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Boosting trade in Africa: Why women are the key
In many countries in Africa, the majority of small farmers are women. They produce crops such as maize, cassava, cotton, and rice that have enormous potential for increased trade between African countries and with the global market.
Women are also involved in providing services across borders, such as education, health, and professional services like accountancy and law.
“Every day in Africa, hundreds of thousands of women cross borders to deliver goods and services from areas where they are relatively cheap to areas in which they are in shorter supply,” says Paul Brenton, Africa Trade Practice Leader for the World Bank.
However, Africa’s trade potential is undermined by constraints that women face. The contribution of women to trade is much less than it could be because of non-tariff barriers that impinge particularly heavily on the trade activities of women and women-owned enterprises.
These barriers often push women traders and producers into the informal economy where a lack of access to finance, information, and networks jeopardizes their capacity to grow and develop businesses.
Women and Trade in Africa: Realizing the Potential, a new report from the World Bank Group’s Africa Trade Practice, demonstrates how women play a key role in trade in Africa and will be essential to the continent’s success in exploiting its trade potential.
The report calls for African governments to recognize the role that women play in trade and ensure this is communicated to officials at all levels. It asks governments to ensure that the rules and regulations governing trade are clear, transparent and widely available at borders, and encourages policy makers to simplify documents and regulatory requirements where possible.
“Removing the obstacles to regional trade integration in Africa would be particularly beneficial for poor women, as they literally carry most of the small-scale, cross-border commerce that happens within the Region,” says Marcelo M. Giugale, Director of the Department of Economic Policy and Poverty Reduction Programs in the World Bank’s Africa Region.
“The potential benefits are huge and obvious: better food security, faster job creation, more poverty reduction, and less gender discrimination. This is a win-win-win-win reform agenda that is ready for action.”
Women and Trade in Africa highlights the need to design interventions that develop trade in ways that benefit women. According to the report, governments and donors are making concerted efforts to facilitate trade, increase productivity in export-oriented sectors, and improve competitiveness, but these need to be better targeted to ensure that not only men benefit.
Finally, it calls for governments to help women – who are generally more risk-averse than men-to more effectively address risks like physical harassment at the border and confiscation of goods, lack of access to stable trade networks and buyer relationships, risks to business arising from the need to provide family care, and constraints on access to finance which limited capacity to diversify.
“The aim of this book is to make available to a wide audience new analysis on the participation of women in trade in Africa,” said Brenton. “In addition to raising the profile of this public policy issue, we also hope that it will encourage more research and analysis over a wider range of African countries to extend the knowledge base.”
According to Brenton, policy makers typically overlook women’s contribution to trade and the challenges they face. This neglect reflects, in part, the lack of data and information on women and trade in Africa and also the underrepresentation of small traders and rural producers in trade and trade policy discussions.
“African countries have enormous potential for trade with the global market and for more intensive trade among themselves,” Brenton said. “Regional trade in Africa can play a vital role in diversifying economies and reducing dependence on the export of a few mineral products, in delivering food and energy security, in generating jobs for the increasing numbers of young people, and in alleviating poverty and promoting a shared prosperity.”
This publication was edited by Paul Brenton, Elisa Gamberoni and Catherine Sear.
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Africa climate adaptation costs could soar to USD $350 billion annually by 2070 if warming hits 3.5-4°C – UN Report
Africa faces huge financial challenges in adapting to climate change, according to a new report by the UN Environment Programme (UNEP) that spells out the costs faced by the continent if governments fail to close the “emissions gap” to keep warming below 2°C.
Adaptation costs for Africa could reach approximately USD $350 billion annually by 2070 should the two-degree target be significantly exceeded, while the cost would be around USD $150 billion lower per year if the target was to be met.
Africa’s Adaptation Gap, released today and endorsed by the African Ministerial Conference on the Environment (AMCEN) whose secretariat is hosted by UNEP, confirms the World Bank’s Turn Down the Heat Reports that there is a 40 per cent chance that we will inhabit a ‘3.5-4°C World’ if mitigation efforts are not stepped up from current levels.
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Africa is already facing adaptation costs in the range of US $7-15 billion per year by 2020.
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These costs will rise rapidly after 2020, since higher levels of warming will result in higher impacts.
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Combining adaptation costs with “residual” damages, the total costs can reach 4 per cent of Africa’s Gross Domestic Product (GDP) by 2100, under a 3.5-4°C scenario.
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If no adaptation measures are taken, damages are expected to cost 7 per cent of African GDP by 2100 in a ‘3.5-4°C World’, according to the Africa Gap report.
The report further cautions that, even if the world does manage to get on track to keep warming below 2°C, Africa’s adaptation costs will still hover around USD $35 billion per year by the 2040s and USD $200 billion per year by the 2070s – with total costs reaching 1 per cent of the continent’s GDP by 2100.
“Missing the 2°C window will not only cost governments billions of dollars but will risk the lives and livelihoods of hundreds of millions of people on the African continent and elsewhere,” said UN Under-Secretary General and UNEP Executive Director, Achim Steiner.
“Even with a warming scenario of under 2°C by 2050, Africa’s undernourished would increase 25-90 per cent. Crop production will be reduced across much of the continent as optimal growing temperatures are exceeded. The capacity of African communities to cope with the impacts of climate change will be significantly challenged.”
“I would like to welcome the decision by AMCEN to endorse the recommendations of the Africa Gap report; an important step towards strengthening political will and building resilient national policies.”
“Additional adaptation funding and technical know-how are imperative if Africa is to move towards a climate-resilient green future path. There is for example a need to develop drought-resistant crops, build early warning systems, invest in renewable energy sources and ensure that the catastrophic impacts of climate change are controlled or, better still, avoided,” he added.
UNEP’s Emissions Gap Report – launched days ahead of the UN Climate Conference in Warsaw – analyzes in much more detail and confirms that current pledges by individual countries to limit emissions by 2020 would lead to a global temperature increase of about 3.5-4°C warming by 2100 – unless emissions are reduced now and substantially reduced afterwards.
Even if nations meet their current climate pledges, greenhouse gas emissions in 2020 are likely to be 8 to 12 gigatonnes of CO2 (GtCO2e) above the level that would provide a likely chance of remaining on the least-cost pathway consistent with holding warming below 2°C.
“Africa cannot risk failure of implementing serious adaptation measures, especially with Africa’s predicted population rise of 2 billion by 2050 and the current ecosystem degradation trajectory,” said President of AMCEN and Minister of State for the Environment, United Republic of Tanzania, Dr. Terezya L. Huvisa.
Africa Warming
In a ‘3.5-4°C World’, Africa’s coastline is expected to undergo sea-level rise 10 per cent higher than the rest of the world, with several countries particularly hard hit.
In Guinea-Bissau, Mozambique, and The Gambia, up to 10 per cent of the entire population would risk flooding risks annually by 2100.
Arid areas in Africa, which already represent about half of the continent’s land area, are expected to increase by 4 per cent.
If we enter a ‘3°C World’, effectively all of the present maize, millet, and sorghum cropping areas across Africa would become unsustainable for current strains.
In a ‘4°C World’, southern Africa will likely see decreases of up to 30 per cent in rainfall each year.
At the same time, north, west, and southern Africa will also see declines of 50-70 per cent in groundwater recharge, according to the study.
The study further details how agriculture, fisheries and water access – among other sectors – will be impacted.
The degree to which these sectors will be impacted will depend on whether commitments are kept and whether better adaptation practices can be implemented.
The study points to a high risk of biodiversity loss, as species may be unable to migrate to suitable climates.
Up to 97 per cent of the 5,000 plant species studied could undergo range size reductions or shifts, while up to 40 per cent could experience total range elimination by 2085 in a ‘2°C World’ scenario.
At the same time, a ‘3.5-4°C’ scenario projects fish declines in freshwater lakes across places such as Chilwa, Kariba, Malawi, Tanganyika and Victoria, which would jeopardize the source of more than 60 per cent of the protein needs of the surrounding communities.
Perhaps the most drastic example of the effects of climate change in Africa is that coral reefs-which are essential support systems for marine fisheries, tourism, and coastal protection against sea-level rise and storm surges-are projected to be entirely extinct before we even enter a ‘4°C World’.
Adaptation Funding: Opportunities and Challenges
How well Africa deals with these climate impacts, now and in the future, will be co-determined by the funding it receives.
Adaptation measures such as early warning systems and coastal zone management to counter sea-level rise offer a possibility of minimizing these impacts, but Africa’s capacity to adapt depends critically on access to funding.
Traceable funding disbursed in Africa for climate change adaptation through bilateral and multilateral channels for the years 2010 and 2011 amounted to USD $743 and $454 million, respectively, although this figure does not fully account for the funding channeled through Development Finance Institutions, for example the World Bank, or national development banks.
To meet the adaptation costs estimated in the report for Africa by the 2020s, funds disbursed annually would need to grow at an average rate of 10-20 per cent a year from 2011 to the 2020s.
There is currently no clear, agreed pathway to provide these resources.
The UN Framework Convention on Climate Change’s developed country Parties have committed to provide funds rising to USD $ 100 billion annually by 2020 through the “Green Climate Fund”-established by the 2010 Cancun Agreements-from public and private sources, for both adaptation and mitigation actions in across all developing countries by 2020.
However, rules drawing up the allocation of funding for adaptation have yet to be defined and await negotiation.
At this stage, there is no clear sense of how much of these funds would benefit countries in the African region, nor of the likely allocation between adaptation and mitigation funding.
Until these issues are resolved it is not possible to assign a share of the USD $100 billion annual commitment by 2020 to Africa.
Assuming funding for adaptation efforts in Africa reached adequate levels by 2020 and assuming the world gets on track to limit warming to below 2°C, annual funding for adaptation efforts in Africa still needs to rise a further 7 per cent a year from the 2020s onwards to keep pace with continuing sea-level rise and warming peaking below 2°C after the 2050s.
This is considerably less than the funding challenge if the current mitigation efforts were not increased, and warming reached 3.5-4°C by 2100.
In this case, the scaling up of annual funds would need to be 10 per cent every year after the 2020s.
Challenged Capacity
In all scenarios, the capacity of African communities to cope with the effects of climate change on different economic sectors and human activities is expected to be significantly challenged, and potentially overwhelmed, by the magnitude and rapid onset of climate change impacts.
