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UNCTAD-ITC Partnership on Trade faciliation
The United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC) have joined forces to assist developing countries in the implementation of the recent WTO Trade Facilitation Agreement reached in Bali, Indonesia. The two agencies signed a Memorandum of Understanding 4 March reaffirming this collaboration.
“The Trade Facilitation Agreement is a real opportunity for developing countries, but only if they can put its provisions into practice,” said Arancha González, ITC’s Executive Director.
“The two agencies complement each other very well and can offer meaningful support to developing countries together,” said UNCTAD Secretary-General Mukhisa Kituyi. UNCTAD already has a successful programme in building institutional capacity around effective trade facilitation, while ITC has experience in building the capacity of the private sector and increasing their export competitiveness”, he added.
The programme which the agencies will develop will focus particularly on Least Developed Countries.
Initially, the cooperation will concentrate on helping countries to identify and categorise the commitments under the Agreement in categories A, B and C and ensuring support for implementing the transparency provisions of the Agreement. These include ensuring better and easier access to information for traders; helping to develop advance rulings and rights of appeal legislation; facilitating greater predictability and reliability of procedures through simplified formalities and documentation and the use of international standards; and the adoption of single windows for traders.
“These are just some of the areas where the ITC and UNCTAD have identified clear needs in developing countries based on UNCTAD”s needs assessment programmes and the surveys undertaken by the ITC of its SME clients,” Mr. Kituyi said.
“In some cases we will need to ensure better cooperation between the public and private sector,” Ms. González said. “This is the ITC”s bread and butter: supporting a trade dialogue between business and policy makers.”
The collaboration between the two agencies is in response to a critical issue identified by developing countries in the lead-up to December’s WTO conference: whether there was enough financing and to support the necessary reforms, particularly in LDCs. This partnership will provide an opportunity to donors and other development partners to demonstrate their commitment to the implementation of global trade facilitation reform by working with UNCTAD and ITC. The agencies will collaborate with other organisations and the private sector to advance implementation of the WTO Trade Facilitation Agreement.
“The hope is that donors will see this collaborative venture between the ITC and UNCTAD, as an effective and efficient platform for helping developing countries, especially LDCs, to take advantage of the benefits an effective facilitating architecture can bring,” Mr. Kituyi said.
The private sector is also urged to explore ways that they can partner with the ITC and UNCTAD to provide their expertise to SMEs in developing countries. “Making the process of trade easier in developing countries is a plus for the global trade reality,” concluded Ms. Gonzalez, “It is a win-win situation”.
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Top African court ‘powerless’ to reinstate SADC Tribunal
The African Commission on Human and People’s Rights has said it has no authority in the fight to fully reinstate the Southern African human rights Tribunal, which was suspended after ruling against Robert Mugabe.
The Commission decided last year to reject a landmark challenge filed by Zimbabwean farmers and victims of the Mugabe led land grab campaign, who cited all 14 Southern African Development Community (SADC) leaders in its application to have the Tribunal restored. It was the first time in legal history that a group of heads of state was cited by individuals as the respondent in an application to an international body.
The Tribunal was suspended in 2011 by SADC leaders, who chose to hobble the work of the court rather than take action against Mugabe. This was after the Tribunal ruled against Mugabe in 2008 in an historic case that pitted dispossessed Zim commercial farmers against the now 90 year old despot. The human rights court ruled that Mugabe’s land grab was unlawful and inherently racist, a ruling that ZANU PF and its leader actively ignored.
SADC leaders then went on to suspend the court and have since deliberately hamstrung the Tribunal’s future, with SADC deciding that the court will only be allowed to continue its work if individual access to it is stopped. This means that the court cannot fulfil its chief mandate, which is to uphold the human rights of all 250 million SADC citizens.
But despite this grave threat to the human rights of African citizens, the African Commission has said it is powerless to do anything and has rejected the challenge filed by Zimbabwean farmers Ben Freeth and Luke Tembani. The Commission, whose decision was only communicated over the weekend, criticised SADC for its handling of the Tribunal situation, but maintained that it cannot do anything further.
Lawyer Willie Spies, who submitted the application on behalf of Freeth and Tembani, told SW Radio Africa on Wednesday that the Commission’s decision is based on a ‘technicality’. He explained that the original complaint was based on two articles within the African Human Rights Charter, the guiding text of the Commission, “which state that African Union member states are not allowed to prevent individuals within their countries to having access to courts within their territories.”
“We said that in 2011, when SADC leaders got together and Robert Mugabe managed to convince them to suspend the operations of the Tribunal, those 14 heads of state contravened the African Human Rights charter,” Spies said.
He continued: “But after a process drawn out for over two and a half years, the Commission has now said that the articles (which the complaint was based on) say nothing about regional courts. And since the Tribunal is a regional human rights court, it is not covered by the (charter).”
Former Chegutu farmer Freeth, who is also the spokesperson of the SADC Tribunal Rights Watch group, said in a statement that the Commission’s “reasoning that the African Charter does not include within its protection courts not known at the time the African Union was formed, cannot be accepted.”
“When we are barred by Zimbabwe law to access the Zimbabwe courts or the Zimbabwe courts fail us, is it not guaranteed by the African Charter that we should have access to justice? We have to question the role and purpose of the African Charter and the African Commission on Human and People’s Rights if this fundamental human right is not guaranteed,” said Freeth.
His co-complainant Tembani meanwhile also said in a statement that the decision by the Commission is “a great injustice for Africans.”
“We ask the world and anyone who cares about human rights, justice, the rule of law and property rights in Africa, to help protect Africans from this injustice which threatens the development of the region. The African Union through the African Commission has made me despair that justice will come – so that Africans can take their rightful place in our world and stop us from being beggars on our resource-rich continent,” Tembani said.
Spies meanwhile said the Commission’s decision is a major blow to the efforts to reinstate the Tribunal, a legal fight he said has now reached the end of the road.
“The problem was created by politicians and the problem will need to be solved by politicians. It’s only a political interference by SADC leaders, a political change in Zimbabwe and a political solution to this situation that can resolve the issue. Legally we have come to the end of the road,” Spies said.
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EU Trade Ministers pledge TTIP support as talks enter next stage
EU trade ministers meeting in Athens last week pledged their full support to the ongoing trade talks with the US, as part of a broader push on both sides to allay concerns from public interest groups over the proposed Transatlantic Trade and Investment Partnership (T-TIP). With the fourth round of negotiations set to begin in less than one week, the planned agreement has received amped-up attacks from a diverse collection of critics on both sides of the Atlantic.
Following last week’s meeting of trade ministers, EU Trade Commissioner De Gucht warned that recent public discourse has featured too much “speculation” and “fear-mongering,” rather than focusing on the facts of the proposed deal.
“I welcome again the full support of all ministers and all our member states for the on-going T-TIP negotiation process,” the EU trade chief told reporters last Friday. “That said, I took the opportunity today to underline the need for the full engagement of their respective governments to explain the benefits of the T-TIP project to their respective publics.”
At the same meeting, Finnish trade minister Alexander Stubb reportedly told fellow officials from the bloc’s member states, along with business leaders from both sides, that many T-TIP opponents tend to generally be against globalisation, free trade, and multinationals.
“We have an uphill battle to make the argument that this EU-US free trade agreement is a good one,” he said, in comments reported by Reuters.
With both the EU and US working their way out of a prolonged financial crisis, advocates for T-TIP have said that the deal could provide a much-needed boost to their economies. For instance, figures cited by the EU place the increase in the bloc’s GDP at an additional 0.5 percent each year, netting an additional €275 billion in total trade per annum.
With stakes set so high, “we will have to prove that this is not a race to the bottom, but a race to the top,” BusinessEurope director general Markus Behyrer told EU officials.
Transparency, investor protections
One of the main complaints from various advocacy groups has been regarding the level of transparency in the talks. On Monday, 42 businesses and advocacy associations joined a petition by the US’ largest labour federation, the AFL-CIO, to the US Trade Representative (USTR) requesting greater transparency and the establishment of a public consultation process.
In an accompanying press release, the organisation, which represents over 12 million constituents, demanded that the US government act “at least as democratic, participatory and transparent as any other in the world.”
US government officials, for their part, have said on several occasions that there are already various opportunities for the public to provide their input into the talks, and have promised to release additional information about Washington’s negotiating objectives before next week’s round of negotiations.
US Trade Representative Michael Froman also announced last month a new initiative – the Public Interest Trade Advisory Committee – that would provide expert input into the negotiations on areas such as public health, development, and consumer safety.
Substantively, the US labour organisation is particularly opposed to investor-state dispute settlement systems, an issue that has also sparked concern in the EU. Brussels, for instance, has already pledged to publish its negotiating objectives for the investment part of the deal this month, which will be followed by a three-month public comment period.
Such investor protections, groups on both sides have warned, could give foreign corporations too much room to challenge domestic policies that are in the public interest.
