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ROLE OF REGIONAL ECONOMIC COMMUNITIES IN PROMOTING ECONOMIC
INCLUSIVENESS
THE SADC LA, Cape Town, 18‐19th August 2016
By Daniel Njiwa
Introductory facts The concept of inclusiveness Existing frameworks Discussion on key sectors & how they impact
economic inclusiveness Examples of regional initiatives that promote
economic inclusiveness: STR, FoodTrade ESA, Industrial Clusters, CAADP…
The gaps ‐ what can be done.
Sources: Africa Development Bank; Africa Investment Report; World Bank; ERA 2016; African Union; TNO/Excelsoir Firm
Demographic dividend [~0.5 billion 25‐64yrs ‐
2015]
65% worlds arable land; most
mineral resources
Share of mobile tel. penetration is significant; tech. transfer
10 of the fastest growing
economies
FDI growth over 10 years > world
average
Middle class more than
tripled over past 30 years
Poverty decline by proportion (56‐48% ‐ ‘90‐
2000)
Integration (trade) structural reforms, private sector focus
Democracy
Diaspora remittances
increasing > ODA & FDI in cases
Tertiary education
enrolment ^ 21% y.o.y from 2000
Econ. growth @least 4.5% over
10 years
Africa today
Sources: Africa Development Bank; Africa Investment Report; World Bank; ERA 2016; African Union; TNO/Excelsoir Firm
Women far more disadvantaged (access/culture)
ICT penetration below par
Infrastructure challenges
[roads, energy, rail]
At least half a billion live below
poverty line ($1.25)
Urbanisation (~3%) & Unemployment (>7% SSA)
Access to tertiary education & vocational skills limited
Imports $35bn of food every year
WHY?
HIV and AIDS remains a big challenge
11 million Africans enter the labour force
annually
Declining commodity prices
Head of UNECA, Carlos Lopez asks: Who is benefitting?
How do we ensure this growth is shared broadly, rather than benefiting a select few? We know from watching it happen in other places that this is not a guarantee.“ Judith Rodin
While Africa’s economies are growing, inequality is increasing all over the continent .Akinwumi Adesina
Income equality (still a significant challenge in Africa)Gender balance – equal participation of women, youth and othersAccess to natural resources Access to social amenities (clean water, housing, energy, education, roads, security, health etc.)Equitable formal employment (>70% are in informal employment; mostly agro‐based)For these: protection of assets and rights is non‐existentParticipation in policy and developmentCorruption breeds inequality (governance institutions still have work)
Single customs territoryRegional customs transit systemCargo tracking systemsInteragency coordinationOne‐stop border postsCorridor monitoring,Dwell time at port reduced by days (e.g. Chirundu or Malaba); border clearance to under 8hrs; Cost of Doing Business reduced by 50%. This Boosts investments, productivity, welfare (but to what extent?)
commercial
Question: How many citizens/local SMEs are benefiting from these arrangements?
COMESA, EAC Simplified trade regime STR:‐ Refers to Simplified Trade Regime: simplification of procedures and documentation of trade/customs in order to encourage utilization by millions of small/informal traders. Prerequisites: ‐ Functional FTA; Legal‐Amended Customs Act; Simplified customs documentation; Issuance of COO at border (or Common list of products agreed bilaterally or regionally); training and awareness creation by both traders and customs and border authorities
Agreement on volumes and values Agreement on other procedures such as SPS controls, immigration procedures, etc Regional Cross Border Traders Association formed Mwami, Livingstone[30,000 monthly]; Malaba, Busia [>50,000 monthly]
Source: COMESA Secretariat
A. AGRICULTURE
Remains the mainstay of the Regional economy [>30 countries generate sig. GDP from Agriculture~15‐45% or more] Employment [close to 50% of working population] Population relying on agriculture: ~48% (2013) Low productivity in the agricultural sector VS industrial production and competitiveness Opportunity: Rising global food prices Trigger key investments in the sector:‐ IRRIGATION: Only 5% of cultivated land in Africa is irrigated (can boost production by >50%) IMPROVED INPUTS:‐ improved Seeds (<20% of farmers); Fertilisers (<fifth of world average). COMESA or SADC seed system LAND GRAB: Ownership, social benefits, protection of rights
Source: AU/NEPAD 2013; COMESA 2016
CAADP:2003: to improve agriculture investments/productivityMost Governments still below 10% commitment; growth still below 6% Progress in Africa/region: Led by NEPAD its now over 10years. Stuck in processes and plans Less than 10 countries have hit 10%; less than 10 countries have hit minimum 6% growthMalabo Declaration: renewed calls to action (…commitment to inclusive agriculture growth to halve poverty by ’25; boost intra‐trade; private sector participation etc.) Small farmers still face productivity challenges; access to inputs; finance; land; technologies limited [Biotechnology –the FEARS]
Food Trade East & Southern Africa
16
1) To stimulate innovative business models that deliver commercial benefits & solutions to market failures;2) Deliver jobs, income & market access for the poor & smallholder farmers; 3) Grants up to $ 1.5 million; 4) 14 contracts currently signed.
