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EAC Issues
Integration slow - Mossi
KAMPALA, UGANDA - The chairperson of the East African Community (EAC) Council of Ministers Hafsa Mossi, has criticized partner states over the slow progress in the implementation of integration process programmes.
She said that that though the EAC had made great strides in the economic, social, and political spheres, there was still a great deal of unfinished business.
"We must own up to the fact that that our region is not yet cohesive or integrative enough," adding that "we are also not yet moving at the right speed nor are we progressing fast enough on our development objectives," she said.
"While performance indicators today depict stable growth of the region's economies in terms of gross domestic product, trade and investments expansion, the region was still riddled with serious problems," she said at the 14th meeting of the sectoral council of ministers for EAC Affairs and planning held in Arusha, Tanzania last week.
She enumerated problems the region is currently experiencing that include famine in Kenya and the Horn of Africa, the problem of piracy on the Indian Ocean waters of the East African coast, the terrorist threat posed by neighboring Somalia, and the energy deficit which was persistent and widespread and had intensified to the point of crisis.
"It is in times of crisis that regional integration is best tested and it is in the ways and means by which we stand together, and forestall or roll back such crises that we should give true meaning and justification of belonging together in regional integration," she asserted.
She called for commitment to early warning systems and effective response preparedness to the crises of economic, political or social nature in the region.
"We need to constantly think through the availability of new technologies to enable rapid and effective decision making so as to strengthen the commitment and spirit of regional integration," she noted.
EAC Secretary General Amb. Dr. Richard Sezibera said regional integration was the critical contributing factor to the stability and growth of the economies of the region.
"Apart from the current inflationary pressures that the region was experiencing, on account of the rising world food and fuel prices and the threat of a looming global recession, the region's economies had registered on average 5% annual GDP growths against the world average of 3%,' he explained.
He said that performance indicators depict significant growth trends, including intra-EAC and international trade, which grew by between 20 to 30% and foreign direct investment inflows, which have increased from $683m to $1.7bn in 2010.
He explained that the region presently has a market of a combined population of 130m with a combined gross domestic product of $75bn.
"The Community welcomes South Sudan to become a member of the EAC and looked forward to closer partnership with it in the near future,' he added.
The Sectoral Council among others; considered the Draft 4th EAC Development Strategy (2011-2016) and recommended it to the next meeting of the full Council scheduled for September 2011 for consideration and adoption.
EAC Head of department for corporate communications and public affairs Richard Owora explained that the strategy aims at consolidating the gains of the Customs Union, fully implement the Common Market, negotiate and implement a Monetary Union Protocol, while also strengthening the foundation for a fast tracked Political Federation.
He said that it addresses implementation of master plans in the productive sectors of Agriculture and Food Security, Industry and Manufacturing and Tourism among others.
"The successful implementation of the strategy shall stimulate investments, promote employment and growth and lead to increased diversification and major transformation of the region's economy," he said
Japan pledges more support to the region
KAMPALA, UGANDA-Japanese Ambassador to Tanzania and representative to the East African Community, Ambassador Hiroshi Nakagawa promised to give support to the East African Community (EAC) infrastructure projects.
"Japan is still committed to supporting EAC integration process especially in the area of infrastructure development. We are satisfied with the assistance being extended to the region especially in regard to corridor studies.
The assistance has also enabled, implementation of trade facilitation instruments, harmonization of axel load, one stop border posts and integrated border management systems, customs, ports, roads and rails transport and many others,' he said during a meeting with the EAC Secretary General Amb. Dr. Richard Sezibera last week.
A statement issued by the EAC secretariat said Ambassaddor Nakagawa re-affirmed Japan's readiness to continue close cooperation with the EAC Secretariat through the Japan International Cooperation Agency (JICA), as well as contribution to the EAC Partnership Fund.
Japan supported the EAC to carry out corridor studies that included the study on the border audits of Namanga, Taveta-Holili, Lunga Lunga-Horo Horo, Mutukula, Rusumo, Kigoma, Tunduma, Nemba-Gasenyi.
Others include the on-going study for the harmonization of Vehicle Overload Control in EAC, real time monitoring system (RTMS) and Cargo Control System (CCS) for one stop border post implementation in Namanga, Malaba and Busia.
"Japan is still committed to supporting EAC integration process especially in the area of infrastructure development. We are satisfied with the assistance being extended to the region especially in regard to corridor studies.
The assistance has also enabled, implementation of trade facilitation instruments, harmonization of axel load, one stop border posts and integrated border management systems, customs, ports, roads and rails transport and many others,' he said during a meeting with the EAC Secretary General Amb. Dr. Richard Sezibera last week.
