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Ministers of Finance and Trade endorse compromises for concluding EPA negotiations
West Africa’s ministers of finance and trade have adopted the compromise proposals for concluding the decade long negotiations of the Economic Partnership Agreement (EPA) with the European Union for a free trade area of the two regions. The impending agreement will replace the previous trade regimes between them and comply with the requirements of the World Trade Organisation.
At the end of a meeting of the ministers under the aegis of the Ministerial Monitoring Committee (MMC) in Dakar, the ministers adopted the compromises proposed during the preceding meetings of senior officials and chief negotiators that had stalled the negotiations for about a year and urged Member States to undertake the necessary tax and economic reforms to ensure the development of their economies.
The proposals examined by the ministers emanated from the 6th February 2014 meeting of the chief negotiators of the two parties held in Brussels where they endorsed the concessions made during the 24th January 2014 meeting of their senior officials held in Dakar in order to resolve their divergences’ and conclude the negotiations.
The compromise proposals are in the areas of market access where the region has agreed to liberalise 75 per cent of its market over a 20 year transition period, based on a scheduled tariff dismantling scheduled, a major shift from its initial position of 60 per cent over 25 years. There were also compromises on the other contentious issues of the EPA Development Fund (EPADP) for which the region had asked for 16 billion euros in new resources from the EU to enable it address its infrastructure deficits ahead of the implementation of the agreement.
As part of the compromises, both parties agreed on the priority needs valued at 6. 5 billion euros and centred around trade, industry, agriculture, infrastructure, energy and capacity building with the EU, its member states and the European Investment Bank agreeing to find a way to match the expressed needs with funding.
The impending conclusion of the negotiations will end an era of different trade regimes in the region following the 2007 signing of interim EPA’s by Cote d’Ivoire and Ghana in order to maintain their preferential access to the EU market.
Ministers of the MMC stressed the need to improve the competitiveness of the region through targeted investments in infrastructure and the adoption of joint standards in order to promote West Africa’s development and its integration into the global economy.
They also called for necessary measures to be taken to improve the disbursement of the resources of the EPADP while further consultations should be held organized private sector, civil society organisations and other stakeholders prior to the next Council of Ministers where the proposals will be considered before consideration and adoption by Heads of State and Government.
Source: http://news.ecowas.int/presseshow.php?nb=028&lang=en&annee=2014
See also: Economic Partnership Agreements: West Africa seals a deal at the 11th hour (ECDPM, 27 February 2014)
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SA farmers cough up to keep black spot out of EU
Complying with the requirements to export citrus fruit to the lucrative EU market had cost the local industry as much as R1 billion in the past year, Justin Chadwick, the chief executive of the Citrus Growers’ Association of SA, has said.
In taking measures to minimise citrus black spot, the local sector has had to pay for orchard treatment, repackaging of fruit and possible diversion of containers from the final destination if they are found to be contaminated.
South Africa exports about 650 000 tons of citrus fruit to the EU every year, which is estimated to bring in R4bn.
Chadwick said that while growers would benefit from the weaker rand, in the longer term those benefits would be absorbed by input costs, including the costs associated with shipment, which were in dollars.
A ban on local citrus exports to Europe was lifted last month but the local industry was recently notified that citrus exports might be further scrutinised by the EU.
Domestic citrus exports were banned from the EU in November last year after it was found that the introduction of citrus black spot fungal disease would pose a threat in Europe’s citrus-producing areas.
The European Food Safety Authority has revised its pest risk assessment on citrus black spot and found that there was still some risk associated with imports from South Africa.
According to the statement by the authority, it was recommended that the EU regulations should be retained and compliance should be enforced.
Chadwick said the cost of preventative measures was eating into citrus growers’ returns. Growers were losing R300 million in orchard treatment, with more costs incurred for picking contaminated fruit out of containers.
“If there is a fruit that is found to have [citrus black spot] on a certain container destined for Europe, one will have to unpack the whole container to get the fruit out. In some instances a container will have to be diverted into other markets,” Chadwick said.
Although no research had been done on the total cost implications of this, he estimated that prevention had cost the industry between R500m and R1bn in the past year.
Chadwick said the latest EU pronouncement created uncertainty. Despite this, the citrus industry was ready to comply with the EU’s import requirements. “It is not what the industry would have hoped for, but is nonetheless something we have anticipated and have prepared for,” Chadwick said.
Citrus growers would give the report careful consideration. “We will also continue our engagement with all parties to ensure that the highly successful trade that has been maintained with Europe for more than a century continues without interruption,” he said.
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Ambitious structural reforms can pave the return to strong and sustainable growth, OECD says
Adopting ambitious and comprehensive structural reform agendas will offer governments the best chance for a return to strong, sustainable and balanced economic growth that creates jobs and reduces inequality, according to the OECD’s latest Going for Growth report.
The report assesses and compares progress that countries have made on structural reforms since 2012 and takes a fresh look at what else can be done to revive growth and make it more inclusive. The OECD shows that most governments have continued enacting reforms, despite the challenges posed by a subdued growth environment, and highlights actions that can still be taken to boost productivity, raise public sector efficiency, improve educational outcomes, and strengthen labour markets.
“Signs of a broad-based recovery are becoming more tangible, but governments of advanced and emerging economies now face the risk of falling into a low-growth trap,” OECD Secretary-General Angel Gurría said during a launch event in Sydney.
“Australia has focused its G20 Presidency on promoting stronger economic growth and employment while making the global economy more resilient to deal with future shocks. The structural reform recommendations the OECD puts forward today offer governments practical ways to boost productivity, lift growth, create jobs and avoid the low-growth trap,” Mr Gurría said.
Mr. Gurría presented Going for Growth with Australian Treasurer Joe Hockey, ahead of the 22-23 February meeting of G20 finance ministers. He said the report’s analysis of potential reforms to product and labour market regulation, education and training, tax and benefit systems, trade and investment rules and innovation policies are applicable to OECD and G20 countries alike. The going for Growth analysis forms the basis of the OECD’s wider contribution to the G20 Framework for Strong, Sustainable and Balanced Growth.
“Progress on structural reforms can boost growth and living standards worldwide,” Mr Gurria said. “Slowing productivity growth and persistently high unemployment in many advanced economies cry out for further reforms. The vulnerability of many emerging-market economies to the ongoing tightening of monetary policy and the cooling of the commodity boom serves as a reminder that the case for structural reforms is also strong there.”
Going for Growth 2014 points to countries where reform action has been taken as well as where more needs to be done:
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The intensity of reform has remained highest in southern euro area countries like Greece, Italy, Portugal and Spain, which are suffering from high long-term unemployment and youth joblessness. Considerable action to reform the labour market and break down barriers to job creation and mobility has been taken, in particular in Spain in Portugal, which have begun growing again.
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Many emerging economies have yet to launch comprehensive structural reform agendas, and should implement wider efforts to improve education, address physical and legal infrastructure bottlenecks and bring more workers into formal sector employment. Mexico stands out among emerging economies for its adoption and ongoing implementation of broad-reaching reforms in competition policy, education, energy, financial services and telecommunications.
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In OECD countries which face particularly rapid population ageing, such as Japan, Korea and Germany, bringing more women into the labour market and ensuring that they are fully integrated remains a key challenge.
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Advanced and emerging economies are both encouraged to boost competition across their economies. Another country hard hit by the crisis – Ireland – has made the most progress on bankruptcy reform and toward creating a more competitive business environment.
A special feature of Going for Growth 2014 assesses the progress countries have made since 2008 toward reducing regulatory barriers. The new OECD Product Market Regulation indicators show that while governments have continued to move towards more competition-friendly regulation, progress has only been modest in most cases.
Competition in network industries and professional services like accounting, architecture, engineering and legal services continues to be held back by regulatory barriers to entry. Where regulatory settings have been improved, the legislated changes need to be fully implemented, to ensure the effective easing of administrative burdens on companies and the entry of new firms.
Dti promotes SA at investment initiative in India
Trade and Industry Deputy Minister Elizabeth Thabethe will today lead a 40-member business delegation to India for the fifth annual Investment and Trade Initiative (ITI).
The ITI forms part of the Department of Trade and Industry’s export and investment promotion strategy to focus on India as a high growth export market, as well as a foreign direct investment source.
South Africa’s trade with India has doubled over the last five years with gold, diamonds, base metals and chemical products, among others, making up the bulk of exports.
According to Deputy Minister Thabethe, India’s emerging economy is expected to play an important and growing role in South Africa and the global economy in coming years.
“World trade patterns are changing, and trade with India is of growing importance to South Africa. Since establishing bilateral relations in 1993, trade between India and South Africa has grown steadily and consistently. The potential of India’s economy and the country’s growth trajectory is forecast to recover to previous levels in the coming years. This is good news for South Africa,” said Deputy Minister Thabethe on Sunday.
The objective of the ITI is to continue to create market access of South African value added products and services in India, and to promote South Africa as a trade and investment destination.
India has been one of South Africa’s top 10 trading partners for several years and is now South Africa’s fifth largest export destination and sixth largest source of imports.
The ITI will promote South Africa’s agro-processing, beneficiated metals and mining technology, automotive components and electro-technical sectors in India.
The ITI — which will include trade and investment seminars and business-to-business meetings, among others — will conclude on Friday.
Outward Investment Mission to Mozambique
Meanwhile, the dti will today also lead a delegation of companies on an Outward Investment Mission (OIM) to Pemba, Mozambique.
The mission aims to promote South Africa as an attractive trade and investment destination in the servicing aspects of the oil and gas industry and to also promote the Saldanha Bay Industrial Development Zone (IDZ) as an oil and gas servicing hub.
The dti Director-General Lionel October says that Mozambique has experienced recent success in oil and gas prospecting and it is reaching out to the international community to partner in the development of its upstream and midstream oil and gas sector.
“It is therefore an essential and opportune time for members of the South African oil and gas sector to visit Mozambique to develop business relations with their oil and gas industry counterparts and authorities. This mission will also make an ideal platform to showcase Saldanha Bay IDZ’s ability to service, maintain, repair and supply the increasing number of oil rigs requiring maintenance in the West and East Coast of Africa,” said Director-General October.
The IOM will conclude on Friday.
Related: ‘Help South Africa to Fast Track Growth’ (The New Indian Express, 25 February 2014)
Source: http://www.sanews.gov.za/business/dti-promotes-sa-investment-initiative-india
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USA to Swaziland: ‘Fully’ comply or lose AGOA
The message from the Americans is loud and clear: Swaziland has to ‘fully’ comply with five conditions or lose their eligibility to participate in the Africa Growth Opportunity Act (AGOA) programme.
In an exclusive interview on Friday, United States of America Ambassador to Swaziland Makila James said there was no longer any room for negotiations with the kingdom on the conditions that have to be met.
Listing the conditions, she said they include full passage of amendments to the Industrial Relations Act; full passage of amendments to the Suppression of Terrorism Act (STA); full passage of amendments to the Public Order Act; full passage of amendments to sections 40 and 97 of the Industrial Relations Act relating to civil and criminal liability to union leaders during protest actions; and establishing a code of conduct for the police during public protests.
Not some, but all of the conditions have to be met for Swaziland to continue enjoying the preferential trade agreement with the USA, the ambassador emphasised.
