned firms versus locally owned firms. The commission is further cognizant that local participation and local ownership of business is important for the economy to go forward. The commission would thus be considerate that local businesses, especially SMEs, are safeguarded and protected from extensive foreign competition in terms of the Competition Act.
Is there room for controlling food price increases?
It should be understood that the government has a legislative mandate to control prices by intervening where necessary in the public interest in order to combat price increases. Such pricing control was done for butter and sunflower oil in the past. Namibia does not have an overarching food control regime, and therefore it is very hard to tell what could happen. However, from a theoretical perspective, the impacts on consumers is very high as high food prices inadvertently reduce the purchasing power of consumers and concomitantly consumer choice is frustrated and even quality and choice of such food products could also be adversely affected, which have implications for consumer protection in terms of competitive pricing and wider product choice in terms of the Competition Act. It should therefore be understood that the government considers such a move on price control viable only to the extent that it should be commercially and financially viable for the targeted sectors or products. Equally it should not frustrate or counter infant industries, which are economically sensitive and necessary for industrial development and for creating local value added manufacturing in Namibia.
Mihe Gaomab II is the Chief Executive Officer of the Namibian Competition Commission (NaCC)
Related News
SA ‘non-tariff barriers’ stifling intra-SADC trade – Fundanga
South Africa’s unfair trading practices are frustrating a diversified intra-regional trade in SADC, says Dr Caleb Fundanga.
Making a presentation at a Consumer Unit Trust Society (CUTS)-organised discussion on regional trade on Monday evening, Dr Fundanga, the former Bank of Zambia governor, said South Africa still had in place a number of non-tariff barriers where some agricultural products from the region cannot enter their market for one reason or another.
“Zambian beans for example cannot enter that market yet our beans is better than most of that South African beans found on their shelves,” he said. “Recently, Vice-President Dr Guy Scott told Parliament that Zambian grapes cannot be sold in South Africa. The South Africans alleged that the grapes were affected by a certain disease. These are non-tariff barriers that need to be removed.”
Dr Fundanga explained that South African companies, which were dominant in a number of SADC countries, tended to favour South African products.
“For example, South African Breweries promotes the sale of Castle Lager all over the region, but does not promote other beer brands in South Africa even if it now owns the breweries that produce these beers such as the Zambian lager, Mosi. They have concentrated on marketing Castle, yet Mosi is equally a good brand,” he said.
Dr Fundanga said the scope for expanding intra-regional trade in SADC existed if only South Africa could open up more to the products of other SADC member countries.
He noted that intra-SADC trade between 2000 and 2008 had increased from US $11.6 billion to US $29.3 billon, but that the increase was driven by the region’s shift in the source of imports from Europe to South Africa following the end of apartheid.
Dr Fundanga said intra-regional trade had to a large extent benefited South Africa, as that country was exporting more compared to other countries in the region.
“This is very clear, for example in the supply of mining equipment. South Africa is the regional hub for most of the global suppliers of mining equipment,” he noted. “Further, the recent expansion of South African supermarket chains into the region has increased the bias for South African consumer goods. Thus, the increase in intra-regional trade is concentrated in one country – South Africa.”
Dr Fundanga, however, noted that potential for Zambia to penetrate countries within the region by exporting products such as kapenta and maize was huge.
“There seem to be a pervasive feeling amongst most Zambians that there is little that can be exported from Zambia, other than copper, a product of an industry which is mainly dominated by external investor interests. This is not true. A number of export opportunities can be identified,” he said.
“Europe has a market for local delicacies like Impwa, Cassava and so on but no one is exploiting those opportunities, yet the most successful exporting nations of recent times like South Korea have exported almost unimaginable products. I have seen canned Inswa from South Korea selling in Germany.”
He observed that the success in exporting to the region was perhaps much easier than exporting far afield because of similarities in cultures and tastes.
“…but clearly there are a lot of obstacles to success in penetrating the regional market,” said Dr Fundanga.
Former commerce minister, Felix Mutati, who was one of the discussants, cited access to affordable finance, high cost of doing business and the existence of policy consistency as some of the non-tax barriers for countries in COMESA to boost intra-regional trade.
“We have agreed to non-tariff barriers, but what is happening on the ground is different. Countries are putting in place the barriers. Unless we begin to tackle these issues we will not be able to use trade by SMEs as catalyst for growth,” said Mutati.
And World Bank country representative for Zambia, Kundhavi Kadiresan, said there was need for countries to simplify cross-border trade.
She said one way that countries could boost cross-border trade, especially for SMEs was by cutting down on paper work.
Kadiresan said focusing on SME cross-border trade could make a huge difference in alleviating poverty and inequality.
Related News
The 20 Year Review: South Africa in the global arena
The Twenty Year Review was launched by President Jacob Zuma on 11 March 2014. The Review reflects on how the country has progressed since the dawn of democracy in 1994, the challenges it still faces and how these can best be addressed.
WHAT DEMOCRATIC SOUTH AFRICA INHERITED IN 1994
Apartheid South Africa was a pariah state, described by former President Mandela as the “skunk of the world”, that was diplomatically, economically, and culturally isolated from the rest of the world. The incoming government inherited institutions that had served the interests of the apartheid system. Under apartheid, the focus of the departments that dealt with foreign affairs, defence, trade and industry, and intelligence was on securing the apartheid state.
On the African continent, relations between South Africa and its Southern African Development Community (SADC) neighbours, and countries on the rest of the continent, were, at best, fragile. Angola, Botswana, Lesotho, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe, together with other African countries, had opposed apartheid, and actively campaigned for the isolation of the apartheid state. In response, South Africa’s defence force and other security structures made frequent cross-border incursions into neighbouring countries. Economic cooperation with the rest of the continent was severely limited.
DEVELOPMENTS SINCE 1994
After 1994, South Africa faced the task of repositioning itself in the region, on the continent and in the world, with a shared interest in peace, stability and prosperity. The new Constitution enjoined the building of a united and democratic South Africa that would take its rightful place as an independent, sovereign state in the family of states. The values espoused in the Constitution, including equality, non-racialism, non-discrimination, liberty, peace and democracy, are central to South Africa’s national identity, and find expression in the country’s foreign policy.
South Africa had to demonstrate to its own people and to the world that its democracy would be durable, that it would work to uplift the poor and redress past injustices at home, and that it would be a responsible member of the international community. South Africa had to demonstrate that it was a peaceful and responsible neighbour, committed to regional, continental and global development and economic cooperation.
After 1994, inspired by the notion of Ubuntu, South Africa’s foreign policy approach was characterised by cooperation, collaboration and the building of partnerships rather than conflict and competition. All departments that represented South Africa internationally were transformed within the first decade of democracy. These departments went from preserving apartheid to formulating, implementing and representing South Africa’s priorities of democracy, human rights, socio-economic development, peace, security and stability in the global arena.
South Africa is now a respected member of the international community and has enjoyed successes in furthering its own interests, as well as those of the African continent and the SADC region.
South Africa’s reintegration into the global community has seen its diplomatic, political and economic relations expand rapidly to include countries with which it previously had no relations. By 2012, the number of foreign diplomatic missions, consulates-general, consulates and international organisations in South Africa had increased to 315. This is the second-largest number of diplomatic offices accredited to any country after the USA. South Africa’s missions abroad increased from 36 in 1994 to 125 in 2012.
South Africa contributed to two tangible elements of the African renaissance during the first decade: namely, the transformation of the continental political architecture with the transition from the Organisation of African Unity (OAU) to the African Union (AU) and the adoption of the New Partnership for Africa’s Development (NEPAD) as the social development blueprint for Africa and the framework for its engagement with the north and other international actors. In the second decade, operationalisation of the AU and implementation of NEPAD became key focus areas, including, in particular, improving the climate for development and investment in Africa. Acting together with its African partners, South Africa used its engagement with the Group of Eight (G8) countries to ensure the adoption of an Africa Action Plan as the framework for the G8’s partnership with the continent.
Trade and investment
Democratic South Africa prioritised developing bilateral political and economic relations, especially with African countries. Since 1994, it has signed 624 agreements and established 40 bilateral mechanisms – nearly half of the total number of bilateral mechanisms in place – with countries on the continent. However, there have been challenges with the implementation of some of these agreements.