A statement issued by the EAC secretariat said Ambassaddor Nakagawa re-affirmed Japan's readiness to continue close cooperation with the EAC Secretariat through the Japan International Cooperation Agency (JICA), as well as contribution to the EAC Partnership Fund.
Japan supported the EAC to carry out corridor studies that included the study on the border audits of Namanga, Taveta-Holili, Lunga Lunga-Horo Horo, Mutukula, Rusumo, Kigoma, Tunduma, Nemba-Gasenyi.
Others include the on-going study for the harmonization of Vehicle Overload Control in EAC, real time monitoring system (RTMS) and Cargo Control System (CCS) for one stop border post implementation in Namanga, Malaba and Busia.
EAC architects sign pact
KAMPALA, UGANDA-East African architects last week signed a Mutual Recognition Agreement (MRA) that will enable architects in Burundi, Rwanda, Uganda and Kenya to exercise their work within the four countries without subjecting them to further examination.
Tanzania didn't sign the architects Mutual Recognition Agreement. It emerged that the architectural work was not among the professions the country opened to other EAC members. It promised to sign later.
Presidents of the Architectural Associations of Kenya, Rwanda, Uganda and Burundi signed the agreement on behalf of their countries at Uganda's Speke Resort Munyonyo.
It was witness by Uganda's first deputy prime minister and minister for East African Community Affairs Mr. Eriya Kategaya.
Ms. Flora Runumi, the chairperson of the East Africa Institute of Architects Common Market Committee, who oversaw the negotiations, indicated that it was "a very difficult process to convince members to sign the protocol as some were skeptical about the process."
"Finally, the four of us saw the importance and agreed to sign, which we're witnessing today," she said, adding that the whole process mimicked the procedure that was followed in the signing of the EAC common market.
Runumi explained that each partner state was required to identify the restrictions to trade in their respective countries. It also emerged that local boards were reluctant to register members because they were not nationals, had different education backgrounds and capabilities. "Further negotiations and sensitizations are still ongoing," she stressed.
Tanzania didn't sign the architects Mutual Recognition Agreement. It emerged that the architectural work was not among the professions the country opened to other EAC members. It promised to sign later.
Presidents of the Architectural Associations of Kenya, Rwanda, Uganda and Burundi signed the agreement on behalf of their countries at Uganda's Speke Resort Munyonyo.
It was witness by Uganda's first deputy prime minister and minister for East African Community Affairs Mr. Eriya Kategaya.
Ms. Flora Runumi, the chairperson of the East Africa Institute of Architects Common Market Committee, who oversaw the negotiations, indicated that it was "a very difficult process to convince members to sign the protocol as some were skeptical about the process."
"Finally, the four of us saw the importance and agreed to sign, which we're witnessing today," she said, adding that the whole process mimicked the procedure that was followed in the signing of the EAC common market.
Runumi explained that each partner state was required to identify the restrictions to trade in their respective countries. It also emerged that local boards were reluctant to register members because they were not nationals, had different education backgrounds and capabilities. "Further negotiations and sensitizations are still ongoing," she stressed.
Where will the Common Market be built?
ARUSHA, TANZANIA - The East African Community (EAC) Secretariat recently commissioned a group of journalists to visit three border post areas of Holili, Tarakea and Namanga on the Tanzanian side and Loitoktok, Taveta and Namanga on the Kenyan side.
The purpose of the reportage mission was to assess the performance of the border posts since the launching of the Common Market Protocol from July 1, 2010.
However during the interview process with two of the residents of Longido on the Namanga-Arusha road project which is one the projects aimed at promoting free movement of persons and goods, two of the respondents asked the journalists when and where the EAC Secretariat is planning to construct the Common Market.
By definition the EAC Common Market literally means that the market of the five partner states is being integrated into a single market in which there is free movement of capital, labour, goods and services.
This process has to be operationalised by signing the EAC Common Market Protocol that was signed the EAC partner states' Heads of State on November 29, 2009.
Implementation of this protocol started on July 1, 2010 meaning that the Citizens of the five partner states are to benefit from the objectives of the Common Market.
It should be known that the main objective for establishing the East African Community Common Market is to widen and deepen cooperation among Partner States in economic and social fields for the benefit of the Partner States.
The Common Market thus provides an important avenue for all East Africans to trade in a manner that is not restricted by borders and restrictions that go with such.
The Protocol on the Common Market provides for free movement of goods, persons, labour, services and capital; and the right of establishment and residence. Freedom of Movement of goods is also governed by other Community laws such those that deal with standards, quality assurance, metrology and testing.