At a roundtable discussion held on Monday in Westminster, British Cabinet Minister Kenneth Clarke was quick to dismiss concerns over policies such as investor-state dispute settlement mechanisms. “Contrary to what is often reported, the dispute resolution element of the proposed treaty is not a means for giant companies to get governments to lower standards,” Clarke said. The British official noted that the UK is party to 94 agreements with such provisions, but that it has yet to lose a case before an arbitration panel.
Regulatory differences
Less than a month ago, Froman met with EU Trade Commissioner Karel De Gucht to conduct a political stocktaking of the negotiations to date. After identifying key differences between their sides’ positions, they urged negotiators to “step up a gear” as they kick off the next phase of the talks.
Despite the expected difficulties ahead, particularly as the two sides dig into the thorny subject of regulations and standards, De Gucht told reporters at the time that overall “things are on track.”
The regulatory portion of the talks – for instance, harmonising health and safety policies – is widely expected to be the toughest area to resolve. The EU official has repeatedly said that there would be “no ‘give and take’” on consumer protection, the environment, or food, in response to concerns that have been raised by NGOs and the EU public.
However, that stance has sparked concern among members of the US farm lobby, given that American agricultural producers had hoped that T-TIP negotiations would lead the EU to revise its ban on genetically modified organisms (GMOs) and beef treated with hormones.
“Unless the EU is truly willing to negotiate, no deal is better than a half-baked deal,” said Steve Censky, CEO of the American Soybean Association, in comments reported last week by the Financial Times. In a speech last month, Froman said that “this is a comprehensive negotiation,” in comments apparently geared at allaying these concerns.
“We are going to have to work through this and come up with a balanced outcome,” he added.
Ratification hurdles?
With the talks still in their early stages, the end-date for negotiations has been pushed back, after previously being set for late 2014. While a new target date has not been set, officials have said that they hope to advance the talks quickly, in order to finish “on one tank of gas.”
Even if a pact is completed in the near-term, however, questions also linger over whether a final agreement would receive the necessary approval by lawmakers to enter into force. In Europe, the upcoming elections this spring are expected to significantly change the make-up of the European Parliament, with some warning that it could lead to an increase in members who are sceptical of the pact.
On the other side of the Atlantic, efforts to renew Trade Promotion Authority – a controversial provision that is essential for ratifying T-TIP once it is completed – are moving at a sluggish pace in Washington, as lawmakers spar over the merits of mega-regional trade deals and how involved Congress should be in actual trade negotiations.
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EAC, EU sign 4.5m Euro agreement to support regional integration agenda
The East African Community Secretariat and European Union Delegation to the United Republic of Tanzania and to the EAC today signed a Financing Agreement totaling 4.45 Million Euros to support Regional Integration Support Programme (RISP 3) at the EAC Headquarters in Arusha, Tanzania.
The programme aims at increasing the capacities of the Partner States to implement the EAC Treaty provisions and Protocols in the areas of Custom Union, Common Market and improve the effectiveness and efficiency of the EAC Organs. The objective of this programme is to support the EAC region, the Secretariat and its 5 Partner States in their efforts to deepen integration agenda and increase competitiveness.
The 3rd generation Regional Integration Support Programme (RISP 3) aims at enhancing regional integration processes in the whole of Eastern and Southern Africa, as well as the Indian Ocean. It also builds on the lessons learnt during the implementation of previous similar projects. RISP 3 specifically addresses the challenges of the East African Community and provides concerted, tailor-made support to the EAC Organs and the 5 Partner States.
The Programme is part of a 20M euros package designed for COMESA, EAC, IGAD and IOC. As far as the EAC is concerned, the priorities focus on implementing the Customs Union, Common Market, Monetary Union and Sensitization programmes.
Speaking during the signing ceremony, the EAC Deputy Secretary General in charge of Finance and Administration Mr. Jean Claude Nsengiyumva expressed the Community’s appreciation for the continuous support from the European Union to the EAC.
He said the continued support from the European Union and other Development Partners had been a key factor in assisting the EAC to move closer to attaining its goal of regional integration and that commitment and effective management had led to more confidence from all the stakeholders.
On his part, the EU Head of Cooperation and Minister Counsellor, Mr. Eric Beaume, affirmed that “in the increasingly globalised world, regional blocks have the potential to foster the wellbeing of their citizens.
“The EU and the EAC want to jointly promote social and economic development. They go hand in hand to extend it to all countries of the region and to make it sustainable. With this support, we hope to achieve the objective to deepen integration and increase competitiveness of the EAC, thereby contributing to reducing poverty and enhancing economic growth” added Eric Beaume
RISP3 will concentrate on one hand on accelerating the implementation of regional commitments at national level. On the other hand, it will reinforce the EAC Secretariat and other statutory organs, such as the East African Legislative Assembly and East African Court of Justice, in their role to steer regional integration.
Coordination efforts between the three regional organisations – the EAC, SADC and COMESA – will also be supported, with the ultimate goal of the reaching a Tripartite Free Trade Area.
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Exciting times for SADC
Namibia is among eight African countries in the Southern African region that have been recognised among the top 20 “most exciting African mineral jurisdictions”.
An investment guide released during the just ended 20th Mining Indaba in Cape Town, South Africa, from February 3-6 recognises South Africa, Zimbabwe, Namibia, Botswana, Mozambique, Zambia, Madagascar and Malawi.
The guide titled “Mining in Africa Country Investment Guide” and specifically produced for the African Mining Indaba and compiled by Singapore-based Global Business Reports, in partnership with Mining Indaba, examines five regions on the continent – Central Africa, East Africa, North Africa, Southern Africa and West Africa – encompassing 53 countries in total.
The guide splits the eight Southern Africa countries into two groups – those that offer a low-risk environment with proven geological potential and those that offer greater risk yet less exploited mineral resources.
“In the former, fall South Africa, Botswana, Namibia and Zambia. Zimbabwe sits in the latter, with Mozambique and Malawi just crossing the line.”
On Namibia, the report does not highlight much apart from stating that the country remains one of the few African states that have formulated an official strategy for engaging with emerging economies – a sensible step given the influx of Chinese investment into Africa.
On South Africa, it states that despite the country having had “a tough couple of years”, with labour unrest and falling production, it continues to dominate African mineral production “to an extent that is impossible to ignore”.
It further suggests that increased mechanisation of the local mining sector in that country could be beneficial if policies are well nurtured.
“The country still holds geological potential, and increased mechanisation of its mines – which tend to be labour intensive compared to other mining jurisdictions – could create a revival of the industry.”
It more or so recognizes the increased role the Johannesburg Stock Exchange (JSE) has played as a centre of African mining finance.
“Roughly 50 percent of JSE-listed mining issuers have either their primary or secondary projects abroad, predominantly in Africa…” the guide notes.
On Botswana, the investment guide noted that the country’s traditional strength in diamonds is arguably not as exciting as its other mining potential.
Botswana contained the second-largest amount of coal in Africa, but had to develop its infrastructure to fully exploit this resource.
On Zimbabwe, the guide finds the country remains the most risky jurisdiction for investors of any type, although certain points stood in its favour, including last year’s “peaceful” elections and the country’s undeniable mineral potential.
Zimbabwe holds an estimated 30 percent of the world’s diamond reserves, as well as substantial deposits of gold, platinum group metals and coal.
The guide labels Mozambique and Malawi as slightly higher risk investment destinations due to the relative immaturity of their mining sectors.
The report, however, highlights the potential of Mozambique’s coal sector, as well as Malawi’s burgeoning production of uranium and other strategic minerals noting that, “The emergence of both countries on to the mining scene has been substantial.”
On government intervention in Zambia’s mining sector, the guide says revoked tax incentives, an increase in mining royalties and more stringent laws regarding financial reporting have not been sufficient to substantially stall investment in Africa’s richest copper producer.
However, on efforts to increase beneficiation in Southern Africa, the guide warns on countries trying to compel mining companies to engage in downstream processing. Beneficiation has sparked fierce debate in South Africa between government, keen to promote this, and the Chamber of Mines, which represents the sector.
The guide in pointing to what it calls a very simple reality – “The mining sector deals in mineral extraction, while mineral beneficiation crosses into the realm of the manufacturing sector”.
On South Africa, the guide suggests that if South Africa and its neighbours seek to obtain greater value from their extracted minerals through industrial processes, their priority must be to make such an industry economically viable.
“If they attempt to force mining companies to engage in downstream processing (for example, through the full use of export bans) without making this profitable, the effect will be to hamper mining investment rather than to encourage beneficiation,” it warns.
The other 12 African countries to soon earn a position in the guide’s “top spot” investment category are the Democratic Republic of Congo, Kenya, Rwanda, Tanzania, Uganda, Burkina Faso, Cote d’Ivoire, Ghana, Guinea, Niger, Nigeria, and Senegal.
The mining indaba, dubbed “Investing in African Mining” attracted more than 1 800 delegates from various specialised fields from African and beyond representing 2100 international companies and 110 countries.