Contextualising the conditions, Ambassador James said: “The Industrial Relations Act did not provide for the registration of labour federations.
The Swaziland government has had this issue on its plate for several years. We understand that the Industrial Relations Act is now being looked at by government as a Bill was tabled in parliament by the Ministry of Labour this week, but the amendments have to be passed fully to allow for labour unions to work collectively to improve workers’ rights.”
On amending the STA and Public Order Act, she said: “These are equally important because even if federations are registered, the question remains whether or not citizens and workers will be allowed to have peaceful public gatherings without interference by the police?
Amendments to these two pieces of legislation should allow for a process of transparency and objectivity in deciding how people can come together for public gathering. As the law is currently interpreted, any public gathering can be stopped, as has happened in the past. We are concerned because this interpretation negatively impacts the rights of labor unions and members of the public to gather to hold May Day celebrations and other meetings to talk about conditions of employment and other issues which affect the economy broadly.”
The ambassador then articulated the need to get amend sections 40 and 97 of the Industrial Relations Act.
“Civil and criminal liability are of concern because they seek to punish labour leaders for the actions of other people. It is a violation of international law to hold people accountable for actions that they themselves do not commit. There are many models of acceptable language to control security threats but these pieces of legislations in their current form are overly broad.”
On police conduct, James articulated: “There is a need to give police better guidance so they can do proper law enforcement. No one can say Swaziland, just like any other country, has no right to have reasonable limits on behavior that can be threatening but right now the law is overly broad.’
The ambassador said throughout the 2013 calendar year, the United States had seen little progress by Swaziland on any of the five conditions.
“The assessment by the U.S government is that of great concern that Swaziland has not made any progress between December 2012 and December 2013.”
However, she said when the AGOA review came in December last year Swaziland was given an extension period up until May 15, 2014 because it was realised that the kingdom’s government was in transition; with a new parliament and Cabinet coming in.
“It was decided that Swaziland should be given a small period in which to finalise action on these critical issues with the new government in place.
That was the reason for not deciding in December 2013 that Swaziland was ineligible. The new period goes on up to May 15, which is an important date because at that point a U.S inter-agency committee in Washington D.C. will reconvene to look at whether Swaziland has fully complied with the five elements.”
The ambassador continued: “If the determination is that Swaziland has not complied, On May 16, Swaziland will become ineligible to remain in the AGOA programme.”
If Swaziland becomes ineligible, exporting goods to the U.S under AGOA will continue until the end of the calendar year.
“But on January 1, 2015, goods coming into the United States from Swaziland will be assessed duty because there will no longer be a trade preference to allow them duty-free entry,” added James.
Close to 20 000 workers stand to lose their jobs should Swaziland be kicked out of AGOA because investors would close business and seek to open shop in countries which are still eligible for the programme.
Swaziland has been enjoying benefits of the AGOA programme since the year 2000.
Brief Q&A
Sunday Observer: What has the Swaziland government taken to address these concerns?
Ambassador James: I have had extensive, high-level engagement with the government of Swaziland to raise these concerns and to hear from them. Generally, the position of the government is that they appreciate and support the AGOA programme.
They would like to keep the programme in Swaziland and that they will try and comply with the criteria for remaining eligible.
That has been their consistent line to me since I arrived in Swaziland. But as we say, when the rubber hits the road is – what are they doing specifically, and I have just articulated to you that since December 2012 to now we have not seen the actions matching the assertions of intent and their desire to see the programme remain in Swaziland.
And so, I would have to say that the Swaziland government needs to demonstrate through deeds, through concrete actions, its level of commitment because they have indeed expressed strong support for the programme.
Sunday Observer: According to your own assessment, will Swaziland meet these conditions?
Ambassador James: Let me say I was very pleased this week to see the minister of labour table in parliament an amendment to the Industrial Relations Act; this is one of the things that must be done.
But there are at least five elements that must be fully complied with and so I will reserve judgment because I think the goal for all of us between now and May 15, 2014 is to work as hard and diligently as possible to meet the terms.
We stand ready as the mission to be helpful where we can. If the government makes the commitment and is doing all it can, we will dutifully monitor how they are progressing and ensure that Washington is fully aware, but it really rests with the government to make serious, diligent and expeditious efforts to comply because deadline is coming very soon.
Sunday Observer: Say Swaziland meets some of the conditions, but not all of them, will that be a problem still?
Ambassador James: Because we have had this conversation not one, not two but several years going back, there is a great concern and great frustration that we have been extremely tolerant of the obstacles and challenges within Swaziland to meet some of these conditions. But it is important that Swaziland now understands that we are at a very critical point where they must meet all of the conditions and that is a very clear message that I hope the government will fully appreciate and will take on board.
We are at a point where on May 15, 2014, the assessment will be – has Swaziland met these conditions?
Sunday Observer: Have you engaged labour organisations regarding this matter?
Ambassador James: Yes, we have. We believe that as an embassy it is important to talk to all stakeholders. And so, we have talked to labour unions; have talked to workers; have talked to the private sector; and have talked to exporters who are currently using the AGOA programme.
They have talked to us and they have sent was their opinions. And so we believe we are giving the same message to everyone, which is:
If you care about AGOA remaining in this country, you should work with government to help them but it is really up to the government to create the conditions to remain eligible.
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Harnessing Africa’s emerging partnership
For most of the post-independence period, Africa’s commercial and development partnerships have been largely dominated by Western Europe, the United States and Canada. For many African countries, colonial ties have tended to be the single most important factor determining such partnerships. During the last two decades, however, many other countries have taken a keen interest in trade, investment, and other types of commercial and strategic relations with Africa. This new interest in Africa has significantly reduced; the relative importance of traditional partnerships to Africa’s development agenda. Notably, among countries that have taken an interest in Africa during the last two decades are emerging economies such as China, Brazil, Russia and India. Other countries that have ratcheted up their commercial ties with Africa over the last decade include Turkey, South Korea, Iran, Malaysia and a few others.
These emerging partnerships involve a wide range of activities, including trade and foreign direct investment in various sectors of several African economies – particularly, natural resource exploitation, manufacturing, agriculture and construction. The new partnerships have also evolved to include development cooperation in the form of aid, loans and grants. Although these emerging partnerships have been very supportive of development efforts in African countries, there is concern that some of these new arrangements could actually be exploitative – in other words, they may not be mutually beneficial. Instead, they may create opportunities for these new foreign partners to plunder Africa’s resources and leave the continent essentially underdeveloped.
There is no doubt that the increased interest in the continent by many countries presents African governments with a lot of opportunities, which could support and advance the continent’s development goals, especially in respect to the effective transformation of Africa’s economies. However, there are also many risks and challenges that come with these partnerships – in fact, if the challenges are not properly managed, the outcome could be exploitation and underdevelopment. As the new “scramble for Africa” continues to gather momentum, it is critically important that Africans rethink their relations – both with emerging and traditional partners – with a view to maximize the benefits from the partnerships and minimize the costs or negative aspects.
Over the last decade, Africa’s interactions with foreign actors – nations and businesses – have grown rapidly both in scope and complexity. Although it has become commonplace to refer to some of these interactions as involving new partners such as China and India, this is not strictly correct because these countries have been involved with Africa for many years. China, for example, has been involved with Africa for many decades, helping some colonies fight for independence and participating in the construction of infrastructure in newly independent countries, such as the transboundary infrastructure project called the Tazara Railway, which extends from Tanzania to Zambia. In addition, Russia, whose predecessor the Soviet Union was heavily involved with various African countries during the Cold War, continues to provide many countries on the continent with military aid as well as help educate their citizens at its universities. Nevertheless, the scale and scope of engagement between Russia and African countries have changed significantly since the heyday of the Cold War.
Although Africa generally receives a very low share of global foreign direct investment (FDI) flows, there has been a marked increase in FDI flows from emerging economies during the last few decades. For example, Brazil, Russia, China and India have in recent years significantly increased their investments in Africa, effectively joining the ranks of top investing countries in the continent. Similarly, many other developing countries have also increased their investments in Africa, indicating the growing importance of the continent to the global economy.
Although there has been a fair amount of diversification of FDI flows to different sectors of African economies, extractive industries remain the most important destination for investments from both traditional and emerging partners. Recent discoveries of natural resources, especially oil and natural gas, have been catalysts for increasing FDI flows. For example, both Chinese and Indian firms have expressed interest in investing in the natural gas block off of the Mozambique coastline. Although Chinese investments in the exploitation of natural resources can be found in practically all African countries, there is significant concentration in South Africa followed by Sudan, Nigeria, Zambia and Algeria. Russian companies, whose FDI to Africa topped $1 billion in 2011, have operations in aluminum extraction in Angola, Guinea, Nigeria and South Africa. Traditional partners such as the United States, Britain and France have also increased their investments in the continent’s natural resource sector.
There has also been an increased interest in recent years from non-traditional partners in land-for-agriculture. According to the Land Matrix Project data, India and China are among the top 10 countries investing in the agricultural sectors of many African countries and companies from both countries have significant investments in biofuels, soy and timber production at various stages of completion. For example, the Indian floriculture company, Karuturi, a major producer of cut roses, is now a significant investor in Ethiopia’s agricultural sector. Karuturi’s combined investments from 2007-2012 totaled 411,000 hectares of land for biofuel, palm oil and rice production. Although levels of production by Karuturi have not yet met the company’s or Ethiopia’s expectations due to severe flooding, the company has projected a tripling of food exports from Ethiopia by 2015.
The other indicator of growing commercial relationships between Africa and other countries is the volume of trade, which reflects at least in part the increase in commodity trade. Although Africa’s share of global trade remains low, it has nevertheless been increasing. For example, the volume of trade between India and Africa has been growing: 32.2 percent per year for African exports to India and 23.6 percent per year for Indian exports to Africa. China’s value of total African trade was $8.9 billion in 2000 and reached an estimated $220 billion in 2012. According to U.S. COMTRADE data, mineral fuels make up the majority of Africa’s exports to Brazil, China and India – 85 percent, 80 percent and 70 percent respectively of imports from Africa.
The increased interest in Africa by investors – both new and old – represents a great opportunity for African countries to solidify the growth experienced in recent years and to invest in the transformation of their economies. However, there are many concerns about the new interest in Africa by countries such as China, Brazil, India and others. One of the most important of these concerns is the view that many of the contracts to exploit natural resources agreed upon between African countries and these new investors are not entered into openly and transparently. In addition, there is fear that some of these new development partners are engaging in practices that are degrading Africa’s environment and its fragile ecosystems. There are also concerns that investment in agriculture involving what are referred to as “land grabs” poses a serious threat to Africa’s precarious food security situation. Other criticisms have been directed at the failure of some investing countries to create jobs for local labor. In fact, many of these countries bring their own workers to their African projects, effectively minimizing their use of domestic labor resources. Finally, some of these investments, especially those made in the exploitation of natural resources, are seen as not contributing to a positive transformation of African economies.
Source: http://news.sudanvisiondaily.com/details.html?rsnpid=232622
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Membership to several blocs hurts trade in EAC – expert
Overlapping membership in several trade areas is impeding “free circulation of goods” within the East African Community-members states, a regional integration and trade expert has said.