To reduce the magnitude of the impacts and their repercussions for African livelihoods, adaptation measures at different levels, from households to national and regional levels, are being planned and implemented and need to be further supported and strengthened.
These measures include:
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The development of early-warning systems for floods, droughts or fires to help populations anticipate and prepare for the occurrence of extreme events;
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Irrigation, improvement in water storage capacity, reforestation to protect surface water systems, sustainable use of groundwater resources, desalinization of seawater, and rainwater catchments and storage to maintain sufficient and reliable access to freshwater for human and agricultural needs;
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City infrastructure protection measures such as seawalls, dykes, wave breakers and other elements of coastal zone management, as well as city-level food storage capacity and urban agriculture to enhance food security;
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Improving design and drainage technology of sanitation facilities to reduce the risk of water-borne diseases in the aftermath of extreme weather events.
The majority of these and other adaptation measures require an anticipatory and planned approach, as well as large investments. The need for planned capital-intensive adaptation is greater at high than low warming levels.
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What we know and don’t know about trade with Africa
A new report could shed light on whether efforts to develop African economies are doing any good.
On September 30, United States Trade Representative Michael Froman wrote a letter to Irving Williamson, chairman of the International Trade Commission, regarding the African Growth and Opportunity Act. In the letter, Froman requested that the International Trade Commission conduct four investigations and provide four reports related to AGOA and our [United States’] trade relationship with Africa.
The results will likely bring sanity to our approach to trade with Africa, and it may very well force changes in how we develop future trade agreements and policy with the second largest land mass on our planet, not to mention with more than a quarter of the world’s countries.
To understand the significance of the letter, one has to understand AGOA, legislation passed by the U.S. Congress in 2000 that was designed to allow African economies far greater access to the United States market, seemingly duty-free. At the time, some likened AGOA to the North American Free Trade Agreement passed during the Clinton administration. It wasn’t close to NAFTA in its terms, but since it was the first major legislation ever adopted by the U.S. Congress on behalf of its relations with the African continent, there was understandable euphoria about its passage and hyperbole about its likelihood to significantly affect the economic and political development of Africa.
To the African lobby in Washington, AGOA became a point of pride and accomplishment. Very quickly, it became politically incorrect to question the benefits of AGOA without being attacked as anti-Africa or worse. Later, under President Bush, AGOA legislation was further strengthened, with the intent to increase exports from Africa to the United States. Objective critique became even more difficult given clear bipartisan support. Groupthink became the rule in Washington.
Now, 13 years later, there are few if any who would say that AGOA has been an unqualified success. The apparel industry in Africa has been a primary beneficiary of AGOA, as has South Africa, which has exported car parts and textiles to the United States duty-free. Some might argue that China has also been a major beneficiary of AGOA, since it owns many of the textile and apparel plants in Africa that are shipping duty-free products to the United States.
However, beyond that there has been little benefit for most countries who are qualified as AGOA-certified. The reason for that is less the legislation but the fact that most African countries do not have the infrastructure or the capacity, including trained workforces, to use AGOA effectively. Furthermore, many African nations have been slow to reform their economic sectors, inhibiting more private sector development and limiting the possibility for investment.
This is hardly a secret, and is discussed openly everywhere but in the halls of Congress. In fact, a recent British study noted that AGOA has largely not affected African development, and stated unequivocally that except for the apparel industry, very few economic sectors in Africa benefited from AGOA.
Yet, here we are again, advocating for the extension of AGOA for another 10 years or longer, arguing that Africa only needs time to develop in order to use it effectively. This argument has a certain logic to it. Eventually Africa will develop and it will be able to use AGOA.
There are also those that argue for the extension of AGOA because, well, we really have nothing better to replace it with, and to have a new overreaching agreement that might work better will probably not be feasible in such a contentious Washington political environment. To abandon AGOA is to be seen as abandoning Africa.
Indeed, it would be difficult to say we weren’t abandoning Africa if we scotched the only significant trade agreement we ever had with the continent. The symbolism and reality of that would be very difficult to bear for the African lobby in Washington. The argument to extend AGOA is an emotional one as much as it is a rational one.
Enter the Froman letter. The first investigation that Froman asks ITC to complete within six months is a report that includes a review of all literature on the AGOA preference program, particularly “in terms of expanding and diversifying the exports of AGOA beneficiary countries to the United States, compared to preference programs offered by third parties such as the EU.” He also asks ITC to give an accurate report on the sectors that have increased the most in exports to the U.S., excluding petroleum sectors. He asks ITC to explain why these increases are so, as well as to identify factors that affect competiveness in AGOA-beneficiary countries.
The reason that petroleum products are excluded in the analysis is that USTR and others count petroleum products in the AGOA total, and petroleum makes up 93 percent of this total. However, some believe that petroleum should not be counted, as it was nearly tariff free before AGOA, and has been effected very little by being placed under AGOA. The purpose of AGOA was to increase and broaden economic benefits beyond petroleum. Froman’s request to ITC takes out a misleading figure and focuses on the real intent of AGOA: the development of other economic sectors throughout Africa.
Froman also asks that in the first investigation, ITC identify the effects AGOA has had on the business climates in AGOA-beneficiary countries (not all African countries qualify under AGOA but that is another issue), and finally, he asks for a comparison of trade agreements to AGOA between sub-Saharan African countries and other countries, including areas that are likely to affect U.S. trade with Africa. Noteworthy is that Froman asks that this report will be available to the public in its entirety. There will be one hymnal from which all can sing.
The report should go a long way in giving an objective analysis of AGOA, both its benefits and shortcomings, and it should then allow Congress, the USTR and others to develop a more effective trade policy towards sub-Saharan Africa, filled with more substance and objectivity and far less emotion and bias. Any new trade policy on Africa, whether it be called AGOA or any other name, should address the causes that prevent greater trade and economic investment in development.
Stephen Hayes is president and CEO of the Corporate Council on Africa.
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“Africa must take ownership of its institutions” says Mo Ibrahim and other participants at the 2013 Ibrahim Forum
African governments must take full ownership of the continent’s institutions to drive greater integration and unity, according to Mo Ibrahim and several other high-level participants at the 2013 Ibrahim Forum this weekend.
Speaking at the conclusion of the event, which was held in Addis Ababa, Mo Ibrahim strongly urged Africa’s leaders to give greater support, including financial resources, to the African Union in order to realise Africa’s true potential.
Convened by the Mo Ibrahim Foundation, the Forum brought together over 200 participants to discuss the major opportunities and challenges the continent faces during the next half century.
The Ibrahim Forum was a frank and open debate between high-level speakers, and an audience of media, business leaders, civil society and government, held at the African Union’s headquarters, around the 50th anniversary of African unity.
The Forum was structured as an ‘African Conversation’, with participants discussing opportunities and challenges around the four categories of the Ibrahim Index of African Governance (IIAG): Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity and Human Development.
There was consensus that African ownership of its institutions; greater cooperation between states; and good governance and leadership will be key determinants of Africa’s success in the future:
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H.E. Dr Nkosazana Dlamini-Zuma, Chairperson of the African Union Commission, opened the debate by saying: “The narrative should be about tomorrow. It must be our narrative. We mustn’t hide anything; we mustn’t exaggerate anything. But we must tell our own story. It is in our hands to transform Africa into an integrated and prosperous continent.”
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H.E. Ato Hailemariam Dessalegn, Prime Minister of Ethiopia, also told participants that Africa “had begun to turn the corner”, certain in its conviction that a better future lies ahead.
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Pascal Lamy, former Director-General of the World Trade Organization, observed that Africa is disunited on trade integration within Africa, but it is good at defending African trade interests as a bloc.
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While Dr Sipho Moyo, Africa Director at ONE, was one of several panellists to highlight the need for governments to listen more to their growing youth population: “Young people want participation. They want to know that their voice is used in shaping and implementing policy.”
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Dr Salim Ahmed Salim, Former Secretary General of the Organisation of African Unity, reminded the audience of the continent’s vast wealth which juxtaposes against extreme poverty in some countries: “Africa is not a poor continent but the people are poor; and that’s because of the mistakes of our leaders.”
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While on the issue of Safety & Rule of Law, Robtel Pailey, Mo Ibrahim Foundation SOAS Scholar, contended that the African Union must assert itself much more strongly to make itself heard. She said that Africa must show that it has responsibility and not wait for the position of the West.
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Speaking on the same panel as Miss Pailey, Jean Ping, Former Chairperson of the African Union Commission, also said that Africa’s autonomy is reduced when it is unable to fund its own institutions. He said: “when we receive money from Europe, it comes with conditions.”
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Maria Ramos, Chief Executive of Absa Group and Barclays Africa, stressed that Africa cannot talk about integration and unity without talking about mobility: “We should ideally be able to have movement on the continent without visas.”
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Indeed, during the closing session, the BBC’s Komla Dumor asked speakers: “If you could make one decision to transform Africa, what would be?” Mo Ibrahim responded: “I’d get rid of all borders.”
To coincide with the Forum, the Foundation published the latest Facts and Figure report ‘Africa Ahead: The Next 50 Years’, providing analysis of Africa’s potential assets and key policy areas to be addressed through exceptional leadership and governance.
The 2013 Ibrahim Forum was the culmination of a series of events organised by the Mo Ibrahim Foundation in Addis Ababa this weekend. They kicked off on Friday with a football match between Ethiopian Bunna and TP Mazembe from Democratic Republic of Congo. On Friday evening, the Foundation hosted a special concert with performances from Angelique Kidjo, Youssou N’Dour and Jah Lude and the Mehari Brothers. On Saturday, the Foundation hosted its annual Leadership Ceremony, a celebration of Africa featuring speeches, music and film.
At the conclusion of the Forum, Mo Ibrahim was presented with a special award from the Gender Is My Agenda Campaign (GIMAC) Network. The ‘Male Champion Award’ recognises Dr. Ibrahim’s “leadership, innovation and bold thinking to advance the status of African women”.
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ACP Trade Ministers adopt declaration for Bali
During the African, Caribbean, and Pacific (ACP) Ministerial Trade Committee that met in Brussels on 9-10 October 2013, Ministers outlined the ACP countries’ common position for the upcoming 9th WTO Ministerial Conference.