"So, if one wants to sell beans in the Common Market, there is need for that person to ensure that the quality of the goods meets the standards set. This guarantees that the good maintains its quality and does not harm the customer whether it is consumed in Kenya, Uganda, Tanzania, Rwanda, Burundi or Uganda," says the East African Legislative Assembly (EALA) member Dora Byamukama.
This has been one of the major reason why there are media reports of products from one partner state being denied entry in another state.
The free movement of persons and labour means that workers are able to apply and accept job offers, move within the community for employment, join associations that bargain for better working conditions and enjoy rights to social security given to nationals of the host partner state.
However this freedom of movement of persons and labour can only be fully enjoyed when East African Community Partner States issue a common travel document for East Africans accepted and respected at all boarder points.
However, according to the Common Market Protocol, employment in the public sector of a partner state is still not accessible to other East Africans.
Work permits are required and in order to qualify for one, a worker has to have a contract that is more than 90 days; if they are less a special pass may be issued.
However Rwanda and Kenya have waived work permits, so other partner states must follow suit if all of us are to benefit from the objectives of the Common Market.
Currently only some occupations are allowed to move in the region, for example Uganda and Kenya allow administrators and managers, finance managers, research, planning and development managers, production operations and craft related workers.
The other partner states are also working on the list of occupations allowed to move. The right of establishment or to "set-up-shop" and residence allows one to register a business in any partner state, with guarantee that they will be treated like other local firms and can therefore be allowed to transfer managerial and supervisory personnel.
"It should be noted, however, that matters related permanent residence and access to and use of land in any part of East Africa are still governed by laws of the Partner State," she advises.
The purpose of the reportage mission was to assess the performance of the border posts since the launching of the Common Market Protocol from July 1, 2010.
However during the interview process with two of the residents of Longido on the Namanga-Arusha road project which is one the projects aimed at promoting free movement of persons and goods, two of the respondents asked the journalists when and where the EAC Secretariat is planning to construct the Common Market.
By definition the EAC Common Market literally means that the market of the five partner states is being integrated into a single market in which there is free movement of capital, labour, goods and services.
This process has to be operationalised by signing the EAC Common Market Protocol that was signed the EAC partner states' Heads of State on November 29, 2009.
Implementation of this protocol started on July 1, 2010 meaning that the Citizens of the five partner states are to benefit from the objectives of the Common Market.
It should be known that the main objective for establishing the East African Community Common Market is to widen and deepen cooperation among Partner States in economic and social fields for the benefit of the Partner States.
The Common Market thus provides an important avenue for all East Africans to trade in a manner that is not restricted by borders and restrictions that go with such.
The Protocol on the Common Market provides for free movement of goods, persons, labour, services and capital; and the right of establishment and residence. Freedom of Movement of goods is also governed by other Community laws such those that deal with standards, quality assurance, metrology and testing.
"So, if one wants to sell beans in the Common Market, there is need for that person to ensure that the quality of the goods meets the standards set. This guarantees that the good maintains its quality and does not harm the customer whether it is consumed in Kenya, Uganda, Tanzania, Rwanda, Burundi or Uganda," says the East African Legislative Assembly (EALA) member Dora Byamukama.
This has been one of the major reason why there are media reports of products from one partner state being denied entry in another state.
The free movement of persons and labour means that workers are able to apply and accept job offers, move within the community for employment, join associations that bargain for better working conditions and enjoy rights to social security given to nationals of the host partner state.
However this freedom of movement of persons and labour can only be fully enjoyed when East African Community Partner States issue a common travel document for East Africans accepted and respected at all boarder points.
However, according to the Common Market Protocol, employment in the public sector of a partner state is still not accessible to other East Africans.
Work permits are required and in order to qualify for one, a worker has to have a contract that is more than 90 days; if they are less a special pass may be issued.
However Rwanda and Kenya have waived work permits, so other partner states must follow suit if all of us are to benefit from the objectives of the Common Market.
Currently only some occupations are allowed to move in the region, for example Uganda and Kenya allow administrators and managers, finance managers, research, planning and development managers, production operations and craft related workers.
The other partner states are also working on the list of occupations allowed to move. The right of establishment or to "set-up-shop" and residence allows one to register a business in any partner state, with guarantee that they will be treated like other local firms and can therefore be allowed to transfer managerial and supervisory personnel.
"It should be noted, however, that matters related permanent residence and access to and use of land in any part of East Africa are still governed by laws of the Partner State," she advises.
EALA speaker calls for more action on MDG's
KAMPALA, UGANDA- Speaker of the East African Legislative Assembly (EALA) has urged East African Community to scale up action towards achieving the Millenium Development Goals (MDG's).
