Étiquette : development

The WTO Trade facilitation agreement (TFA): the Bali agreement

Posted on by Rubrique Analyse Economique

The first multilateral agreement concluded since the creation of the WTC was adopted by consensus during the Bali ministerial conference, on December 2013, attended by the WTC members. This is the Trade facilitation agreement that will enter into force upon ratification by the two-thirds of the WTO members. As at December 16, 2015, 63 ratifications on 162 had been obtained. Seven African States ratified the agreement: Botswana, Ivory Coast, Kenya, Mauritania, Niger, Togo and Zambia. The agreement is divided into three sections and approaches amongst others release and clearance of goods, cooperation between border Agencies and Customs cooperation in general. Besides, it provides for Special and Differential Treatment (SDT) measures that enable developing countries and least developed countries (LDCs) to determine their implementation pace of the provisions and to notify any external reinforcement needed. Moreover, it provides trade facilitation committees. A mechanism launched on July 22th, 2014 by the WTO Chief Executive Roberto Azevêdo and operational on November 27th, 2014, aims at supporting the developing countries and LDCs in the implementation process of this agreement.

 

The 2015 world trade report, entirely dedicated to the analysis of the TFA, estimates that the implementation of the agreement would lead especially to the annual increase of the world exportations by 1 000 billions of dollars and a reduction of the trade costs between 9.6% and 23.1%. The developing countries and the LDCs are considered as the major beneficiaries of the TFA. Indeed, more than a reduction of trade costs of almost 16% (18% for manufactured goods and 10.4% for agricultural goods), those countries will take significant advantage of the diversification of their exportations in terms of goods and partners, favored by the agreement.

The African regional trade agreements (RTAs)

The RTAs are reciprocal trade agreements between at least two partners. According to the WTO statistics, the Free Trade Agreements (FTAs) and the partial-scope agreements represent 90% of those RTAs, compared with 10% for Customs unions. The eight African Regional Economic Communities (RECs) recognized by the WTO are registered and reported as RTAs.

Some African States or regions concluded interregional agreements with States or regions members of WTO. For instance, the European Union (EU) and South Africa signed on October 11th, 1999 a bilateral free trade agreement on goods. This RTA, recognized by the WTO and entered into force on January 1st, 2000, includes tariff quota, Customs procedure and balance of payments measures. Ivory Coast also concluded with EU a RTA whose scope and fields are similar to EU-South Africa ones. This agreement was signed on November 26th, 2008 and entered into force on January 1st, 2009. So is the agreement between EU and Eastern and Southern Africa signed on August 29th, 2009.

The Preferential Trade Arrangements (PTAs) with Africa

The PTAs are unilateral trade preferences. African States benefit from several PTAs through arrangements in favors of LDCs. Between 2002 and 2012, the LDCs exported at least 72% of their goods towards partners with whom they have PTAs[1] : in a decreasing order of the percentage of exportation, those partners are the EU, the USA, China, India and Japan. The EU has granted almost 100% duty and quota free access to its market for all the LDCs since 2001. Since 2010, China has given duty quota free access for 60% of tariff lines to forty LDCs. India grants progressive duty and quota free access in order to reach 85% of the tariff lines in 2012. As for Japan, since 2008, nearly 98 % of tariff lines have benefited from duty and quota free access to its market.

The USA have not concluded any specific PTA with the LDCs. Nevertheless, they have set up a unilateral regime in favor of sub-Saharan States through the “African Growth and Opportunity Act” (AGOA). This act promulgated on May 18th, 2000 and notified to GATT/ WTO on January 10th, 2001 grants duty free access for goods from “D” code in the “Special” column of the Harmonized Tariff Schedule, as long as they respect the rules of applicable origin.

As the AGOA was due to expire on September 30th, 2015, WTO General Council authorizes its expansion. This is the AGOA 2.0 whose success depends on many challenges. [2]

2. The eventual conflicts between agreements and African challenges to international agreements.

Contradictions between the RTAs, foundations of the African REC

The regional agreements create rules, in particular in regional trade, that is supposed to be implemented to all the signatory States. However, in practice, it is noted that the multiplication of trade regimes could point out some inconsistencies or be an obstacle to their efficacy. Thus, in 2011, the Southern African Development Community (SADC), of the Eastern African Community (EAC) and of the Common Market for Eastern and Southern Africa (COMESA) had some member States in common, but who implemented the trade regime of one organization to the expanse of others’ ones. Fourteen COMESA members on nineteen obeyed the rules of the free-trade treaty; four members remained at the stage of the law preceding the preferential trade area [3]. The five member States of the EAC were part of the REC Customs union in order to set up a common market. Lastly, twelve of the fifteen members of the SADC implemented the terms of the agreement, launched in 2008. The identification of those overlaps leads the three RECs to start discussions in order to create a common free-trade area.