Download: The Official Mining In Africa Country Investment Guide 2014 (160 pages, 49.4 MB)
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Economists wary of BRICS initiatives, transparency snags
Experts have cautioned the government to be careful in handling foreign investors coming to the country offering contracts without transparency.
Participating in a debate organized by Policy Forum over the weekend in Dar es Salaam to evaluate investments from Brazil, Russia, India, China and South Africa (BRICS) in Tanzania as an alternative to western predominance in accelerating development, stakeholders said that most investors coming to invest in Tanzania have contracts employing complicated terms with a lot of conditions that do not benefits locals.
Mzumbe University Lecturer Dr Darlene Mutalemwa said that BRICS are important investors and trading partners, project contractors for Tanzania.
BRICS were expanding and deepening ties with Tanzania as at present the country has a significant opportunity for growth and economic transformation, she stated.
“BRICS states need to be more active and transparent in dialogue with Tanzania and in the multilateral system in presenting how they want to contribute to Tanzania’s development and reduction of poverty clearly articulated in MKUKUTA,” the lecturer underlined.
“Brics may have to clarify more on how their vision for increased South-South co-operation will translate into better opportunities for Tanzania and a reduction in poverty,” she said.
It is important for the government of Tanzania to engage with Brics in consideration of development cooperation policies, as well as the need for the newly emerging major economies to pay attention to implications positions on governance issues and nature of foreign direct investments (FDIs),” she said.
“Engagement with BRICS states is becoming more important but their presence has not been felt in dialogue mechanisms.
Given that BRICS have local offices in the country, they should be engaged at country-level annual discussion for such as annual policy week, MKUKUTA and MKUZA working groups or associated informally as much as is possible in the development partners group framework,” she stated, apparently equating BRICS with traditional donor countries.
Tanzania Private Sector Foundation (TPSF) director of membership services Louis Accaro said that BRICS block can not claim to speak for the emerging world, and Tanzania does not see anything in common between us and them.
“They have come from a similar social-economic environment, but developed at a faster rate than us,” he said.
In 1961 we were nearly at the same level of development with China, but today is a superpower while some parts of rural China are similar to our rural Tanzania,” he ventured to suggest.
Yulli Jeremia, an assistant lecturer in political science at the Dar es Salaam University College of Education said the problem with the BRICS group is that they are not open as to what they are investing in the country, so they is a need to have a framework for monitoring initiatives from these countries.
“If BRICS countries are really in need of cooperating with mutual benefit then they need to be transparent,” he said.
Gilead Teri, a policy and budget analyst coordinator from the Agricultural Non State Actors Forum (ANSAF) suggested that the government should focus on regional economic integration since shares a lot with neighboring countries.
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Europe, America and the Transatlantic Partnership
The United States and Europe are poised to create the world’s largest Free Trade Area under the proposed Transatlantic Trade and Investment Partnership (TTIP).
The negotiations have been underway since July 2013 after the November 2011 US-EU Summit. In February 2014, the EU Trade Commissioner Karel De Gucht and the United States Trade Representative Michael Froman met in Washington D.C. to review progress before launching the fourth round of talks in Brussels this month.
De Gucht informed the media that “things are on track,” though the next phase of negotiations would be challenging in view of the bilateral differences in standards on labor and environment issues.
Already the world’s largest bilateral trading partners accounting for 40 percent of the world’s GDP, the US and the EU expect to benefit substantively from enhanced trade and investment opportunities by reducing non-tariff barriers and fostering regulatory cooperation. As such, the acid test of the TTIP will lie in the fulfillment of these expectations, especially from the perspective of the Obama administration that has attempted to renew friendly ties with the EU.
As is known, the US-EU relations were strained under the Bush administration in the aftermath of the latter’s unilateral approach to the “war on terror” in disregard of “transatlantic unity.” Moreover, then US Secretary Donald Rumsfeld’s use of the words “problems” and “old Europe” for France and Germany, on account of their opposition to the war in Iraq, had added fuel to the fire.
New era of US-EU relations
Of course, President Bush sought to bring ties back on track through his tour of Europe in May 2005. On his part, as a US presidential candidate, Obama addressed a vast crowd in Berlin in July 2008 to highlight his distinctively warm and friendly approach to Europe. Obama averred:
“True partnership and true progress requires..allies who will listen to each other, learn from each other and, most of all, trust each other..America has no better partner than Europe. Now is the time to build new bridges across the globe as strong as the one that bound us across the Atlantic.”
Interestingly, since Obama assumed the presidency on January 20, 2009, America has not filed a single case against the EU at the World Trade Organization (WTO), while bringing up as many as 14 cases–the bulk against China–against developing countries. On the other hand, the EU filed a case against the US in April 2011 in connection with the latter’s anti-dumping duties on imports of stainless steel sheet and strip in coils from Italy, which are stated to have been in place since 1999.
The matter is in the consultation stage. Barring this case, however, the EU has not filed any case against the US during the Obama administration. As a matter of fact, the post-financial crisis scenario is a significant factor propelling the Obama administration to bolster trade and economic cooperation with the EU in a spirit of mutuality of interests.
Hence, through the proposed TTIP, America hopes to boost its international competitiveness, jobs and growth, while the EU seeks a “long-term recovery” by gaining enhanced access to the US market for its agricultural and industrial goods as well as public contracts for its firms, among other benefits. Importantly, it will be critical for the US to correct its trade deficit in goods with the EU that amounted to $107 billion in 2012.
There is, however, skepticism in certain quarters regarding TTIP’s concrete benefits for the US. As pinpointed by the American Federation of Labor and Congress of Industrial Organizations, the “rosy predictions” by the International Trade Commission and free trade advocates about export and job growth have been belied in several cases.
For instance, America’s grant of Permanent Trade Relations (PNTR) status to China, which paved the way for the latter’s entry into the WTO, came to exhibit pitfalls. In 1999, the year before PNTR conferment, America’s trade deficit with China amounted to $68 billion. In 2013, it was as high as $471.5 billion, though witnessing an improvement over the preceding year’s deficit of $534.7 billion.
Furthermore, the story of US trade deficit has replicated in the cases of the US-Korea FTA and the North American Free Trade Agreement. In this context, Robert E. Scott, an economist at the Washington D.C.-based Economic Policy Institute, suggests: “This is not the time for massive trade deals that cost jobs and depress wages. The United States should stop negotiating new trade deals such as the [Trans-Pacific Partnership] TPP, and fix the ones we have.”
The US leadership owns a critical responsibility to ensure that the country gets a fair share in the fruits resulting from the TTIP, which requires an adequate assessment of the deal under consideration and inclusive participation of a wide variety of stakeholders beyond the business lobbies. It is apt to quote de Gucht’s statement on one of the EU stances:
“We need to make absolutely sure that transatlantic trade and investment supports, rather than undermines, our high standards on these [labor and environment] sustainable development issues. We will not sacrifice them for commercial gain.”
In a similar vein, the US will need to carefully articulate what is most integral to its expectations and acceptable to its negotiation compass.
Romi Jain is a published poet, novelist, and Vice President of the Indian Journal of Asian Affairs.
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EU sets EPA deadline signing for October
Uganda seems not yet prepared to conclude the on- going EAC- EU Economic Partnership Agreement (EPA) trade, analysts have observed.
The Africa Caribbean Pacific (ACP) European Union EPA negotiations were launched in 2002 under the Cotonou Partnership Agreement (CPA) where parties agreed to conclude new World Trade Organisation (WTO) compatible trading arrangement, remove progressively barriers to trade between them and enhance cooperation in all areas relevant to CPA.
Despite negotiations spanning over 12 years with remaining contentious issues unresolved, the European Union has put 1 October 2014 for concluding the negotiations. This means countries that have not signed or ratified EPAs by October 1 2014 will be removed from the list of beneficiaries of the duty Free Quota free market access.
Jane Nalunga the SEATINI- Uganda country director noted that much as the five partner EAC states- Kenya, Uganda, Rwanda, Burundi and Tanzania- decided in 2007 to strengthen their regional integration agenda and negotiate EPA as a bloc under the initial Framework Economic Partnership Agreement (FEPA) nothing much seems to be effective as a bloc.
“The stated objective of EPA was to ensure sustainable development of ACP countries and to ensure smooth and gradual integration into the global economy and eradicate poverty but so far the negotiations have not addressed these objectives,” said Nalunga at the EAC-EU EPA review workshop in Kampala.
Nalunga said there were still contentious issues which are critical for the EAC future development and make EPA a tool for the EAC’s sustainable development.
She notes that during the January 30 2014 ministerial meeting in Brussels the EAC ministers and EU commissioner for Trade failed to agree on the three most important matters such as Duties and Taxes on Exports, article 16 the Most Favored Nation (MFN) clause and regarding the issue of Rules of origin and agriculture.
“The EAC states wont access European markets if we don’t sign EPA by October 1 but how prepared are we when some clauses are still not agreed upon?” she asked.
Ambassador Nathan Irumba a lead negotiator and former Ugandan envoy to Geneva said the preferences have not helped the EAC partner states to up their production. “Is the framework development friendly? I don’t think this EPA is helping regional integration. They are just about getting market for their products and get us out of business,” said Irumba.