"With still less than five years to go it is late, but not too late, we are the first generation that can put an end to poverty and should refuse to lose this opportunity, we are all linked by trade, finance, migration, disease, terrorism and financial crises which do not recognize national boundaries," he said in a paper on theme " Attainment of the MDGs - Cooperation between European Parliamentarians and Regional Parliamentary bodies," at the African Development Cooperation Strategy Towards the MDGs Seminar held in Warsaw, Poland.
He said all countries including the rich and the poor committed themselves to eradicate extreme poverty and hunger, gender inequality and environmental degradation, and ensure access to education, health care and clean water, all by 2015.
"But the goals explicitly recognize that eradicating poverty can be obtained only through the global partnership for development," he noted.
He however warned that the MDGs will not be achieved unless concerted action was taken by developing countries themselves.
"With still less than five years to go it is late, but not too late, we are the first generation that can put an end to poverty and should refuse to lose this opportunity, we are all linked by trade, finance, migration, disease, terrorism and financial crises which do not recognize national boundaries," he said in a paper on theme " Attainment of the MDGs - Cooperation between European Parliamentarians and Regional Parliamentary bodies," at the African Development Cooperation Strategy Towards the MDGs Seminar held in Warsaw, Poland.
He said all countries including the rich and the poor committed themselves to eradicate extreme poverty and hunger, gender inequality and environmental degradation, and ensure access to education, health care and clean water, all by 2015.
"But the goals explicitly recognize that eradicating poverty can be obtained only through the global partnership for development," he noted.
He however warned that the MDGs will not be achieved unless concerted action was taken by developing countries themselves.
EAC warned on harmful tax race
KIGALI, RWANDA--The five economies of the East African Community (EAC) risk to reap unequal integration benefits if they continue to embrace harmful tax competition among themselves to woo domestic and Foreign Direct Investments (FDIs), two civil society groups have warned.
Each of the five states uses a list of tax incentives and exemptions to attract investors and a new sturdy on East Africa's Tax Incentives and Tax Competition calls for harmonisation of tax policiesto ensure equal benefits and a smooth integration process.
The five countries-Uganda, Rwanda, Kenya, Tanzania and Burundi-are on the losing side while investors are on the winning side because of toomany unnecessary tax incentives to the investors that result into loss of unknown but significant amount of taxes.
According to Tax Justice Network Africa and Actionaid, between 2005 and 2008, Uganda lost US$781,700 in tax incentives while Tanzania lost $5.5 m and Kenya $6.1m in tax incentives.
Rwanda lost $159m and $235.7m in 2008 and 2009 through foregone taxes.
In 2007/2008, the foregone taxes represented 3.5% of Tanzania's Gross Domestic Product (GDP), one per cent for Kenya, and 0.4% for Uganda.
Rwanda's foregone taxes as a percentage share to the GDP stood at 3.6% and 4.7% in 2008 and 2009 respectively.
Tax Justice Network Africa Policy and Advocacy Officer Ms. Vera Mshana says that tax incentive and tax competition has been identified as one of original revenue leakages.
"We are calling for domestic resource mobilisation in recognition of the fact that tax is the most sustainable source of finance," Ms. Mshana says.
The two civil society organisations jointly carried out research in four of the five member countries of the EAC.
The research which covered Uganda, Rwanda, Kenya and Tanzania was
aimed at assessing the impact of tax incentives and tax competition EAC's development policy.
The findings of which East African Business Week has seen, suggest reforms in domestic and regional tax incentives to maximise domestic revenue collections by minimising leakages.
Tax Justice Network Africa and ActionAid are of the view that the EAC countries should harmonise their tax policies to avoid a situation where one member country would use domestic tax incentives to woo investors leaving the other countries on the losing side.
Continued tax competition among the EAC states could be potentially dangerous to the expected successfulness of the EAC common market, which provides freedom of movements of factors of production such as labour, goods, capital and enterprise, analysts suggest.
Competition should be based on business prospect rather than tax incentives that result into losses of tax revenues that could be used to finance national expenditures.
If 'harmful tax competition' continues among the EAC countries, members with less attractive business prospects may continue to lose out on the benefits of integration and this could result into sour ending of the regional integration drive.
An official at the International Monetary Fund (IMF) who preferred anonymity says, "Regionally coordinated approach at level of EAC is required in order to minimize the risks of harmful tax competition."
The same official said that the International Finance Corporation (IFC), a member of the World Bank Group is moving to compile a list of tax incentives in the EAC in a bid to assist in looking for long-term solution to attract investment without necessarily tax incentives.
Some analysts believe that signs of tax competition among the EAC countries have already started to show up action is needed now.
For instance, Kenya, EAC's largest economy in terms of Gross Domestic
Product (GDP) and business prospect is already worried about looming
competition from Rwanda as an alternative investment destination in
the region.