Alfred Ombudo K’Ombudo, the Coordinator of the EAC Common Market Scorecard team, has told The News Times that belonging to other trade blocs outside the EAC makes members reluctant to remove internal borders to allow goods to move more freely.
According to K’Ombudo, a Common External Tariff (CET) is critical to ensure free circulation of goods through the application of equal customs duties. The EAC Customs Union protocol has a three-band structure of 0 per cent duty on raw materials, 10 per cent on intermediate goods and 25 per cent on for finished goods.
However, of the five partner states, Tanzania is a member of the SADC and subscribes to a different structure while Burundi, Kenya, Rwanda, and Uganda, are members of the Common Market for Eastern and Southern Africa (Comesa). On the other hand, Burundi belongs to the Economic Community of Central African States (ECCAS).
This, according to the expert is “perforation of the bloc’s CET,” drilling a hole in the regions tariff structure as member- states trade with other countries below the agreed tariffs.
“This makes EAC countries less willing to remove internal borders because they are not sure whether goods may have come from other blocs. This is a serious structural problem that is difficult to solve because the customs union legally recognises other blocs that members belong to,” K’Ombudo noted.
Burundi, Kenya, Rwanda and Uganda’s participation in Comesa and Tanzania’s membership to SADC is recognised by the EAC, but no exception is granted to Burundi for participating in the ECCAS.
Article 37 of the bloc’s Customs Union Protocol recognises other free trade obligations of partner states but it requires them to formulate a mechanism to guide relationships between the protocol and other free trade arrangements.
EAC Secretary General, Richard Sezibera, told The New Times during the launch of the Scorecard in Arusha, that there have been efforts to address the issue of overlapping membership.
“They [EAC leaders] have done two things to [try] addressing it: One is to harmonize the CET of the EAC and that of COMESA. This makes it easier for COMESA states to reduce the level of perforation,” he explained.
He added that in 2008, the heads of state decided to negotiate a free trade area between the EAC, COMESA and SADC as another way of fixing the problem.
Dr Catherine Masinde, the Head of Investment Climate, East and southern Africa at the International Finance Corporation (IFC), said: “If we were not to perforate the EAC would end up with a bigger volume of trade figures”.
She noted that since the launch of the EAC Customs Union, in 2005, the region has witnessed strong growth in intra-regional trade, rising from $1.6 billion to $3.8 billion between 2006 and 2010. Intra-EAC trade to total EAC trade grew from 7.5 per cent in 2005 to 11.5 per cent in 2011.
“This is significant growth but, I am told that this is, in fact, a drop in the ocean. That it is far from the potential of the market. I was given a figure, that $22.7 billion [in inter-regional trade] was actually lost to other regional blocs, from this region, [between 2005 and 2012] because of non-compliance with the common market protocol.”
The Scorecard, Masinde hopes, will solve various EAC compliance issues as well as energize reforms to spur the bloc’s development.
Source: http://www.newtimes.co.rw/news/index.php?a=14521&i=15642
See also: EAC Scorecard to Track Implementation of the Common Market Protocol Launched in Arusha (East African Community Headquarters, 18 February 2014)
Related: EAC scorecard gives top marks to Kenya, Rwanda, Uganda (Guardian on Sunday, 23 February 2014)
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DEAD AID: Why TRADE facilitation is necessary but not AID
Indeed to release the potential of Africa, there is the need to develop means to facilitate trade across the borders and this means major investments in transport infrastructure including roads, ports; internal container depots; inland water ways and railways are needed.
In the post-independence period, trade has being a core element of the development strategy of African countries and despite claiming regional trade as a strategic objective, African countries have yet to reach their trade potential particularly, when it comes to trading with each other.
The importance that African countries attach to regional trade has been reflected in the high number of trade schemes and policies on the continent and this trade agenda is geared towards empowering Africa to take its rightful position in the global economy.
A Continental Free Trade
Free trade is a policy by which a government does not discriminate against imports or interferes with exports by applying tariffs (to imports) or subsidies (to exports) or quotas. According to the law of comparative advantage, the policy permits trading partners’ mutual gains from trade of goods and services.
It is also a means of enjoying goods and services that one has a disadvantage in producing due to the level of discrepancies in resources endowments of various countries. That is, through trade one country can have access to goods and services produced in other countries. Free trade is also a system in which goods, capital, and labor flow freely between nations, without barriers which could hinder the trade process. According to the United Nations Economic Commission for Africa (ECA), only 10% of trades in Africa occur between African countries but stands at 60% with the rest of the world.
The Aid
Whiles trade has been identified as a means of robust economic development, foreign aid is considered by a lot, especially the foreign development partners as the way forward. In the past fifty years, more than $1 trillion in development-related aid has been transferred from rich countries to Africa. But the question is, has this assistance improved the lives of Africans? In fact, across the continent, the recipients of this aid are not better off as a result of it, but much worse.
Total foreign aid to Africa from all sources amounts to a little over 50billion dollars a year, but corruption alone cost Africa 148 billion dollars a year. Has those billions of dollars in aid sent from wealthy countries to developing African nations helped to reduce poverty and increase growth?
Aid to Africa has however become a Band-Aid, not a long-term solution since aid does not aim at transforming Africa’s structurally dependent economies. If donors aim to make long-term sustainable impact, aid should target transcontinental projects such as highways, telecommunications and power plants. Again development aid ‘promotes dependence on others’ as it creates the impression that ‘emergence from poverty depends on external donations rather than on people’s own efforts and motivation, the more reason why Africans should focus on trade and not aid.
It appears as though most African countries are so dependent on aid and that without it almost half of their yearly budgetary commitments cannot be fulfilled. It therefore seems aid is not meant to ensure recipients become self-reliant since if it is the case, powerful states can no longer brag about who is giving more than the other.
Dr. Dambisa Moyo, a global international economist argues in her famous book ‘DEAD AID: why aid is not working and how there is a better way for Africa’ that the notion that aid can alleviate poverty is a myth since ‘aid has been and continues to be, an unmitigated political, economic and humanitarian disaster’ for most developing countries.
She sees the vicious cycle of aid as one that chokes off investment, encourages dependency and facilitates corruption, adding that this cycle ‘perpetuates underdevelopment and guarantees economic failure’ in poor regions. In her book, Moyo also touched on ‘the paradox of plenty’, insisting that aid instigates conflicts in Africa.
If not, how come the same continent that receives the largest amount of aid is the most conflict ridden place in the world? Moyo therefore suggests a low-aid market-based development financing model that encourages trade and investment from both foreign and domestic middle class.
This is her formula: 5% from aid, 30% from trade, 30% from FDI, 10% from capital markets and the remaining 25% from remittances and harnessed domestic savings.
In fact, poverty levels continue to escalate and growth rates have steadily declined and millions continue to suffer.
Provocatively drawing a sharp contrast between African countries that have rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase, Moyo illuminates the way in which overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the ‘need’ for more aid.
Trade
Therefore for Africa to take its rightful position in the world’s global economy, then it must dream of becoming borderless in terms of doing business and not being dependent on aid. If we can create a single economic space, eliminate the regulatory and administrative physical barriers; then we are on the rise of taking our rightful position in the global economy and facilitate our efforts to reduce poverty.
The boosting of intra-African trade requires the adoption and implementation of current trade policies at the national, regional and continental levels, which should be geared specifically towards the promotion of intra-African trade.
For regional markets to operate efficiently there is the need for strong regional and domestic framework regulations on trade related issues of intellectual property rights, competition policies, investment, government’s procurement, trade and the environment. Non-tariff barriers such as staggering transaction cost, complex immigration procedures, limited capacities of border officials, costly import and export licensing procedures and lack of investments in trade association.
Trade is actually an engine of growth and if Africa is to sustain the current growth momenta which currently stand at averagely more than 5%, we should ensure that we increase the volume of trade within the continent.
Africa at the moment is paying up to 40% extra on transport itself of goods at the consumer end. When you look at this cost at the rest of the world it is averaging about 10%. So Africa remains uncompetitive not because of any insurmountable reasons but things that we can remove without additional investments. Studies show that if we remove these types of barriers to trade and have trade facilitation measures, we can have an additional $34billion of trade annually.
This will help Africa’s booming informal trade into the formal economy. This will mean more jobs for Africa’s 400 million young people, increased global competitiveness and less reliance on Western struggling economies and it could mean an end to food shortages across the region where hunger affects nearly 240 million people.
The trade challenges
A number of challenges have been recognized as hampering the continental Free Trade Zone agenda. These include undiversified und underdeveloped production structures, inadequate infrastructure, and prevalence of non-tariff barriers and lack of trade governance structures. Increased intra-African trade will enable the continent create a large market of close to one billion people as well as encourage the diversification of economies. In the post-independence period, integration has being a core element of the development strategy of African countries.
Unclear policies also hamper trade across the continent. For example, goods from Togo may be left at border in Nigeria with the reason that they do not satisfy local requirement. A trader may get his/her grain at the Burkina border only to find out that a ban on exports is imposed. Transport costs are very high. African leaders must implement current policies and existing legislation that help to reduce the challenges hampering trade in Africa.
Studies show that if we remove these types of barriers to trade and have trade facilitation measures, we can have an additional $34billion of trade annually. This will help Africa’s booming informal trade into the formal economy.
Trade facilitation can provide important opportunities for Africa by increasing the benefits from open trade, and contributing to economic growth and poverty reduction. However, the quest for more open trade is not an end in itself but rather driven by the experience that open trade provides more economic opportunities for people.
Producers can offer their goods and services to more customers, and consumers have more choices, lower prices, and access to innovations. Open markets increase prospects of producing and selling new ideas and products locally, regionally and in global markets, which leads to more income opportunities and the improvement of living standards on the continent. Africa needs Trade not Aid.
Paul Frimpong, a Chartered Economist (ACCE-Global), writes on the macro-economy and global affairs. He is also an African Affairs Analyst and Emerging Markets Strategist.
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G20 finance ministers agree global growth target of two percentage points
Ministers fail to outline a clear plan to achieve the target – which amounts to about $2tn – or consequences for missing it
The G20 nations will aim to increase global growth by at least two percentage points over the next five years, but are yet to endorse a clear action plan to achieve the target.
G20 finance ministers and central bank governors set the growth goal, an ambition that translates to about $US2tn in economic activity, after two days of meetings in Sydney.
In an acknowledgement of concerns about the impact of the US Federal Reserve’s tapering program, the official communiqué said all central banks “maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated”. Central banks are urged to be “mindful of impacts on the global economy”.
Host nation Australia had been pushing for ambitious global goals to increase economic growth.
The communique, published on Sunday, says there is “no room for complacency” and the G20 nations commit to develop new measures to foster growth.
“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2% above the trajectory implied by current policies over the coming five years,” the document says.
“This is over US$2tn more in real terms and will lead to significant additional jobs. To achieve this we will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies.”
But detailed plans to achieve the growth are yet to be enunciated.
The Australian treasurer, Joe Hockey, who hosted the weekend meeting, hailed the agreement to set a clear global growth target as significant.
Hockey said each country would take its plan for contributing to the global growth target to the G20 leaders’ summit in Brisbane in November.