Moses Ogwal the Private Sector Foundation policy and advocacy nanager said Uganda would lose out if it doesn’t sig the EPAs. “To us from the private sector, October is very near and something must be done before we lose out,” said Ogwal.
However, Emmanuel Mutahunga the senior principal commercial officer in the Ministry of Trade who has been at the forefront of the negotiations said some progress had been made.
“Our focus was to strengthen regional integration which is successful. The EAC and EU both agreed to create market access for their products. Some products had tariffs on them but are now zero rated,” he said.
He said signing of EPAs is geared towards avoiding trade disruption between ACP and the EU after the expiry of the Cotonou agreement. “The EAC market access offer constitutes 82.6 percent liberalization of imports from the EU over a 25 year period while raw material and capital goods attract zero tax rates under the EAC customs protocol,” he said.
Mutahunga said intermediate input attracts 10 percent import duty. He observed that 17.4 percent of the imports from the EU are not included under the liberalized regime.
He said areas that had so far been discussed include the economic development, agriculture, Rules of Origin, and Export taxes. He said areas still under contention include the Most Favored Nations clause, and the dispute settlement.
“We all agreed that further work is needed to conclude the issue of Rules of Origin and the Most favored Nation clause,” he said.
Mutahunga noted that the EU still remains an important market for the EAC. “The EU is the second major destination of Uganda’s products and one of the leading inflows of imports and investment,” he said. He acknowledged that the negotiations have taken long to conclude but is worth the wait.
Source: http://www.newvision.co.ug/news/653120-eu-sets-epa-deadline-signing-for-october.html
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Can Africa make it?
Without strong industries to create jobs and add value to raw materials, African countries risk remaining shackled by joblessness and poverty.
Côte d’Ivoire and Ghana produce 53% of the world’s cocoa. But the supermarket shelves in Abidjan and Accra, their respective capitals, are stacked with chocolates imported from Switzerland and the UK, countries that do not farm cocoa.
This scenario is repeated throughout the continent in different contexts. For example Nigeria, the world’s sixth-largest producer of crude oil, exports more than 80% of its oil but cannot refine enough for local consumption. In 2013 it spent about $6 billion subsidising fuel imports, estimated Finance Minister Ngozi Okonjo-Iweala late last year.
In such apparently baffling scenarios lies one of Africa’s greatest challenges – and opportunities. The continent possesses 12% of the world’s oil reserves, 40% of its gold and between 80% and 90% of its chromium and platinum, according to a 2013 report from the UN Conference on Trade and Development (UNCTAD). It is also home to 60% of the world’s underutilised arable land and has vast timber resources. Yet together, African countries account for just 1% of global manufacturing, according to the report.
This dismal state of affairs creates a cycle of perpetual dependency, leaving African countries reliant on the export of raw products and exposed to exogenous shocks, such as falling European demand. Without strong industries in Africa to add value to raw materials, foreign buyers can dictate and manipulate the prices of these materials to the great disadvantage of Africa’s economies and people.
“Industrialisation cannot be considered a luxury, but a necessity for the continent’s development,” said South Africa’s Nkosazana Dlamini-Zuma shortly after she became chair of the African Union in 2013.
This economic transformation can happen by addressing certain priority areas across the continent.
First, African governments, individually and collectively, must develop supportive policy and investment guidelines. Clearly-defined rules and regulations in the legal and tax domains, contract transparency, sound communication, predictable policy environments, and currency and macroeconomic stability are essential to attract long-term investors.
Moreover, incentives – such as tax rebates to multinational companies that provide skills training alongside their commercial investments – will help local economies grow and diversify. In addition, each industrial policy should be tailored to maximise a country’s comparative sector-specific advantages.
Mauritius, one of Africa’s most prosperous and stable countries, provides important lessons for other African countries. In 1961 this Indian Ocean island nation was reliant on a single crop, sugar, which was subject to weather and price fluctuations. Few job opportunities and yawning income inequality divided the nation. This led to conflict between the Creole and Indian communities, which clashed often at election time, when the rising fortunes of the latter became most apparent.
Then from 1979 on the Mauritian government took practical steps to invest in its people. Realising that it was not blessed with a diversity of natural resources, it prioritised education. Schooling became the critical factor in raising skills and smoothing the lingering religious, ethnic and political fractures remaining since independence from Britain in 1968. Strong governance, a sound legal system, low levels of bureaucracy and regulation, and investor-friendly policies reinforced the country’s institutions.
Under a series of coalition governments, the nation moved from agriculture to manufacturing. It implemented trade policies that boosted exports. When outside shocks hit – such as loss of trade preferences in 2005, and overwhelming competition from Chinese textiles in the last 15 years – it was able to adapt with business-friendly policies.
From being a mono-economy reliant on sugar, the island nation is now diversified through tourism, textiles, financial services and high-end technology, averaging growth rates in excess of 5% per year for three decades. Its per capita income also rose from $1,920 to $6,496 between 1976 and 2012, according to the World Bank.
While much responsibility lies with African governments, the continent’s private sectors must play their part in improving co-ordination between farmers, growers, processors and exporters to increase competitiveness in the value chain and ensure the price, quality and standards that world markets demand.
Tony Elumelu, chairman of Nigerian-based investment company Heirs Holdings, and Carlos Lopes, the executive secretary of the United Nations Economic Commission for Africa, advocate what they call “Africapitalism”, a private sector-led partnership focused on the continent’s development. “Private-sector business leaders must also do more to tackle poverty and drive social progress by ensuring that long-term value addition – as well as short-term gain – is built into their business model,” they wrote in a joint article for CNN in November 2013.
Next, African countries must pursue beneficial economic strategies with their neighbours. Regional integration would help reduce the regulatory burden facing African industries by harmonising policies and restraining unfavourable domestic programmes. It would boost inter- and intra-African trade and accelerate industrialisation.
The right recipe for regional integration requires countries to concentrate on commodities in which they have a competitive advantage. For example, Benin and Egypt could concentrate on cotton, Togo on cocoa, Zambia on sugar – each country trading in bigger regional markets.
Agriculture, which employs over 65% of the continent’s population, according to the World Bank, could become a springboard towards industrialisation. It can provide raw materials for other industries, as well as promote what economists call backward integration, in which a company connects with a supplier further back in the process, such as a food manufacturer merging with a farm.
This is already under way in Nigeria. The diversified BUA Group “will process 10m tonnes of cane to produce 1m tonnes of refined sugar annually”, according to Chimaobi Madukwe, the company’s chief operating officer.
Sustained investment and improvements in infrastructure are also needed throughout the continent. Countries everywhere, not just in Africa, cannot establish competitive industrial sectors and promote stronger trade ties if saddled with substandard, damaged or non-existent infrastructure.
“Developing industries require sustained electricity supply, smooth transportation and other very basic infrastructure facilities, which at present are still not enough to ensure operations,” said Xue Xiaoming, vice-chairman of the Nigerian Chinese Chamber of Commerce and Industry.
Africa’s poor roads, railways and other transport networks, faulty communications, and unreliable and insufficient energy result in high production and transaction costs. It takes 28 days to move a 40-foot container from the port of Shanghai, China to Mombasa, Kenya at a cost of $600, while it takes 40 days for the same container to reach Bujumbura, Burundi, from Mombasa at a cost of $8,000, explained Rosemary Mburu, a consultant at the Institute of Trade Development in Nairobi. “This represents double the time at 13 times the cost,” she said.
Public-private partnerships (PPPs) should be developed to stimulate massive investments in infrastructure, which could have a multiplier effect on economic growth. Finally, without education the continent cannot succeed in its drive towards industrialisation. PPPs should be pursued in this arena too, because governments often lack the skills and finances to carry out technical training. Private sector companies would benefit from a skilled and competent workforce.
The country would benefit from a stronger economy blessed with less unemployment and higher incomes. Historically, countries have succeeded by focusing on education in science and technology and promoting research. For example, in the 1960s and 1970s South Korea – like Singapore, Taiwan and Hong Kong – reformed its education system and made elementary and high school compulsory. From an adult literacy rate of less than 30% in the late 1930s, South Korea now boasts a literacy rate of nearly 100% and has one of the highest levels of education anywhere in the world, according to UNESCO, the UN’s education agency. Its highly- skilled population has helped South Korea to become one of the world’s foremost exporters of high-tech goods.
Africa, the world’s youngest continent, is currently undergoing a powerful demographic transition. Its working-age population, which is currently 54% of the continent’s total, will climb to 62% by 2050. In contrast, Europe’s 15-64 year-olds will shrink from 63% in 2010 to 58%. During this time, Africa’s labour force will surpass China’s and will potentially play a huge role in global consumption and production. Unlike other regions, Africa will neither face a shortage in domestic labour nor worry about the economic burden of an increasingly ageing population for most of the 21st century.