Each of the five states uses a list of tax incentives and exemptions to attract investors and a new sturdy on East Africa's Tax Incentives and Tax Competition calls for harmonisation of tax policiesto ensure equal benefits and a smooth integration process.
The five countries-Uganda, Rwanda, Kenya, Tanzania and Burundi-are on the losing side while investors are on the winning side because of toomany unnecessary tax incentives to the investors that result into loss of unknown but significant amount of taxes.
According to Tax Justice Network Africa and Actionaid, between 2005 and 2008, Uganda lost US$781,700 in tax incentives while Tanzania lost $5.5 m and Kenya $6.1m in tax incentives.
Rwanda lost $159m and $235.7m in 2008 and 2009 through foregone taxes.
In 2007/2008, the foregone taxes represented 3.5% of Tanzania's Gross Domestic Product (GDP), one per cent for Kenya, and 0.4% for Uganda.
Rwanda's foregone taxes as a percentage share to the GDP stood at 3.6% and 4.7% in 2008 and 2009 respectively.
Tax Justice Network Africa Policy and Advocacy Officer Ms. Vera Mshana says that tax incentive and tax competition has been identified as one of original revenue leakages.
"We are calling for domestic resource mobilisation in recognition of the fact that tax is the most sustainable source of finance," Ms. Mshana says.
The two civil society organisations jointly carried out research in four of the five member countries of the EAC.
The research which covered Uganda, Rwanda, Kenya and Tanzania was
aimed at assessing the impact of tax incentives and tax competition EAC's development policy.
The findings of which East African Business Week has seen, suggest reforms in domestic and regional tax incentives to maximise domestic revenue collections by minimising leakages.
Tax Justice Network Africa and ActionAid are of the view that the EAC countries should harmonise their tax policies to avoid a situation where one member country would use domestic tax incentives to woo investors leaving the other countries on the losing side.
Continued tax competition among the EAC states could be potentially dangerous to the expected successfulness of the EAC common market, which provides freedom of movements of factors of production such as labour, goods, capital and enterprise, analysts suggest.
Competition should be based on business prospect rather than tax incentives that result into losses of tax revenues that could be used to finance national expenditures.
If 'harmful tax competition' continues among the EAC countries, members with less attractive business prospects may continue to lose out on the benefits of integration and this could result into sour ending of the regional integration drive.
An official at the International Monetary Fund (IMF) who preferred anonymity says, "Regionally coordinated approach at level of EAC is required in order to minimize the risks of harmful tax competition."
The same official said that the International Finance Corporation (IFC), a member of the World Bank Group is moving to compile a list of tax incentives in the EAC in a bid to assist in looking for long-term solution to attract investment without necessarily tax incentives.
Some analysts believe that signs of tax competition among the EAC countries have already started to show up action is needed now.
For instance, Kenya, EAC's largest economy in terms of Gross Domestic
Product (GDP) and business prospect is already worried about looming
competition from Rwanda as an alternative investment destination in
the region.
EAC still at $1.7b in investments
ARUSHA, TANZANIA-Although Uganda is leading other East African Community (EAC) states in attracting foreign direct investments (FDI) in 2010 the other partner states did not attract more investment projects in the year compared to the year 2009.
Uganda is leading with a total of $848m of foreign direct investments in 2010, having increased from $816m in 2009, followed by Tanzania with $700 in 2010 from $645m in 2009 while Kenya with $133m falling from $141m worth of projects attracted in the year 2009.
Rwanda is in the fourth position with investments worth $42m, also having fallen from $110m in the 2009 and $103m in 2008 while Burundi posted some $14m though having increased from $10m in the year 2009. Despite the variations the overall figure of foreign direct investments into the region remained at $1.7b for 2009 and 2010, according to the World Investment Report (WIR) 2010 released last week. The annual report released by the United Nations Conference on Trade and Development (UNCTAD) on the theme "Non-equity modes of international production and development".
The report says total FDI inflows to Africa for the year came to $55b or 10% of the total inflows to developing countries.
"Africa´s share among developing countries declined from 12% in 2009 and foreign direct investments to Africa´s primary sector, especially the oil industry, continued to dominate inflows to the continent," said the report.
It said that among the continent´s subregions, inflows to North Africa, which account for roughly one third of the total African FDIs fell for the second year running to $17b, but the rate of decline was much reduced and the picture uneven within the subregion.
"For example, inflows to Libya increased by over 40% in 2010 to $3.8b, but this rebound seems to be short-lived, given the current political situation in the country," says the report.
It says that FDI inflows also declined in the countries of West Africa who are the recipients of about one fifth ($11b) of the continent´s total flows.