The Declaration emphasized the importance of securing a meaningful outcome in the areas under negotiation. Ministers urged all members to show the required flexibility in the areas of development, agriculture and trade facilitation.
According to the ACP group, the inability of WTO Members to conclude the Doha round has contributed to a proliferation of free trade agreements, and the pursuit of plurilateral agreements in areas within the scope of the Doha Agenda.
LDCs’ share of world trade is currently very low, at around 1.12 percent, with more than half of the countries of the ACP group defined as Least Developed Countries (LDCs).
Development
The Declaration stresses the critical dimension of development, particularly with regard to special and differential treatment. The group expressed concerns about the “slow progress in that work”.
LDCs
Turning to least developed countries issues, ACP ministers urge the WTO to take commitment toward greater integration of the LDCs into multilateral trading system in line with the proposals put forward by the LDC group for the decision at the Ninth Ministerial Conference. The proposals relates to duty-free quota-free market access for LDCs, simplified and flexible rules of origin for exports that qualify for duty-free, quota-free treatment, the operationalization of the LDC services waiver, and the proposals on cotton.
ACP ministers reiterated the importance of the Enhanced Integrated Framework – a WTO programme aimed at helping LDCs play a more active role in the global trading system – and called for its extension after 2015.
Agriculture
The Declaration defined six areas of concern related to agriculture: market access, domestic support, export competition, cotton-sector issues, the right to use certain traditional trade policy tools for food security. With regard to these issues, ACP Ministers plan to address imbalances in the WTO that prevent numerous ACP countries from maintaining food security while confining them to the position of net food importing countries.
Trade Facilitation
On the theme of trade facilitation, the Declaration stressed that while ACP countries did not ask for trade facilitation in the WTO Doha Development Agenda negotiations, they nevertheless recognise the potential of such agreement that could facilitate reforms for ACP countries in the area of trade. To his end the ACP group further reaffirmed the need to provide LDCs with mandatory special & differential treatment.
Aid for Trade
The declaration urges donors to continue supporting efforts of developing countries, especially LDCs, to integrate into the world trading system by directing aid to trade through infrastructure, productive capacity, and costs of adjustment.
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New World Bank Group report charts road map for financial inclusion
Low-income populations benefit the most from technological innovations such as mobile payments, mobile banking, and borrower identification based on fingerprinting and iris scans, according to a new World Bank Group report.
That’s because those innovations make financial services cheaper and easier to access for the poor, women, and rural residents, especially those living in remote, less populated regions without brick-and-mortar bank branches, according to the report, Global Financial Development Report 2014: Financial Inclusion.
“Financial services are out of many people’s reach because market and government failures pushed the costs of these services to prohibitively high levels,” said World Bank Director of Research Asli Demirguc-Kunt, a co-author of the report. “Vulnerable populations benefit the most when policy and products address the regulatory and other hurdles to financial inclusion.”
The report, the second in a series, is the most comprehensive study yet on financial inclusion, a topic that has gained worldwide attention. More than 50 countries have committed to explicit targets to increase financial inclusion. And last month, World Bank Group President Jim Yong Kim set targets toward universal financial access for all working-age adults by 2020.
Many countries have made progress in expanding account use among those underserved by traditional financial institutions. Some policies have proven to be especially effective, such as requiring banks to offer low-fee accounts, waiving onerous documentation requirements, and using electronic payments to deposit government assistance into bank accounts. For example, South Africa, with a public-private framework, increased the number of bank accounts by six million in four years.
Technological innovations, which have grown rapidly in the past decade, can speed up the progress. Mobile banking has played a key role in expanding financial inclusion in low-income countries, such as Kenya, the Philippines, and Tanzania. Brazil increased financial access to people living in remote areas by promoting technology-based “correspondent banking” – financial services provided on behalf of banks by retails stores, gas stations, agents on motorcycles, and boats on the Amazon River.
To allow consumers to take full advantage of those innovations, also including e-mobile wallets and other e-money accounts, the report recommends that regulators encourage competition among financial service providers and improve the legal, regulatory and institutional environment. That will also minimize the chance that credit is overextended among people not qualified to receive it.
“Policy makers need to strike a balance between providing incentives for the new technologies and requiring them to be open to competition,” said Martin Cihak, lead author of the report and lead economist in the World Bank’s research department. “Competition policy is a key part of consumer protection, because healthy competition among providers gives more power to consumers.”
Challenges of reaching the “unbanked”
Considerable evidence has shown that people, especially the poor, benefit from having basic payments, savings and insurance services. But some 2.5 billion people – more than half of the world’s adult population – lack bank accounts. Low-income countries face especially daunting challenges. Thirty percent of the adults there saved in 2011, compared with 58 percent in high-income countries, according to analyses of the World Bank’s Global Findex database included in the report.
Technological innovations also present new challenges, partly because they take root in different fashions across the globe. Russia, for example, has one of the highest rates of mobile phone subscriptions in the world, at 179 phones per 100 people, but it ranks among the lowest in mobile phone use for financial transactions, at fewer than two transactions per 100 adults. By contrast, in Kenya, where one-fifth of the population has cell phones, 68 percent of the adults used a mobile phone in 2011 to pay bills or send or receive money.
The report cautions, however, financial inclusion should not mean finance for all at all costs. For example, creating millions of bank accounts has little impact if they aren’t used regularly. And promoting credit without regard to cost actually exacerbates financial and economic instability.
To promote financial inclusion responsibly, the report urges policy makers to encourage product designs that address market failures, meet consumer needs and overcome behavioral problems. For example, commitment savings accounts, where access to cash is possible only after a period of time or after a goal has been reached, can promote savings. Responsible financial inclusion also requires consumers to better understand finance.
For countries with strong banking bricks and mortar networks, which often view mobile banking as a trend that competes with checking and credit card use, the report recommends that regulators take care to price new products reasonably so that the unbanked can use them as well.
The report includes several datasets, including an updated version of the Global Financial Development Database. The database includes more than 100 financial system characteristics – such as the access, efficiency, and stability of financial markets and institutions – for more than 200 economies.
The report is a part of a broader commitment to provide knowledge and operational support to developing economies. The World Bank Group currently has financial inclusion projects with public and private partners in more than 70 countries.
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Gathering for the African Economic Conference, leaders call for wide-ranging structural change
Regional Integration Key to Transformation and Development
UPDATE: The African Economic Conference 2013 Report is now available for download.
Heads of State and business and development experts from across the world will gather at the three-day African Economic Conference from Monday, October 28 to Wednesday, October 30 in Johannesburg, South Africa, to discuss regional integration and its role in boosting economic growth and human well-being on the continent. [Click here to view previous coverage of the African Economic Conference 2013].
The conference will be opened by Jacob Zuma, the President of South Africa; Donald Kaberuka, President of the African Development Bank (AfDB); and Abdalla Hamdok, Deputy Executive Secretary of the United Nations Economic Commission for Africa (ECA).
Africa has seen high levels of economic growth over the last decade, however that growth has had limited impact on boosting competitiveness and increasing the quality of life of ordinary people on the continent.
Weaknesses persist in the quality of institutions, infrastructure, macroeconomic policies, education and adoption of new technologies, while there are big gaps between its highest and lowest ranked economies.
“This great gathering should do more than restate the case for regional integration: it must examine how to push the African continent to the next level, to become a global growth pole in its own right,” said Donald Kaberuka, President of the African Development Bank.
“At a time of diminishing multilateral solutions, this is the sure way to build resilience against external shocks. I applaud the steady progress that has been made in areas such as tariff reduction. Robust action is what is now needed on non-tariff barriers, trade facilitation, and the movement of people. Africa has the political will and the strategic vision to make this happen. The time is right.”
In addition, because of its focus on capital-intensive, commodity-based industries, Africa has seen limited economic transformation, with little investment in the manufacturing, services and agricultural sectors. Due to these limitations, the creation of jobs, markets and institutions required to help young women and men build better futures has lagged behind.
“There needs to be a much broader definition of regional economic integration. True, regional integration must include investments in regional infrastructure, trade and labour mobility. But countries would also gain by harmonizing regulations and standards, devising common approaches to macroeconomic policy, job creation, and effective management of shared natural resources for sustainable poverty reduction and structural economic transformation,” said Abdoulaye Mar Dieye, Director of UNDP Africa.
While the benefits of integration are now well-known and many of the legal frameworks in place, the biggest challenge is how to further that agenda. Among the major hurdles are harmonizing standards and regulations, boosting human resource capacities and mobilizing leadership and political will.
The African Economic Conference will look at the political economy of regional integration and examine closely some of the practical solutions to advance it. High-level dialogues will cover integration issues ranging from finance to water resource management, fiscal convergence and harmonization of social policies. Participants will also be exposed to cutting edge research on all aspects of regional integration based on new analysis from African researchers and institutions.
Participants at the conference will look at some of the trends and best practices unfolding across the continent.
“It is undeniable that regional integration will impel Africa to economic transformation and industrialization. Capitalizing on natural resources, industrialization can swiftly add value to the continent’s exports and, therefore, stimulate job creation,” said Abdalla Hamdok, the Deputy Executive Secretary of the Economic Commission for Africa.
Held every year and sponsored by the African Development Bank, the Economic Commission for Africa and the United Nations Development Programme, the African Economic Conference will also provide a unique forum for in-depth presentations of policy-oriented research by both established academics and emerging talents from the continent.
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“BRICS Bank to reduce risks in emerging markets”
China and India have agreed to step up cooperation in BRICS to safeguard “common interests”.
India Prime Minister Manmohan Singh has identified the BRICS Development Bank and the $100 billion Contingency Reserve Arrangement as major efforts “to support trade and investment and reduce risks in emerging markets”.
Singh said the India and China have a vital stake in preserving an open, integrated and stable global trade regime.
“We are in the midst of a significant and ongoing transformation where both political and economic power is being diffused. A multi-polar world is emerging but its contours are not yet clear,” he said.
“Protectionist sentiments in the West have increased and the global trading regime may become fragmented by regional arrangements among major countries,” he warned.
The Chinese President Xi Jinping during his meet with Singh urged that the world needs the common development of China and India.
A Chinese Foreign Ministry official said the agreements signed during Singh’s visit involve many long-term projects that will contribute to regional and world peace, and stability for several decades.