This “demographic dividend” can be cashed in to stimulate industrial production. An influx of new workers from rural areas into the cities, if harnessed correctly and complemented with the appropriate educational and institutional structures and reforms, could lead to a major productivity boom. This would then increase savings and investment rates, spike per capita GDP, and prompt skills transfers. Reduced dependency levels would then free up resources for economic development and investment.
Without effective policies, however, African countries risk high youth unemployment, which may spark rising crime rates, riots and political instability. Rather than stimulating a virtuous cycle of growth, the continent could remain trapped in a vicious circle of violence and poverty.
The continent’s youth represent a huge potential comparative advantage and a chance to enjoy sustained catch-up growth. Or they could remain shackled in joblessness and become a major liability.
Africa is ripe for industrialisation. A strong and positive growth trajectory, rapid urbanisation, stable and improving economic and political environments have opened a window of opportunity for Africa to achieve economic transformation.
Ronak Gopaldas works as a sovereign risk analyst at Rand Merchant Bank in Johannesburg, South Africa.
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UN Group Chairs outline priorities for Sustainable Development Goals
The co-chairs of a UN group tasked with drafting a blueprint for sustainable development goals (SDGs) released a list of 19 focus areas on Friday, following a year of discussions. The effort is part of a broader process to develop a post-2015 development agenda that would replace the current Millennium Development Goals, which are soon set to expire.
The plan to develop a set of SDGs – stemming from an initiative originally tabled by Colombia and Guatemala – was a key result of the UN Conference on Sustainable Development (Rio+20), held in June 2012 in Rio de Janeiro, Brazil. Discussions in this area have since been held under the Open Working Group (OWG) on Sustainable Development Goals, which was established in January 2013 by the UN General Assembly.
For the working group, UN member states decided to use a constituency-based system of representation, meaning that most of the seats in the group are shared. In order to remain inclusive, the group was instructed to develop modalities to engage stakeholders, civil society, and the scientific community.
An accompanying letter penned by OWG Co-chairs Macharia Kamau, Permanent Representative of Kenya, and Csaba Kőrösi, Permanent Representative of Hungary, indicates that these 19 focus areas represent a summary of input provided by member states and stakeholders during the group’s eight thematic discussion sessions.
The duo also suggests that poverty eradication, inequitable international development, and environmental protection “were among the most pressing sustainable development challenges facing humankind this century.”
“It is our view that the international community could realise greater impacts of the much sought transformative change if further actions are taken in these focus areas of sustainable development. This is necessary to build prosperous, peaceful and resilient societies that also protect the planet,” their letter read.
Not a zero draft
Each of the 19 focus areas in Friday’s report highlights the inter-linkages to other issues, in accordance with the internationally agreed-upon objective to create a set of universal development goals that integrate and balance environmental, social, and economic concerns.
The co-chairs’ letter emphasises that these focus areas do not constitute a “zero draft” or a first working version, indicating that the topics included were not “exhaustive.” Given the international community’s intention to have a limited set of goals, experts suggest the 19 areas will presumably need to be whittled down. One option, for instance, would be to assimilate complementary topics.
Friday’s release also included a progress report outlining in detail the substance of the thematic discussions. The text reveals that, initially, the group sought to formulate a vision and narrative to frame the selection of proposed goals, but later moved to pin these down directly, including identifying associated targets.
Commenting on the process, Saskia Hollander, a research editor for NGO The Broker, suggests that international divisions remain on targets and associated finance. “While the North opts for a clear and negotiable list of goals and targets, the G-77 is reluctant to already commit itself to goals and targets and stresses that the issue of finance needs to be solved first,” she wrote.
Hollander also speculates as to whether the emerging economies will continue with this rhetoric or instead move away from the conventional development model towards alternative finance paradigms – such as South-South cooperation to harness trade and investment.
Trade as an enabler of sustainable development
Among the topics and targets listed for consideration, the focus areas document mentions the broad role of an open rule-based trading system in fostering sustainable growth, and as a means of implementation. More specifically, this includes references to addressing damaging subsidies, although ideas are also put forward around the need for policy space to support industrial development, as well as promoting new industries.
The section on marine resources, oceans, and seas, for example, suggests eliminating all harmful fisheries subsidies, as well as combatting unreported and unregulated (IUU) fishing. The energy area includes the phasing out of “inefficient fossil fuel subsidies that encourage wasteful consumption,” while the food security and nutrition headline puts forward addressing “harmful agricultural subsidies.”
The progress report, however, for its part notes that OWG members discussed the fact that trade-related issues – such as agricultural and fisheries subsidies – are also being addressed within the framework of the WTO.
The body will now continue with the second phase of its work in five negotiation sessions scheduled from early March to mid-July, and stakeholders have been solicited for input through various liaison platforms. The stated deliverable will be a report containing SDG proposals, to be presented for debate at the 68th session of the UN General Assembly in September 2014.
Click here for more information on the Open Working Group on Sustainable Development Goals
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The great China ‘takeover’ of Africa is greatly exaggerated
Investors from South Korea to Brazil and from India to South Africa are the new kids on the African block. Nor have old investors like the US, UK, France and Australia pulled out.
Thatch covers the wooden roof of The Clubhouse in Abuja and the tables are decorated with animal-print cloths. The casual restaurant in Nigeria’s capital looks archetypally African, but it is also distinctly Lebanese, serving dishes such as hummus and shish kebabs.
Early on a Saturday night, a young man in traditional clothes taps on his smart phone while manager Assaad Abi Antoun sips Lebanese coffee at a nearby table. “Lebanese can do hospitality at the top level,” says Mr. Antoun, who has been here for four years.
The Lebanese are well known in West Africa for owning posh hotels, restaurants, and grocery stores. But, like other immigrant groups working on the continent, the Lebanese are not nearly as famous worldwide for investment in Africa as the Chinese, who are popularly believed to be “taking over Africa.”
The great China takeover, however, may be something of a myth, according to Bright Simons, an honorary fellow at the Ghana-based IMANI Center for Policy & Education. China is Africa’s biggest trading partner – it took the top spot from the United States in 2009 – and a large source of capital. Trade between Africa and China, which totaled $10.5 billion in 2000, ran $166 million in 2011.
But Canadians, Americans, Britons, the French, and Australians still represent a heavy footprint in Africa. And a plethora of investors from other emerging economies are becoming more integrated into Africa’s social and political life, Mr. Simons says. While not eclipsing China, these new kids on the Africa block are showing a dynamism previously hidden by China’s shadow.
African trade with South Korea and Brazil has moved from single-digit billions in 2000 to more than $25 billion each in 2011. (Korean giant Samsung peppered the continent with $150 million in shops, technology, and employment between 2010 and 2012, the company says.) India‘s footprint is small, but growing at 400 percent a year, according to Páidrag Carmody at Trinity College Dublin in his 2013 study “The Rise of the BRICS in Africa.”
Investment by the emerging economic powerhouses of Brazil, Russia, India, China, and South Africa (BRICS) has doubled since 2007 in Africa, though numbers are notoriously poor. A 2013 United Nations study shows African foreign direct investment grew 5 percent, to $50 billion, while shrinking in nearly every other region.
Africa’s ‘rise of the rest’
Africa auctions off mining and oil exploration to a “broad array of companies from around the world that you did not see before,” says Todd Moss, a former senior State Department official dealing with Africa who is now at the Center for Global Development in Washington, D.C.
The push is being called a “rise of the rest” for Africa, or a new “South-South” partnership. Partly the story is of high rates of growth. New “greenfield investments” – business start-ups – from South Africa and the United Arab Emirates have eclipsed those of China, according to a new Ernst & Young study.
“People have said China is bolstering its ‘soft power’ through the use of charitable projects, Confucius Institutes, donations of medicines, etc.,” Simons says. “But the truth is that most of these projects are lackluster.”
To be sure, China’s role in Africa will never be insignificant. Large-scale symbolic projects such as the highway across Nigeria or the new African Union headquarters in Addis Ababa, built by China at a cost of $200 million and the tallest structure in Ethiopia’s capital, are hard to miss. With trillions in cash reserves and few legal restrictions on public-private partnerships, China’s presence in Africa grows daily.
But the idea that China and the West are the only competitors in a battle for Africa’s resources and markets is outdated, says Ben Payton, an Africa analyst at Maplecroft, a Britain-based global risk analysis company. “In addition to Africa’s traditional partners in the West, there is growing interest in Africa’s resource wealth from companies in countries such as Brazil, India, Singapore, and South Korea,” Mr. Payton says. “By some measures, Malaysia provided more foreign investment in Africa than China last year.”
Nations like Malaysia appeal to African states, says Mr. Moss, the former US-Africa trade official, as an “Asian model” that emphasizes strong political control and wealth. “Americans want both political openness and open markets, but Asians stick to a commercial relationship,” he says.
With only Asia growing faster as a region than Africa, foreign investment can be successful on the continent despite troubles such as constant power outages and muddled trade laws, according to Thomas Hansen, a senior Africa analyst at Control Risks, a security assessment firm. “It’s one of the few places in the world now where you can get a relatively high return on your capital,” he says.