“We are absolutely committed to working together to deliver on our ambition to lift the world’s economy by at least 2% of GDP over the next five years, thereby creating tens of millions of new jobs,” he said.
Hockey signalled that each country’s contribution to the target would vary, saying it was a combined goal. The G20 did not engage in “central planning” of individual economies, he said.
Asked to explain any consequences if the growth target was not achieved, Hockey said: “If we don’t achieve it there’ll be fewer jobs created and less economic growth and less prosperity; it’s as simple as that.”
The IMF managing director, Christine Lagarde, welcomed the meeting’s focus on growth as its “rallying factor”.
She said predicted hostility between advanced and emerging economies, particularly over the effect of US tapering, had not eventuated.
Lagarde said the IMF stood ready to provide support to Ukraine following days of political turmoil. She said this could include policy advice and financial assistance, but she pointed to potential negotiating complications as a result of the leadership upheaval.
“We need to have somebody to talk to because any discussions takes two: the IMF on the one hand, the representatives of a country on the other,” Lagarde said.
The UK chancellor, George Osborne, had called on the G20 to send a strong message that financial support would be available to help the people of Ukraine rebuild their country. Before the meeting Osborne also backed Australia’s push for commitments to lift global economic growth.
The US treasury secretary, Jack Lew, said the decision to focus on growth strategies was important because it was a “shared objective”. Lew contrasted the discussion with past debates over austerity measures.
“It’s in all of our interests and that’s why there was such a consensus in the discussions this weekend,” he said.
Lew said the US president, Barack Obama, would soon outline growth plans in his new budget. The elements were “not going to be a surprise”. They would include infrastructure projects to create “a lot of good middle-class jobs” and a foundation for economic growth.
Lew said the US also welcomed the G20 finance meeting’s agreement to move forward on tax co-operation.
The communique commits to a global response to base erosion and profit shifting, endorsing the common reporting standard for automatic exchange of tax information. Implementation details are expected to be fleshed out later this year.
The meeting also raised concern over lack of progress on reform of the International Monetary Fund (IMF).
G20 countries “deeply regret” that IMF quota and governance reforms agreed to in 2010 had not yet become effective, the communique said. It urged the US to ratify the reforms by April.
Lew said the US government would work with Congress to secure passage of the IMF reforms.
The IMF’s latest forecasts point to global growth of 3.7% this year and 4% in 2015.
An IMF report prepared for the G20 meeting says the recovery from the great recession has been disappointing, but outlines suggested strategies to raise world real GDP by about 2.25% in 2018. Actions would include product market reforms to increase competition and improve the business environment; reforms to increase labour market participation; and infrastructure investment.
The meeting welcomed recent signs of improvement in the global economy, in particular, growth strengthening in the United States, United Kingdom and Japan alongside continued solid growth in China and many emerging market economies, and the resumption of growth in the euro area.
But the communique said the global economy “remains far from achieving strong, sustainable and balanced growth”. It pointed to weaknesses in some areas of demand, recent volatility in financial markets, high levels of public debt, continuing global imbalances and remaining vulnerabilities within some economies.
The G20 economies committed to creating a climate that encouraged higher investment, particularly in infrastructure and small and medium enterprises.
The Australian prime minister, Tony Abbott, has vowed to use the nation’s presidency of the G20 to strike agreement on concrete actions to increase economic growth, lift employment and promote infrastructure investment. He has previously indicated that the G20 meeting of world leaders in the Queensland capital of Brisbane in November would focus on a commitment “to take practical action”.
By the time of the Brisbane summit the G20 aims to “substantially” complete core reforms set out in response to the global financial crisis, including building resilient financial institutions, ending “too big to fail”, addressing shadow banking risks and making derivatives markets safer.
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Rob Davies on the Special Economic Zones Bill 2013
Address by the Minister of Trade and Industry, Dr Rob Davies to the National Council of Provinces (NCOP), on the Special Economic Zones Bill 2013
18 February 2014
The Special Economic Zone (SEZ) Bill that is being tabled today aims to support a broader-based industrialisation growth path for our country, balanced regional industrial growth, and the development of more competitive and productive regional economies with strong up and downstream linkages in strategic value chains. Adoption of this Bill will be a significant milestone in pursuit of the aspirations expressed in the National Development Plan (NDP), New Growth Path (NGP) and Industrial Policy Action Plan (IPAP).
SEZs are defined as geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements and systems that are often different from those that apply in the rest of the country.
Preceding the SEZ Bill, the department of trade and industry (the dti) initiated the Industrial Development Zone (IDZ) programme under the Manufacturing Development Act (MDA) in 2000. The focus of the IDZ programme was largely to attract foreign direct investment, increase exportation of value added manufactured products and creates linkages between domestic and zone based industries. To date five IDZs have been designated (i.e Coega; East London, Richards Bay, OR Tambo and Saldanha Bay), with the newly designated Saldanha Bay in October 2013. Honourable speaker, I can confidently indicate to this house that there are already eight investors in the Oil and Gas sector that are signing to invest at Saldanha Bay IDZ. Three of the five IDZs in Coega, East London and Richards Bay are fully operational. Whilst these have achieved some major successes, 42 operational investments worth R4bn and created over 5,000 direct jobs and 43,000 construction jobs), some weaknesses on the implementation were identified during IDZ policy review, which include:
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weak governance,
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lack of IDZ incentives,
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poor stakeholder co-ordination, and
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lack of integrated planning.
Most importantly the criteria for IDZ designation were biased towards the development of coastal regions and ignored economic potentials existing in the inland regions; IDZs by nature are export oriented and vicinity to the sea or airport becomes strategic for logistics purposes. Due to the identified weaknesses above, the programme could not assist the country to unlock the long term development potential of all regions and reverse the process of economic marginalisation and perpetuation of spatial inequalities.
Confronted with these challenges (especially, the concentration of economic activities around metropolitan areas in three regions, namely Gauteng, KwaZulu-Natal and Western Cape), including economic crisis that started in 2008, the dti recognised that measures responding to both global and domestic economic conditions require a focus on new sources of competitiveness that lie in innovation and productivity, with an entrenched base in skills, infrastructure and efficient responsive state action, that is, more versatile policy instruments.
the dti has therefore identified SEZ programme as one of the appropriate mechanisms that will contribute towards the realisation of economic growth and development goals as envisaged in the IPAP, NGP and NDP. Besides the SEZ Bill serving as an enabler for the government to effectively regulate all SEZs including IDZs which are one category of SEZ, it also proposes an internationally competitive SEZs value proposition that would assist in attracting both domestic and foreign direct investments into the zones. The intention is that industrial production in the SEZs will focus on the manufacture of value added goods. Once designated, it is expected that each SEZ will have strong backward and forward linkages with other sectors in its locality building and strengthening localisation through supplier development programmes – a departure from the traditional SEZ model where you had SEZs as separate enclaves.
The Special Economic Zones Bill
As indicated above, Special Economic Zones are just one of many policy tools available to Government in its drive for increased industrialization. SEZs offer a potentially valuable tool to overcome some of the existing constraints to developing industrial capabilities, attracting investments and growing exports. The aim of the SEZ Bill seeks to boost private investment (domestic and foreign) to labour-intensive areas to increase job creation, competitiveness, skills and technology transfer and exports of beneficiated products.
The Bill builds on the experience that we have gained from the IDZ programme and introduces a number of new measures that take into consideration inputs by the general public and social partners at NEDLAC. The SEZ Bill thus provides for the:
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Designation, promotion, development, operation and management of SEZs,
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Determination of SEZ Policy and Strategy,
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Establishment of SEZ Advisory Board and SEZ Fund,
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Regulatory measures and incentives for SEZs to attract domestic and foreign direct investment, and
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Establishment of a single point of contact or One-Stop Shop to deliver government services.
The Bill introduces a variation of Special Economic Zones, to cater for the various socio-economic and regional/spatial planning considerations of the various spheres of government at local, provincial and national level. In particular, the SEZ Bill provides for the designation of the following types of SEZs:
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Free Ports: Duty free areas adjacent to a port of entry where imported goods may be unloaded for value-adding activities, repackaging, storage and subsequent re-export, subject to special customs procedures
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Free Trade Zones: a duty free area offering storage and distribution facilities for value-adding activities within the Special Economic Zone
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Industrial Development Zone: A purpose built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services
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Sector Development/Specialised Zones: A zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market
By making it possible to have different categories of Special Economic Zones we aim to address the previous challenges experienced within the IDZ Programme, allowing for tailoring of the individual SEZ’s Strategies, to fit with its individual needs and demands.
The Public Consultation Process
The SEZ Bill consultative process started in 2010 with all relevant stakeholders across three spheres of government and State Owned Enterprises, including National Treasury, SARS, NEDLAC and Business community.
MINMEC granted approval for the SEZ Bill and policy to be submitted to Cabinet in August 2011 and Cabinet approved the Bill for public consultation in December 2011. NEDLAC consultative process was finalized in October 2012 and the Bill was introduced to Parliament in March 2013.
The Parliamentary Portfolio Committee on Trade and Industry (‘the Portfolio Committee’) invited written submissions from stakeholders. Submissions were received from Business Unity South Africa (BUSA), the Centre for Development and Enterprise (CDE), the Chemical and Allied Industries’ Association (CAIA), the East London Industrial Development Zone (ELIDZ), the Free Market Foundation (FMF), the Minerals Processing and Beneficiation Industries Association of Southern Africa (MPBIASA), Mr Paul Hjul, and the Richards Bay Industrial Development Zone (RBIDZ).
Some of the issues addressed, which have further been elucidated on and addressed in the Bill, include the following:
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Defining the composition and nature of the Special Economic Zones Advisory Board (the SEZ Advisory Board), term of office of members and removal of SEZ Advisory Board;
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Describing roles and functions of and the relationship between the various structures created in the Bill;
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Clarifying how the one-stop-shop will operate in order to streamline approval processes and reduce red-tape;
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Providing for a public consultation process prior to the Minister making certain decisions; and
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Explaining details on the IDZ transitional arrangements.
After the Portfolio Committee supported the Bill, it was then tabled at National Assembly where it was supported and referred to the National Council of Provinces for concurrence. Through the NCOP, the Bill was presented to eight out of nine provincial legislatures and at 16 provincial public hearing meetings. The Bill received an overwhelming support from the provinces and society at large. The level of support accorded to the Bill by all parties involved is a clear indication that South Africa wants to realise a higher industrial path and improvement of livelihood of its citizens.
The uniqueness of Special Economic Zones
The above consultation processes resulted into an improved formal regulatory framework supporting the SEZ programme. Furthermore, extensive regional and international benchmark studies were conducted to determine the appropriate support measures for the SEZ Programme that would allow for South Africa to compete in the international SEZ environment.
The following support measures were put in place to enhance the South Africa’s SEZ value proposition including:
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A broader SEZ Incentives Strategy: Allowing for 15% Corporate Tax, Building Tax Allowance, Employment Tax Incentive, Customs Controlled Area (VAT exemption and duty free) and Accelerated 12i Tax Allowance.
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An Enhanced Funding Strategy: Including a comprehensive SEZ Fund, Mix of funding instruments, PPP arrangements, etc.