Generally, the treaties of regional organizations provide for how to deal with the contradictions of the different law regimes. Let’s see the example of the West African Economic and Monetary Union (WAEMU) and the Organization for Harmonization of Business Law in Africa (OHADA) which includes 7 of the 17 member states of the first one. The treaties of the two organizations consider that the acts adopted in each organization prevail on national Law (article 6 of the WAEMU treaty and article 10 of the OHADA treaty) without any mention of supremacy of one treaty over the other [4]. Yet, some of their areas of responsibility overlap: the OHADA is supposed to govern business law while the WAEMU treaty lends authority to itself to adopt any rule needed to achieve its objectives in the area of economic, monetary, sector policies or the common market, an area which can include business law.[5]

Incompatibilities with the international system

WTO encourages the creation of regional organizations as they are regarded as a mean to achieve the development objectives. However, they have to respect WTO rules. In theory, all the member States have to apply the same trade treatment the other member States, even if in practice the PTAs derogate from this principle.

The implementation of the WAEMU Common Customs Tariff (CCT) in 2015 revealed how hard it could be to reconcile Community and international commitments. Indeed, the CCT imposes to the each WTO member State not to raise the rate of Customs duty beyond a certain level, called “the bound rate”. The rates applied in reality were often lower, especially for agriculture. Thus, Nigeria had a bound rate of 150% for agricultural goods, compared to an applied rate of 33.6%; the Senegal bound rate was 29.8% while Ivory Coast one was 14.9%. The new WAEMU CCT fixed to 35% on agricultural good placed those countries automatically beyond the rate that they committed not to exceed [7]. Even if some mechanisms, like the payment of compensation, make possible the cohabitation of the two norms, one can note easily that regional commitments could enter into conflict with the engagements within other systems.

Besides, the European Union seems at first sight to approach the EPA negotiation more logically as she talks with regional groups: central Africa, Eastern and Southern Africa, Western Africa, Southern African Development Community and East Africa Community. This multiplicity of interlocutors shows many limits: the members of the COMESA for example, are divided into 3 regional groups that negotiate separately the terms of the EPA related to them, although the COMESA countries share the same objective of common market. Moreover, as the EPA is a reciprocal but asymmetrical agreement between the EU and the African countries, he aims at fostering trade between the two areas and minimizing the tariff barriers. Even if the African countries keep benefiting from derogations to protect their weak economies from the concurrence of the strong Europe, one can understand that forwards low Customs duties could conflict with rules like the CCT fixed by some regions and be inferior to the tariffs practiced within a region, favorishing Africa-Europe exchanges at the expanse of intra regional exchanges.

Which stakes for Africa in front of this diversity of agreements?

In its 2015 report on industrialization through trade, the United Nations Economic Commission for Africa evokes the importance, and even the urgency, to implement a mega-regional agreement specific to Africa to boost its economic positioning. Indeed, the Commission studies shows that an effective implementation of the non-African mega-regional trade agreements, like the transatlantic trade and investment Partnership (TTIP), transatlantic partnership and the global regional economic partnership, results to the increase of one thousand of billion dollars by 2020, of the member States exportations. In the contrary, it would lead to a fall of the African exportations of some 2.7 billions of dollars because of the intensity of the competition and the attractiveness for markets covered by those mega-regional agreements. However, this trend could be reversed if Africa gets its own continental free trade area (CFTA) because its exportations would increase of some 40 billions of dollars, through an acceleration infra-regional trade. The CFTA implementation is a current project: African Heads of States and Governments have pledged to the acceleration of its implementation by 2017.

On June, 10th, 2015, the COMESA, SAEC and EAC Heads of States and Government, gathered in Sharm El Sheikh in Egypt, launched the tripartite free-trade area (TFTA) that set up an integrate market of 26 countries, of a population of 632 millions habitants representing 57% of the global African population. This TFTA is certainly a critical step of the African CFTA implementation process as it represents a global GDP of 1.3 billions of dollars (2014) which is 58% of the Africa GDP.

The commitment of African countries in those different agreements demonstrates before all the evident willingness to integrate more in the world trade and to benefit from it to accelerate their development. However, they fail to achieve the expected results and sometimes they may constitute a constraint for the continent. To benefit fully from this global trade opening, Africa needs to reinforce its production capacities, thus to modernize the trade infrastructure and to mobilize the financial resources.