South Africa’s export markets have changed considerably over the past 20 years. New markets have emerged, while the share of exports to some traditional markets, such as the United Kingdom, Japan and Europe, has declined. China has emerged as South Africa’s most important export trading partner since 2009, with its share of non-gold merchandise exports measuring 12.9 percent in 2012, compared with 0.8 percent in 1994. India is now South Africa’s fifth-largest export destination, having overtaken both the United Kingdom and Switzerland.
African countries have also become increasingly important export markets, especially for manufactured goods. Exports to the entire African continent increased from 10 percent in 1994 to 17.6 percent in 2012. SADC countries claimed most of these exports, accounting for 12.9 percent of overall exports in 2012, up from 8.3 percent in 1994. Africa accounts for around a third of South Africa’s exports of more advanced manufactures.
South Africa has benefited substantially from the United States’ African Growth and Opportunity Act of 2000 (AGOA), which aims to expand US trade and investment with sub-Saharan Africa, stimulate economic growth, encourage economic integration and facilitate sub-Saharan Africa’s integration into the global economy. Bilateral trade between South Africa and the USA grew from R15.9 billion in 1994 to more than R129 billion in 2013, with the trade balance being in South Africa’s favour.
Between 1994 and 2013, South Africa’s fiscal and macro-economic policies boosted bilateral trade between South Africa and European countries and stimulated foreign direct investment (FDI) and tourism. … inward FDI stock during the 80s and early 90s remained extremely low, as a result of South Africa’s isolation. From 1994 inward FDI stock increased significantly as South Africa experienced a continuous upward trajectory, from R44.7 billion to R1.38 trillion in 2012 in nominal terms.
South Africa’s bilateral political and economic relations also increased exports in goods and services, from R106 billion in 1994 to R892 billion (in nominal terms) in 2012. Although South Africa’s export basket has predominantly consisted of mining and basic processed goods since 1994, mining products, as a percentage of total exports, has decreased from 57.3 percent (in value terms) in 1994 to 49.1 percent in 2012. By 2012, advanced manufactured products accounted for 18.8 percent of total exports, compared with 7 percent in 1994. Bilateral trade between South Africa and European countries declined by between 35 percent and 40 percent after the 2008 global financial crisis, but is slowly recovering. South Africa is an attractive investment destination in Africa, drawing more than twice as many FDI projects in 2012 than any other African country.
The state, together with the private sector and civil society, has improved the international marketing of South Africa and Africa as international tourism destinations. This has resulted in a sustained increase in tourist arrivals, as discussed in Chapter 4. Highlights over the past five years have been the hosting of the 2010 World Cup and the World Conference on Climate Change in Durban in 2012.
South Africa has continued to drive bilateral agreements for cooperation in science and technology. A significant achievement has been South Africa’s appointment along with Australia to host the square kilometre array radio telescope, a major international space project. This is an indication of the strength and international standing of the country’s scientific and technological capabilities.
CONCLUSION AND WAY FORWARD
South Africa has taken important steps in positioning the country in the global arena. Going forward, South Africa’s foreign policy should continue to be shaped by the interplay between prevailing diplomatic, political, security, environmental, economic and regional factors. It should remain cognisant of global power shifts, the stratification of regional groupings, threats to human and state security, internal and external sovereignty and natural resources, and the need to promote South Africa’s national interests.
Regional and continental integration are important for Africa’s socio-economic development and political unity, and for South Africa’s prosperity and security. Consequently, Africa will remain at the centre of South Africa’s foreign policy. The country will strengthen its support for regional and continental institutions that work towards achieving peace and resolving security crises, and it will take further steps to strengthen regional integration, promote intra-African trade and champion sustainable development on the continent.
Structural changes in the global economy are creating opportunities to position Africa as a significant player. The continent is already positioned to benefit from demand for its natural resources, especially from emerging powers in Asia. South Africa has a critical role to play in supporting economic growth, development and structural transformation on the continent to ensure that these opportunities are realised. This involves continuing to identify specific trade, manufacturing and industrial niches, especially where South Africa enjoys a competitive advantage. South Africa will also strengthen efforts to alter existing trade patterns, which rely on raw materials, in favour of value addition, industrialisation and intra-African trade.
Regional trade integration will be aimed at ensuring economic connectivity and regional competitiveness. Successfully integrating trade on the continent requires accelerating the development of hard infrastructure (road and rail networks, energy and water) and soft infrastructure (trade facilitation systems, supply chain management, and customs controls and administration).
Cooperation between vital state institutions that deal with international relations policy and cross-border issues should also be strengthened. Closer collaboration and partnerships between government, business, civil society and labour must be pursued to ensure that the country operates holistically in the competitive and unpredictable international arena. Government needs to continue fostering healthy consultative and practical relationships with research institutions and corporations to help expand trade and investment and improve the country’s leadership role in regional and global affairs.
Extracts from Chapter 8 of The 20 Year Review.
Related News
Revised WTO Agreement on Government Procurement to come into force on 6 April 2014
The revised WTO Agreement on Government Procurement (GPA) will come into force on 6 April 2014, effectively two years from the date on which the Protocol amending the Agreement was adopted in March 2012. The Chairman of the WTO Committee on Government Procurement, Bruce Christie of Canada, confirmed that the threshold of acceptances by two-thirds of the Parties, which is required for the revised Agreement to come into force, had been met, with Israel accepting the Protocol on 7 March.
The revised Agreement streamlines and modernizes the Agreement’s text, for example by taking proper account of the widespread use of electronic procurement tools. It provides gains in market access for the Parties’ businesses that have been estimated as in the range of $80-100 billion annually. This results from the addition, to the Agreement’s scope of application, of numerous government entities (ministries and agencies) and the coverage of new services and other areas of the public procurement activities. The revision also incorporates improved transitional measures that are intended to facilitate accession to the Agreement by developing and least-developed economies.
The ten Parties that have, to date, accepted the Protocol to amend the Agreement are, in the order in which they have accepted it, Liechtenstein; Norway; Canada; Chinese Taipei; the United States; Hong Kong, China; the European Union; Iceland; Singapore and Israel.
The Chairman, Mr Christie, said that the prompt bringing into force of the revised agreement “shows the Parties’ firm commitment to the Agreement and augurs well for its future as an increasingly important element of the framework for global trade.”
The entry into force of the GPA is in keeping with Ministers’ undertaking at Bali to work hard to achieve this goal by the two year anniversary of the adoption of the GPA revision. Once again, Members can celebrate a successful outcome.
The Director General of the WTO, Roberto Azevêdo, said:
“This is a very welcome achievement. The revised WTO Agreement on Government Procurement will open markets and promote good governance in the participating Member economies. The fact this has been achieved so quickly shows the importance that the Parties attach to the GPA and is further evidence, after the successful Bali Package, that the WTO is back in business. The modernized text of the revised GPA and the expanded commitment to market access should prompt other WTO Members to consider the potential advantages of joining.”
The GPA is a plurilateral treaty that commits members to certain core disciplines regarding transparency, competition and good governance in the public procurement sector. It covers the procurement of goods, services and capital infrastructure by public authorities. The aim of the Agreement is to open up, as much as possible, government procurement markets to international competition and to help eradicate corruption in this sector.
In addition to the 43 WTO Members that already participate in the GPA, ten other WTO Members, including China, Moldova, Montenegro, New Zealand and Ukraine, are in the process of negotiating accession to it.
Related News
Appeal for single African passport
A Ghanian MP at the Pan-African Parliament (PAP) gathering in Midrand, South Africa yesterday mooted the idea of launching a common African passport to boost the integration of all Africans.
Mohammed-Mubarak Muntaka, who is also the Ghanaian NDC party’s chief whip, believes that a common African passport will create a common identity for all Africans, adding that it took Africa about 40 years to establish the Pan-African Parliament, therefore action should be taken now towards the birth of a African passport.
Speaking exclusively to New Era on the sidelines of the Fourth Ordinary Session of the Third PAP currently underway in Midrand, Muntaka said: “As legitimate as it is for us as parliamentarians to demand diplomatic passports, I just thought it will be more legitimate to fight for the African people to have a common passport. Some regions such as West Africa use a common passport, but I believe the integration of one region out of the five on the continent will never integrate us as a continent, we must all sacrifice to have a common identity.”