"Regulatory concerns in the oil industry contributed to the 29% fall in inflows to Nigeria, which still accounted for more than half of the inflows to the subregion while the emerging oil industry pulled inflows to Ghana and Niger to record levels, at $2.5b and $947m, respectively," says the report.
In Central Africa and East Africa, inflows of foreign direct investments increased in 2010 to reach $8.0b and $3.7b, respectively. But the portion going to the larger recipients in Central Africa countries including Chad, Congo, the Democratic Republic of the Congo, Equatorial Guinea, and Gabon was mostly due to oil-related investments.
The report says that the only significant instance of foreign direct investment inflows in non-primary sectors was investment in telecommunications in the DR Congo.
"East Africa´s increase was modest at 2.5% as inflows to the subregion´s largest recipient, Madagascar, fell substantially to negative nineteen percent (-19%)," noted the report.
It adds that inflows to Southern Africa decreased by 24% to $15b although the subregion accounted for more than one quarter of the African total.
"The second largest recipient in the subregion, South Africa saw its inflows fall by over 70% to $1.6b, a level amounting to only one sixth of the peak recorded in the country in 2008,".
The report also indicates that inflows to the continent´ largest recipient, Angola, also declined substantially.
"One of the problems Angola´s oil industry faces is that its oil production has exceeded the quota allocated by the OPEC," says the report.
It says that although there is some evidence that intraregional inflows are beginning to emerge in non-natural-resource-related industries, intraregional flows in Africa are still small, only $46 billion, or 5 per cent of total African projects during 2003-2010. "Harmonization of Africa´s regional trade agreements and accelerated and closely coordinated planning with respect to attracting investments would help Africa reach its intraregional inflows potential", the report contends.
Secretary-General of the United Nations BAN Ki-moon noted that for the first time in 2010, developing economies absorbed close to half of global inflows and also generated record levels of outflows to other countries in the South.
He said that this further demonstrates the growing importance of developing economies to the world economy, and of South-South cooperation and investment for sustainable development.
"Increasingly, transnational corporations are engaging with developing and transition economies through a broadening array of production and investment models, such as contract manufacturing and farming, service outsourcing, franchising and licensing," he added.
Uganda is leading with a total of $848m of foreign direct investments in 2010, having increased from $816m in 2009, followed by Tanzania with $700 in 2010 from $645m in 2009 while Kenya with $133m falling from $141m worth of projects attracted in the year 2009.
Rwanda is in the fourth position with investments worth $42m, also having fallen from $110m in the 2009 and $103m in 2008 while Burundi posted some $14m though having increased from $10m in the year 2009. Despite the variations the overall figure of foreign direct investments into the region remained at $1.7b for 2009 and 2010, according to the World Investment Report (WIR) 2010 released last week. The annual report released by the United Nations Conference on Trade and Development (UNCTAD) on the theme "Non-equity modes of international production and development".
The report says total FDI inflows to Africa for the year came to $55b or 10% of the total inflows to developing countries.
"Africa´s share among developing countries declined from 12% in 2009 and foreign direct investments to Africa´s primary sector, especially the oil industry, continued to dominate inflows to the continent," said the report.
It said that among the continent´s subregions, inflows to North Africa, which account for roughly one third of the total African FDIs fell for the second year running to $17b, but the rate of decline was much reduced and the picture uneven within the subregion.
"For example, inflows to Libya increased by over 40% in 2010 to $3.8b, but this rebound seems to be short-lived, given the current political situation in the country," says the report.
It says that FDI inflows also declined in the countries of West Africa who are the recipients of about one fifth ($11b) of the continent´s total flows.
"Regulatory concerns in the oil industry contributed to the 29% fall in inflows to Nigeria, which still accounted for more than half of the inflows to the subregion while the emerging oil industry pulled inflows to Ghana and Niger to record levels, at $2.5b and $947m, respectively," says the report.
In Central Africa and East Africa, inflows of foreign direct investments increased in 2010 to reach $8.0b and $3.7b, respectively. But the portion going to the larger recipients in Central Africa countries including Chad, Congo, the Democratic Republic of the Congo, Equatorial Guinea, and Gabon was mostly due to oil-related investments.
The report says that the only significant instance of foreign direct investment inflows in non-primary sectors was investment in telecommunications in the DR Congo.
"East Africa´s increase was modest at 2.5% as inflows to the subregion´s largest recipient, Madagascar, fell substantially to negative nineteen percent (-19%)," noted the report.
It adds that inflows to Southern Africa decreased by 24% to $15b although the subregion accounted for more than one quarter of the African total.