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Infrastructure Strategy: Accommodation of bulk infrastructure requirements by government through the SEZ Fund, greater SEZ location considerations, greater involvement of various stakeholders’ roles in providing infrastructure in and out of zone,
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Skills & Supplier Development: Skills development strategies and frameworks for SEZs are being formulated jointly by the dti and relevant international experts and national authorities. These include Supplier development programmes to develop our local businesses in and around SEZs, as well as continuous training of civil servants on SEZ in partnership with Chinese and other international partners.
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One Stop Shop (OSS) Strategy: To reduce bureaucracy and red tape (cost of doing business) of government approvals and applications processing, a single point of investor contact will be implemented within each SEZ. This OSS platform aims to reduce information search & transaction costs for investors locating within SEZs, to facilitate permits & licences for investors, to reduce steps in approvals, and to provide a more effective and sustainable investor after care service. The dti is in the process of finalising the One Stop Shop Delivery model that will see the roll out soon.
Conclusion
As alluded to above, the dti has consulted broadly with the general public since 2010, with provincial departments responsible for economic development under the auspices of MIN-MEC and provincial legislatures; various national government departments including National Treasury, SARS and the Economic Development Department; existing Industrial Development Zones; and municipalities represented by the South African Local Government Association (‘SALGA’) at meetings of MIN-MEC; including Eskom, National Planning Commission, Industrial Development Corporation and Development Bank of Southern Africa.
The SEZ tax incentives offering that have already been pronounced by the Minister of Finance will ensure that we are able to provide an investment environment that competes effectively with other locations in the world. The incentives will become effective, upon enactment of the SEZ Bill.
the dti is currently preparing for the implementation of the SEZ Bill by consulting with all the provinces in identifying the potential SEZs. As a result, together we have commissioned pre-feasibility and feasibilities studies in the various provinces. The designation of new SEZs will take place once the new SEZ Act and Regulations are in place.
It is thus imperative that the SEZ Bill is expediently considered in order to take advantage of this huge imminent interest and opportunity. This house’s support for the SEZ Bill would be greatly welcomed.
I would like to express my sincere appreciation to the Select Committee on Trade and International Relations and the Provinces that has tirelessly worked on the SEZ Bill and ensured not only that it is completed within a short space of time, but ensured that a good quality Bill comes out of its process. The Committee’s contribution in this regard has been invaluable. My thanks also go to the dti team for their hard work.
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Kenya to lose export edge if new EPA delays, says EU
Kenya could lose more than other East African Community member states if the trade bloc does not sign a new Economic Partnership Agreement with the European Union.
The EU delegation to Kenya yesterday said it is upon the country to marshal support for the international free trade treaty, whose signing should be concluded by October 1 to retain competitiveness of its exports.
Outstanding issues on the EPA include clauses providing for ‘most favoured nation’, export taxes, and non-execution. “These are the ones requiring political will, as well as the constellation of EAC states, each of which is sovereign, making it more of structural negotiation to ensure convergence,” said Lodewijk Briët, ambassador and head of EU delegation to Kenya.
“We need to realise that by now there’s a strong political impetus to conclude the EPA negotiations,” he said. The EPA is expected to provide free market access and co-operation support between the two trade blocs. Trade liberalisation will have to be compatible with the World Trade Organisation’s rules. Presently, Kenya exports to the EU under the Market Access Regulations since 2007, but this will be repealed on October 1.
Kenya is categorised as a developing country, while Uganda, Rwanda, Burundi and Tanzania are considered Least Developed Countries. The LDCs will continue to gain favourable access to the EU market under the ‘Everything But Arms’ scheme, which grants ‘duty-free, quota-free’ access to imports of all their products.
Tariffs will be hiked in October, with flower exports attracting a duty of 8.5 per cent, which will make them uncompetitive against other exporters such as Colombia.
“The purpose of these negotiations was to sign the EPA between regions. Kenya cannot therefore sign separately … the EAC rules do not allow that,” said Christophe De Vroey, the trade and communication counsellor at the EU delegation to Kenya.
“If we sign the agreement before October 1 … we will apply the tariffs but possibly refund once ratification is concluded,” said De Vroey. The EU is a 28-member states trade bloc, offering access to a potential 0.5 billion consumers. The region makes up Kenya’s biggest export destination, taking up loads of cut flowers, French beans, coffee and tea, fruits, fish and textiles.
“What we (EU) stand to lose is in terms of quality and the comprehensiveness of our relations. The longer these negotiations drag on, the stronger the trade erosion that occurs,” said Briët.
According to the delegation, 23 per cent of Kenya’s exports – worth Sh110 billion – went to the EU. EPA negotiations have been on-going for 12 years now, initially dragged by “lack of political will”.
“Time is of essence. We must provide certainty and predictability to operators and potential investors. Economically, ambiguity is the worst enemy of investment and growth,” the delegation said.
EAC states will be expected to open up their markets gradually to EU imports – phasing out duties – over 20 years to 2033 if the EPA is concluded this year.
While EAC exports are expected to have 100 per cent access to the EU market, the latter will be allowed access of up to 83 per cent of the EAC trade bloc. About 17 per cent of EU goods are labelled ‘sensitive’ and will continue to taxed to avoid “undue competition”.
Source: http://www.the-star.co.ke/news/article-155743/kenya-lose-export-edge-if-new-epa-delays-says-eu
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China-Africa trade exceeds $200 billion
China-Africa trade totaled more than $200 billion last year, Chinese President Xi Jinping said Thursday, highlighting the Asian powerhouse’s burgeoning trade and investment ties with the continent.
“In 2013, Chinese-African trade surpassed the $200 billion mark for the first time, making China Africa’s biggest trading partner,” Xi told visiting Senegalese President Macky Sall, adding that Chinese direct investment in Africa grew 44 percent.
“That all stands witness to the endlessly renewed vitality of Sino-African friendship, to the scale of the potential for co-operation and the excellent outlook for the new kind of Sino-African strategic partnership,” Xi said at Beijing’s Great Hall of the People.
Xi did not give an exact total.
But China-Africa trade has boomed in line with the Asian country’s rise to become the world’s second-biggest economy, which has been accompanied by a thirst for African natural resources to help fuel its growth.
Underscoring the continent’s importance, Xi visited Tanzania, South Africa and the Republic of Congo as part of his first overseas tour after he become president in March last year.
But China’s growing role has also sparked tensions in some countries.
In February last year, for example, the Zambian government seized control of a Chinese-owned coal company due to poor compliance with safety and environmental standards, its mines minister said. In 2012 workers at the mine killed a Chinese manager during rioting over work conditions.
Acclaimed primatologist Jane Goodall told AFP in a recent interview that China was exploiting Africa’s resources just as European colonizers did, with disastrous effects for the environment.
Related news story: China, Senegal decide to build long-term partnership (Xinhua, 20 February 2014)
Source: http://www.arabnews.com/news/528746
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South Africa, Africa and International Investment Agreements
Remarks by Dr Rob Davies at the Centre for Conflict Studies Public Dialogue
Cape Town, 17 February 2014
At the outset, let me thank the Centre for Conflict Studies and its Director, Dr Adekeye Adebajo, for convening this public dialogue on what is clearly an issue of growing international and national interest.
I want to congratulate the Centre for organizing the Seminar on International Investment Agreements and thank all the distinguished participants for their attendance, particularly those who have travelled from outside South Africa to be here. I am informed that this two-day Seminar, which started today, has already engaged in good discussion and addressed many of the questions I will raise in my remarks.
In my comments today, I want to touch on South Africa’s longstanding policy approach to foreign direct investment (FDI); our concerns with international investment agreements; and, in light of this, the work the South African Government currently undertaking in this important area. I will conclude with some comments for future work in this area.
To provide some context, I begin by recalling the South African Government’s commitment to an economic development strategy that will accelerate growth along a path that generates sustainable, decent jobs in order to reduce the poverty and the extreme inequalities that characterise our society and economy.
Download the full speech here.
See also: Investment bill ‘adds to uncertainty’ in SA (BDlive, 18 February 2014)
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Five questions answered on Africa’s rising economic growth
There has been a lot of talk about Africa’s rising economic prosperity and whether it is sustainable and deeply rooted in reducing extreme poverty across the continent. So, I sat down to answer some basic fundamental questions that I often get asked about Africa’s growth and development.
Why does Africa show the highest growth prospects out of any continent in the world?
There is no doubt that favorable commodity prices have and will be a key driver of growth for sub-Sahara Africa. The so-called commodity super-cycle has benefited traditional oil exporters, such as Nigeria and Angola, and new ones, like Ghana. Demand for natural resources from emerging markets, especially China, has increased in the last decade and remains important. As noted in the BP Energy Outlook 2035, Africa will remain an important producer of oil and natural gas, accounting for 10 percent of global oil and 9 percent of natural gas production in 2035.
In addition, the continuation of good medium-term policies and structural reforms bodes well for future growth in the region. Africa has “democratized” to some extent, and violence and armed conflicts have decreased in spite of a few hot spots. Half of the world’s future population growth will be driven by Africa (not because of higher fertility, which is declining, but because of longer life expectancy). This trend could lead to a “demographic dividend” of an adult population of 800 million by 2030 (compared to 460 million in 2010). Africa’s rapid urbanization and burgeoning middle class could generate hundreds of millions of consumers.
To sustain its growth, however, Africa will need to continue reducing poverty and inequality, and step up the transformation of its economy. As noted by Dani Rodrik, African countries, unlike East Asian countries, have not yet been able to turn their farmers into manufacturing workers, diversify their economies, and export a range of increasingly sophisticated goods. Moreover, many African countries are joining the resource-rich country club and with it come not only opportunities but also challenges. Good governance will be needed to enable future generations of Africans to benefit from this new wealth. Low global interest rates and high commodity prices have opened a window of opportunity for African countries to reform. This window will not always remain opened, and reform is needed now.
What role does China play in Africa’s economic development?
China’s economic performance shows that a transformational agenda can succeed and lift a large segment of the population out of poverty. Beyond being a benchmark, China has become the largest single trading partner for sub-Saharan Africa, with a 17 percent share of total trade. In comparison, India has a 6 percent share and Brazil, a 3 percent share. The so-called Group of Five (Indonesia, Malaysia, Saudi Arabia, Thailand and the United Arab Emirates) accounts for only 5 percent of sub-Saharan Africa’s total trade.
China also accounts for 16 percent of total foreign direct investment to sub-Saharan Africa and has become a key investor and provider of aid. There is no doubt that China is interested in Africa’s natural resources (such as copper in Zambia and oil in Nigeria and Sudan), but it is expanding its focus. Over 2,000 Chinese enterprises are investing and developing in more than 50 African countries, and South Africa is the leading recipient of Chinese foreign direct investment.
The key advantage of China in Africa is speed. Chinese firms are able to deliver quickly and work in close coordination with their financial and other national partners. Speed is a big comparative advantage in Africa. For instance, the continent has large infrastructure needs and African policymakers are under pressure to deliver. They are tempted to agree to an offer to build a coal-generated power plant in a couple of years when their population and businesses are getting increasingly disgruntled by sometimes daily power outages. They agree to this at the expense of adopting less polluting technologies.