“It is a shame for us as parliamentarians to be sitting here and fighting about there not being enough French, Arabic, Portuguese or English translators while we have African languages that we can speak,” said Muntaka.
Muntaka said continental integration would allow Africans to do things together such as “cross-marriages and trade” and at the same time make it easier for one common African language.
“Our wish for integration will be faster through our people rather than politicians. Politicians cannot integrate the people, all we can do is to give them a common identity, and trust me within 10 years this continent will be integrated,” he said.
The MP said a common passport would also make it easier for Africans to travel across the continent without any restrictions.
Muntaka claims Africans identify themselves through their nationalities instead of having a common identity as Africans because most have chosen to compartmentalize their minds.
“It will be very difficult for people who do not know us to tell that you and I are not brothers or that I am from Ghana and you from Namibia unless we open our mouths and tell them that we are not related,” he explained.
Professor Peter Katjavivi, the Swapo Party chief whip, who is also the Namibian head to the Pan-African Parliament, said: “Through regional integration we [African states] can do things together and learn from it. Regional unity is a building bloc that will inform us and help us to build continental unity.”
He added: “During the course of cooperation that could be achieved through regional integration there are also talks of identifying instruments that could be used to make sure that we in Southern Africa cooperate to the maximum.” .
“In West Africa they talk of a West African passport, a document that helps citizens of the West African nations to communicate with each other and to facilitate the movement across countries,” he noted
“In this case we talk of moving further than the regions to promoting continental unity and cooperation. It is considered a dream, but the time has come to translate this dream into reality so that Africans can see benefits of working together across national boundaries,” said Katjavivi.
“Here we are at the headquarters of the Pan-African Parliament, whoever thought we will have a continental parliament in which members from national parliaments from over 50 member states are meeting. This is an important step in the right direction and in consolidating the unity of the African people,” he said. Katjavivi said the fundamental interests of Africa should always be kept in mind.
Deceased Libyan President Muammar Gaddhafi also mooted the idea and at the same time advocated the immediate creation of a unity government, with an African military and single African currency.
Related News
Focus on effectiveness and sustainability of development cooperation: WTO expert
World Trade Organization’s Development Division Director Shishir Priyadarshi on Monday stated that the two key dimensions to development cooperation is its effectiveness and sustainability, and added that emphasis should be given to these two.
“Governmental support should act as a catalyst but we need to ensure the sustainability of development cooperation,” Shishir said while addressing the session on ‘India Development Cooperation Initiatives – The Road Ahead’ held on Day 2 of the 10th CII-EXIM Bank Conclave on India Africa Project Partnership being organised in New Delhi.
Giving a brief outline of the government’s development programme for developing economies, especially in Africa, Ministry of External Affairs (MEA) Joint Secretary Alok Kumar Sinha said: “Our Technical and Economic Cooperation programme, popularly known as ITEC launched in the 1960s, is completing its 50 years this year. Under this programme, a large number of professionals in Africa have been trained in diverse fields including IT, telecommunication, agro-processing and other areas. In addition, special programmes have also been organised on the request of various countries in specific areas of interest.”
“In the recent past we have moved from conducting training programme to developing institutions of excellence in African countries in various areas. Two important strands have been added to the capacity building initiatives-the extension of concessional lines of credit to developing countries, particularly in Africa, which would help them to import goods and services from India and undertake projects of infrastructure development, and building capacity in accordance with the development priorities identified by the recipient countries. Since its launch in 2004, we have extended more than 200 lines of credit worth about USD 10 billion and out of this more than 60 per cent, about USD 6.5 billion, has been extended to countries in Africa,” Sinha added.
He cited the example of Mozambique and Ethiopia, the largest recipient of the Lines of Credit from India.
Sinha said that the third strand of the development partnership initiative is project assistance.
“This is an assistance programme to implement specific projects in various countries in priority areas as required by them,” he added.
Armando Inroga, Minister of Trade and Industry, Mozambique, said that his country was one of the fastest developing economies in Sub-Saharan Africa with 7.5 per cent GDP growth in the last 20 years.
“India has become one of the top 10 investors in Mozambique in the last five years. Bilateral cooperation has been growing and reinforced in areas like science and technology, agriculture, mineral resources, iron ores and housing,” Inroga said while highlighting that the way forward for India-Mozambique bilateral cooperation would be in the areas of poverty reduction, skill development, etc.
Randso Mwadiwa, Principal Secretary, Ministry of Industry and Trade, Government of Malawi, however highlighted some of the specific areas that need attention.
He said that although the concessional lines of credit extended by India have helped this country, the condition that 30 percent material should be bought from India needed to be revised.
“We also need to increase the Lines of Credit,” he added.
Alie B Mansaray, Deputy Minister of Trade and Industry, Sierra Leone, said that his country is one of the fastest growing economies in Africa with an average 6.2 per cent GDP growth.
He said that Indian companies are increasing that footprint in Sierra Leone and that India could play a key role in the country’s effort to become a mid-income economy by year 2035.
He cited energy, agriculture, fishery and IT as the most promising areas for India-Sierra Leone bilateral trade and investments.
Related News
Latest UNCTAD Investment Policy Monitor released – Message from Mr. James Zhan
It is my pleasure to share with you UNCTAD’s twelfth Investment Policy Monitor.
The Monitor finds that twenty five countries took thirty six investment policy measures in the review period (November 2013–February 2014). These measures show a continued move towards improving entry conditions, reducing restrictions and facilitating foreign investment. Among the most important policy measures are a liberalization of the oil industry in Mexico and the adoption of a new investment law in Mongolia; other countries pursue their privatization programs. At the same time, new investment restrictions were adopted mainly in some South American and Asian countries.
Overall, the extractive industry has been among the most active sectors in terms of investment policy developments in recent years.
Regarding international investment policies, the Monitor finds that ten economies concluded six new international investment agreements (IIAs), that is five bilateral investment treaties (BITs) and one “other IIA”. The move towards regional IIAs continues as several such agreements are currently being negotiated. There is a slowdown in the conclusion of BITs and an increase of treaty making at regional and inter-regional levels. A “scaling-up” of IIAs through “mega-regionals” occurs in parallel to efforts for change of (or exit from) the regime by some developing countries.
UNCTAD’s Investment Policy Monitor is a regular publication that provides the international investment community with country-specific, up-to-date information about the latest development in foreign investment policies, both at the national and international level.
Let me also use this opportunity to draw your attention to the forthcoming fourth World Investment Forum (WIF), scheduled for 13-16 October 2014 in Geneva. The WIF is the pre-eminent platform for high-level and inclusive discourse on investment policies for sustainable development, gathering on average 2,000 participants from 196 countries and convening the full range of investment for development stakeholders.
James X, Zhan
Director
Investment & Enterprise Division
United Nations Conference on Trade & Development
Palais des Nations, Geneva
Related News
Africa – a new era for partnerships with the south
The economic weight of Southern actors at the global level over the last two decades has been unprecedented in speed and scale.
Whilst growth levels of western economies plummeted following the 2008-2009 financial crisis, developing economies continued to grow at high rates, largely driven by a variety of factors, including sound industrial policies and investments in human, physical and technological capacities. Countries of the South have been transforming their economic bases slowly but surely from large agrrian sectors to more diversified economies with large manufacturing and modern service sectors.
For the first time in 150 years, the combined output of the developing world’s three leading economies – Brazil, China and India – is about equal to the combined GDP of the longstanding industrial powers of the North – Canada, France, Germany, Italy, United Kingdom and the United States (HDR 2013). This represents a dramatic rebalancing of global economic power: In 1950, Brazil, China and India together represented only 10% of the world economy, but it is estimated that by 2050, they will together account for 40% of global output.
The impact of this shift is also evident in demography and social development. The absolute number of people in the South means that the middle class will continue to grow in size, income and expectations. Rapid economic growth and poverty reduction, especially in China, have led to a decline in the number of poor by $158 million between 2000 and 2011. Investments in technology and innovation have led to Southern economies sometimes outpacing Northern counterparts in technological entrepreneurialism and manufacturing capabilities, producing complex products for developing markets. As part of the rising South-South trade, the share of developing countries’ capital goods imports from other developing countries has increased steadily, from 35% in 1995 to 54% in 2010, rendering developing countries as the major source of capital goods for other developing countries.