“China-India relations have gone far beyond bilateral scope and have global and strategic significance,” Xi said during his meeting with Singh.
In a reference to recent reports of the much-hyped American Asia pivot which seeks to “contain” China, the Indian Prime Minister said “old theories of alliances and containment are no longer relevant”.
“India and China cannot be contained and our recent history is testimony to this. Nor should we seek to contain others,” Singh said.
“We both know that the benefits of cooperation far outweigh any presumed gains from containment,” he added.
In his address to the Central Party School in Beijing, Singh also stressed on increased FDI from China.
“India plans to invest $1 trillion in infrastructure in the next five years and we would welcome China’s expertise and investment in this sector,” he said.
Singh also underlined the need for a stable, secure and prosperous Asia Pacific region.
“While both India and China are large and confident enough to manage their security challenges on their own, we can be more effective if we work together,” he said.
Xi also suggested the two most populous countries in the world should strive towards “revitalisation of oriental civilisation”.
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Regional integration is a primary condition for Africa’s industrial revolution
“Regional Integration in Africa,” the theme of this year’s October 28-30 African Economic Conference (AEC) in Johannesburg, is at the very core of the quest for the continent’s industrial revolution.
The AEC is an annual business intelligence forum organized by the African Development Bank (AfDB), the UN Economic Commission for Africa (ECA) and the United Nations Development Programme (UNDP), to discuss the continent’s major economic development challenges.
The conference groups government leaders, policy-makers, researchers and development practitioners from Africa and other parts of the world. This year, discussions will focus on how the continent of 54 disparate states can overcome its fragmentation and pool resources for industrialization and productive growth.
Africa’s stunted growth has mostly been attributed to the absence of large economic space that can spur and sustain economies of scale which is a primary condition for genuine economic development.
Empirical data suggest that the quest for an African industrial revolution can only occur where large markets drive competitive production to satisfy demand and supply, facilitated by appropriate public policies.
The lack of these probably explains why the traditional import substitution development and several industrial strategies enacted by many African governments in the past half century have failed to ignite and sustain worthwhile productive entrepreneurship.
Thus, for Sub-Saharan Africa, the need to build economies of scale would depend on the availability of energy, transportation, communication and social infrastructure, water resource management, fiscal convergence and labour mobility, among others, that feature prominently on the agenda of the African Economic Conference.
Integrated infrastructure helps to expand the political, economic and social space for increased production and consumption of goods and services. Besides, globalization and technology have respectively condensed space and heightened competitiveness to the point where micro entities can no longer survive on their own. They must come to the market with a variety of quality goods and services.
Even for the so-called resource-rich countries, indications are that relying solely on the proceeds of extractive industries without value addition would not deliver sustainable development.
This would only entrench the practice whereby African countries compete against each other vis-à-vis external partners in a buyers’ market where technology and innovation are gradually replacing hydrocarbons with biofuels and other forms of green energy.
The 2013 Africa Competitiveness Report on the theme “Connecting Africa’s Markets in a Sustainable Way,” makes this point more clearly. According to the report, jointly produced by the AfDB, the World Bank and the World Economic Forum, regional integration can help Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population.
This can be done by:
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Closing the competitiveness gap in which Africa is trailing other emerging regions by investing in quality institutions, infrastructure, macroeconomic policies, education and technological adoption.
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Facilitating trade by liberalizing intra-African trade currently estimated at 11 percent and by removing trade barriers; and diversifying products away from primary commodities.
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Building better energy, transportation and ICT infrastructure to link up African producers and consumers thereby leveraging economies of scale in manufacturing and service delivery.
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Developing growth poles through public-private investments in industries and support infrastructure to boost productive capacity for local and export markets.
These suggestions fit and easily tie in with the operational priorities of the African Development Bank as enacted in its Regional Integration Strategy 2009-2012, and its Strategy 2013-2022 which focuses on 1) infrastructure development; 2) regional economic integration; 3) private sector development; 4) governance and accountability; and 5) skills and technology.
Thus, the Bank will continue to channel considerable resources in African integration as it has done since it began operations in 1967, mostly in the areas of hard and soft infrastructure and the diffusion of knowledge products.
For instance, between 2009 and 2011, the Bank completed 51 transport projects valued at over $3 billion, covering road, airport, seaport and railway infrastructure. The institution has financed over 4,000 kilometres of roads and several major bridges in Africa. Its private sector arm supported a fleet modernization for Ethiopian Airlines as well as investments in regional information and communication technology networks, which represent important contributions to regional integration.
Yet, a lot more remains to be done given Africa’s geo-political configuration and demographics. Africa is the world’s second-largest continent (30.2 million km²) with a population of over one billion people, half of whom are below 20 years of age.
The continent’s 54 sovereign states and nine territories are shaped and impacted by emerging global megatrends that present challenges and opportunities for development and sustainable growth.
Forums such as the AEC can provide the knowledge base to ensure that Africa is properly integrated in the global economy.
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Traffic at port of Maputo increase four-fold in nine years
Traffic at the port of Maputo rose almost four-fold between 2003 and 2012, but the facility and its associated transport corridor still have potential to grow, the Economist Intelligence Unit (EIU) reported.
In a recent report on Mozambique, the EIU said that “a lot of progress was made” in setting up conditions to increase goods traffic at the port, which resulted in growth of 275 percent between 2003 and 2012, to 15 million tons of cargo per year, which even so is less than the record of 17 million tons per year in 1971.
Empresa de Desenvolvimento do Porto de Maputo, which is controlled by Dubai Ports World and South African logistics company Grindrod, and state port and rail manager Portos e Caminhos de Ferro de Moçambique, expects traffic to reach 40 million tons over the next six years and expects investments to total US$750 million by 2038.
“We expect business and investment in the port and in the associated corridor to continue to increase, but it will stay at below potential,” the EIU said
The Maputo Corridor includes the Johannesburg industrial hub and the South African provinces of Limpopo and Mpumalanga, which border Mozambique.
Support facilities such as opening the Ressano Garcia border on a 24-hour basis, have yet to be put in place.
“The current congestion at the Ressano Garcia border post has been a significant obstacle to trade,” the EIU said.
The United Nations Conference on Trade and Development in its latest report gave the Maputo Corridor as a success story, but also noted that trade needed to be liberalised.
The level of economic growth expected over the next few years – around 7.9 percent between 2014 and 2017 according to the EIU – will be the result of coal mining projects and investment in new transport facilities.
“Transport, communications, industry and Services, will grow significantly,” said the EIU.
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Economic Partnership Agreements (EPAs) – State of play, future perspectives and implementation
Address by Karel De Gucht, European Trade Commissioner, to the EU-ACP Joint Ministerial Trade Committee, Brussels, 11 October 2013
Ministers,
This is now the fourth time that I have the honour to address Economic Partnership Agreements (EPA) in this forum. I have always been – and still am – optimistic about the prospects of concluding the EPA negotiations. There is no reason to be pessimistic: we are implementing three EPAs and have made good progress in many negotiations. What we need now, is a strong commitment and political will to go that extra mile.
Let me start with an overview of the progress we have made, in negotiating and implementing agreements with the seven regions.
I'll start with EPA implementation. We are now implementing three EPAs, in the Caribbean, in the Pacific and in Eastern and Southern Africa. We are seeing good progress in all regions, new investments and business relations, regular engagement between the partners and a constructive partnership which helps to find solutions to sometimes tricky situations.
In the Caribbean, we are making progress in discussing outstanding issues, identified by the Joint EPA Council. Countries are proceeding with tariff cuts and completing ratification. The EPA Parliamentary committee held its second meeting in April. As you see, implementation is very much underway by both sides.
In the Pacific, the Trade Committee established under the interim EPA has met several times to review implementation between the EU and Papua New Guinea. The agreement is giving tangible results in Papua New Guinea. With major investments in the fisheries sector coming on stream, we are seeing the creation – directly or indirectly – of around 30,000 new jobs, mainly for women and locals.
Four countries of the Eastern and Southern African (ESA) EPA group have started implementing their agreement with the EU. Earlier this year, we held the second meeting of the EPA committee in Mauritius to review trade matters, customs and development co-operation. The Commission organised a seminar to increase awareness of the private sector in Madagascar. At the same time, some major regional aid programmes underpinning the EPA process are being approved still this year.
Turning to on-going regional negotiations, these are in much better shape than they are sometimes perceived to be.
In the Southern African Development Community's EPA group, we are discussing revised offers to increase agricultural market access. This is the main element and key to conclusion. Senior officials have frequent meetings to get this deal done. And I had excellent meetings on an otherwise physically punishing trip to Namibia, South Africa and Botswana. I hope that when we do conclude these negotiations – and by this I mean very soon – that my staff will plan for some time to breathe between meetings and flights.
In the context of continued negotiations, South Africa has agreed to work towards an agreement on Geographical Indications. Negotiations have also officially started on services and investment, which are being negotiated with a sub-group of interested countries. This year, we have made progress on a number of issues, but quite a few points remain on the agenda. Further to the last round of talks, the EU is doing some internal work and hopes to revert to partners before the end of October. I am ready to travel again to the region for focussed talks as soon as possible thereafter.
With the East African Community, several rounds of exchanges have helped to make substantial progress on all issues. During this year, EU and EAC teams managed to settle the development cooperation chapter – a major step. One further technical round in May allowed agreement on rules of origin in fisheries. I visited Kenya in July to urge rapid progress.
In the meetings of Arusha also in July, EU and EAC teams ended talks with open issues still on the table. They requested political guidance pushing them to overcome the few outstanding issues paving the way to concluding the EPA. So far, our main hurdle are overlapping diary commitments. I had hoped we could have a stock-taking ministerial back-to-back with today's JMTC but this was not possible. My invitation to EAC ministers to come to Brussels in October still stands and I would be delighted to find time to travel to East Africa for a conclusive round when our respective teams have resolved most of the open technical issues based on the expected political guidance. My main appeal would be to find time for stock-taking as soon as possible. Because of the WTO ministerial and a few EU institutional meetings with other trade partners, until the end of the year, my diary is filling up faster than I would like it to.