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Translated by  Mame Thiaba Diagne

 

 

[1] Economic Commission for Africa, 2015, « Industrialization through trade », annual economic report on Africa.

[2] United-Nations, African Union, 2014 « How ‘AGOA ‘2.0’ could be different “  

[3] TradeMark Southern Africa, 2011, « Aid For Trade Case Story : Negotiating the COMESA ‐ EAC ‐ SADC Tripartite FTA », Pretoria

[4] IBRIGA (LM), 2006, “The juridictionalization of the integration process in West Africa”, University de Ouagadougou

[5] KONATE (IM), 2010, “The OHADA et the others community regulations: UEMOA, CEMAC , CIMA, OAPI, CIPRES etc.”.

[6] DIOUF (EHA), 2012, “New CEDEAO Common external tariff and individual commitments of its members in WTO: overwhelming incompatibilities”, Passerelles, Part 13 – number 3.

[7] Ibid.

 

What financial contribution do African Women make to the development of the continent?

Posted on by Daphnée Sétondji

Woman, African: These are two words that equal an ominous social and economic heritage in relation to cultural representations, sociological realities and discriminatory practices that we see in the work and capital market. However, a growing number of studies reveal that gender equality is one of the pillars of economic development in Africa. [1]

In the study, Women in Africa published in 2013, the OECD estimated that women constituted 70% of the agricultural work force in Africa and are involved in the production of 90% of foodstuffs. In addition, it was found that African women produce 61.9% of the economic goods. This number exceeded the average percentage reported in all the regions that make up the OECD. This activity, mainly independent, informal and agricultural has given rise to segmentation in the African labour market and a high under-representation of women in the workforce and the agricultural sector (8.5% across the continent). This revelation is even more important than the expansion of the tertiary sector of the African economy (the rise of the digital/ICT, telecoms and financial sectors), as the latter can lead to a biased technical progress to the detriment of women who are not part of the human capital. [2] 　.

 

The market barriers that women experience are in different forms and have been analyzed through the morality, cultural and fundamental rights lens. However, it is important to recognize that beyond these unquestionable and legitimate factors, Africa has no economic interest in using the skills of this group that occupies more than half of its population in the secondary and tertiary sectors. The failure of the market and institutions can help to explain the displacement of women in the secondary and tertiary sectors.

 

This article aims to give an overview of the institutional context of economic activities of women in Africa. We will take a look at the measures taken to improve these activities and then the limits of these public policies. Then we will analyze the prospects for development.

 

Firstly, qualified or not, African women contribute to the growth of the continent despite many structural impediments

Many studies have shown that international trade has a negative but low impact on employment. This negative impact is usually found in activities with a less qualified workforce. In Africa, the latter is made up of mainly women. For example, according to l’INSEE, in 2011, industrial trade between France and developing countries led to a deficit of 330　000 jobs. Without urgent investment in the low-skilled female work force, African nations will run the risk of increasing the rate of unemployment, while the volume of investments in high growth sectors increases. The displacement of low-skilled women from the formal market does not however translate into total inactivity but results in the strengthening of the informal market which is accompanied sometimes by long-tem success. For example «　Nana Benz　», a group of Togolese women, who made a fortune from the sale of wax prints on the informal market during the colonial times up until the 2000s.[3]

On the other hand, the barriers for skilled female workers are mainly institutional and legal. The Family Code that is being implemented in many African nations generates harmful distortions in the market, in that, it limits the equitable transfer of inheritance between female and male descendants during the sharing of estates and restricts women’s access to bank credit. Also, the unfairness of land ownership rights constitutes an obstacle to women entrepreneurship. It drives a lot of them out of the different markets. The imperfection of the labour market and the low access to capital creates an asymmetry between women and structures which demand the use of a workforce in order to fix meager nominal wages. To combat this, microfinance enterprises started to provide credit to vulnerable populations and those far from the banking sector. This is shown in the study carried out by the researcher, Annelise Sery in Micro-credit: Empowering Ivoirian Women

 

Secondly, we must restructure the institutional framework of the economic activities of African women

Conscious of the dangers that the displacement of women constitute, many African states have opened the grounds for a debate on gender equality. On the 14th of May, 2010, the Senegalese National Assembly adopted a law on the equality of men and women. This was done in a country where women make up 52% of the population. This new law should lead to an amendment of the Family Code. Also, in Morocco, where the 2011 constitution opposes any discrimination on the grounds of gender, one its towns, Marrakech, hosted the Global Entrepreneurship Summit in November 2014. The aim of this program was to promote the regional and local economic activities of women.　