Challenges and opportunities for Africa in the new global economic context
Africa economic fortunes seem to be no different. Since 2000, Africa’s growth has been robust, with the continent showing resilience and recovering very quickly from the global financial crisis. With an impressive growth rate of 5% in 2012, the continent is projected to be the fastest growing by 2014 and 11 out of the 20 fastest growing economies globally will come from Africa.
These changes are not only limited to the economic arena. With labour force set to reach 1.1 billion by 2040 and adult and youth literacy rates set to approach 100% by 2063, the continent’s human resource endowment will play a major role in realizing its economic potential, provided it can properly address the needs for a demographic dividend.
Inspite of these achievements, challenges continue to persist on the continent – extreme hunger, youth unemployment, and underlying structural causes of poverty – detract Africa from making the most of its current growth. The continent seems, nevertheless, to be attracting increasing levels of foreign direct investment from southern partners such as Korea or Turkey. Indeed the highest investor stock in Africa is from Malaysia with US $19 billion followed closely by South Africa with US $18 billion. In 2011, the rate of return on inward FDI in Africa (9.3 per cent) was the highest compared to other regions of the world. The world average was 7.2 per cent, with 8.8 per cent in Asia, 7.1 percent in Latin America and Caribbean or 4.8 per cent in developed economies. Africa is therefore slowly but surely shedding its image as the poster child of poverty and destitution to being the new place for investors to be.
Partnerships with other southern countries are increasingly important. Africa can learn from the successes and failures of these countries and use them as building blocks to craft its own development. For example, the Brazilian Bolsa Familia Programme, which was implemented under President Lula da Silva, used cash transfers to alleviate poverty linking social development, economic improvement and education in a wide reaching process that eventually took 50 million people out of poverty. While land productivity in China, Brazil and India has grown respectively from 1.21, 1.35 and 0.95 tons per hectare to 5.52, 4 and 2.53 respectively over the past fifty years, Africa’s land productivity is stuck at 1.5. Africa’s increasing ties with the South are particularly important also in view of the debt crises in Europe, the slow recovery of the world economy and the increasing signals for investors to reduce their exposure to hedging markets in light of reduced quantitative easing.
Although creating partnerships with other developing countries starting as far back as the 1955 Bandung Conference is not new, these relationships were more political. At the end of the cold war Africa started new partnerships arrangements with the South, driven primarily by economic rather than political considerations. The fact that Africa’s total merchandise trade with the South (excluding intra-African trade) increased from US$34 billion in 1995 to US$283 billion in 2008, representing a third of all of Africa’s total trade, is an attestation to this.
Africa must however be aware of the challenges and disadvantages that may accrue as a result of opening its borders to its partners. Many studies have shown the negative impact of cheap goods flooding African markets and killing African fragile industries. A recent study done by the African Economic Research Consortium on China’s trade relations with Mauritius for instance found that cheap imports have benefited consumers but that more significantly, Chinese import competition has caused heavy losses to local industry in Mauritius, with small firms and those in sectors such as garments, footwear and furniture experiencing a loss of market share. Similar findings came to light in a study of China-Nigeria investment relations.
Policies guiding trade must address the intrusion of cheap manufactured goods from emerging economies flooding African markets and out-competing domestic firms. However, cheaper imported goods from emerging markets can benefit Africa’s own industrialization if they are primarily industrial inputs.
A comprehensive cooperation strategy
To ensure a win-win situation, Africa needs to carefully devise new partnership arrangements with developing countries. Whether on a country by country basis, through the Regional Economic Commissions or at a continental level, it is imperative to design a workable plan for engagement with partners. The world is not waiting for Africa to put its house in order. In 2006, China released an official China-Africa policy white paper, which covered a broad range of topics on which China will engage with Africa from aid, debt relief, the promotion of Chinese culture and language, tourism and alliance building. It was the first of its kind in China’s diplomatic history with Africa, and it embodied Chinese long-term plan of enhancing all-rounds cooperation with Africa. Through it, Beijing presented the world that the objective of China’s African policy is to ‘establish and develop a new type of strategic partnership with Africa’ on the basis of advancing the fundamental interests of both sides. Following up on this, on the 50th anniversary of the start of diplomatic relations between China and Africa, in 2012, another policy paper was issued that strengthened and tightened the role of partnership between these two developing nations.
Africa must also do same. African countries need to ensure that partnership with developing countries work for Africa’s transformation agenda. This has to be within and complementary to existing national and regional policies that promote integration. Regional bodies such as the African Union must work as forums to reach binding agreements amongst member states for a standard set of requirements for foreign involvement on the continent, whether with new or traditional partners. This collective action can also be leveraged, for example, to open up greater policy space for industrial investments that were utilized by the Asian newly industrialized countries during their economic transformation.
In this regard, Africa’s engagements must be articulated and managed in the context of a comprehensive development strategy for economic transformation. A clear transformation agenda that enables Africa to shift from a largely agrarian society with acute dependence on primary resources towards an economic model based on industry and modern services, with significant employment generation and a more equitable distribution of income. To achieve this, Africa must prioritize its interaction with traditional and emerging partners, articulate its needs in infrastructural development, education and training, health, finance and other critical areas.
There is a win-win situation to be achieved. Africa has the natural resources, the land, the man power and increasingly the markets that are and continue to be of strategic interest to the emerging economies of the south. On the other hand, partners can provide the technical and expert assistance to address Africa’s growth challenges. The story of the Asian tigers rise from low income countries to high and developed countries is of course relevant to Africa. Through a system of state planning, favourable interest rates for loans to specific exporting industries, major government investments in education, maintenance of export-led regimes and low taxes, among others, they charted a path to rapid industrialization.
The good news is that the increasing trends in development cooperation between Africa and its partners present the right opportunities for such enhancing growth to fuel an economic transformation. Africa’s key priorities in this regard should be identifying the means of cooperation with partners that have the greatest potential to foster its transformation, provide sufficient domestic investments to complement this cooperation, and engage external partners collectively in order to maximize the benefits of such cooperation.
The South Africa-China Comprehensive Strategic Partnership presents a model agreement whereby China will increase investment in South Africa’s manufacturing industry and promote the creation of value-adding activities. Such investments can focus on value-addition as a means to guide interest in Africa’s natural resources to productive activities that yield a greater portion of global value chains for processing within Africa.
As the availability of loans and financing from external emerging markets increases, Africa must ensure that new borrowing finances projects with significant employment-generating potential in order to absorb the increasing number of young people entering the labour force. The policy environment in Africa must ensure a stable and low-cost business environment conducive for investment, in order to attract jobs that are anticipated to relocate away from the rising labour costs of Asia.
Enhanced regional integration and a common vision and a comprehensive framework for engagement with traditional and emerging partners are critical for the continent to make partnerships work for the benefits of its people and to address potential challenges of such cooperation.
Carlos Lopes is the Executive Secretary of the Economic Commission for Africa (UNECA).
Related News
South Africa’s Minister of Trade and Industry visits tralac’s Master of Commerce programme
On Friday 7 March 2014, South Africa’s Minister of Trade and Industry, Dr Rob Davies, delivered a presentation on South Africa’s Trade Policy and Strategic Framework to the Master of Commerce in Management Practice specialising in Trade Law and Policy class in Cape Town, South Africa. The third residential module of the Master of Commerce in Management Practice programme took place at the Graduate School of Business, University of Cape Town, from 1-15 March 2014.
Related News
African Integration Fund: Feasibility study
Background
Despite numerous resolutions made by African leaders, the African integration process has been marked by slow progress due to differences in political commitment vis-à-vis the integration agenda, limited effectiveness of continental, regional and national bodies dealing with regional integration issues and limited expertise and financial capacity to implement the decisions arrived at.
In recent years the Continent has experienced improved growth performance but it still faces serious challenges of poverty level, economic diversification and international competitiveness. Numerous studies indicate that, if African countries were to increase their share in global trade by only 1 per cent, that would represent an additional annual income of over $200 billion which is approximately five times more than the amount the continent receives as Official Development Assistance (ODA). Yet despite this potentially massive economic return of international and regional trade to Africa, intra-African trade remains relatively small (at around 11-12% of global African Trade) due to numerous non-tariff barriers (NTBs), poor trade facilitation services and limited supporting infrastructure, including transport and logistics, as well as financial institutions and services.