What are the African countries to which we should being paying close attention?
South Africa has always been a key recipient of foreign investment given the sophistication of its economy.
In addition, natural resource-rich countries in Africa such as Angola and Nigeria will remain a key destination of foreign investment, especially given that the number of resource-rich countries will only increase with recent advancements in offshore oil exploration and extraction. In fact, Japanese Prime Minister Shinzo Abe recently visited Mozambique to secure natural gas contracts. Countries in the East African Community, such as Kenya, Uganda and Tanzania, are now discovering oil. Metal-exporting countries such as Burkina Faso, Ghana and Tanzania are also attractive.
As a non-natural resource-rich country, Ethiopia has a large population of more than 80 million people, high GDP growth, and a government-led strategy to attract foreign investment in some sectors. Rwanda is a smaller economy but it is growing rapidly and is trying to leverage its membership to the East African Community. In West Africa, Côte d’Ivoire is fast recovering from armed conflict, and Ghana remains a darling of foreign investors.
What are key areas of opportunity to capitalize on for Africa’s development?
Large infrastructure projects in Africa need foreign partners. Infrastructure spending in Africa is estimated to reach $93 billion per year, and tax revenues and other domestic resources will not be enough to fill the financing gap for infrastructure projects.
Information and communications technology (ICT) needs remain high in spite of the rapid growth in mobile phones and mobile banking. Major companies, including Google, Microsoft, Huawei and GE, are betting on the continent and investing in research and development.
The rising African middle class is also attracting investors in the retail sector. For instance, French supermarket chain Carrefour and American big box store Walmart have expanded their operations to Africa. Banking is also attractive given the low financial depth in Africa. Foreign investors are now innovating to focus on urban centers with a high potential for consumer spending. In 2020, the household spending of Alexandria, Cairo, Cape Town, Johannesburg and Lagos will total $25 billion dollars.
One untapped area is agriculture for major investment. Africa has about half of the planet’s arable land and there are potentially large expected returns from this sector, especially if its infrastructure gap is reduced.
Finally, portfolio investments in equity markets, domestic bond markets, and Eurobond markets are increasing and private equity firms are increasingly investing in the region. In 2013, the MSCI African Frontier Market (equity) index was up 28.5 percent and $10.7 billion of sovereign bonds were issued by capital markets in Africa. There are now five times more sovereign ratings in Africa than there were in 2000.
Is the whole continent progressing or are only a few countries?
The extent to which overall growth is shared by the 54 countries in Africa is quite impressive. This being said, some trouble spots remain. While some fragile countries like Liberia, Sierra Leone and especially Rwanda have been able to move forward from unfortunate legacies of violence and in some cases even genocide, the situation in other countries is worsening, particularly in the Central African Republic and South Sudan (which is oil-rich). In spite of recent progress, the situation also remains fragile in the east of the Democratic Republic of the Congo and in Mali, and press reports often remind us of the piracy situation in Somalia’s Gulf of Aden and terrorist acts by al-Shabab. Even in the north of Nigeria there is violence attributed to Boko Haram as well as piracy in the Gulf of Guinea. There is a need to build an African-owned framework and response mechanism to prevent and resolve violent conflict and crises in the continent.
African efforts to increase economic integration are helping to strengthen regional growth as well. Economic and trade integration across Africa will help foreign investors access larger markets and reduce transaction costs, including costs associated with regional infrastructure projects. African countries are trying to strengthen regional integration through regional economic communities and are negotiating free trade agreements and customs unions with the goal of ultimately having common currencies. We are far from one common African currency for the continent but we are beginning to some steps forward in this area. The East African Community – which includes Burundi, Kenya, Rwanda, Tanzania and Uganda – is a market of 150 million people and is set to become a monetary union soon. The former French colonies in Africa all use the same currency, which is pegged to the euro and have common institutions.
What is striking is that there is a consensus in African policy circles that we are witnessing Africa’s moment. The challenge will be in implementing the policy roadmap quickly as there is little time left for transformation. The World Bank notes that half of the region’s population is under 25 years of age. Each year between 2015 and 2035, there will be 500,000 more 15-year-olds than the year before. The challenge will be to transform this youth bulge into an opportunity.
Amadou Sy is a senior fellow in the Africa Growth Initiative and currently serves as a member of the Editorial Board of the Global Credit Review. His research focuses on banking, capital markets, and macroeconomics in Africa and emerging markets.
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Technical officials discuss EAC-USA Trade and Investment Partnership in Bujumbura
Technical Officials from the East African Community (EAC) and the United States (U.S.) met 12 to 15 February 2014 in Bujumbura, Burundi to discuss Trade Africa and the EAC – U.S. Trade and Investment Partnership (TIP). In particular, the Technical Officials discussed among others, the Ministerial guidance provided in August 2013; AGOA; Regional Investment Treaty; Trade Facilitation; Trade Capacity Building, and Commercial Dialogue.
Both Parties reviewed a summary of the last EAC – U.S. Trade Ministerial Meeting held on the sidelines of the August 2013 AGOA Forum in Addis Ababa, Ethiopia. Both Parties also discussed the need to make substantial progress on all areas of Trade Africa and the Trade and Investment Partnership in advance of the first U.S.-Africa Leaders Summit in Washington, DC on August 5 and 6, 2014. The U.S. and EAC teams agreed to work as expeditiously as possible to create concrete actions and outcomes in all areas under discussion by the time of the Leaders’ Summit.
Both Parties also discussed the Obama Administration’s review of the African Growth and Opportunity Act (AGOA) in advance of its scheduled expiration in September 2015. The U.S. underscored the Obama Administration’s commitment to a seamless renewal of AGOA and described the process by which the U.S. Congress would have to develop and pass legislation in order for AGOA to be re-authorized.
The U.S. noted the review offers an opportunity to assess the future of the U.S.-Africa trade and investment relationship from a broad and holistic perspective, to include an assessment of mechanisms to make AGOA trade preferences more effective and identification of complementary, non-tariff focused efforts to support Africa’s integration into the global trading system.
The U.S. also noted the economic conditions in Africa are today substantially different from when AGOA was enacted in 2000. Africa’s evolving trading regimes with other global partners is also being considered as part of the U.S. AGOA review.
Both Parties also discussed the African countries’ recommendations for AGOA renewal that was presented during the 2013 AGOA Forum in Addis Ababa, and the U.S. affirmed these African views are being considered as part of the Administration’s comprehensive review. The U.S. and EAC also discussed strategies to increase the volume and number of products exported from EAC Partner States to the U.S. as well as to increase the presence and competitiveness of U.S. businesses in the EAC.
Both Parties continued exploratory discussions on a proposed Regional Investment Treaty, discussed the approach on Trade Facilitation, SPS and TBT, and agreed on a plan for the next steps to be undertaken in March and April 2014.
On Trade Capacity Building, the USAID presented a summary of their current program under the new USAID East Africa Trade and Investment Hub, highlighting four areas of activity: deepening regional integration through support to the EAC Secretariat; promoting regional food security through improved markets and market information; reducing the time and cost of trade across the region; and increasing exports under AGOA through increased linkages between U.S. and African businesses and trade associations.
Both Parties also discussed the recent and planned private sector engagement under the EAC-U.S. Commercial Dialogue.
The EAC noted the need for national and sectoral level private sector engagement under the Commercial Dialogue and the U.S. noted its regionally based Commercial Counselor plans upcoming travels to the EAC Partner States to discuss ways to deepen EAC and U.S. private sector cooperation.
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Azevêdo’s health-check on global trade: Growth recovering but restrictions on the rise
Director-General Roberto Azevêdo, in presenting his first global trade-monitoring report to WTO members on 17 February 2014, said that trade growth projections for this year are “much improved, hovering somewhere between 4.0% and 4.5%.” However, he said “407 new restrictive measures were reported during the review period,” affecting 1.3 % of world merchandise imports – valued at $240 billion. This is what he said:
Good afternoon everyone.
The Bali Package was an historic achievement, representing a significant boost for trade, growth and development around the world. But its true significance lies in what it allows us to do next – to conclude the Doha Development Agenda.
As we prepare to seize this opportunity in 2014, it is timely to look back on the challenges which emerged in the international trading environment in 2013 and to consider how members might respond.
You have all received my report on developments in the international trading environment which was circulated on 31 January. It was posted on the WTO website on the same date, according to approved procedures concerning unrestricted documents.
The report aims to provide Members with an assessment of a range of trade and trade-related issues and trends during the period from mid-October 2012 to mid-November 2013.
Put simply, it is a health-check on global trade – and I think the diagnosis is cautiously positive although there are still reasons to be concerned about trade restrictive measures. We were not in great shape last year – and we have picked up a few bad habits which we need to shake off. But overall trade growth is beginning to recover and we have a healthier outlook for 2014.
Before I go into detail on the findings of the report, I’d just like to give you some background on its preparation.
Preparing the Report
As in the past, the information on the measures included in this Report has been collected from inputs submitted by Members and Observers, as well as from other official and public sources.
56 Members replied to the initial request for information on measures taken during the period under review.
All country-specific information reflected in the annexes was then sent for verification to the delegation concerned. And if it was not possible to verify the information then this has been noted in the annexes.
I would like to thank those delegations who have participated in this important exercise.
Unfortunately, however, the number of Members that responded to the request for information on their new trade measures still remains small. In fact it slightly declined from 38% of the membership in 2012 to 35% in 2013.
Although many were also very helpful in responding to the request for verification of the accuracy of the information contained in the annexes, the reply rate was still only around 50% – which again is slightly down from last year’s report.
The lack of sufficient information has sometimes been a criticism of the monitoring reports – particularly when it comes to behind-the-border measures, including general economic support measures.
As a first step towards improved transparency, and following the proposal made by several members at last year’s meeting which was welcomed by all delegations, the Report includes a comprehensive overview of WTO notification obligations and the status of their implementation by members.
We should now consider what more we can do to improve the transparency of general economic support measures and the overall participation in the monitoring of such measures.
Findings of the Report
Let me now turn to some of the substantive findings of the Report.
The context is all important here. The backdrop to the review period was one of slow and uneven growth in the global economy. We should bear this in mind when considering our findings.
First, in terms of trade in goods, its volume expanded by less than 2.5% in 2013.
Growth projections for 2014 are much improved, hovering somewhere between 4.0% and 4.5% – but this is still below the historical average since 1990 of 5.5%.
We are, of course, keeping a close eye on recent developments in the global economy and their impact on these projections.
The WTO will be releasing its preliminary trade statistics for 2013 and updated forecasts for both 2014 and 2015 in early April.
Regarding developments in trade measures, there are two specific categories: trade remedy actions; and other trade measures.
Counting both categories together the Report shows that overall 407 new restrictive measures were reported during the review period.
This is compared to 308 in the same period a year earlier.
These new restrictive measures affect about 1.3% of world merchandise imports – valued at 240 billion dollars.
Moreover, they add to the existing stock of restrictions and other impediments to the flow of international trade.
Looking specifically at trade remedy actions – which were mostly anti-dumping and safeguard measures – we saw 217 initiations of new trade remedy investigations. This covers around 0.2% of world imports, and compares to 138 terminations of either investigations or existing duties covering around 0.1% of world imports.