However, even though this country is a key growth driver in Africa, women participation in the economy fell from 30% in 1999 to 25% in 2012[4. Article 19 of the 2011 Moroccan constitution did not particularly address the economic inequalities but brought the debate on gender equality to the limelight. This was institutionalized by the creation of the High Authority on gender equality.

Ultimately, micro financing should be properly developed, so that a proto-industrialization can occur, which can allow mothers to work from home. This will lead to an inclusion of the African banking system in a virtuous cycle, which will profit shareholders and vulnerable populations such as women. International banking and financial organizations also have a role to play in the increased participation of women in the African economy as they are transnational and are not subject to religious or local factors that limit the rights of women in different African countries

 

As such, initiatives such as that of the African Development Bank’s ‘‘Prize for Women Innovators’’ created in October 2010 should not just be a slogan but must give way to proactive and specific action to encourage female entrepreneurship. For now, low-skilled women are the pillars of agricultural production in Africa. Nevertheless, growth prospects and the expansion of the tertiary sector of individual African economies is giving rise to an urgent need to remove the entry barriers into the secondary and tertiary labour market for women to gain access. On the other hand, a proactive policy should be implemented to restructure the Family Code all around the continent.

 

Finally, initiatives by international organizations that aim to promote women entrepreneurship will allow Africa to groom its women leaders and increase gender equality in government circles.

Translated by Onyinyechi Ananaba

[1] Cf Women in Africa publié par le Centre du Developpement de l’OCDE.

[2] Katz et Murphy, 1992 Changes in relative wadges, 1963 -1987 : supply and demand factors

[3]  Amselle, 2001.

[4]Word Bank Poverty, adjustment and growth, Royaume du Maroc 2013. 

 

Innovative development financing in Africa

Posted on by Pauline Deschryver

1852367421Many different financial instruments coexist to support the development of the continent. The main source of funding development in Africa is the public development aid which has already provided 125.6 billion USD dollars to 160 countries. Other sources that are not linked to any multilateral organisations also exist. Some are developped by the recipient countries themselves, such as public-private partnerships and recourse to debt. Other sources involve the transfer of funds by the African diaspora. According to the World Bank, these funds reached 351 billion dollars in 2011. It represents more than the double of the public development aid.

These financial flows have a mixed impact on development. The efficiency of multilateral development aid is questioned. A growing number of donors are intervening to increase the efficiency of multilateral aids, improve information and predictability and reduce the amount of multilateral funds while providing funds to more countries. Some vulnerable countries do benefit from voluntary aids called New Deals. It has been observed that since the 1980s and 1990s, private investments have taken the lead on public aids. More and more public-private partnerships have been developped by individuals and companies. Thus, more and more innovative sources of funding of development have been implemented. They are more consistant and predictable than the public development aid. These innovative systems involve public and private entities that fund local companies in a more sustainable way. For instance, Danone Communities is an investment fund that has shown great results. The aim of these new funding mecanisms is to reduce poverty and inequalities and compensate for the financial deficit, in accordance with the Millenium Development Goals. It is crucial to reach these goals in a context where the needs of the countries are increasing while budgets for public development aid are tightenning.

There are four main types of innovative funding.

1. Voluntary contributions : they are implemented by the Millenium foundation to improve health system. It also includes the funds immigrants invest in their home country.

2. Compulsory contributions : these are taxes on national and international financial transactions (taxes on air tickets and possibly on financial transactions).

3. Loan guarantees : these are pre-funding mecanisms on financial markets covered by a public guarantee.

4. Various market-based mechanisms such as auctions of carbon dioxyde emissions.

There is a controversy over taxes on financial transaction. This tax is an efficient way to raise money without weighing on financial markets. At a rate of 0.005 %, it could help raise 30 billion dollars annually. Nevertheless, this tax is very controversial because of its public opportunity.

Other innovative sources of funding include Output Based Aid programs of the World Bank and mechanisms of decentralised cooperation and carbon compensation by companies. Thus, the GERES NGO intervenes in Cambodia and Africa since 1987 to manufacture and sell solar ovens.

These innovative fundings are all the more important since public development aid is lessening. The African continent is attracting new donors such as China, Brazil, Russia. However, South-South funding follows a different set of rules. These countries invest in building infrastructures from the profits of natural ressources, develop the private sector and give priority to turnkey projects. They are more flexible and demand less in return from the countries they invest in. These new investors tend to develop the private sector and favour projects directly involving companies. These projects are on the rise but also more likely to suffer from corruption. It is difficult to gauge the actual impact of these investments for the development of the continent. These innovative sources of funding are crucial to compensate for the lessening of funds available to support development. Although the public development aid has a central place in funding the development of African countries, other innovative sources are essential to raise consistant and sustainable funds. However, the real issue here is whether these funds are really appropriate for the needs and economies of African countries.