Introduction
This Feasibility Report on the creation of an African Integration Fund (AIF) has been prepared for the African Union Commission (AUC), under the technical and financial assistance of the UNDP and the supervisory role of the Department of Economic Affairs of the AUC. The AIF is meant to help finance the “Minimum Integration Programme” (MIP) adopted during the Fourth Conference of African Ministers in charge of Integration (COMAI IV) of May 7-8, 2009 in Yaoundé-Cameroon. The genesis for the proposed establishment of the AIF, one among many vehicles deployed by the AUC, was a response to the low level of funds flow to support the integration process towards achieving the objectives of the Abuja Treaty, and that the realization of the MIP is the minimum necessary to accelerate the integration process. The AIF will be a financial facility with two windows: a technical assistance and grant window and a commercial window.
The technical assistance and grant window will offer grant, technical assistance, advisory services and institutional support; while the commercial window would entail a commercial investment and financing fund, the provision of partial loan guarantees and matching grants which should enable the leveraging of additional resources from domestic, regional and international financial institutions. It is also worth stressing that the commercial window of the fund is expected to contribute to the replenishment of the AIF.
The possibility of structuring child trust funds or thematic funds, managed by the host institution or directly by stakeholders such as the AUC or RECs, will be left to the judgment of the AUC, the Steering Committee of the AIF and anchor development partners.
The feasibility study takes cognisance of the significant evolutions in the regional integration process and ambitions of the AU and the Regional Economic Communities (RECs) since the articulation, in 2009, of the MIP which the AIF is meant to support.
Firstly, the AU has expressed enhanced ambitions for its regional integration agenda and launched major continental initiatives (C-FTA, BIAT, CAADP/3ADI, PIDA, AIDA/RADS/ACPI/ATII, RADS/AMV, AGA, APSA, and EPYW).
Secondly, though the pace of regional integration has been relatively slow overall at the level of the RECs, some degree of realization has been achieved in many thematic areas of regional integration (Free Movement of People, Customs Union, TBs, NTBs, Transport Corridors, regional infrastructures, etc.) and some RECs have taken bold steps to speed-up the integration process, namely, with the advent of the Tripartite FTA COMESA-SADC-EAC announced by the three RECs in 2008.
Thus the AIF and the concept of MIP have been “re-contextualized” to account for these major developments in the African regional integration agenda. In other words, the AIF will support priority regional integration programs/projects as well as the re-actualized MIP programs and projects of slow-movers in the regional integration process of the continent.
Related News
Growing middle-class leading consumption drive in rapid-growth markets
Growing middle-class leading consumption drive in rapid-growth markets
Across the rapid-growth markets there will be nearly 200 million middle-class households by 2022 up from 94 million in 2012, according to EY’s latest Rapid-growth markets forecast (RGMF) released today [6 March 2014]. With the growing middle class buying a wider range of consumer products and services rapid-growth markets (RGMs) will increasingly look to their own markets to drive demand. Over the medium-term, RGMs still hold many winning cards.
As the number of middle class households increases, demand for health and education services is likely to expand significantly, also adding to the skills of the workforce. Spending on services such as communications, culture and recreation will grow at almost twice the pace of spending on food.
As a whole, RGMs are set to recover over the course of this year with 4.7% growth expected for 2014 and over 5% in 2015 but the risk of capital flight and a sharp slowdown has increased. According to the forecast renewed capital flight could lead to RGM growth falling closer to 3% by 2015, with global repercussions.
While growth is expected to remain steady, over the course of the next two years, more divergences are expected in terms of growth among the RGMs. Those in the Americas are struggling to regain momentum, while steady growth in China boosts Asia’s RGMs. With industrial production surprisingly strong in Poland and the Czech Republic, emerging Europe is gaining strength, looking to the West, particularly as Germany leads the Eurozone out of recession.
Looking at South Africa in the longer term
In the South Africa (SA) context, GDP growth rates remain below the global RGM trend at an expected growth rate of 2.7% for 2014 and 3.2 % in 2015. This does still mean, however, that SA will be growing faster than most advanced economies as well as several prominent RGM’s, notably Brazil and Russia.
Michael Lalor, Africa Business Center Leader at EY Africa says, “The consistent message coming through from the South African government as a whole is focus on implementing the National Development Plan (NDP). The emphasis that was given by Minister Pravin Gordhan in his annual Budget Speech around the focus of the NDP is therefore very encouraging. The extent to which government is able to make this shift successfully, with active support from the private sector and civil society, will determine which of the diverging RGM growth paths South Africa follows.”
Risks to the forecast
As jitters return to financial markets, some RGMs are still vulnerable. Heightened political risks or weak economic growth could trigger a wave of risk aversion, leading to changes in portfolio allocations away from rapid-growth markets’ assets. This could lead to capital flight which would impact several RGM’s are dependent on portfolio flows to fund their current account deficit. In this capital flight scenario, higher inflation, interest rates and debt payments would amplify the downturn. Along with falls in share and house prices, this would lower potential growth across most RGMs.
In this scenario, GDP growth in rapid-growth markets would fall to 3.7% and 2.8% in 2014 and 2015 respectively. This would in turn have a significant impact on growth in the advanced economies.
Indeed, a new term – the ‘Fragile Five’ – has been coined to describe the five economies supposedly most vulnerable to this scenario: India, Brazil, Turkey, Indonesia and SA.
However, the heatmap contained in the report provides a broader perspective on financial vulnerability, comparing RGMs across seven relevant factors. As may be expected, SA ranks lower on the current account deficit and currency volatility. However, on other factors, including government debt levels, the rankings are more moderate. In terms of average growth of credit markets as a share of GDP, SA is ranked the best in the world, reflecting the relative maturity of our financial system and credit markets. Overall, SA ranks ahead of ten of the other twenty four RGM’s we analyse, including India, Brazil, Turkey, and Indonesia, as well as the likes of Argentina, Vietnam and Poland.
Related News
The continent of opportunities
Healthy ties and improved infrastructure make the African continent ripe and right for Indian industry
The African continent today represents new horizons and opportunities for Indian industry, in light of rising per capita incomes, new infrastructure and connectivity networks, and the expanding reach of technology.
The economy is expected to expand from a GDP of $2 trillion to $2.6 trillion by 2020, with a consumer base amounting to $1.4 trillion. The pace of growth is forecast at around 6 per cent annually for the next decade, bolstered by young demographics. Sub-Saharan Africa is projected to be home to one-fourth of the world’s population under the age of 25 by the end of this decade.
The IMF expects GDP growth to accelerate to 6.5 in 2014, driven by robust commodity prices, inflow of foreign capital, and domestic consumption and infrastructure spending. The continent has also benefited from a strong commitment by African governments to structural reforms and prudent macroeconomic policies. Roads, bridges, airports and other facilities are being built through pan-African institutions with a strategic vision for integration.
Strong links
India is fortunate to have a strong and close friendship with countries of the African continent based on shared historical experiences. India has always demonstrated strong optimism regarding the potential of the African continent and has seen itself as a significant stakeholder in its progress.
The Indian government has taken several initiatives over the recent past to strengthen the bilateral engagement, instituting platforms for dialogue and cooperation such as the Pan-African e-Network, the Focus Africa programme, and the India-Brazil-South Africa process. The India-Africa forum summits have imparted further impetus to this endeavour. The CII-Exim Bank India-Africa partnership conclave series, started in 2005, has facilitated project cooperation through its nine editions, the last of which brought together almost 900 delegates to discuss project proposals worth close to $70 billion.
India’s economic engagement with Africa goes beyond trade and investment to extend to innovative domains such as alternative energy, organic farming, medical expertise, skill development and technology partnerships. Africa’s natural and human resources resonate well with India’s capacities to convert them into productive assets.
Indian companies in Africa have earned goodwill for their long-term strategic engagement to work with communities and people. ‘Affordable, adaptable and accessible’ goods and services have been considered the road to successful ventures in Africa.
Burgeoning trade
As a result, trade has skyrocketed from less than $5 billion in 2000-2001 to over $70 billion in 2012-13. India’s exports to Africa have almost trebled from $10.3 billion in 2006-07 to $29.1 billion in 2012-13, and reached 10 per cent of aggregate exports in April-December 2013-14. The export profile is well-diversified and top export items include petroleum products, transport equipment, pharmaceuticals and fine chemicals, and machinery. The export destinations too are wide-based, with eight countries accounting for over a billion dollars worth of exports each.