With West Africa, the agreement currently negotiated will cover goods and development-cooperation and include rendezvous clauses for services and rules chapters. Few issues remain open and most need addressing at Ministerial level. We are now waiting for a revised market access offer in order to make progress. The region is now taking the necessary political decisions. I had a much appreciated discussion with the President of Senegal, Macky Sall only two days ago and look forward to the outcome of the ECOWAS Summit on 25 October in Dakar. West Africa is on my list of places to visit as part of my commitment to advance EPAs on a political level. I could manage one country this year and certainly will follow up next year too. I thank Commissioner Ciolos for the discussions he had on EPAs in Senegal and Ghana last week.
In the Pacific, negotiations are following a regular pace, with clear commitment on both sides to forge an agreement. The agreement will cover trade in goods, development cooperation, sustainable development, and fisheries. Since October 2012, several technical working group meetings based on a revised draft text and market access offers for all countries have been held. These talks have revealed large differences, especially on fisheries (notably the issue of conservation and resources management). I therefore very much look forward to a stock-taking discussion with Pacific ministers in Brussels next week and thank them for coming such a long way.
Negotiations with other regions are less advanced. In the Eastern and Southern African region, we have been focussing on implementation of the interim EPA.
With Central Africa, we could not engage in negotiations as the Central African negotiators need political guidance from their governments. I do not exclude a visit to the region between this year and the first half of next year.
On the whole, I would say that EPA negotiations have clearly made much progress over recent years. In several regions, they have advanced so much that most technical issues are being settled and only a handful of politically more sensitive issues remain open. These are not the same everywhere, reflecting the regional nature of negotiations and needs.
In parallel, the EU adopted in May the amendment of the Market Access Regulation, thereby clarifying the options available to ACP countries in their choice of the trading relationship they wish to have with the EU.
This amendment is meant to bring closure on the agreements initialled in 2007. Countries concerned have until 1 October 2014 to sign and/or ratify and implement their existing interim agreements and maintain their free access to the EU. Meanwhile, on-going EPA negotiations may continue as long as they have the prospect to bear fruit. I take the opportunity to repeat once again that there is no deadline for EPA negotiations in progress since 2007.
I want to be clear on one point: there will be no new bridging measure.
The whole purpose of the amendment was to regularise the status of the older EPAs. For the rest, applicable trade regimes with ACP countries that choose not to have an EPA is GSP or where applicable MFN status. The only possible third way could be a regular comprehensive free trade agreement, but in such a set up EU market access is far less generous than the 100% duty and quota free access we offer in EPAs which were specifically designed to offer the best possible trade conditions to less developed but justifiably ambitious economies. Growth and a stronger position in world markets is what you all deserve.
We continue to see EPAs as the most promising means to use trade for growth, jobs and development. Openness to trade has been a key element of successful growth and development strategies. Cheaper imported inputs will lower production cost and facilitate integration into global value chains which in turn foster long-term business relations and investment.
Again, I care to repeat that EPAs are the most generous trade partnerships the EU has ever offered to any trading partner. They provide for full free access to the EU and for asymmetry in the level of obligations, for flexibility in their implementation and for provisions tailor-made to ACP development needs. Moreover, the EU stands ready to provide tailored development support in order to help ACP partners implement their EPAs.
The EU, including Commission President Barroso in his bilateral contacts with many of your leaders, has made it clear that EPAs are a priority. We stand ready for dialogue, in the competent ACP structures, in bilateral and bi-regional meetings. The choice is yours!
The year has been good, but it can even be better before 31 December. We need political determination to move forward and bring EPAs to conclusion. I have spent a good part of the year speaking to ACP ministers and statesmen. It has been a privilege to engage in meaningful dialogue and to learn of the economic vision set out by governments for ACP countries. We are not serving contradictory ends. I am a doer and am determined to end the year with even more progress on EPAs. For this, I need you to match or even outdo my ambition.
» Click here for further information on Economic Partnership Agreements.
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New Working Paper series on trade issues for Africa focuses on regional integration
The World Bank’s Africa Trade Practice is introducing a series of working papers that aims to share new voices and analysis on the critical issues surrounding trade and regional integration. The first installment of the series is a paper by Trade Economist Peter Walkenhorst on Indicators to Monitor Regional Trade Integration in Africa.
Stronger regional integration has been a policy priority in Africa for several decades. Closer trade links with neighboring countries promise to stabilize food markets, enhance profitable exchanges in light manufactures, reduce consumer prices, and help develop regional production networks. However, the implementation of existing integration initiatives has often been lackluster, so that the potential for economic development and reduced poverty from expanded intra-regional trade has remained untapped.
More effective monitoring processes for existing integration arrangements could help to shine a light on issues hampering trade and provide policy makers and civil society with the necessary information to push for change.
Successful implementation of regional integration agreements requires two steps: first, the recasting of trade policies in national laws and second, the de-facto change of trading practices on the ground.
In countries with notable governance challenges and under-resourced administrations, many of them in Africa, the gap between the two implementation steps can be substantial, so that the de-facto implementation of trade reforms remains incomplete and ordinary traders, business people and consumers experience little, if any, benefits from regional integration.
Outside Africa, there are some regional integration initiatives that have started to systematically monitor trade outcomes through indicators that cover not only aggregate trade evolution and tariff reductions, but also non-tariff measures, trade facilitation, and services trade.
Regional trade initiatives in Africa could usefully adopt similar processes and complement their monitoring systems with indirect goods and service trade volume information, as well as specific indicators on trade costs related to tariffs, non-tariff barriers, trade logistics obstacles, and services market regulation.
This series of working papers and much of the work upon which they are based is supported by the Multi-Donor Trust Fund for Trade and Development 2 which is financed by contributions from the governments of Sweden, the United Kingdom and the Netherlands.
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Africa’s ample resources provide an opportunity for inclusive growth
Africa continues to grow strongly but poverty and inequality remain persistently high
Five years after the start of the global financial crisis, most countries in Sub-Saharan Africa have continued to register relatively vigorous growth. Economic activity throughout the region continues to expand: GDP growth is projected to reach 4.9% in 2013, compared with 4.2% in 2012, and will rise to 5.5% in 2015, according to the World Bank’s new Africa’s Pulse, the twice-yearly analysis of the economic trends and latest data on the continent.
This burgeoning economic activity is supported by strong domestic demand from rising household consumption and booming production in mineral resources, agriculture, and service sectors. The expansion of commodity exports spurred by the gradual strengthening of advanced countries worldwide, remain key to the region’s growth dynamics, the report notes.
“Africa’s economies are have been expanding robustly and poverty is coming down,” says Punam Chuhan-Pole, the World Bank’s Lead Economist for Africa and co-author of Africa’s Pulse. “At the same time, the analysis shows that without programs to create inclusive growth, significant reductions in poverty will be harder to achieve, even among Africa’s faster growers,” Chuhan-Pole adds.
Across the region, governments have stepped up investment spending. Public investment in most countries in the region – for example, Ethiopia, Ghana, Namibia, Niger, Nigeria, South Africa, Tanzania, Uganda, and Zambia – continues to be geared toward the provision of basic infrastructure, such as power generation, roads and port facilities, which remain critical to improving competitiveness in the region.
Poverty Results Show Progress
Africa’s Pulse shows that poverty in Sub-Saharan Africa has also declined. An estimated 58 percent of people in the region were living on less than US$1.25-day around the turn of the millennium. By 2010, the poverty headcount ratio declined by almost 10 percentage points to an estimated 48.5 percent.
However within this impressive economic expansion, the analysis shows some variation in economic performance across country groups. Within the “resource-rich” country group, the gap in growth between oil and nonoil countries has narrowed. At the same time, several countries within the “non-resource rich” county group have achieved sustained high growth rates for over a decade, such as Ethiopia, Mozambique and Rwanda. South Africa is one of a few countries where growth is lagging behind the levels achieved before the global crisis began.
In addition, ensuring that growth translates into considerably less poverty has been slow and hindered by high inequality.
“Africa grew faster in the last decade than most other regions, but the impact on poverty is much less than we would’ve liked. Africa’s growth has not been as powerful in reducing poverty as it could have been because of the high levels of inequality. Growth with equity is possible, but it requires a decline in inequality in both outcomes and opportunities,” says Francisco Ferreira, Acting Chief Economist, World Bank Africa Region.
Food Prices Remain Stable
Immediate risk from global food price spikes appears contained for now. Recent food price developments show that the price of major food commodities – maize, sorghum, rice, and wheat – declined from January to August 2013.
With some exceptions, domestic prices of staples (maize, miller and sorghum) across the region rose only slightly and remained well below price levels from last year. In some parts of the region, such as in parts of Southern Africa, droughts tightened maize supplies leading to higher prices. In Mozambique, for example, maize prices increased by over 9% in Maputo. Meanwhile in Mali, Burkina Faso and Niger, improved security and favorable harvests resulted in lower prices of sorghum and millet.
Internally, natural disasters, both old (droughts), but also new (floods), are occurring with increasing frequency, and continue to dampen crop productivity, the report notes. The agricultural sector still plays a dominant role in most African economies, and families spend significant amounts from their household budgets on food. For these reasons countries will need to take steps to increase the resiliency of agriculture and protect it from unfavorable climate change impacts, according to the analysis.
At the same time, the threat of conflict continues, as demonstrated by the events over the last 18 months in the Central African Republic, Kenya, and Mali. Building resiliency to this type of volatility is as critical to sustaining economic growth and reducing poverty as measures that help to speed economic expansion, the report adds.
Looking Into the Future
With the region’s impressive economic performance during this period of global insecurity, Africa’s Pulse asks the question: If there are further adverse shocks to the global economy, will economic growth persist in Sub-Saharan Africa, and what impact will it have on poverty reduction? Two separate scenarios simulating global oil and metal price shocks show that among developing regions, Sub-Saharan Africa would experience the most impact.
The report recommends that countries could avoid the negative trade effects from global price changes if the appropriate policies and steps that promote economic diversification are put in place.
Africa’s Pulse also looks at how new economic challenges in high-income countries might stress Africa’s recent growth and poverty reduction progress. The simulation results show that African economies are fairly impervious to a prolonged economic recession in high-income countries, unless it is accompanied by a drop in investment.