South Africa understands
In Nigeria, Africa’s most populous country, with more than 160 million people, Indians own many of the supermarkets and computer shops. South Koreans are well known for making affordable electronics available. Brazil and Russia are growing players in Nigeria’s gas and its 2.2 million-barrel-a-day oil export industry, the largest in Africa.
South Africa, the largest economy in Africa, stands out as one of the most successful investors, leading the telecommunications industry on the continent and building shopping malls and supermarkets, according to Simons of IMANI. South African investment tends to be visible in terms of social impact, he adds.
“South Africa has the exceptional capacity to understand Africa,” he says. “South African investments tend to be savvy.”
At a cafe in Abuja on a Sunday afternoon, waitress Becky Utase flips her BlackBerry in her hand. Despite rapid economic growth, the African continent is still the poorest in the world. Ms. Utase says foreign investment only matters to her if it somehow helps Nigerians live better lives. Mobile phone networks, she adds, mean the world to her.
Before cellphones, much of Nigeria and the continent was not connected by land lines. Utase says she remembers when posted letters or physical visits were the only way to keep in touch. “Communication is easier,” she adds, sitting on a couch overlooking her dining customers on the patio. “Even work is easier. Back in the day all business needed to travel.”
South Africa’s MTN leads the telecommunications industry, and other major phone companies in Africa are based in the United Arab Emirates and India. Nigeria’s own Globacom Ltd. provides mobile phone service in three other West African countries.
All these non-Chinese telecom companies, however, sell equipment such as handsets, headphones, and chargers made in China. Among the many innovations in mobile technology especially suited for Third World customers are popular prepaid flash modems, almost exclusively produced by China’s behemoth Huawei Technologies.
Anti-China platforms
People in Africa often say they like China because the country’s investors build roads, the needed predecessor to development and economic growth. But that doesn’t necessarily translate into winning hearts and minds, according to Payton, the Africa analyst.
“Chinese companies are generally far less concerned with respecting internationally recognized labor standards than their Western counterparts,” he says. “As a result, workforces and local communities in countries such as Zambia have become increasingly hostile to Chinese employers.”
This hostility feeds on itself when African governments use it to distract the public from their shortcomings, according to John Campbell, former US ambassador to Nigeria now at the Council on Foreign Relations in New York.
Both Zambia and Malawi have elected presidents who ran on anti-China platforms.
“The tendency,” says Mr. Campbell, is “to blame the Chinese for certain domestic shortcomings, particularly about whatever government is in power.”
The main difference between Chinese investors and all the rest, according to Mathew Agabi, who works at a popular Indian-owned supermarket in Abuja, is that Chinese companies are known for importing their own workers, and that angers many Nigerians. Locals employed by Chinese companies also are expected to work what Nigerians call “slave hours.”
When Chinese companies don’t hire locals and teach them technical know-how, Mr. Agabi says, they leave behind a community of workers that can’t handle or maintain high-end operations. “South Korean companies don’t have those issues,” he says.
Chinese investors are not alone in angering Africans. Nigerians complain that most foreign companies may hire a majority of locals, but then give choice positions to expatriate workers. Nigerians particularly loathe Western clothing companies that prefer to open factories in Asia and overlook a massive pool of unemployed laborers in Africa. “They should build factories,” Agabi says.
Investment anxiety, however, targets China because it tends to be the least accessible culturally, according to Payton. Few Africans speak Mandarin, and many fear that Chinese investments allow African governments to evade Western demands for compliance with human rights standards.
“In the long term, there is a risk that anger at perceived Chinese exploitation could escalate into a perception that China’s political and economic clout enables it to exert a form of neocolonial domination over Africa,” he says.
On the other hand, he adds, China has championed poverty-alleviation programs at home and could serve as an example for policymakers in Africa.
“Chinese investment is not only providing Africa with new infrastructure and new sources of capital,” he says. “It is also altering the horizons of policymakers and driving a new confidence in the continent’s economic outlook.”
Back at The Clubhouse in Nigeria, manager Antoun says China may not be literally taking over Africa, but its presence is certainly palpable. A few years ago, Antoun says, he had one-fifth as many Chinese customers. Most of their work is in construction, he adds, and infrastructure draws other investors.
When his place opened about seven years ago, it had been a canteen for a construction company, without air conditioning, reliable electricity, or even a fan.
“There was nothing, from decoration to infrastructure,” he says.
Antoun is not concerned that Chinese investors will drive others out because the Chinese tend to keep to themselves and avoid businesses with a high public profile, he says. In Nigeria, he adds, foreign companies struggle more with dealing with the country’s chaotic business policies and poor infrastructure than competing with each other.
Hurdling those barriers, he says, is one thing Lebanese excel at. But he is sardonic about his reasons for working in Africa. The Nigerian economy is growing more than four times as fast as the Lebanese economy, according to the CIA World Factbook, and insecurity in the Middle East is making things worse. “We have to do something outside [Lebanon],” he says, lifting a single finger in the air, “because the chances in Lebanon are between zero and one.”
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African Ministers call for increased employment impact of infrastructure investments
Ministers gathered at the 15th Regional Seminar of Labour-based Practitioners in Yaoundé called for increased participation of local enterprises and people in infrastructure development in Africa as a key tool to tackle the un- and underemployment challenge.
Their Ministerial Declaration made in Yaoundé, the capital of Cameroon, on 25th February 2014 includes nine commitments in which they pledge to put in place adequate institutions with coordinating functions made possible through political support at the highest level to accommodate the multi-sectoral character and ensure efficient governance of labour-based programmes.
They will furthermore strive for innovative financial mechanisms fed by specific national funding to increase substantially the scale and impact as well as the sustainability of labour-based programmes.
They call on Regional Economic Communities (RECs) and the African Union to endorse the conclusions of the Ministerial Meeting and Seminar as an action that contributes to poverty reduction and job creation, and ask them to make a large dissemination during upcoming events including the follow-up to the Ouagadougou Summit on Employment, Poverty Eradication and Inclusive Growth, the OUAGA+10.
The Ministers acknowledged with satisfaction that increasingly more countries have made firm commitments to initiatives with employment creation potentials. They call on development partners, particularly the African Development Bank for less conditionality, to continue their commitment and increase their funding of job creation components in all infrastructure development programmes.
They call on the ILO, in close collaboration with regional and sub-regional economic communities, to put in place a monitoring and knowledge-sharing mechanism to document and disseminate all known initiatives in Africa and in the world to countries and development partners with a view to improve knowledge sharing and advocacy of labour-based approaches in development programmes.
The 15th Regional Seminar of Labour-based Practitioners started on 24 February under the theme of “Labour-Based Approaches to Infrastructure: From Policy to Action for Job Creation”. The ministerial delegations (Benin, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Congo, Democratic Republic of Congo, Ghana, Liberia, Senegal, South Africa, Tunisia and Uganda) and the 400 participants who were first reviewing the progress made on labour-based programmes since the Accra Declaration of 2011, continued to deliberate on the four themes of:
National Policies and Decentralisation
Capacity Building and SME Development
Application of Labour-Based Approaches in different fields
Innovations and Knowledge-Sharing; and
cross-cutting themes of gender issues and the challenges of HIV/AIDS.
Source: http://www.ilo.org/addisababa/media-centre/news/WCMS_236662/lang–en/index.htm
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Next IPAP version drafted, says Minister Davies
Trade and Industry Minister Dr Rob Davies says a draft of the next iteration of the Industrial Policy Action Plan (IPAP) has been prepared.
Minister Davies was addressing a post State of the Nation media briefing held on Tuesday by ministers of the Economic Sectors and Employment and Infrastructure Development cluster.
“IPAP has always been a three-year rolling action plan. It is not a vision document. What I can say is that inside the Department of Trade and Industry (dti), we’ve done our work.
“We’ve prepared a draft but IPAP is not a policy document or action plan of the dti – it’s of government as a whole, so we have to take it through government processes. We are ready to launch it at the appropriate time,” he said.
The dti launched the pdf fifth iteration of IPAP (2.38 MB) , which includes specific action plans to promote industrial growth and reduce unemployment, in April last year. Today’s briefing was an opportunity for government to give an overview of progress made by the cluster under the IPAP.
Investment incentives had spurred approximately R143 billion in private sector investments, creating around 144 000 jobs in the process.
In the past two years, substantial diversification of the auto industry – led by the recent establishment of two new minibus-taxi assembly plants – has been recorded.
“We note the appetite for investment in the auto sector,” said Economic Development Minister Ebrahim Patel.
New investments and developments in the automotive sector include BMW SA introducing a third shift at its Rosslyn plant, and Toyota SA opening a new Ses’fikile tax assembly line in Durban, as well as a R363-million investment in a parts distribution warehouse – the largest in Africa.
The South African labour market has continued to recover from the 2008 financial meltdown.
In 2013, employment climbed by 653 000 or 4.5%. Employment now totals 15.2 million the highest level ever. Since 2009, employment has risen by 1.3 million.