India’s imports from Africa too are growing robustly, crossing $44 billion in 2011-12.
The country is Africa’s fourth largest trading partner, and accounts for over 5 per cent of Africa’s trade. Given India’s dependence on crude oil and gold, Nigeria and South Africa accounted for about half of total imports. Coal, metals and inorganic chemicals are among the top five import items.
The most encouraging feature of the economic partnership is the strong pipeline of investments that Indian companies have undertaken in Africa, across sectors such as FMCG, mining and minerals, telecommunications, construction and projects, among others. It is estimated that acquisitions by Indian companies accounted for a third of the total value of acquisitions in Sub-Saharan Africa in 2010. India’s approved cumulative investments from April 1996 to March 2013 are estimated to be $37.8 billion.
Upping the ante
While bilateral trade has been increasing, it is concentrated on a few products at the low end of the value chain. Africa enjoys a trade surplus of close to $12 billion vis-à-vis India, but this is due to primary commodity exports, including fuel and precious items. We need to take measures to expand the trade basket to include more value-added products. The Exim Bank has 129 lines of credit in operation as of December 2013, amounting to $6 billion for projects in 45 African countries. These LoCs facilitate imports of project equipment and services from India in infrastructure and manufacturing.
Two, trade needs to be regionally diversified. India’s four largest trade partners in Africa account for close to 70 per cent of India-Africa trade, primarily due to fuel and gold. In particular, Central and southern Africa deserve special attention for investments and sourcing. Three, investment-led trade is the way forward for expanding and diversifying the trade basket. Indian companies need to explore mining opportunities in particular and expand their stakes.
Four, economic cooperation must embrace the services sector. Sectors such as tourism, financial services, transport and logistics, and knowledge areas would benefit from institutional mechanisms for greater connectivity. Healthcare too has high potential.
Five, human resource development continues to be high on the agenda. The Indian government offers scholarships to 22,000 African students, tele-education and capacity building through 100 institutions. CII organises the industrial services training programmes for capacity building of African chambers of commerce, and the India Africa technology partnership programme for better technology absorption capacities.
Eye on the target
India and Africa have set a trade target of $90 billion by 2015, which may be difficult to achieve given the current global scenario. India would need to enhance its trade agreements with the different regional economic blocs in Africa to integrate into local supply chains. We should also target participation in Africa’s North-south corridor, the upcoming integrated transport infrastructure system.
Two other areas that governments of both sides should examine are the enhanced participation of Indian consultants in African development projects and the greater presence of Indian financial institutions in Africa’s capital markets.
Chandrajit Banerjee is the Director General of the Confederation of Indian Industry (CII).
Related News
Africa’s push to add value to minerals now a riskier gamble
African government efforts to force mining companies to process minerals before export may backfire as they come up against weakening commodity prices and investor demands that firms reduce risky investments.
In the last year alone, Zimbabwe, Zambia, Democratic Republic of Congo (DRC), Namibia, South Africa and others have hinted at, announced or put in place measures aimed at adding value to minerals exports, which would boost tax revenue, encourage formation of new businesses and add jobs.
But with falling metal prices and a drastic reduction in the capital available for the mining industry, wary companies are increasingly shying away from investment in countries where the rules of the game can change quickly.
“Investment sentiment in the last year has moved against the mining sector, but the governments tend to have a lagging view of how this is going to affect investment in their countries,” said Mike Elliott, global mining and metals leader at Ernst & Young.
“They continue to argue that mining needs to make a bigger contribution to their economies, but you’ll have to see investment severely tail off to make them think they need to attract investment rather that scare it away.”
Consultants say governments could find more targeted and effective ways of adding value to local economies.
For example, they could push local companies that provide services for the mining industry such as logistics, security, catering and construction to become more competitive and then tighten regulation around the procurement of such services, consultant Tom Wilson at Africa Practice suggested.
“Ultimately you can’t turn market forces on their head. You have to figure out where the country has the capacity to fill the need for goods and services and provide some structures that actually help indigenize some businesses,” Wilson said.
The top five mining companies are slashing total capital spending from a peak of about $70 billion in 2012 to an expected $46 billion in 2015, according to Reuters I/B/E/S.
Mining firms have been taking costly writedowns following years of risky bets to pursue growth, and they now need to prove to shareholders they can use their cash more wisely.
“Companies need to decide whether they wish to continue mining in these countries and face what the governments want to do in terms of beneficiation or pull out. And in some cases it will be a pull-out strategy,” said Kevin Goodrem, vice president of beneficiation for De Beers Group.
THE HARD LINE
Zimbabwe, which holds the world’s second-largest platinum reserves after South Africa, has taken a hard line. President Robert Mugabe late last year threatened to stop exports of raw platinum in a bid to force mining firms to process the metal domestically.
The government said last month it had short-listed two companies to build a refinery by 2016, but industry players expect the project will take much longer than two years.
A source at a mining company operating in southern Africa said the volumes mined in Zimbabwe are not enough to make construction of a $2-$3 billion refinery economically viable, and he was sceptical that the energy supply would be sufficient to run it.
But companies operating in Zimbabwe, which include top world platinum producers Anglo American Platinum and Impala Platinum Holdings, have to remain engaged with the government to avoid losing assets.
“For the platinum miners who operate in Zimbabwe, it is a very concerning time. And it is a bit of a tragedy for Zimbabwe, because they are a very significant producer, but no global capital is going to go there today with that policy uncertainty,” Elliott said.
The DRC and Zambia, Africa’s largest copper producers, are also trying to boost downstream investment.
Kinshasa is trying to implement a ban on exports of copper and cobalt concentrates but has so far encountered the resistance of the powerful governor of Congo’s copper-producing Katanga province.
Many in the industry say the ban is unrealistic as acute electricity shortages hamper processing activities in Congo.
In Zambia, President Michael Sata in October revoked a law that had suspended a 10 percent duty on exports of unprocessed minerals including copper, iron, cobalt and nickel.
Miners say that although some plants are being built, Zambia does not have enough smelting capacity to process all its copper, so they are accumulating high stocks of concentrate.
“Some of these countries are trying to run before they can walk,” Deutsche Bank analyst Robert Clifford said.
“I understand why they want to do it, but they have to provide some assurance to companies that they are not going to pull the rug out from under their feet and change the rules once they have spent billions of dollars.”
Also new smelters and plants may not make sense if their products are expensive and uncompetitive in global markets.
Mining experts say governments should avoid blanket policies and instead target parts of the industry that will actually benefit from downstream investment.
They cite Indonesia’s controversial ban on exports of unprocessed mineral exports as an example.
The ban is expected to boost downstream processing investment in the next few years in nickel, where the country is competitive. But in copper, it is expected to achieve little besides souring the relationship between the government and producers.
Wary of the risks, Namibia seems to have taken a softer approach so far. The government has commissioned a study to identify the commodities it would be more beneficial to process.
“You have to be careful with value-addition policy, because the risk is that it could be value disruptive,” said Magnus Ericsson, founder of the Raw Materials Group, a consultancy that advices governments and companies on mining issues.
“One policy doesn’t fit all. That’s a recipe for disaster.”
Related News
Improved trade policies in fish sectors could address gender inequalities
New UNCTAD-EIF study of the fisheries sector in The Gambia shows trade policies have to be inclusive if they are to reduce poverty.
The expansion of the fisheries sector could help lift Gambians from poverty, in particular women, a new UNCTAD-EIF report has found, concluding that the inclusion of gender considerations in trade policy is a useful way to achieve greater prosperity for all. The case study warns that without built-in gender perspectives, the promotion of fish exports in The Gambia could in some cases actually worsen inequality between men and women.
The report, The Fisheries Sector in the Gambia: Trade, Value Addition and Social Inclusiveness, with a Focus on Women, is co-published by UNCTAD and the Enhanced Integrated Framework (EIF) Executive Secretariat on 6 March.
The Gambian fisheries sector has significant potential to make a major contribution to national socio-economic development: it is a source of food and protein for the population; a source of revenue and foreign exchange earnings; and has significant potential to generate jobs, particularly for low-income women.
The Gambia, Africa’s smallest mainland country with access to both banks of the River Gambia and 80 kilometers of the Atlantic coast of West Africa, has a special relationship to its waters and the fish that swim there.