Translated by Bushra Kadir

Data : the next frontier of Development

Posted on by Rubrique Analyse Economique

UntitledHow is the digital tide taking care of the digital divide? At the start of the new millennium, there was global concern that poor countries, especially in Africa, would be twice left out: economically and also technologically. Fortunately, the digital divide never became a global challenge. In fact, it is closing faster than anyone had imagined. In some parts of the developing world there are even budding signs of possible digital overtaking.

Kenya is one of few African countries driving in the fast lane. Over the past decade, it has experienced a sweeping “digital tide”. Today, Kenya has crossed the 30 million threshold of active cell phone numbers, up 29,000 from 12 years ago! Almost everyone can now afford to buy a phone, which sell for as little as Ksh 500 (or US$5) on the flourishing second hand market.break  People are also spending more on communication. in 2012, Kenyans have spent on average US$65 on communication, compared to US$45 a year ago.

Moreover, Kenya, East Africa’s powerhouse, has reached two other milestones in 2012 : 20 million users of mobile money and 15 million internet users, thanks largely to ubiquitous smart phones (see figure).

ict_penetration_0
World Bank calculations based on Communication Commission of Kenya

Now that everyone can own a phone, even in poor countries, is the mobile revolution over? Has everything that can be invented actually been invented – a claim famously associated with a commissioner of the US patent office in the 19th century?

We actually think the opposite is true: a new wave of innovation is starting, which will exploit increased connectivity to bring new solutions to old problems, including in development policy and economics. Here are three early examples of such innovation:

First is public sector accountability. In Kenya, a new service called “I Paid A Bribe” lets people expose bribery cases by reporting them online or by SMS. In less than one year, the site has reported corruption cases ‘worth’ over half a million dollars (mainly to traffic police and other government officials).“I Paid a Bribe” has helped to expose the problem publicly, which is the first step to tackling it. Similar services could also help monitor other areas of government performance such as quality of health services, teacher attendance and power services. The Kenyan government’s pioneering resolve to open-up public data at Opendata.go.ke is a good first step in making government and public services more accountable more broadly. The database is a gold-mine for developers and civil society that have already developed great uses.

Second is economic and social welfare monitoring. Previously, socio-economic data was tediously collected via paper surveys. The results were typically available to policy makers and researchers two-to-three years later when, frankly, they were often no longer relevant. In South Sudan, the National Bureau of Statistics and the World Bank have leveraged the expansion in mobile coverage to monitor how economic and social conditions are changing in near-real-time in the young nation. Last year, they conducted a monthly phone survey, with a sample of households, asking questions about their economic situation, security, outlook, and other topics.

This year, they used cellphone-enabled tablets to collect data on food security and market prices. Such high frequency, real-time data has never been available before. It is already revolutionizing how policy makers can identify problems and bring timely solutions. As Marcelo Giugale of the World Bank puts it: High-frequency data has the potential to do “to economics what genetics did to medicine”.

Third, the explosion in mobile phone and internet leaves behind ‘digital traces’ of human behavior which can help to better understand development challenges. For example, recent research by Harvard scientists using Kenya data, published in Science last month, shows how mobile phone data (tracking people’s movements) can be used to trace the spread of malaria. By conducting such monitoring in real-time, officials could for example send text message warnings to people traveling in high-risk areas and pre-position testing equipment and drugs.

There are many other examples of such use of ‘big data’ for economic, social and policy purposes. Google has demonstrated how search data can predict dengue breakouts in Brazil, India and Indonesia by monitoring how people search for dengue-related topics and symptoms. In Indonesia, the UN Global Pulse and a research firm used Twitter data to monitor food prices with surprising accuracy, finding that the way people spoke about rice on Twitter could be correlated with the actual market price of rice. As internet use increase in Africa, large amounts of digital traces will be available and useful for monitoring and tackling social problems also here.

brazil_dengue_activity
Google Dengue Trends

These examples are just the tip of the iceberg, with many more applications of new technology to be discovered. Traditionally, data was used and analyzed by “experts” within government and research institutions. Today, with more available (open) data, better visualization tools, and new, socially concerned IT developer communities, the universe of users is expanding fast. Groups of expert and volunteer computer programmers are making data accessible to the public, popularizing its use and finding technical solutions to real-world issues.

The digital divide is behind us. This generation’s challenge is to leverage the new “digital tide” for the public good. Some early innovations are already very promising and there will be many more to come.

An article by Wolfgang Fengler, lead economist in trade and competitiveness (World Bank)