In the fourth quarter of 2013, the investment rate climbed to 19.2% of GDP compared to 18.9% a year earlier and 18.5% in the fourth quarter of 2010.
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Africa group COMESA ‘encouraged’ with regional trade cooperation
A senior official at the Common Market for Eastern and Southern Africa (COMESA) says the organization is encouraged by an agreement between heads of state from Uganda, the Democratic Republic of Congo (DRC) and Ethiopia to join the group’s free trade program, a decision taken at the just-concluded summit.
The heads of state and government that attended the COMESA summit, which ended Thursday, in the DRC capital, Kinshasa, include Joseph Kabila, Michael Sata, Yoweri Museveni, Joyce Banda, Robert Mugabe, Omar Hassan Al-Bashir and Ismail Omar Guelleh.
Francis Mangeni, the Director for Trade at COMESA says the region’s relative peace and stability has led to a sharp increase in business activities, which he says could attract foreign investment.
“Peace and security in the region has improved and we are happy about that. Conflicts in Congo are almost resolved, the M23 has been defeated. So the security situation is very good and this is very important for investment,” said Mangeni.
Officials say the heads of state discussed the status of the implementation of the COMESA Free Trade Area and progress on the implementation of the COMESA Customs Union.
“The three countries that have agreed to join the COMESA Free Trade Area by December this year are Uganda, Ethiopia and Congo DR, the host country. Congo DR and Ethiopia are large economies so this is really good news for us,” said Mangeni. “Overall we have got some good outcomes and we need to now implement these decisions over this year so by the time of the next summit, we will have something to report to the [leaders].”
Observers say implementation of agreements at such summits is often weak, despite proposed solutions to resolve problems the entire continent faces. Mangeni acknowledged Africa needs to do more to resolve its challenges.
He says the regional group has established a measure it calls “domestication” in a bid to ensure decisions and agreements signed at the Kinshasa summit are fully implemented.
“We have got clear pronouncement from heads of state…that this is a number one priority and they will make sure they will do everything possible at the national level in terms of enacting national laws, putting in place the required institutions and polices to ensure that what they have adopted at the COMESA level is translated into national laws and there are national institutions to implement them,” said Mangeni.
Some analysts say pockets of violence in Sudan, DRC, Somalia and other countries could undermine COMESA’s efforts to attract foreign investors.
But, Mangeni says the group has implemented mechanisms to help resolve the conflicts. He also says there is an upsurge in business activities.
“The message to investors is things are improving,” said Mangeni. “Business is booming in COMESA and the statistic that we like to cite is trade in goods has risen from $ 3.1 billion in the year 2000 to $19.3 billion at the moment. If you look at the trajectory, the rate of growth, the potential is really good for investors that come to Africa.”
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SACU revenue dependence raises concerns
A financial analyst has expressed concern about about Namibia’s reliance on revenue from the Southern Africa Customs Union (SACU), saying the government needs to diversify its source of revenue.
James Cumming, Head of Research at Simonis Storm Securities told a Namibia Chamber of Commerce and Industry post budget meeting that he is concerned about over reliance of budget revenue from the SACU pool, saying 35% to 40% of tax revenue is from the SACU.
He explained that government needs to diversify its revenue sources as future adjustments to the SACU revenue formula could lead to lower revenue from this agreement.
The Minister of Finance, Saara Kuugongelwa-Amadhila, told the meeting that sources of revenue have been increasing and are expected to grow over the next three years. She said new sources of revenue have been identified with preliminary studies already underway in order to secure a consistent revenue stream in the future.
Leonard Kamwi, head of advocacy and research at the Chamber, said he was disappointed that previous budgets had failed to reconcile expenditure on education with the resulting output, which has been below par. He said it is not enough for the government to target sectors in their wholesome but rather target the prospective beneficiaries. “The budget should target specific necessary skill sets as opposed to the whole sector,” said Kamwi.
Kuugongelwa-Amadhila defended the proposed export tax on natural resources, indicating it was meant to minimise the disparities that arise from the exploitation of Namibia’s naturally endowed resources.
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Japan, U.S. should cooperate to stop TPP talks from drifting
Ministerial talks for the Trans-Pacific Partnership multilateral economic partnership agreement once again failed to reach a basic agreement, mainly due to a confrontation between Japan and the United States.
The TPP negotiations should not be left drifting. Japan and the United States, the countries responsible for leading the negotiations, must swiftly put the talks onto a desirable track.
The latest TPP ministerial talks held in Singapore, in which 12 countries including Japan, the United States and Australia participated, have ended.
It was a fresh start from the previous talks in December, but the negotiations have broken down for the second time. No schedule has been officially set for the next meeting. This result is utterly disappointing.
The aim of the TPP is to create new free trade rules in the Asia-Pacific region to lead the world with an economic partnership framework for the 21st century. However, if the negotiations were to lose momentum, it would be difficult to break the state of deadlock.
The main reason that the participating ministers have given up on reaching a basic agreement was a confrontation between Japan and the United States over the elimination of tariffs.
Regarding the Liberal Democratic Party’s insistence that five sensitive agricultural categories, including rice, wheat and barley, be exempted as sanctuary items, the United States has maintained its hard-line stance, persistently seeking tariff cuts on them. Japan sought a point of compromise on the five categories by suggesting the possibility of lowering tariffs on beef and pork to sound out the U.S. reaction. However, the abyss between the two countries on the issue was so deep that they could not find any point of compromise.
On the issue of tariffs on automobiles and auto parts, which Japan demanded that the United States remove, the two countries could not solve their confrontation.
It will be difficult to find a way out of the deadlock in the TPP talks if Japan and the United States, two economic giants, only stick to their negotiation principles and do not show flexibility. The two countries should reflect on their attitudes, which have lacked broader perspective.
Reshaping the talks
Australia and emerging countries such as Malaysia, which have closely watched the Japan-U.S. negotiations, have also become passive in the TPP talks. Broad differences were also seen between the claims of the United States and emerging nations as well. Japan and the United States should feel a serious sense of responsibility for holding up the overall TPP talks.
The focus from now on is how to put the talks onto a desirable course. The 12 countries are expected to have the next meeting when the Asia-Pacific Economic Cooperation forum holds a meeting of trade ministers in Qingdao, China, in May.
Another important factor for breaking the deadlock of the TPP talks is a Japan-U.S. summit meeting between Prime Minister Shinzo Abe and U.S. President Barack Obama, who will visit Japan in late April. It is inevitable that the TPP should become a main discussion agenda for their talks.
In the United States, the protectionist pressure has been increasing with midterm elections of the U.S. Congress scheduled for November. For this reason, we are concerned about how the U.S. side’s difficulty with compromising in the talks will play out.
Obama has maintained that concluding the TPP agreement is the top priority issue for employment and export expansion. We hope he exercises his leadership in domestic coordination and efforts to make progress in the TPP negotiations.
The attitude of Abe, who made the TPP a pillar of his growth strategy, will be put to a test. Abe must stand at the helm in finding a point of agreement with the United States, while reinforcing the competitiveness of Japan’s agricultural sector ahead of market liberalization.
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BRICS to set up their bank within five years, progress slow – Russia
The BRICS bloc of emerging economies will set up its development bank with a total capital of $100 billion within five years, but member countries still haven’t agreed on their share in the bank’s structure, a senior Russian official said on Tuesday.
The bank is being set up by Brazil, China, India and South Africa to fund infrastructure projects. But it has been slow in coming, with prolonged disagreements over funding and management of the institution.
The start-up capital of $50 billion would eventually be built up to $100 billion. Russia has proposed that each member contributes an equal, 20 percent share. Other BRICS officials say their share should depend on the size of their economies, Russia’s Deputy FinanceMinister Sergei Storchak said.
“Russia’s stance is that this is a new development bank, based on new principles, so we vote for equal participation, 20 percent from each,” Storchak told journalists.
Establishing the bank was first proposed in 2012. It was approved last year at a BRICS summit in South Africa.
Officials from the group met last weekend in Sydney on the sidelines of a meeting of thefinance ministers and central bank governors from the Group of 20 developed and developing nations.
“After numerous attempts, we were able to agree that the process of building up the capital … will be stretched over time,” Storchak said. “We managed to come to an agreement that the period of contributions to the capital’s share can be up to five years.”
The group has struggled to take coordinated action in the past year, after the scaling back of U.S. stimulus prompted an exodus of capital from their markets. That in turn raised fears about the health of the BRICS economies.
The five-year span allows time for the global economy to improve and for growth in emerging markets to revive, which would help in replenishing domestic budgets, Storchak said.
“(Then) we will get more favourable conditions for countries to fully engage in the bank’s operations,” he said.
The location of the bank, another long-debated issue, was not decided in Sydney.
“There are interesting diplomatic negotiations because each country has declared that they will propose their candidates (for the bank’s headquarters),” Storchak said. “We have reached an agreement that it should be decided through … consensus.”
The group’s other project, a $100 billion fund designated to steady currency markets has also been off to a slow start, awaiting a final approval.