1) Facilitate dialogue & actionaround key barriers in regional staple food markets 2) Fund targeted interventions to strengthen these markets.3) Support to non‐profits,agencies, NGOs. 4) 5 contracts currently signed (incl. the PPP with the WFP)
FoodTrade ESA Challenge Fund
17
Extraction PlantMt. Meru (Tanzania & Zambia) Grant $ 1.5 million ‐ company multi
million £ investment 4,000 new soya farmers Produc on ↑ 50% with minimum
price New products: soy oil and cakes
Joseph Initiative Uganda Grant $ 1.5 million ‐ company £ 9
million 90 new village aggregation centres Inputs and loans 57,000 farmers, incomes ↑ 150% Trade volumes ↑ 30%
18
East Africa Grain Council To develop a private sector‐driven, market platform
(G‐Soko) to link buyers & sellers in staple foods trade in Eastern Africa.
The new G‐Soko Platform will bring structure and consistency to trade in grains.
Millions of farmers in East Africa Grant: £ 3.5M
Alliance for Commodity Trade ESA To facilitate the domestication of harmonised seed
trade regulations in east and southern Africa (7 countries)
Issues include: complex national regulations, a lack of common regional standards for production, seed quality, certification and release.
Grant: £ 1.2M
FoodTrade ESA Development Fund
B. MANUFACTURING/INDUSTRY AU/AIDA; AfDB private sector development strategy
COMESA/EAC/SADC have some Industry strategy
Share of manufacturing remains low: moving from 9.5 percent of GDP in 2001 to 9.6 percent in 2012 ‐ limited employment for youth and the educated In part not supported by low agro‐productivity
Low investments in energy and other physical infrastructure [Africa needs $100bn/year for next 10 years to close this gap]
1% per capita growth is held back Infrastructure will lead to higher intra‐regional trade, global trade, investment, competitiveness etc
Sources: AfDB, UNECA, WB, Rockefeller Foundation
9/19 member states of COMESA: Regional strategy Programme implementation led by the COMESA Leather and Leather Products Institute based in Ethiopia Currently supported about 6 country strategies: Uganda, Sudan, Malawi, Ethiopia, Eritrea, Burundi Focus is:‐ Policy and regulatory environment improved Capacity building of SMEs in leather and leather products [skills development] Access to technology and financing Business skills and information access Establishment of industrial clusters, technology hubs for leather and leather products
Currently…..
C. MINING AU/UNECA: African Mining Vision 2009 SADC : 1997 Protocol on Mining; Framework and Implementation plan for Harmonisation of Mining Policies, Standards, Legislative and Regulatory frameworks EAC: Harmonize their mineral laws and policies; joint exploration; information exchange; among others COMESA: A harmonized mineral sector policy framework. To what extent these frameworks have translated into better livelihoods for common people needs interrogation
CHALLENGES still exist for the SMEs- policy framework limited (deal making. corruption); limited access to
technology and capacity; lack of markets; conflict minerals; lack of financing; - women and child labour issues
AU/NEPAD 2013: Extractive industries spur growth but have little impact on employment and revenue
Productive Capacities...(cont’d)
SADC Protocol Facilitating Movement of Persons 2005 Only 4 MS have ratified against 2/3 to put it in force
Transposition into National laws also a Challenge COMESA: Also has a protocol of free movement of persons which has not been fully signed by all its Member States.
EAC is by far ahead of all other RECs in ESA: Free movement of persons is in force with the ‘Coalition of the Willing’ – Rwanda, Kenya, Uganda leading. Labour freely moves, no passport/visa required on travel
UNECA 2016: Less than 50% of MS in all these RECs are categorised as high‐performers RSA, Zambia are examples in the southern region: But ASK, what does it take? $500,000….how many of us has this amount? Critical for extending economic benefits of regional integration to the majority of the citizens of the region. ONUS ON US
RECs and similar institutions have done a lot of good work: strategies, programmes but gaps still exist Economic growth has not kept pace with employment: Capital intensive or commodity based. Infrastructure gap remains very wide to propel broad based growth [rural roads, energy, rail, etc] Intra‐regional Trade although rising, remains significantly low – policies, infrastructure, weak industry Important Role of private sector in driving growth and ensuring full participation of small players in regional and global value chains Legal and Regulatory frameworks are not designed to address the challenges of the small players [farmers, land owners, miners, businesses]‐still a lot to be done
Develop and implement Industrial and Trade policies that bring more SMEs into the game. Develop and implement Trade policies that protect the local industries by using the provisions of the WTO Encourage Private sector models/Initiatives that promote participation of SMEs in GVC/RVC Develop and implement Legal and regulatory frameworks that protect the rights/assets of small businesses, environmental and social sustainability Lets get our hands dirty:‐ From processes to ACTION Increased investments in irrigation infrastructure, agri‐technologies/GMO, ICT, R&D, Education and vocational Skills