Sardinellas, shad and other types of fish are sold fresh or smoked in the country’s colourful markets. But while Gambians consume such locally-caught fish, they also export, among other seafood products, high-value sole, shrimp and lobsters to the European Union and other global markets.
The UNCTAD-EIF report, written against the background of efforts to achieve the third Millennium Development Goal to promote gender equality and empower women, shows that the structure of Gambia’s fishing and fish processing sector offers insight into the way that women for whom fish provides a livelihood often lose out to men working in the same sector.
In the sector, men and women tend to produce distinct products, operate on different scales, and serve different markets. The result is specific gender-based trade patterns throughout the value chain.
Women are the predominant dealers and marketers of fresh and cured fish to domestic urban markets near landing sites, while long-distance trade involving relatively capital-intensive techniques and higher profit margins, including the export of frozen and smoked/dried fish products, is carried out mainly by men.
This division of labour reflects deeply entrenched social roles that restrict women’s mobility and access to productive resources in the fish value chain. Women tend to receive “diminished” assets and the parts of the fisheries sector that attract export-oriented investment do so at the expense of women working in the domestic market.
Because men already largely control the export trade, the selective upgrading of this segment risks magnifying the existing split between large-scale male traders and small-scale women traders.
However, this need not be the case – export-oriented investment may lead to greater employment opportunities for women downstream, for example in processing factories, if the appropriate measures are in place. Women’s access to resources, including credit, and support services such as training in marketing and financial literacy, would greatly enhance their ability to benefit from new export opportunities. It is also important to explore niche markets for high-value products that can generate income for women, the study recommends.
More broadly, UNCTAD and EIF call for domestic, sub-regional and international perspectives to be carefully assessed in the light of food security, poverty alleviation and social inclusiveness.
“One challenge is that social issues are addressed in a different framework than economic issues and no sufficient synergies are established between the two,” Dr. Mukhisa Kituyi, Secretary-General of UNCTAD said.
“For example, strategies for social protection should be closely linked to policies on employment, education and training. Due consideration should be given to changes in employment and welfare brought about by international trade. While there are ‘winners’ from trade liberalization, there are also ‘losers’, and their needs must also be addressed,” Dr. Kituyi added.
As the target date of the Millennium Development Goals in 2015 draws closer, it is clear that a lot more remains to be done to achieve them, and it has been suggested that the post-2015 agenda should address all kinds of inequalities in a more substantive way.
“In The Gambia, 80 per cent of fish processors and 50 per cent of small-scale fish traders are women. Through its Diagnostic Trade Integration Study Update, The Gambia has prioritized the need to build skills of women in income-generating activities,” Dr. Ratnakar Adhikari, Executive Director of the Executive Secretariat for the EIF, said.
“Together with the Government, we are strongly supporting a gender balanced Trade Facilitation project which aims to facilitate air cargo export of fresh horticulture and fishery products. We are also supporting the Government to leverage resources from development partners to build a sustainable and inclusive eco-friendly fishing model that puts focus on sharpening women’s skills and women empowerment,” Dr. Adhikari added.
As the study of The Gambia’s fisheries shows, putting in place coherent trade, infrastructure and social policies may be instrumental to achieving inclusive development and to reducing inequalities, including those based on gender. The gender perspective is key to bringing issues of sustainability and inclusion to the forefront of analysis, the study concludes.
The report forms part of the support that UNCTAD provided to The Gambia for the update of its Diagnostic Trade Integration Study and was carried out under the auspices of the Enhanced Integrated Framework for Trade-Related Assistance for Least Developed Countries.
Related News
SACU: The inconvenient institution?
The article aptly titled “SACU Dead Man Walking” giving a SACU Perspective by Professor Roman Grynberg needs further reflection and critical insight.
There is no denying the fact that the region’s oldest trade agreement, the Southern African Customs Union (SACU) – made up of Botswana, Lesotho, Namibia, South Africa and Swaziland – has gone into paralysis mode in terms of advancing the regional integration and common policy development and implementation agenda.
This does not mean SACU is about to be finally killed off by South Africa or that member states are ready to dump SACU for a better alternative.
It is, however, plausible given the current contemporary developments on trade and regional integration that SACU has become an inconvenient institution. South Africa argues that the revenues apportioned to BLNS states (Botswana, Lesotho, Namibia and Swaziland), the smaller economies of SACU, is increasingly a burden on its state coffers representing 55 percent of the total SACU pool of revenues. While it can be acknowledged that revenues to BLNS did increase as a redistributive transfer to BLNS, the reality is that the 55 percent only represents less than 5 percent of total South African revenues.
Given the historical fact that SACU has a polarised trade and commercial pattern where industrial activity was concentrated and biased towards South Africa, such revenues accorded to the BLNS is a small feat considering the trade expansionist role and industrial concentration of South African firms in the region.
It would be in the best interest of SACU member states, however, that the regional grouping should stay but needs to be transformed to suit current financial, trade, industrial and tariff setting realities.
In terms of financial considerations, one should regard that South Africa is not looking only at SACU as a gateway of making its financial imprints in Africa. It is looking at SADC and the COMESA EAC SADC Tripartite arrangement and ultimately the African continent as a whole.
But South Africa’s priority now primarily lies in the global arena through BRICS where it wants to establish a Development Bank of R100 billion to fund infrastructure projects.
The Revenue Sharing Formulae (RSF) of SACU seem to be in the way of South Africa wanting to foster and establish, through fully fledged development co-operation mechanisms, a Development Fund to finance regional infrastructure projects which may be commensurate with its trade expansion plans through better road, rail, air transport linkages and sufficient energy and telecommunications supply networks. SACU needs to heed that call and realise that it will not be in all member states to stick with the current RSF but to transform it to suit the targeted and well-focused financing, which would benefit the whole region as well. Given that South Africa is in a position to finance such a fund, it may be well advised that member states consider such a fund but with clear provisions that set out terms and conditions. There is no way that South Africa can use the Development Fund to leverage itself due to its bargaining strength to enforce conditions that would remind BLNS of “Structural Adjustment Programmes” of the IMF and the World Bank.
The proposed or considered Development Fund should be transparent, predictable and fair to all and it should allow room for all member states to have a say on how it is managed. It should also not make any member state worse off than under the current revenue sharing arrangement.
In fact, SACU can acclimatise and accommodate the Development Fund under its consensual decision making structures while it serves its objective to afford targeted funding streams for infrastructure and project financing opportunities. SACU is historically indebted to ensure that funds are availed largely from its member states, as it is not only politically expedient to do so but is also motivated on economic necessity for trade diversion, polarised industrial development effects and agglomeration accumulation of commercial, industrial and financial growth in the South African economic hub versus the “spokes” of the BLNS.
In terms of trade, SACU needs to be more realistic in order for trade integration to take root. It needs to sit down politically and agree on “growth points” of sectors, industries and products among its member states. There is no way that regional integration can grow in SACU, as a region, if all countries aim to do the same thing, such as to grow same products, sectors or industries. SACU member states should agree who takes what products, sectors and industry based on comparative endowment or competitive basis, and then assist each other to deepen and stimulate such sectors, products and industry.
They should explore this through identifying regional value chains and ensure through market access and production technologies that such agreed growth centres are stimulated on a complementary and growth valued shared basis. Such shared growth, value-added regional focus strategy can assist greatly in terms of industrialisation for broad-based development in SACU and not just for South Africa as is the case.
SACU needs to be commended for doing well on its institutional strength to getting the Common Negotiating Mechanisms (CNM) going, especially in terms of the EU-SADC-EPA. It has to be pointed out that SACU needs to go as a firm collective to advance its EPA agenda and to solidify gains and opportunities from the EU. It is encouraging that SACU is moving towards that direction although painstaking and slow. It needs to stay resilient and resolute to achieve the common agenda not only with the EU but also with all other negotiating forums on trade as it is with India, Mercosur and China. SACU must be commended for trying to put in place the SACU Tariff Board but must at the same time realise that it is necessary to go first with establishing domestic national bodies on trade that would be capacitated to handle competently first the domestic trade distortions and then only regional trade distortions at SACU Tariff Board level. This noble objective can transform SACU from been not being only a reactive institution on trade but also a proactive institution to influence trade and industrial policy at regional level.