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World Bank to help map Africa’s mineral resources
There may be a trillion dollars worth of minerals buried underneath the African continent – but information on those resources remains in many cases unknown, unmapped or otherwise underutilized.
That’s why the World Bank is creating a $1 billion fund to help governments map the continent’s resources and integrate that data into comprehensive platform that is accessible to mining companies, governments and the public. The ambitious effort, which is still in its infancy, aims not only to make investment in Africa more attractive to mining companies, but also to create a level playing field for governments to negotiate with those very companies, according to Paolo de Sa, the manager of the oil, gas, and mining unit at the bank.
The fund, to be officially launched in July, will support the African Union’s strategy to help governments take advantage of and better manage their mineral resources, part of a larger effort to help the extractives industry contribute more to the development of African economies.
Building the billion dollar map will involve data collection and mapping, but also the integration of that data into a universal platform. That process includes gathering and integrating information that already exists in government ministries, conducting gap analyses, and then implementing surveys and mapping projects across the continent to fill in those gaps.
For governments
While outside expertise will be certainly needed, an important part of the effort will be capacity building in government-run geological surveys in a regional integration effort spearheaded by the African Union, De Sa told Devex.
“At the end of the day, the governments are the owners of the information, and they need to be capable of updating and interpreting it and using it for the different policy objective that they have,” he said.
The World Bank, for its part, plans to continue support for African geological surveys at its current level, which will amount to about $200 million of the total amount allocated for the fund. The institution is in the process of creating a multi-donor trust fund for contributions from donor governments, and De Sa said that the United Kingdom, Canada, and Australia had expressed initial interest in supporting the fund, while eventually, he hopes, mining companies themselves might also contribute to the effort.
The mapping and harmonization effort itself is modeled on the way that Canada and Australia integrated their provincial surveys as well as similar efforts underway in the European Union.
Capacity building has already started in Southern and Eastern Africa, where the World Bank already supports several projects with government surveys. De Sa said that in two to three years, data integration will likely expand to Central and Western Africa.
Scientific project, not business investment
The prospect of monetizing the commercially relevant information should be an impetus for governments to ensure the accessibility of their information, but the true value of the maps will be in the way the data informs national discussions and decisions on resource management.
“This is not a money-making investment, this is much more of a scientific, access to data and transparency exercise from our point of view,” De Sa noted about a project he sees as having potential beneficial “side effects” beyond increasing investments and raising revenues for the government.
“It will be a very, very strong tool to inform government on policies related to the management of other natural resources, development of infrastructure, and of course management of the most precious substance on Earth – water,” he said.
While the goal of mapping the entire continent is very long-term, De Sa said that, assuming the initiative goes well, an obvious next step would be to create another fund to come up with an integrated map of South American mineral resources.
See also: Can Natural Resources Pave the Road to Africa’s Industrialization? - Paulo De Sa, World Bank Blogs (28 February 2014)
Source: https://www.devex.com/en/news/world-bank-to-help-map-africa-s-mineral-resources/82916
Tanzania: Talks on Agoa extension going on well – Kigoda
The government has said that talks on its request to have the US government extend the African Growth and Opportunity Act (Agoa) are progressing well.
Speaking in an exclusive interview with The Guardian from Dodoma, Industry and Trade minister Dr Abdallah Kigoda said the talks to extend the Agoa market after expiry next year are in good progress and the US government is also thinking of renewing the programme.
The trade programme is due for expiry in 2015, but there are feelings that it has not been fully utilised by African countries.
“We are still in talks with the American government to ensure that Agoa tenure is extended although most African governments have not fully utilised the opportunity given. Agoa market is very useful in promoting trade between Africa and America,” he said.
Dr Kigoda challenged the Tanzanian business community to export value added products so as to benefit from the opportunity given.
“Since Agoa was signed into law in May 18, 2000 it has been offering incentives for African countries that export a wide range of products to the US. Tanzania has somehow utilised the market compared to its neighbours such as Kenya but we have to improve our products by insisting on value addition so as to earn better prices,” he said.
The minister noted: “We have to insist on quality to our products, one among the challenges that face our traders is quality, I am sure that if we will improve the quality of our products, surely we will win the Agoa market and other markets as well.”
However, statistics issued recently say that in the first half of 2012, US total trade with sub-Saharan Africa (SSA) reached $48bn, a decrease of 24 percent compared to the same period in 2011.
In accordance with 7 percent growth of exports to the world, US exports to SSA (mostly composed of machinery) increased by 4.5 percent, nearly reaching $11bn but representing only 1.4 percent of total US exports to the world.
The top five African destinations for US products have continue to be South Africa, Nigeria, Angola, Ghana and Benin.
While exports to South Africa decreased by 4 percent and those to Nigeria remained constant, sales to Angola increased by 14 percent (largely increase in US exports of electrical machinery).
Exports to Ghana by 10 percent (increase in US exports of machinery), and to Benin by 7 percent (increase in US exports of pharmaceutical products).
The only major increases in US imports from SSA originated from Tanzania (precious stones) and Senegal (oil).
In the first half of 2012, US imports from SSA decreased by 29 percent, falling to $27bn and representing only 2.4 percent of total US imports from the world.
This decrease was mostly due to a 32 percent decrease in US minerals, fuel and oil imports and a 19 percent decrease of precious stones and metals imports from SSA.
US imports from SSA originated, for the most part from Nigeria, Angola, South Africa, Chad and Congo.
US imports (mostly oil) from Nigeria dropped by 44 percent, from Gabon by 76 percent, and from Ghana by 57 percent.
During this timeframe, Agoa imports totaled $18.7bn, 29 percent less than in the same period in 2011, mainly due to a 32 percent decrease in petroleum product imports.
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Boosting trade with Africa
New measures aim to encourage trade and promote SA as an African investment hub
We all know the stories of Shoprite, MTN and Game’s growing presence on the African continent. But these companies are not alone – they represent just a few of the increasing numbers of South African companies that are taking advantage of growth opportunities on the African continent.
Improved transport, telecommunications, financial and diplomatic links, as well as robust economic growth on the continent have resulted in increased levels of trade between South Africa and other African countries.
In 2012 the rest of Africa accounted for 12% of our dividend earnings, up from 2% in 2002 and 28.2% of our exports up from 22.6% in 2002. To put it in context EU the accounted for 18% of exports last year.
South Africa’s economic prospects are becoming increasingly intertwined with that of the rest of the continent and the government is committed to supporting this expansion. It will provided tax revenue, profits and dividends in the receiving country, and in South Africa.
As a result government has announced measures to improve South Africa’s attractiveness as a hub for companies – local and international – wanting to expand in Africa.
Extending the HoldCo subsidiary regime
In 2013 Treasury allowed JSE-listed companies to establish a ‘HoldCo’ to hold their African and offshore operations. Government now plans to extend this regime to facilitate investment into Africa, and beyond.
For JSE companies it will increase the size of allowed transfers from R750m to R2bn a year. Applications for transfers of up to 25% of the listed company’s market cap will be considered by the Reserve Bank, provided there is demonstrated benefit to South Africa.
Unlisted companies may operate HOldCo’s under the same restrictions as listed companies, except that the size of transfers to their HoldCo is limited to R1 billion a year.
Government’s plans go further than this.
National Treasury is proposing the introduction of “foreign member funds”, which would not be subject to the macro prudential limit imposed on all institutional funds. These funds could be collective investment schemes and alternative investment funds such as private equity and venture capital funds. They would be able to source funding from non residents, domestic institutional funds and individuals, but they do need to be domiciled, managed and tax compliant in South Africa.
The objective is to support South Africa as a hub for African fund management.
Treasury also wants to support South African firms in their bid to raise capital in order to expand in Africa and other emerging markets. It is proposing that unlisted technology, media, telecommunications, exploration and other R&D companies should be allowed to freely lift offshore to raise capital for their operations, provided they remain based in South Africa and provided they have a secondary listing in South Africa within two years of the offshore listing.
In addition, listed companies will be allowed to freely list secondary listings to facilitate expansion.
To support South Africa’s role as a financial centre for Africa a number of other steps will be taken: New regulations to facilitate the operation of foreign central counter parties will be released shortly. This will facilitate the establishment of foreign market infrastructure of the clearing of derivatives. In addition, Treasury has been working closely with the JSE and local banks to develop an electronic trading platform for South African government bonds. This should enhance price transparency, liquidity and regulation in the secondary government bond market, which in turn will encourage greater global participation in that market.
Government is proposing a number of other initiatives which it believes will reduce the administrative burden and cost of doing business for SA firms, investors and individuals – for instance customers will be allowed to process advance payments for imports of up to R50 000 upon presentation of an invoice only.
See also: SA’s economic prospects increasingly tied to African continent’s - Minister Pravin Gordhan on South Africa’s economic prospects in 2014 Budget Speech (National Treasury, 26 February 2014)
Source: http://www.moneyweb.co.za/moneyweb-2014-budget/boosting-trade-with-africa