Three Percent by 2030
Inspired by the recent achievement of poverty reduction across the developing world, and Africa’s dramatic turnaround after many years of decline, the international community and the World Bank have agreed to find ways to reduce the global US$1.25-a-day poverty headcount ratio to 3% by 2030. With this in mind, Africa’s Pulse asks a second question: What are the ramifications of the global “3 percent by 2030” target for Africa’s poverty status now and in 2030?
The analysis presents three scenarios for growth across the region through 2030, and all three illustrate the challenge of accelerating the reduction of poverty in Africa. Despite the continent’s growth and its progress in the fight against poverty, the world’s poor will increasingly be concentrated in Africa, according to the analysis. This change will move the continent even more to the center stage in the global fight against poverty, the report adds.
With this in mind, the report concludes that Africa’s poverty reduction must be accelerated, not delayed. Economic expansion and growth alone will not suffice to rapidly reduce poverty in the region, it concludes.
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UNCTAD releases new reports on developments in trade policy and trends in international merchandise trade
The new UNCTAD publication Key Statistics and Trends in Trade Policy seeks to provide a snapshot of recent and medium-term developments.
The report is intended to serve as a regular monitoring exercise that conveys factual information on a wide range of trade policies such as tariffs, preferential margins, non-tariff measures, preferential trade agreements, trade defences measures and exchange rates.
It reviews policies directly or indirectly impacting international trade, with particular attention paid to issues affecting developing countries. Its aim is to inform the broader policy dialogue.
The just-released issue of the report highlights that the process of tariff liberalization has continued largely unabated over the past decade, resulting in around three-quarters of international trade being fully liberalized under most favoured nation or preferential tariff regimes. Nevertheless, tariffs remain relatively high in some key sectors of interest to developing countries and for non-regional South-South trade.
The study further takes note of the growing complexity and fragmentation of the international trading system, largely attributed to the proliferation of bilateral and regional preferential trade agreements. Preferential trade agreements have greatly contributed to liberalizing and facilitating international trade, often extending beyond traditional tariff liberalization by covering “behind-the-border” measures. However, the report also shows how the proliferation of these agreements affects the structure and magnitude of preferential margins as well as the policy space allowed to countries to raise tariffs.
In addition, study analyses the evolution in the use of contingency measures (anti-dumping measures, countervailing duties and safeguards) and describes the important role being played by non-tariff measures such as quotas, licensing, pre-shipment inspections, import and export regulations, standards and technical measures. Finally, the report surveys movements in exchange rates and reviews their role in influencing the external competitiveness of countries.
New UNCTAD publication monitors trends in international merchandise trade
UNCTAD’s new publication entitled Key Trends in International Merchandise Trade provides an overview of recent developments, with a particular focus on developing countries.
The newly launched report, which will appear annually, covers a range of trends and indicators, including statistics on sectoral, regional and South-South trade, on export diversification and sophistication, and on intra-industry trade. Its aim is to present factual information on global trade in a concise and accessible manner, and to provide useful background information for government delegates, policymakers, and others working in the global trade arena.
The publication shows that, notwithstanding the economic crisis, world trade has increased dramatically over the past decade, rising almost threefold since 2002 to reach about $18.5 trillion in 2012. Developing countries have assumed an increasing share in these trade flows, and they now account for almost half of global exports. And yet, data at the regional level reveal that developing countries’ integration into the global economy is characterized by wide variations in performance, with East Asia continuing to dominate these flows of merchandise. Increased demand in developing (especially middle-income) countries, paired with a fragmentation of production processes, has resulted in a rapid increase in South-South trade, the report says.
Trade patterns across different categories of products, and across economic sectors, are also examined in the publication. The last decade has seen an overall increase in the importance of primary products in world trade, prompted by a surge in demand in emerging markets and by a consequent rise in commodity prices. Notably, the energy-related sector is the largest (and fastest-growing) in terms of value of trade. It now accounts for about a fifth of world trade.
The report notes that the dependence of many developing countries on exports of natural resources and other commodities makes them particularly vulnerable to price movements in international markets. Despite these countries’ efforts to diversify, the export basket of many developing – and particularly low-income – countries has remained tied to unprocessed products that have lower technological content and value addition, and therefore limited growth potential.
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COMESA Court of Justice rules that Mauritius breached the COMESA rules for the Free Trade Area
COMESA Court orders a refund of customs duties to a small company
In a landmark case, the COMESA Court of Justice has decided that the Government of Mauritius, by imposing a customs duty on imports of a product (car paint) from Egypt, acted contrary to Article 46 of the COMESA Treaty, which required that member states eliminate by the year 2000 all customs duties and other charges of equivalent effect on goods which originate from the member states that are in the COMESA Free Trade Area.
The Court ruled in addition, that an agreement between two or more member states to re-instate customs duties on trade among themselves, in this case between Egypt and Mauritius, is contrary to the object and purpose of the Treaty and in breach of the Treaty; that instead, member states can use Article 61 of the Treaty which provides a possibility of taking safeguard measures against import surges, for one year after informing the Secretary General, and for additional years if approved by the Council of Ministers.
Background
A company called Polytol Paints, based in Mauritius, on 15 February 2012 brought a case in the COMESA Court against the Government of Mauritius complaining that the Government imposed a customs duty of 40% on its imports of Kapci paints from Egypt from 16 November 2001 up to 20 November 2010, over which period the company paid the duties which it sought to be refunded.
The Mauritius Revenue Authority had declined the claim for the refund. The Supreme Court of Mauritius supported this rejection, in a case in which it decided that “non-fulfillment by Mauritius of its obligations, if any, under the COMESA Treaty is not enforceable by the national courts”.
The company contended that since Mauritius joined the COMESA FTA on 1 November 2000, when it eliminated duties on products originating from COMESA member states in the FTA including the kapci paints imported from Egypt, the Government acted inconsistently with the Treaty, in particular with Article 46, by re-introducing a customs duty subsequently in November 2001; even if this was done purportedly under an agreement with Egypt to address import surges experienced from 1997 to 2000 as the Government claimed.
The court dealt with a number of specific issues. First, the company was challenged that it had no basis for challenging the failure by the Government of Mauritius to implement some Treaty obligations into its national law. On the question of whether the company could sue the Government for failing to implement some obligations under the COMESA Treaty, the court held that only the Secretary General or a member state could sue a member state for failing to fulfill its obligations, under Article 24 of the Treaty. At the same time, the Court cited Article 26 of the Treaty, which says that “any person who is resident in a member state may refer for determination by the Court the legality of any act, regulation, directive or decision of the Council or of a Member State on the grounds that such act, directive, decision or regulation is unlawful or an infringement of the provisions of this Treaty”. The Court therefore held that “a legal or natural person is only permitted to bring to Court matters relating to conduct or measures that are unlawful or an infringement of the Treaty but not the non-fulfillment of a Treaty obligation by a Member State. The responsibility of bringing a matter relating to non-fulfillment of obligations under the Treaty is reserved for Member States and the Secretary General”.
The Court then proceeded to the question of whether or not the Government of Mauritius acted consistently with the Treaty when it introduced a customs duty on imports of the car paints from Egypt. The Government argued that obligations under the COMESA Treaty are to be implemented progressively “irrespective of the Treaty timeframe”, because only some member states joined the COMESA FTA and not others, and also because the COMESA Council of Ministers recently extended the transition period for the Customs Union. The COMESA Court rejected both these arguments.
After citing Article 31 of the Vienna Convention on the Law of Treaties which provides that “a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of the its object and purpose”, the court held that “Article 46 is clear and unambiguous and its terms must be interpreted with their ordinary meaning in the context of the purpose and objective of the treaty to achieve free trade with the COMESA area”, and that “Mauritius infringed Article 46 by reintroducing duties on Egyptian products including Kapci paints even if it was for the protection of its industries”.
On the question of whether or not individuals who reside in the member states can have an enforceable right under the COMESA Treaty, the Court again cited Article 26 of the Treaty and held that “the content of this rule shows the extent the signatories of the COMESA Treaty have committed themselves to give some space in the COMESA territory not only to the Member States but also to individuals. By giving the residents of any Member State the right to challenge the acts thereof on grounds of unlawfulness or infringement of the Treaty, the Member States have in some areas limited their sovereignty. The proper functioning of the Common Market is, therefore, not only a concern of the Member States but also that of the residents. The Treaty is more than an agreement which merely creates obligations between Member States. It also gives enforceable rights to citizens residing in the Member States”.
The Government had tried to argue that the COMESA Treaty was not enforceable in Mauritius as the Government had not taken measures to domesticate the Treaty. The Court made it a point to explain at length that the Government’s actions had breached the Treaty and caused prejudice to the company in breach of its rights provided by the COMESA Treaty, and the Government could not use its own internal laws as an explanation or a defence for not implementing the COMESA Treaty. The Court said
“In the case at hand, the Respondent has imposed a customs tariff that is in breach of the Treaty. If the Respondent’s Customs Tariff Regulations were consistent with the rules of the Treaty, the Applicant would have paid no customs duty on the Kapci products imported from Egypt during the relevant time. The Applicant was therefore clearly prejudiced because of the Regulations of the Respondent that was in breach of the Treaty. The argument of the Respondent’s Counsel that the Treaty is not directly enforceable in some jurisdictions, including Mauritius, and therefore the individuals cannot have rights emanating from the Treaty is misconceived.
It is indeed true that there are differences in legal systems regarding their position towards the domestication of international law. In some Member States, Treaties become directly applicable; in others they require another domestic legal instrument for their incorporation.
Notwithstanding the differences in domestic legal systems the Treaty objectives can be achieved when all Member States fulfill their obligations under the Treaty. Any Member State that acts contrary to the Treaty cannot, therefore, plead the nature of its legal system as a defence when citizens or residents of that State are prejudiced by its acts.
This is clearly stipulated in Article 27 of the Vienna Convention on the Law of Treaties, 1969 which provides that ‘ [a] party may not invoke the provision of its internal law as justification for its failure to perform a treaty’.”
The COMESA Court drew upon the decision of the European Court of Justice, on a similar issue that arose before it. The European Court of Justice held that,
The … Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only Member States but also their nationals. Independently of the legislation of Member States, Community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. These rights arise not only where they are expressly granted by the Treaty, but also by reason of obligations which the Treaty imposes in a clearly defined way upon individuals as well as upon the Member States and upon the institutions of the Community… according to the spirit, the general scheme and the wording of the Treaty, Article 12 must be interpreted as producing direct effects and creating individual rights which national courts must protect”.