In order to do this, SACU needs to be viably transformed to developed common policies on agriculture, industry, and competition policies in line with the full implementation of the SACU 2002 Agreement.
The drawback to the unrealistic expectation of agreeing on common policy development is that it is increasingly difficult for member states, who are at varying levels of economic development, to agree on what is common. It is better if SACU emphasizes “variable geometry” where flexibility can be allowed for those member states to explore commonality of these policies and to cement even on a bilateral basis those policies, which are intertwined with an objective of gravitating towards the common ground on those policies. For SACU member states to chase a pipe dream of having agreed common policies one day would be too high and unrealistic.
It is important that member states be allowed to explore common basis even bilaterally on these policies and such critical mass be explored to the common goal, whenever such goals are agreed upon only on principal basis but acknowledging variations and diversity of commonality between and among the member states.
In conclusion, SACU should not be allowed to die. It should not be killed off either. It is not a dead woman walking nor is it the last kick of a dying horse. It just needs to be clear on its limitations and ambitions. It has to be transformed, as it is simply inconvenient for all member states. All member states can agree that the current revenue sharing formula needs a radical overhaul, as it is neither trade-enhancing nor conducive for regional integration. SACU member states must realise that regional institutional structures of SACU can be extremely beneficial for regional financing mechanisms. But such funding arrangements should be conducive to all and not felt imposed. It should aim for regional infrastructure projects on an agreed modality basis.
SACU needs to jealousy safeguard its common negotiating agenda. It is not easy to put in place such negotiation forums nor easy to maintain it on a uniformly engaged basis. SACU has to move towards that by concluding international obligations. It should be done similarly for the EU EPA.
SACU must protect its cohesive approach at the EU EPA level and make sure that it speaks with one agreed voice on safeguarding its trade and economic interests taking full advantage of opportunities.
SACU must allow diversity of common policy development at the initial stages and allow for such semblance and commonality to develop even on a bilateral basis between and among member states. That can pave a development of critical mass on cross border regional policy linkages, which can serve as a basis for a principled common policy development at a later stage.
Mihe Gaomab II is the President of the Namibian Economic Society
Related News
Tanzania most active in removing NTBs
EAC launches Common Market Score Card 2014 in Dar es Salaam
The East African Common Market Score Card has revealed that the United Republic of Tanzania is the most active in removing Non-Tariff Barriers (NTBs) once identified, a fact that records a potential source of peer learning for other Partner States. This was revealed yesterday during the dissemination Workshop to launch the East African Common Market Score Card at New Africa Hotel in Dar es Salaam, Tanzania.
While addressing participants, the Lead Economist and Sector Leader Finance and Private Sector Development Africa Region of the World Bank, Mr. Andrea Dall’Olio said that in the area of goods, although Tanzania and Kenya has the highest number of NTBs being reported by other Partner States, the East African Common Market Score Card notes that Tanzania is most active in removing them once identified.
He said that the value of trade between the Partner States has more than doubled after the Customs Union became fully fledged in 2010, adding that as Partner States continue to remove barriers between the economies, there is the need to put in place good rules that are transparent and accessible to all.
“Domestic laws and regulations that restrict enjoyment of the rights and freedoms under the Protocol require reforms” he stressed.
The East African Common Market Score Card to measures commitment by EAC Partner States to enable free cross-border movement of capital, services and goods provides the analysis basing on the review of 683 laws and regulations relevant to the Common Market along with key legal notices, reports and trade statistics.
Presenting to the delegates on the Common Market Score Card, the Coordinator for EAC Common Market Diagnostics at the World Bank Group, Mr. Alfred Ombudo K, Ombudo said that the score card has identified a number of laws that are in conformity to the Community laws and showed differing scores in areas of the free movement of goods, services and capital that are pillars of the Common Market Protocol.
He has stressed that regarding on the free movement of services, the general observation is that each Partner State has laws that contradicts Common Market Protocol rules and regulations in order to serve the interests of their citizens.
The Score Card only measures the compliance of national laws to commitments under the Protocol and it does not measure compliance of bi-lateral agreements entered into by the Partner States to the Protocol.
On behalf of the Permanent Secretary for the Ministry of East African Cooperation, Dr. Abdulla Makame urged the Partner States to focus on the implementation of the EAC Railway Master Plan that will come up as solution for most emerging Non-Tariff Barriers as revealed by the score card especially on Free Movement of Goods under the Common Market.
Related News
EU proposes responsible trading strategy for minerals from conflict zones
High Representative (HR) of the EU for Foreign Affairs and Security Policy Catherine Ashton and EU Trade Commissioner Karel De Gucht today [5 March, 2014] proposed an integrated EU approach to stop profits from trading minerals being used to fund armed conflicts. The package of measures will make it more difficult for armed groups in conflict-affected and high-risk areas to finance their activities through the mining of and trade in minerals. The focus of the approach is to make it easier for companies to source tin, tantalum, tungsten and gold responsibly and to encourage legitimate trading channels.
“We are committed to preventing international trade in minerals from intensifying or perpetuating conflict,” said HR/VP Catherine Ashton and EU Trade Commissioner Karel De Gucht. ”Today’s initiative on ‘conflict minerals’ will help trade to work for peace, for communities and for prosperity in areas around the globe affected by armed conflict. It is a first and timely contribution from the EU to support a consensus reached by business, civil society and governments in OECD countries to help communities benefit from their natural resources.”
The Commission proposes a draft Regulation setting up an EU system of self-certification for importers of tin, tantalum, tungsten and gold who choose to import responsibly into the Union. Self-certification requires EU importers of these metals and their ores to exercise ‘due diligence’ – i.e. to avoid causing harm on the ground – by monitoring and administering their purchases and sales in line with the five steps of the Organisation for Economic Cooperation and Development (OECD) Due Diligence Guidance. The aim is to act at the most effective level of the EU supply chain for these minerals and to facilitate the flow of due diligence information down to end users. The Regulation gives EU importers an opportunity to deepen ongoing efforts to ensure clean supply chains when trading legitimately with operators in conflict-affected countries.
To increase public accountability of smelters and refiners, enhance supply chain transparency and facilitate responsible mineral sourcing, the EU aims to publish an annual list of EU and global ‘responsible smelters and refiners’. With more than 400 importers of such ores and metals, the EU is among the largest markets for tin, tantalum, tungsten and gold.
The proposed Regulation is accompanied by a ”Communication” (a proposal), a paper that presents the overall comprehensive foreign policy approach on how to tackle the link between conflict and the trade of minerals extracted in affected areas. It sets out the EU’s further engagement in support of the OECD due diligence guidance and the EU’s foreign policy outreach and support in this regard. With the Communication, the Commission and the HR/VP confirm that ‘conflict minerals’ are part of the EU’s foreign policy agenda and that the EU will take concrete action at country and international level – ranging from support to policy dialogues and diplomatic outreach to smelter countries. The Communication supports the commitment by the Commission and the High Representative to promote a strong and coherent EU raw materials diplomacy, addressing the security-development nexus in a joined-up and strategic manner.
Today’s initiative also proposes a number of incentives supporting the Regulation to encourage supply chain due diligence by EU companies, such as:
- Public procurement incentives for companies selling products such as mobile phones, printers and computers containing tin, tantalum, tungsten and gold;
- Financial support for Small and Medium sized Enterprises (SMEs) to carry out due diligence and for the OECD for capacity building and outreach activities;
- Visible recognition for the efforts of EU companies who source responsibly from conflict-affected countries or areas;
- Policy dialogues and diplomatic outreach with governments in extraction, processing and consuming countries to encourage a broader use of due diligence;
- Raw materials diplomacy including in the context of multi-stakeholder due diligence initiatives;
- Development cooperation with the countries concerned;
- Support by EU Member States through their own policies and instruments.
Background
The proposal for a Regulation is based on a public consultation, an impact assessment and extensive consultations with the OECD, business, civil society, as well as with institutions in producer countries.
It responds to the European Parliament’s call in 2010 for the EU to legislate along the same lines as the US which requires its companies using ‘conflict minerals’ to declare their origin and exercise due diligence.
The public consultation and impact assessment highlighted the difficult market situation in the Great Lakes Region which has prompted the Commission to develop an alternative but targeted and complementary model. The Commission also announced in the specialised publication Commodity markets and raw materials and its Trade, growth and development Communication its intention to look at ways of making the supply chain more transparent.