As was the case in 2012, therefore, more trade remedy actions were initiated than were terminated in 2013.
Trade remedy activity is therefore clearly on the rise, and Members should reflect on what the causes of that might be.
The number of new other trade measures also increased from 164 in the previous year to 190 during the review period.
The majority of such new measures were applied to imports mostly in the form of import tariff increases and customs procedures, covering around 1.1% of world goods imports.
Compared to the trend in new restrictive measures, the number of new trade-facilitating measures reported by Members fell to 107 in 2013, well down from 162 a year earlier. These measures cover the equivalent of 1.4% of world merchandise imports – which is approximately 258 billion dollars.
These measures, plus the number of terminations of trade remedy actions, represent little more than one-third of the total measures covered in the Report.
This paints a rather unflattering picture of the ratio of trade restrictive measures to facilitation measures.
The Individual Trade Policy Reviews undertaken in 2013 show that some WTO Members are making genuine efforts to resist domestic pressures to erect trade barriers.
But we must acknowledge that the stock of current trade restrictions and distortions continues to accumulate.
I strongly believe we have a collective responsibility to attend to the risk posed by the cumulative effect of new and existing trade restrictions.
The Trade Facilitation Agreement passed in Bali takes on even greater significance against this backdrop – and it reinforces the importance of implementing that Agreement in a timely and efficient way.
Let me also draw your attention to the issues of regional trade agreements.
During the period covered by this Report, Members notified 23 new RTAs to the WTO, bringing the total number in force today to 250.
Negotiations on new RTAs are also continuing, in some cases between parties that collectively account for very substantial shares of world trade and GDP.
My view is that these initiatives are positive and are to be welcomed – but they can only ever be one part of the wider picture. Agreements such as these cannot be sufficient on their own to ensure gains which can be realised on a global scale. In fact, the proliferation of regulations and standards could multiply costs rather than reduce them.
As we all know, the multilateral trading system was never the only option for international trade negotiations. It has always co‑existed with, and benefitted from, other initiatives. They are not mutually exclusive alternatives.
As the RTAs progress and result in deeper liberalization and rules-making, the WTO must follow with an update of its own disciplines, so as to ensure a sound foundation for a level playing field to all Members.
We must think about how the two processes can move forward together to reduce costs effectively and to curb protectionism.
Issues and challenges
As I have said before, 2014 is a pivotal year for the WTO. It is the year that we will implement our first negotiated outcomes – and the year that the Doha Round is put back on track.
So, in closing, I would like to highlight some of the key issues and challenges that we face in moving forward with our work in 2014.
First, I have already made reference to the continued accumulation of trade restrictions and the new and significant developments in the area of RTAs. Both areas have significant ramifications for the evolution of the multilateral trading system and they merit priority attention by policymakers.
Second, I think transparency is another area where we should have a frank discussion. Clearly, better transparency of trade and trade-related measures is a key factor affecting all aspects of the WTO’s core functions.
This Report shows that there is considerable scope to improve the compliance with the many obligatory transparency mechanisms that exist and that underpin the effectiveness of WTO rules generally.
The sharing of information among Members is not just essential for the WTO’s surveillance activities through the Trade Policy Review Mechanism and the trade monitoring exercise. It is also essential for: the proper implementation of WTO agreements; avoiding unnecessary trade disputes; and completing successful negotiations.
Improving this aspect of the functioning of the WTO requires no new mandate; we simply have to be better at applying the existing rules. In this sense the Report is a call to action.
Third, the positive outcome of Bali creates an opportunity for you, the members, to take steps to reinvigorate the multilateral trading system.
Building on the commitment to multilateralism which Ministers showed in Bali, we should now consider how to create a better understanding of, and support for, the benefits of multilateral trade cooperation.
And in doing so we must always bear in mind the many remaining traditional trade barriers and distortions that persist in the trading system, and the need to address them.
So, Mr Chairman, that concludes the health-check.
Thank you all for listening. I look forward to our discussion.
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China and Africa must redefine new terms of engagement
In Africa, exports are booming and export markets have become more diversified.
Foreign direct investments have increased by a factor of six over the past decade. Private entrepreneurs have emerged as a dynamic force for change, driving innovation and transforming outdated business models. There is an emergent middle class, although its size is often exaggerated. For the first time in over a generation, the number of people living in poverty have fallen; fewer children are dying before their fifth birthday and more are getting into school.
Africa and the West
Africa has had 50 years of development partnership with the West and even though still continues to, but really, there is not much change experienced on the continent. This has sent a lot of frustration shared by people not only on the African continent but by people in the West as well. Questions are been thrown at the West as to why after several years and several billions poured into Africa, there has not been a significant change on the continent. This and other questions are very legitimate to be tabled before both the donor west and recipient Africa.
The most intriguing aspect is that, Africans themselves are up on their toes and asking questions as to whether they are better off without the West/traditional donors or are there alternatives to this model. Can we as Africans form a different development partnership which can bring us the change that we so seek?
The coming of China
For the past decade, there has been a new friend of Africa in town – that whom the whole people are pointing at, saying, – ‘I like that’; ‘I want that’. I am talking about China in Africa. For many Africa’s, China is now the number trading partner.
The country has emerged as Africa’s largest trading partner. Two-way trade has increased dramatically to an all-time high of $166.3 billion, triple the figure for 2006. Both imports and exports have registered impressive growth rates. According to estimates, there are around 800 Chinese firms in Africa, investing in the infrastructure, energy and banking sectors.
This enthusiasm has led Africa to sit at the same table with China, the new development partner. The China-Africa relation started dating back to the 1960s and 1970s. But the relationship came to the fore in 2006 when 48 African leaders attended a joint forum in Beijing. The Forum on China-Africa Cooperation (FOCAC) is the name of the joint meeting between the People’s Republic of China and the states of Africa. There have been five summits held to date, with the most recent meeting having occurred from July 19-20, 2012 in Beijing, China.
The Forum on China-Africa Co-operation (FOCAC) which was held historically on November 2006, marked the beginning of a new chapter of China-Africa relations. This forum held in Beijing saw in an enthusiastic attendance of about 43 African heads of states.
This however has created some form of schism especially between the West-Europe and China’s share of trade on the continent. Without doubt, China for the past decade has made a significant share of trade with the African continent. In 2014 and beyond, a lot more China would be seen as governments are seeking to sign new deals and enter into great deals – infrastructure deals with China.
The Critics
In an August 30, 2012 article published by the Express Tribune, it stated that “It is indeed ironic, that the very nations that divided up Africa and its peoples in the last quarter of the 19th century are accusing the Chinese of being neocolonialists. The original scramble for Africa took place between 1884 and 1885 following a conference in Berlin. As in other parts of the globe, the colonial powers left deep imprints on the continent. Some of the main problems that continue to plague Africa were perpetuated, nee fostered, by the colonial powers to further their own ends. The frequent outbreak of violence between Hutus and the Tutsis in Rwanda is one such example where Belgian policy favoured the minority Tutsis much to the chagrin of the majority Hutus. Post-independence, this historical sense of deprivation has often led to acts of ethnic cleansing carried out by the majority. Economic exploitation and policies favouring firms from the metropole were also promoted by the colonial powers”.
On the other hand, Chinese investment in the region is not based on extracting monopoly contracts for its firms. Similarly, in terms of development lending, as opposed to conditional lending by multilateral agencies (such as the World Bank) controlled by developed countries, Chinese aid to the region is unconditional and usually spent on infrastructure projects that have a greater impact on people’s lives. Sinopec, one of the leading Chinese state-owned oil companies, acquired oil concessions in Angola on the back of an oil-backed credit of $2 billion from China’s Eximbank to rebuild the country’s railways, state buildings, hospitals and roads. Far from being seen as neocolonialist, the “Beijing consensus” between African countries and China – to borrow a term coined by Joshua Cooper Ramo of the UK-based Foreign Policy Centre – is viewed as a much more attractive alternative economic development model in the continent, compared to the Washington consensus.
The Chinese Strategy
The Chinese strategy is hinged on a very simple economic principle – “we are here for development”. On government to government level- the Chinese approach has been non-interference, no political strings attached and mutual benefits. Of course, one would be very naïve to ignore the Chinese interest. Whichever way, their involvement with Africa has saved the continent on many fronts. It has helped Africa to diversify and hence helped to escape the hard consequences of the recent past global economic and financial crises as was felt heavily in other parts of the world.
In 2006, the Chinese government adopted Africa-China policy detailing how their engagement with Africa is going to be mutually beneficial. The policy was characterized on sincerity, friendship and equality, mutual benefit, reciprocity and common prosperity; mutual support and close coordination as well as learning from each other and seeking common development.
African countries was able to weather the global economic crisis fairly well due in large part to a shift away from their traditional trading partners – primarily the United States and the European Union – toward China, India and other emerging markets.
Globally, there is been the debate of whose system is working and going forward, would continue to work to spur economic growth and development. Is it the West’s private capitalism or China’s state capitalism; liberal democracy or the de-emphasis on democracy; West’s political rights over economic rights or China’s economic rights over political rights.
Again, there are a lot of issues that have been raised internationally and diplomatically, as to the ethics of China’s involvement in Africa. Also, there is the question as to whether China is really an emerging market or should they be classified as a fully developed economy together with the fact that they are also a member of the UN Security Council? And based on that, should they be playing a greater role in terms of conflict resolutions in Africa?
The point is that, Africa wants to develop-grow and transform its economies. In 2014 and beyond, African countries would continue to cultivate and build on these new and promising economic relationships with China, obviously with a new approach that would be mutually beneficial. Whiles Europe continuous to be Africa’s trading partner, China, in particular, has emerged as an important and dynamic export destination for Africa. China’s share of exports from Africa has increased significantly over the last decade from 3 percent in 1998 to 15 percent in 2008. In 2009, China overtook the United States to become Africa’s largest trading partner. China again is by far the fastest growing external source of infrastructure financing for the continent-the roads, dams, rails etc.
At the level of attitude, China sees its interest in development as directly linked with Africa. Of course, that is what has necessitated for the constant engagement between African countries and China. China has a huge population to feed; talk of domestic demand for potable water, arable land, oils, minerals etc. China therefore sees Africa as the best destination to meet the increasing demand domestically.
The Africa strategy
A wind of policy swing began blowing in 2013 and would continue in 2014 and beyond to position Africa well in this relationship. Over the last decade, the China-Africa relationship has been dictated by China’s interest in Africa’s natural resources. Therefore, for African countries to maximize the potential benefits from this partnership, in 2014 and beyond, African governments must articulate their own comprehensive China policy, which should include strategies for engagement beyond natural resources.
Moreover, African government should take the advantage of increasing trade ties with China to gain access to other Asian markets more broadly and to diversify the African region’s export products.
China will continue to remain an important trading partner for Africa over the next decade. Therefore Africa should look at means to maximize on this relationship to spur economic growth and development, reduce poverty and reduce youth unemployment.
Paul Frimpong, a Chartered Economist (ACCE-Global), writes on the macro-economy and global affairs. He is also an African Affairs Analyst and Emerging Markets Strategist.
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India to develop people-centred technology with BRICS partners
India will collaborate with the four other BRICS countries in science and technology to generate new knowledge and develop innovative products, services and processes, critical to its and the grouping’s growing economies.