Another important issue the COMESA Court decided on was whether or not the bilateral agreement between Egypt and Mauritius could be relied upon by the Government of Mauritius, under which it was agreed to impose customs duties on imports from Egypt contrary to the COMESA rules which required that no customs duties or charges of equivalent effect should be imposed on imports that originate from other member states. The COMESA Court again went at length to explain that bilateral agreements between member states should aim to promote the achievement of the objectives of the COMESA Treaty, and that by instead seeking to reverse the rules under the COMESA FTA, the bilateral agreement could not stand. The Court explained that Article 61 of the Treaty provides for the possibility of a safeguard measure that a member state facing import surges can use, instead of seeking bilateral agreements that are inconsistent with the object and purpose of the Treaty. As the Court explained,
The Treaty allows Member States to enter into bilateral agreements with each other or with third states. This should not however, be construed as giving the Member States a right to enter into agreements that defeat the main purpose of the Treaty which they have undertaken to respect.
In this connection Article 56(3) states that
Nothing in this Treaty shall prevent two Member States from entering into new preferential agreements among themselves which aim at achieving the objectives of the Common Market, provided that any preferential treatment accorded under such agreements is extended to the other Member States on a reciprocal and non-discriminatory basis.
Article 56(3) of the Treaty allows Members States to enter into agreements among themselves only if some basic requirements are met. First, whatever agreement the Member States enter into must contribute towards the achievement of the objectives of the Common Market. Second, the agreement should relate to a preferential treatment. Third, such preferential treatment should be extended to all the other Member States provided that the other Member States reciprocate. That there was communication between the States of Mauritius and Egypt on this matter is admitted by the Applicant’s Counsel. The argument is that even if there was such an agreement it was contrary to the requirements of the Treaty.
The Court has examined the nature of the communication preceding the imposition of the duties and the impact of the Regulations in light of Article 56(3) of the Treaty. The Regulation that was issued in 2001 by Mauritius imposed a 40% duty on Kapci products imported from Egypt. The purpose of the negotiations was not therefore to give preferential treatment to the products from Egypt, as envisaged by Article 56 but to levy additional duty on the same products. What Article 56(3) envisages is a situation where Member States give additional benefits to products apart from the minimum protection given to them under the Treaty. The agreement between Egypt and Mauritius had in effect raised the duty from zero, which is the rule under the Treaty, to 40%. This bilateral act was clearly against the basic objectives of the Treaty which include the elimination of customs duty and other non tariff barriers within the time limit provided by the Treaty.
Under Article 55 of the Treaty any practice which negates the objective of free and liberalized trade shall be prohibited. The agreement between Egypt and Mauritius hampered the process of liberalization of trade within the COMESA territory and could not relieve the Respondent from its obligations to uphold the principles of the Treaty.
The Court then went on to cite Articles 18 and 41 of the Vienna Convention on the Law of Treaties, which provides that any such bilateral agreement can be entered by member states if it is not prohibited by the Treaty and if the bilateral agreement does not create a derogation that is incompatible with the effective executive of the object and purpose of the COMESA Treaty as a whole.
In conclusion, the COMESA Court issued an order that the Government of Mauritius should refund to the company the customs duties paid for the period from 1 April 2005, when the company first sent a letter formally complaining about the customs duties, to 20 November 2010 when the law was removed, with interest at the rate applied by the courts in Mauritius, and to pay 70% of the costs the company incurred in pursuing the case.
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Export-led development is no longer viable, UNCTAD says – economies will perform better with more balanced strategies
Developing and transition economies need to move towards more balanced growth and give a greater role to domestic demand in their development strategies, a new UNCTAD report contends.
The Trade and Development Report 2013 (TDR13), subtitled “Adjusting to the changing dynamics of the world economy,” cautions that a prolonged period of slow growth in developed countries will mean continued sluggish growth in their imports. Developing and transition economies can compensate for resulting growth shortfalls through countercyclical macro-economic policies for some time, the study says. But in the longer term, policy makers will need to reconsider development strategies that have been overly dependent on exports. Instead, the report says, development strategies should place a greater emphasis on the role of wages and the public sector in the development process. The TDR was released today [11 September 2013].
Prior to the Great Recession, buoyant consumer demand in some developed countries enabled the rapid growth of manufactured exports from industrializing developing countries which, in turn, provided opportunities for primary commodity exports from other developing countries. The overall expansionary – though eventually unsustainable – nature of these developments boosted global growth. The boom also seemed to vindicate developing and transition economies in adopting an export-oriented growth model. However, such a model is no longer viable in the current context of slow growth in developed economies, the report warns. To address the prospect of a prolonged period of considerably slower export growth, policymakers need to give greater weight to domestic demand.
Moving towards a more balanced growth path could, on a sustained basis, compensate for the adverse effects of slower-growing exports to developed countries. Moreover, it could be pursued simultaneously by all developing and transition economies without the “beggar-thy-neighbour” effects and the contractionary wage and tax competition inherent in export-led strategies, the TDR notes. Indeed, if many developing and transition economies simultaneously give domestic demand a greater role in their growth strategies, their economies could become markets for each other, fostering regional and “South-South trade,” and thus further growth for all. Hence, shifting the focus of development strategies to domestic markets does not mean minimizing the importance of the role of exports. Exports could actually expand further if several trade partners were to achieve higher economic growth at the same time. In that context, natural-resource-rich countries may be able to continue to benefit from historically high commodity prices. But they should ensure that the resulting revenues are used for investing in new activities that enable production and export diversification, the report advises.
The study warns that there are challenges to such shifts in growth strategies. Developing countries’ insufficient market size is often cited as a reason why domestic-demand-oriented growth is not viable. But recent projections on the growth and composition of the “global middle class” suggest that some of the most populous developing and transition economies may now have the rising household consumption needed to compensate for a major part of any decline in export demand from developed countries. The study underlines, however, that to realize this sales potential, policymakers must boost domestic purchasing power and achieve an appropriate balance between increases in household consumption, private investment, and public expenditure. The specifics of this balance depend on the circumstances of individual countries. But in general, striking the balance will require a new perspective on the role of wages and the public sector.
The Trade and Development Report recalls that export-oriented strategies emphasize the cost aspect of wages. Indeed, wages have lagged behind productivity growth in most countries in recent decades. By contrast, a strategy giving a greater role to domestic demand would emphasize the income aspect of wages, as it would be based on household spending as the largest component of domestic demand. Employment creation combined with productivity-oriented wage growth should create sufficient domestic demand to fully take advantage of growing productive capacities, without having to rely on continued export growth. Some developing countries have recently tried to boost consumer spending by easing access to consumer credit, but the study warns that such an approach can lead to excessive debt and household insolvency, as amply demonstrated by recent experiences in a number of developed countries.
The report contends that the public sector can further boost domestic demand by increasing public employment and undertaking investment. Moreover, changes in the tax structure and the composition of public expenditure can shape the distribution of purchasing power towards those income groups that spend larger shares of their incomes on consumption. Increased aggregate demand from household consumption and the public sector would provide an incentive to entrepreneurs to invest in increasing real productive capacity.
Investment decisions could be further supported by industrial policy, the TDR notes. This would aim at making the sectoral allocation of investment better match the newly emerging patterns of domestic and regional demand. Local enterprises in developing countries may already have an advantage over foreign ones in catering to the new demand patterns emerging in their countries and regions. They have better knowledge of local markets and local preferences and can more easily develop appropriate new products and distribution networks. Thus, they could prevent the rise in domestic demand from causing excessive trade deficits.
In the case of countries heavily dependent on commodities exports, the study advises a careful evaluation of future developments in export earnings to determine if commodity prices are in a so-called “super-cycle”, and, if so, at what point in the cycle they are currently located. It argues that a collapse of commodity prices or a quick return to a long-running deteriorating trend is unlikely to occur in the next few years. As long as commodity prices remain at relatively elevated levels and commodity producers are able to appropriate a fair share of resource rents, policymakers should ensure that the revenues accruing from natural resource exploitation are used to reduce income inequality and to spur industrial production. The report says related measures should include public investment and the provision of social services targeting those segments of the population that do not directly benefit from resource revenues.
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Institutions and innovation increasingly important for competitiveness
Excellent innovation and strong institutional environments are increasingly influencing economies’ competitiveness, according to The Global Competitiveness Report 2013-2014, which was launched on 4 September 2013.
The report’s Global Competitiveness Index (GCI) places Switzerland at the top of the ranking for the fifth year running. Singapore and Finland remain in second and third positions respectively. Germany moves up two places (4th) and the United States reverses a four-year downward trend, climbing two places to fifth. Hong Kong SAR (7th) and Japan (9th) also close the gap on the most competitive economies, while Sweden (6th), the Netherlands (8th) and the United Kingdom (10th) fall.
The United States continues to be a world leader in bringing innovative products and services to market. Its rise in the ranking is down to a perceived improvement in the country’s financial market as well as greater confidence in its public institutions. However, serious concerns persist over its macroeconomic stability, which ranks 117 out of 148 economies.
In Europe, efforts to tackle public debt and avoid a break-up of the euro have taken the focus off addressing deeper competitiveness issues. Southern European economies such as Spain (35th), Italy (49th), Portugal (51st) and notably Greece (91st) all need to continue addressing weaknesses in the functioning and efficiency of their markets, boost innovation and improve access to finance in order to help bridge the region’s competitiveness divide.
Some of the world’s largest emerging market economies must also engage business, government and civil society to implement long-overdue reforms. Of the five BRICS, the People’s Republic of China (29th) continues to lead the group, followed by South Africa (53rd), Brazil (56th) India (60th) and Russia (64th). Among the BRICS, only Russia improves its ranking, climbing three places, while Brazil drops eight places.
Among the Asian economies, Indonesia jumps to 38th, making it the most improved of the G20 economies since 2006, while Korea (25th) falls by six places. Behind Singapore, Hong Kong SAR, Japan and Taiwan (China) (12th) all remain in the top 20. Developing Asian nations display very mixed performances and trends: Malaysia places 24th while countries such as Nepal (117th), Pakistan (133rd) and Timor-Leste (138th) are near the bottom of the ranking. Bhutan (109th), Lao PDR (81st) and Myanmar (139th) join the index for the first time.