"The second largest recipient in the subregion, South Africa saw its inflows fall by over 70% to $1.6b, a level amounting to only one sixth of the peak recorded in the country in 2008,".
The report also indicates that inflows to the continent´ largest recipient, Angola, also declined substantially.
"One of the problems Angola´s oil industry faces is that its oil production has exceeded the quota allocated by the OPEC," says the report.
It says that although there is some evidence that intraregional inflows are beginning to emerge in non-natural-resource-related industries, intraregional flows in Africa are still small, only $46 billion, or 5 per cent of total African projects during 2003-2010. "Harmonization of Africa´s regional trade agreements and accelerated and closely coordinated planning with respect to attracting investments would help Africa reach its intraregional inflows potential", the report contends.
Secretary-General of the United Nations BAN Ki-moon noted that for the first time in 2010, developing economies absorbed close to half of global inflows and also generated record levels of outflows to other countries in the South.
He said that this further demonstrates the growing importance of developing economies to the world economy, and of South-South cooperation and investment for sustainable development.
"Increasingly, transnational corporations are engaging with developing and transition economies through a broadening array of production and investment models, such as contract manufacturing and farming, service outsourcing, franchising and licensing," he added.
EAC’s commodity exchange plan to boost farmers’ incomes
ARUSHA, TANZANIA- The East African Community (EAC) and the US-based Nicolas Berggruen Institute are planning to establish a regional commodity exchange market which among others is to save farmers from price manipulation resulting into increased incomes.
Commodities exchanges usually trade in futures contracts on commodities, such as trading contracts for the farmer to sell maize to a particular buyer in a specified month.
The farmer and the buyer sign a contract specifying the standardized quality and quantity for a price agreed today which is referred to as the futures price or the strike price in the market language with delivery occurring during a specified future date.
Such an exchange could help address issues of price manipulation, often a problem experienced by farmers imposed on them by the middlemen in developing countries. The commodity exchange therefore would increase farmers' incomes, and can also help in the development of other innovative financing tools for agriculture in particular and infrastructure in general.
A farmer raising maize can sell a future contract on his maize which will not be harvested for several months, and guarantee the price he will be paid when he delivers while the buyer is also guaranteed the price will not go up when it is delivered and this protects the farmer from price drops and the buyer' from price rises.
That is why the East African Community and the Nicolas Berggruen Institute have started discussions that are expected to result into the establishment of a regional commodity exchange.
The first meeting was at the EAC Secretariat headquarters in Arusha between the Secretary General Amb. Dr. Richard Sezibera and Nicolas Berggruen Institute Senior Advisor Ms Jendayi Frazer that set the stage for the work towards the realization of a regional commodities market.
"A regional commodity market can help solve the problem of thin markets by creating much needed mass and concentrating supply and demand in the East African Community and can also help in the development of other innovative financing tools for agriculture in particular and infrastructure in general," said a statement issued in Arusha recently.
Dr. Sezibera noted that one of the key principles of the EAC as a private sector-driven and people-centered Community is making sure the people of East Africa gain access to the tools of wealth creation.
"One of the biggest challenges of the region is that over 80% of the population is employed by the agriculture sector yet it suffers from low productivity, lack of infrastructure to get produce to markets, and limited value addition to what the region produces," observed Dr. Sezibera.
He said that some of these challenges are partly responsible for the region experiencing regular occurrences of supply surplus and hunger at the same time.
"We don't have a market for foodstuffs, the laws and regulations in the Community should allow for the development of these markets and a commodity exchange is one way to address these challenges," he observed.
"The regional commodity exchange envisaged in the case of the EAC is one that centralizes a number of trading places unto one trading platform, this means that the national commodity exchanges will also assume the role of being regional platforms for trade," he explained.
Ms Frazer said the institute is looking forward to collaborating with the EAC in this venture and added that she recognized that EAC can afford to have critical mass of production that can meet the commodity exchange requirements. EAC publicist Richard Owora explained that the proposed regional commodity exchange is planned to be implemented in a Public-Private Partnership arrangement.
Commodities exchanges usually trade in futures contracts on commodities, such as trading contracts for the farmer to sell maize to a particular buyer in a specified month.
The farmer and the buyer sign a contract specifying the standardized quality and quantity for a price agreed today which is referred to as the futures price or the strike price in the market language with delivery occurring during a specified future date.
Such an exchange could help address issues of price manipulation, often a problem experienced by farmers imposed on them by the middlemen in developing countries. The commodity exchange therefore would increase farmers' incomes, and can also help in the development of other innovative financing tools for agriculture in particular and infrastructure in general.
A farmer raising maize can sell a future contract on his maize which will not be harvested for several months, and guarantee the price he will be paid when he delivers while the buyer is also guaranteed the price will not go up when it is delivered and this protects the farmer from price drops and the buyer' from price rises.