Science and technology ministers of Brazil, Russia, India, China and South Africa (BRICS) met at Kleinmond, southeast of Cape Town, South Africa, last week and agreed to promote partnerships also with other strategic actors in the developing world.
They zeroed in on five sectors of climate change and mitigation of natural disasters; water resources and pollution treatment; geospatial technology and its applications; alternative and renewable energy; and astronomy to share experiences and complementarities.
India would thus drive geospatial technology and its application, while Brazil will lead climate change and natural disasters. Russia would head water resources and pollution treatment.
New and renewable energy and energy efficiency would be led by China while South Africa would steer astronomy.
Thirumalachari Ramasami, secretary, department of science and technology, represented India at the first ministerial on “A Strategic Partnership for Equitable Growth and Sustainable Development”.
The ministers reached a Memorandum of Understanding (MoU) to stimulate joint investment in the development of high technologies, create common technology platforms and set up centres of applied research and innovation laboratories.
The MOU, officials said, will serve as the “strategic inter-governmental framework” that would be signed by the heads of state and government at the 6th BRICS Summit scheduled for July in Fortaleza, Brazil.
The Feb 10-11 meeting, held as per the “eThekwini declaration and Action Plan” adopted at the Durban Summit last year, also ensured complementarities vis-à-vis cooperation with Africa, notably regarding increased access to technology as well as the launch of the BRICS Business Council and the BRICS Think Tanks Council.
The ministers suggested the establishment of mechanisms to transfer technology and knowledge and the creation of a student exchange programme within the group to address their human capital challenges.
“The meeting is a clear demonstration of our commitment to intensify cooperation in science, technology and innovation (STI) within the BRICS framework”, said Derek Hanekom, South African minister of science and technology.
Hanekom said the University of Cape Town has discovered a novel chemical compound which has “exciting potential” to both control and eradication of malaria.
India and South Africa are hosting components of the International Centre for Genetic Engineering and Biotechnology, promoted by the United Nations.
The participants declared their intention to face the common global and regional socio-economic challenges, and emphasised that the basis for cooperation in STI among the bloc’s countries should be centred on people and the public assets in order to support equitable growth and sustainable development.
“We agree that people centred and public good driven science, technology and innovation, supporting equitable growth and sustainable development, shall form the basis of our cooperation within the framework of BRICS,” they said.
The Kleinmond meeting took place in the context of the First BRICS Summit held in 2009 in Yekaterinburg, Russia, where the leaders at that time envisaged cooperation in the field of science, technology and innovation with the aim to engage in fundamental research and development of advanced technologies.
There is already broad agreement amongst the BRICS partners on possible priority areas for cooperation. These include exchange of information on science, technology and innovation policies and programmes and promotion of innovation; food security and sustainable agriculture; nanotechnology; biotechnology and technology incubators.
The 3rd BRICS Summit in Sanya, China, in 2011 resulted in member-countries setting up working mechanisms that include a BRICS Science, Technology and Innovation senior officials meeting and the STI Working Group.
The BRICS ministers visited the Square Kilometer Array (SKA) site in Carnarvon, where the world’s biggest and most sensitive radio telescope, will be jointly built by South Africa in collaboration with Australia and New Zealand.
The telescope is a combination of thousands of dishes and antennas, whose total collecting area will be approximately one square km, giving 50 times the sensitivity and 10,000 times the survey speed of the best current-day telescopes.
It will address unanswered fundamental questions about our universe, including how the first stars and galaxies formed after the big bang, how dark energy is accelerating the expansion of the universe, the role of magnetism in the cosmos, the nature of gravity, and the search for life beyond the earth.
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11th Regional Meeting of the ACP-EU Joint Parliamentary Assembly concludes in Mauritius
The 11th Regional Meeting of the African Caribbean Pacific-European Union (ACP-EU) Joint Parliamentary Assembly has ended with delegates rallying for the harmonization and rationalization of regional integration in the face of multiple memberships.
The Communiqué released at the end of the three-day meeting in Port Louis, notes the need to rationalize the processes of integration given overlapping memberships in order to strengthen integration. It further underscores the importance of embracing regional integration as a means to creating an enabling environment for economic growth, development and poverty reduction.
The delegates at the meeting further maintained that Economic Partnership Agreements (EPAs) must support regional integration. In addition, the ACP Members expressed concerns on the elimination of sugar quotas scheduled for 2017 and called for additional time to complete their adjustment processes. This results from the fact that abolition of sugar quotas could lead to loss of competitiveness, revenues and adversely affect living conditions.
On regional infrastructure development, Members stated the need to catalyse and harness development within the sector. The Communique acknowledges that more attention needs to be paid to the needs of island nations for marine and air transport as well as digital connectivity.
On peace and security, delegates called for enhanced resources to boost early warning systems in a bid to address armed conflicts and terrorism.
In his presentation yesterday, Mbalambala constituency (Kenya) MP, Hon Abdikadir Aden noted that Kenya and the EAC region were victim of attacks of terrorism originating largely from Somalia. He noted that more efforts were needed to offer alternatives targeting the youth.
“Youth suffer from unemployment and often turn to terrorism. We need to have their skills built through investments in the age group to be given sustainable form of livelihood to integrate in the society”, the legislator added.
On his part, the Deputy Speaker of the Parliament of Uganda, Hon Jacob Oulanyah, said that the ACP-EU needed to interrogate on the supply of arms and the effects of war on women and children.
“Nothing justifies war in any form. Even when in conflict, there need not necessarily be combat, but let us focus on solutions”, he said.
On piracy and maritime security, the conference called for an urgent need to strengthen institutions to combat piracy, enhance judicial co-operation efforts to bring pirates to justice and to trace ransom moneys.
“The international community needs to keep focus and maintain momentum in the fight against piracy”, the Secretary General of the Indian Ocean Commission, Jean Claude de l’Estrac said in his presentation to the meeting yesterday. “We must deal with the failed State of Somalia”, he added.
On urbanization challenges and waste management, the Members emphasized the need for political will, decentralization challenges and appropriate legislative frameworks to encourage sorting, recycling and sustainable management of household, industrial and electronic waste.
The delegates in attendance commended Mauritius as a model of democracy and accountability, characterized by effective separation of powers, independent judiciary, free and fair elections and the respect for human rights.
In his presentation today, Justice Ashraf Caunhye of the Supreme Court of Mauritius said it was vital for citizens to demand for effective, transparent, responsive and accountable institutions.
He remarked that for accountability to be realized there was need for effective anti-corruption bodies, national audit institutions and public procurement monitoring bodies. In addition, the political parties and national human rights institutions need to have the space and capacities to perform their roles.
EALA which has an Observer status at the ACP-EU Joint Parliamentary Assembly was represented by the Speaker, Rt. Hon Margaret Nantongo Zziwa. The Kenya National Assembly Deputy Speaker, Hon Dr. Joyce Laboso led her delegation to the three- day meeting. Hon Laboso is the former Co-President of the ACP-EU Joint Parliamentary Assembly. Parliament of Uganda was represented by its Deputy Speaker, Rt. Hon Jacob Oulanyah and Hon Rose Akol while Hon Job Ndugai, Deputy Speaker, led a delegation from the Parliament of Tanzania. Burundi was led by Hon Mo-Mamo Karerwa, Ist Vice President of the Burundi Senate. The Rwanda Chamber of Deputies on its part, had the Deputy Speaker, Hon Uwimanimpaye Jeanne d’ Arc and Senator Michel Rugema of the Senate in attendance.
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SMEs: Key players in regional integration
The push towards regional integration in eastern and southern Africa depends on a number of factors. One important factor is ensuring that small and medium enterprises (SMEs) are fully equipped to contribute towards socio-economic development.
This is because SMEs are a vital conduit through which the region can spur development, as the sector provides employment to the majority of the population, particularly youths and women.
SMEs also contribute immensely to poverty eradication and rural development by improving income distribution in the region.
According to a recent study by the Common Market for Eastern and Southern Africa (COMESA), SMEs contribute over 50 percent of employment in the region.
It is estimated that there are about six million SMEs in eastern and southern Africa operating in various sectors ranging from transport, tourism and mining to agriculture, manufacturing and retail.
However, SMEs continue to face various challenges in their operations and are usually not highly regarded in society
Some of the challenges faced by the enterprises include limited access to financial resources, cumbersome documentation required to set up or expand business and inefficient road and rail networks that cause time delays in moving goods from one place to another.
In this regard, the forthcoming COMESA Summit has once again chose SMEs development as the main theme for discussion.
The theme for the summit scheduled for Kinshasa, the Democratic Republic of Congo on February 26-27 is “Consolidating Intra-COMESA Trade through Micro, Small and Medium Enterprises Development”.
This is similar to the previous theme of “Enhancing Intra-COMESA Trade through Micro, Small, and Medium Enterprises Development”.
“The Council of Ministers agreed that micro, small, and medium enterprises are still a vital component to the development of the region’s economy,” COMESA spokesperson Mwangi Gakunga said.
“Thus the ministers felt that there is a need to further focus on them and continue to give them any support they may require to be a force for greater economic growth and regional integration.”
At the last summit held in Kampala, Uganda, in 2012, leaders from eastern and southern Africa proposed a number of measures aimed at capacitating SMEs so that there are fully equipped to compete with other well-established enterprises in an open market.
An open market in eastern and southern African has boosted intra-regional trade, increased investment flows, and enhanced competitiveness, but it has also seen more vibrant multi-national enterprises push and swallow less prepared SMEs.
This has resulted in millions of youths and women involved in SMEs lose their jobs, placing the whole regional integration agenda on the back foot since such a programme should benefit the majority and not hinder their growth.
As such, leaders from eastern and southern Africa are expected to recommit their efforts towards promoting SMEs development since small businesses are the backbones of most economies in the region. The commitment includes increasing access to financial and technical support for SMEs, and availing more land to women and youth, who make up the majority in the SMEs sector.
It is also critical to link SMEs with the big businesses so that the two could complement each other, as they are both key players in socio-economic development and regional integration.
Other interventions are infrastructure developments to improve road and rail network, as well as improving border posts across the region. Improved roads would allow SMEs to move smoothly within the region, while effective border posts are critical in making business easier.
For example, the establishment of a One-Stop-Border Post at Chirundu between Zambia and Zimbabwe has greatly reduced the time traders spend on transit.
Ultimately, the One-Stop-Border Post launched in 2009 has reduced the cost of transporting goods and services. In this regard, the future of intra-regional trade in eastern and southern Africa depends on strengthening SMEs since small businesses are heavily involved in trade.
The annual COMESA Summit set for DRC is being held later than planned. It was originally set for December 2013, but COMESA Secretary-General Sindiso Ngwenya said “unforeseen circumstances” led to the postponement of the summit.
Prior to the 17th COMESA Summit, there will be various ministerial meetings to review the socio-economic situation in the region. COMESA is made up of 19 members – eight of which belong to the Southern African Development Community (SADC).
These are the DRC, Seychelles, Swaziland, Madagascar, Malawi, Mauritius, Zambia and Zimbabwe. As host nation, DRC is expected to assume the COMESA chair from Uganda.