In the Middle East and North Africa, Qatar (13th) tops the region’s rankings, with the United Arab Emirates (19th) entering the top 20 for the first time. Saudi Arabia (20th) falls two places but remains among the top 20. Israel ranks 27th. Egypt (118th) drops a further 11 places on last year’s index. Bahrain (43rd), Jordan (68th) and Morocco (77th) also decline. Elsewhere in the region, Algeria moves up to 100th place and Tunisia re-enters the index at 83rd.
In sub-Saharan Africa, Mauritius (45th) overtakes South Africa (53rd) as the region’s most competitive economy. With only eight countries in the region featuring in the top 100, profound efforts across the board are clearly needed to improve Africa’s competitiveness. Among low-income economies, Kenya makes the biggest improvement, rising by ten places to 96th position. Nigeria (120th) continues to be ranked low, highlighting the need for it to diversify its economy.
Despite robust economic growth in previous years, Latin America continues to suffer from low rates of productivity and the results show overall stagnation in competitiveness performance. Chile (34th) continues to lead the regional rankings ahead of Panama (40th), Costa Rica (54th) and Mexico (55th), which all remain relatively stable.
“Innovation becomes even more critical in terms of an economy’s ability to foster future prosperity,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “I predict that the traditional distinction between countries being ‘developed’ or ‘less developed’ will gradually disappear and we will instead refer to them much more in terms of being ‘innovation rich’ vs. ‘innovation poor’ countries. It is therefore vital that leaders from business, government and civil society work collaboratively to create education systems and enable environments which foster innovation.”
Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, said: “The report highlights a shift in the narrative of the global economy from one year ago, when fire-fighting still characterized much of global and regional economic policy. This has now given way to an increasing urgency for leaders to make wide-ranging structural reforms to their economies.”
Background
The Global Competitiveness Report’s competitiveness ranking is based on the GCI, which was introduced by the World Economic Forum in 2004. Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, GCI scores are calculated by drawing together country-level data covering 12 categories – the pillars of competitiveness – that together make up a comprehensive picture of a country’s competitiveness. The 12 pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation. For more information on the methodology of the report, click here.
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A renewed global partnership for Africa
Between 2000 and 2009, eleven African countries grew at an annual rate of 7% or more, sufficient enough to double their economies in ten years. Because Africa’s collective GDP of over US$2 trillion is roughly equal to that of Brazil and Russia, and larger than that of India, it can be seen as a vibrant frontier market and an emerging pole of growth.
Africa’s social and political indicators have also improved with achievements in increasing primary school enrollment and tackling gender disparity, as well as declines in HIV/AIDS prevalence rates and maternal deaths. However, unemployment remains high, particularly among young people, and while successes in HIV/AIDS and malaria alleviation have been driven by access to vertical funds, nearly half the population is still considered poor, and Africa’s overall MDG progress is below par.
Global partnerships can provide the impetus for tackling the socioeconomic development challenges that Africa is facing. For example, India’s development performance is one of the most spectacular in the past 50 years. The country went from being one of the largest recipients of foreign aid in the mid-1980s to a net donor, with aid constituting less than 0.3% of its national GDP. Now a member of G20 and BRICS, it led an agricultural revolution and became a net exporter of food, doubled its life expectancy and halved its poverty rate.
Global partnerships, therefore, can work for Africa if they are aligned with the strategic vision of the continent and supported by a unified continental voice. The mixed results of MDG8 on the one hand, and Africa’s ambition of fostering sustainable transformative growth on the other hand, requires that we think global partnership anew. The nearing end of the MDG era therefore provides this opportunity, in a way that is mutually beneficial and sustainable.
Global trade patterns are currently not in Africa’s interest and efforts to increase its share through Aid for Trade and market access initiatives have had mixed results. Also, disbursements have fallen short of commitments and the proportion of developed country imports from Africa (admittedly duty-free) has stagnated, which is unfortunate since trade is an important mechanism for promoting economic growth and employment.
That being said, we need to keep the heterogeneity of African countries in mind. The continent is home to least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing states (SIDS). The special needs of these countries, as acknowledged in the Millennium Declaration, must be reflected in the next global partnership framework, which has to go further in terms of financing options for the most vulnerable countries.
What could be some desirable features of a new global partnership framework?
Global partnerships remain fundamental in addressing global concerns like climate change, conflict and insecurity, financial instability, illicit capital flow and health threats.
A new global partnership must be mutually beneficial, promote the autonomy of African states and address Africa’s developmental priorities. And while these priorities are country-specific, most African countries prioritize structural transformation and the development of capacities to sustain this. A new partnership must avoid the donor-recipient logic of MDG8 relating to global partnerships, promote fair trade and foreign direct investment and forge cooperation with the private sector.
In parallel, Africa must have greater ownership of its development agenda, for example by developing resource mobilization strategies and restoring the accountability of the state to its people instead of to development partners. This will require special attention and support for official statistical systems and information systems.
The new framework must take account of each country’s initial conditions, because we cannot repeat the mistake of assuming that every country departs from the same point. Therefore, mutual accountability, enforcement mechanisms, mechanisms that foster the compliance of multinational firms with international norms and standards should be essential features of this framework.
Finally, a future global partnership should include new sets of actors: the private sector, parliamentarians, private foundations, civil society, women and young people. Youth in particular must have a voice in the world’s youngest continent.
As we make the transition to the successor development agenda, we must be united in our commitment to negotiate a global partnership and a financing architecture that are respectful of Africa’s development priorities, promote the mutual interests of developed and developing countries, and hold all sides accountable for their actions. If we would fail to do so, we will also fail in our duty as leaders of our institutions, communities and countries.
Carlos Lopes is the eighth Executive Secretary of the United Nations Economic Commission for Africa (ECA).
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Transnet tests water for better Africa-wide ports integration
Transnet National Ports Authority (TNPA) took a step closer toward improving the integration of African port authorities on Wednesday after agreeing with the Namibian Port Authority (Namport) to work more closely together to lift the operational performances of the continent's ports.
It is the second such agreement that Transnet has entered into in 2013 after a similar deal was reached with the Maputo Port Development Corporation in June. Other countries to be targeted for the co-operation framework include Kenya, Tanzania and Angola, Namport CEO Bisey Uirab said on Wednesday.
Although the ports of Namibia and South Africa compete with each other for traffic, Mr Uirab said the Southern African Development Community (Sadc) market was large enough to allow for all ports to capture sufficient trade.
Port authorities had to invest in the skills required for investment planning and customer-focused operations.
TNPA CEO Tau Morwe said the two port operators could learn from each other.
Namport operates the ports of Walvis Bay and Luderitz. The sparsely populated country's ports largely rely on its landlocked neighbours for export and import volumes, handling commodities such as fuel, copper and salt.
"The key thrust of this agreement is that you cannot have regional integration and regional growth without co-operation," Mr Morwe said.
Many areas provided scope for collaboration, he said, including customs issues and "delays at borders".
"These issues we can bring to our respective governments" for resolution, Mr Morwe said.
He also said Transnet could learn from Namport on creating logistics corridors, as Namibia had well-established relationships with its landlocked neighbours.
The programme for greater integration of the region's logistics infrastructure falls within Transnet's ambitious rolling seven-year investment programme. It will invest about R308bn to lift its capacity and operating efficiencies.
Namport is also embarking on an expansion programme that will see it triple its container volumes at Walvis Bay port to almost 1-million twenty-foot-equivalent units (Teus), from 355,000 Teus, at a cost of about R3bn, Mr Bisey said.
In addition, it is increasing its liquid-fuels handling capacity with investment in a new, deeper liquid-fuels berth at the port.
Franklin Mziray, secretary-general of the Port Management Association of Eastern and Southern Africa, said collaboration between ports was necessary in Africa for operators to better understand the needs of customers.
He said it was common practice for shipping companies to play ports off against each other to extract discounts or favourable pricing. Without shared knowledge on issues such as waiting times at other ports, it made ports vulnerable to such opportunism, he said.
Mr Bisey said many agreements were signed and gathered dust, but Namport and TNPA were determined to identify key goals and to see their work bear fruit within the next month.
"Our intention is to put together teams to seek the particular benefits that we want," he said.
"We need to ensure that there is healthy competition and excellent collaboration "in a region of more than 300-million people there is more than enough market for all port authorities."
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Regional integration tops council of ministers meeting
The implementation of the regional integration process of the member States of the Southern African Development Community (SADC) and financial situation will top the meeting agenda of the Council of Ministers of the sub-region set for 14-15 of this month, in Lilongwe, Malawi.
The expert of SADC, who are meeting since Saturday to prepare the meeting of the ministers, said so Tuesday.
According to the experts, the ministers will examine the current state of the process of regional economic integration, namely the free trade zone, customs union and cooperation with other regional organisations for development and mobilisation of resource.
The document also foresees the valuation of investments in infrastructure and the implementation of programmes under the African Union and the New Partnership for Africa’s Development (NEPAD), an initiative which aims to change the current reality of the continent.
The event will also examine the report of activities performed by the Executive Secretariat, since the last Summit held in August 2012 in Maputo, Mozambique.
The participants will analyse the issue of the SADC Court, which has not worked since 2010. The meeting will run under the chairmanship of Foreign Minister of Mozambique, Oldemiro Baloi.
The Angolan delegation of experts comprises specialists from the ministries of Foreign Affairs, Finance, Transport, Trade and senior officials of the national secretariat of SADC and the Angolan embassy in Mozambique.
The Session of Council of Ministers will also be marked by the appointment of the new executive secretary of the organisation.
The event aims to prepare the 33rd Summit of 14 Heads of State and Government of SADC, scheduled for 17 and 18 August in Lilongwe.
At this summit, the Head of State of Malawi, Joyce Banda, will take up the rotating presidency of SADC, succeeding his Mozambican counterpart, Armando Guebuza.
SADC comprises Angola, South Africa, Botswana, Zambia, Zimbabwe, Tanzania, Democratic Republic of Congo (DRC), Mozambique, Malawi, Lesotho, Mauritius, Seychelles, Namibia, Swaziland and Madagascar, this last is suspended from the organisation.