That is why the East African Community and the Nicolas Berggruen Institute have started discussions that are expected to result into the establishment of a regional commodity exchange.
The first meeting was at the EAC Secretariat headquarters in Arusha between the Secretary General Amb. Dr. Richard Sezibera and Nicolas Berggruen Institute Senior Advisor Ms Jendayi Frazer that set the stage for the work towards the realization of a regional commodities market.
"A regional commodity market can help solve the problem of thin markets by creating much needed mass and concentrating supply and demand in the East African Community and can also help in the development of other innovative financing tools for agriculture in particular and infrastructure in general," said a statement issued in Arusha recently.
Dr. Sezibera noted that one of the key principles of the EAC as a private sector-driven and people-centered Community is making sure the people of East Africa gain access to the tools of wealth creation.
"One of the biggest challenges of the region is that over 80% of the population is employed by the agriculture sector yet it suffers from low productivity, lack of infrastructure to get produce to markets, and limited value addition to what the region produces," observed Dr. Sezibera.
He said that some of these challenges are partly responsible for the region experiencing regular occurrences of supply surplus and hunger at the same time.
"We don't have a market for foodstuffs, the laws and regulations in the Community should allow for the development of these markets and a commodity exchange is one way to address these challenges," he observed.
"The regional commodity exchange envisaged in the case of the EAC is one that centralizes a number of trading places unto one trading platform, this means that the national commodity exchanges will also assume the role of being regional platforms for trade," he explained.
Ms Frazer said the institute is looking forward to collaborating with the EAC in this venture and added that she recognized that EAC can afford to have critical mass of production that can meet the commodity exchange requirements. EAC publicist Richard Owora explained that the proposed regional commodity exchange is planned to be implemented in a Public-Private Partnership arrangement.
South Sudan ready to join EAC - Salva Kiir
KAMPALA, UGANDA - South Sudan President Salva Kiir has said that the newly created country is ready to become a member of the East African Community (EAC).
If granted membership, Southern Sudan will become the sixth partner state of the EAC
"We hope that the country will speedily be considered for membership to the economic bloc to enable it reap the benefits of regional integration," he said during a meeting with the Speaker of the East African Legislative Assembly, Mr Abdirahin Abdi in Juba.
He hailed EAC for supporting South Sudan and the Sudan during the period of the Comprehensive Peace Agreement.
"I note with gratification the assembly's efforts in ensuring that peace in South Sudan prevailed," he noted.
The Assembly visited South Sudan to assess the state of preparedness during the period leading to the referendum and also sent an observer team during the referendum.
President Kiir stated that the Parliament of South Sudan stood to benefit from the enriching experience of EALA.
Speaker Abdirahin Abdi said that citizens of South Sudan had bestowed on him confidence to lead the new republic to greater heights.
He urged the citizens to unite and re-double their efforts in building the new nation.
He said the EAC was committed to ensuring peace generally prevails in Sudan as a whole and added that the envisaged entry of South Sudan in to the EAC would strengthen the economic bloc further.
"The Republic of South Sudan provides a wide range of opportunities for investment and trade, we shall welcome the entry of South Sudan in to the regional bloc with open arms once ready", he said.
We welcome you with open arms among the independent nations of our region and wish you Progress, Peace and Prosperity.
If granted membership, Southern Sudan will become the sixth partner state of the EAC
"We hope that the country will speedily be considered for membership to the economic bloc to enable it reap the benefits of regional integration," he said during a meeting with the Speaker of the East African Legislative Assembly, Mr Abdirahin Abdi in Juba.
He hailed EAC for supporting South Sudan and the Sudan during the period of the Comprehensive Peace Agreement.
"I note with gratification the assembly's efforts in ensuring that peace in South Sudan prevailed," he noted.
The Assembly visited South Sudan to assess the state of preparedness during the period leading to the referendum and also sent an observer team during the referendum.
President Kiir stated that the Parliament of South Sudan stood to benefit from the enriching experience of EALA.
Speaker Abdirahin Abdi said that citizens of South Sudan had bestowed on him confidence to lead the new republic to greater heights.
He urged the citizens to unite and re-double their efforts in building the new nation.
He said the EAC was committed to ensuring peace generally prevails in Sudan as a whole and added that the envisaged entry of South Sudan in to the EAC would strengthen the economic bloc further.
"The Republic of South Sudan provides a wide range of opportunities for investment and trade, we shall welcome the entry of South Sudan in to the regional bloc with open arms once ready", he said.
We welcome you with open arms among the independent nations of our region and wish you Progress, Peace and Prosperity.
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