Africa Loses Billions in Potential Trade Earnings, Falls Short of Vast Promise in Cross-Border Business

Press Release No:2012/239/AFR

Washington, February 7, 2012 – With African leaders now calling for a continental free trade area by 2017 to boost trade within the continent, a new World Bank report shows how African countries are losing out on billions of dollars in potential trade earnings every year because of high trade barriers with neighboring countries, and that it is easier for Africa to trade with the rest of the world than with itself.

According to the new report―De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services―regional fragmentation could become even more costly for the continent with new World Bank forecasts suggesting that economic slowdown in the Eurozone could shave Africa’s growth by up to 1.3 percentage points this year. As the authors write, “while uncertainty surrounds the global economy and stagnation is likely to continue in traditional markets in Europe and North America, enormous opportunities for cross-border trade within Africa in food products, basic manufactures and services remain unexploited.”

The reports says this situation deprives the continent of new sources of economic growth, new jobs, and sharply falling poverty, factors which accompanied significant trade integration in East Asia and other regions. The cross-border production networks that have spurred economic dynamism in other regions, especially East Asia, have yet to materialize in Africa.

“It is clear that Africa is not reaching its potential for regional trade, despite the fact that its benefits are enormous—they create larger markets, help countries diversify their economies, reduce costs, improve productivity and help reduce poverty.” says Obiageli "Oby" Ezekwesili, The World Bank’s Vice President for Africa, and a former Nigerian Minister of Extractive Industries. “Yet trade and non-trade barriers remain significant and fall most heavily and disproportionately on poor traders, most of whom are women. African leaders must now back aspiration with action and work together to align the policies, institutions and investments needed to unblock these barriers and to create a dynamic regional market on a scale worthy of Africa’s one billion people and its roughly $2 trillion economy."

In a special World Bank video produced for the report, women traders on the border with the Democratic Republic of Congo (DRC) and neighboring countries in the Great Lakes region describe how they routinely encounter violence, threats, demands for bribes, and sexual harassment, at the hands of the large numbers of customs and other government officials at the border. As one egg and sugar trader from Goma says on the video: “I buy my eggs in Rwanda; as soon as I cross to Congo I give one egg to every official who asks me. Some days I give away more than 30 eggs!”

Barriers blunt trade in goods as well as services

The report says that until the onset of the financial crisis, most sub-Saharan African (SSA) countries grew rapidly and often at much higher rates than the world average. Economic growth in these countries was robust and driven by the boom in commodity prices, which led to very high growth in export values, especially for minerals, to new fast-growing markets such as India and China.

While exports have grown strongly over the last decade, and the region’s trade has recovered well from the global crisis, the impact on unemployment and poverty has been disappointing in many countries. Unemployment remains around 24 percent in South Africa. In Tanzania, extreme income-poverty appears to have remained broadly constant at around 35 percent of the population. This shows that export growth has typically been fueled by a small number of mineral and primary products with limited impacts on the wider economy and that formal sectors remain small in many countries.

As a result, the report suggests that Africa will have to diversify its exports from depending solely on precious metals and other commodities and encourage more people to trade goods and professional services in accounting, law, education, healthcare, among others. The region’s large number of young people also calls for significant numbers of new jobs, intensive trade, and growth.

“Imagine the benefits of allowing African doctors, nurses, teacher, engineers and lawyers to practice anywhere in the continent, but responsibility for making this happen lies with countries first and foremost,” says Marcelo Giugale, the World Bank’s Africa Director for Poverty Reduction and Economic Management. “The final prize is clear: helping Africans trade goods and services with each other. Few contributions carry more development power than that.”

Changes are needed in three areas

To escape the current straightjacket of trade fragmentation, the report says that African leaders, need to pursue changes in three key areas.

1. Improving cross-border trade, especially by small poor traders, many of whom are women, by simplifying border procedures, limiting the number of agencies at the border and increasing the professionalism of officials, supporting traders associations, improving the flow of information on market opportunities, and assisting in the spread of new technologies such as cross-border mobile banking that improve access to finance.

2. Removing a range of non-tariff barriers to trade, such as restrictive rules of origin, import and export bans, and onerous and costly import and export licensing procedures

3. Reforming regulations and immigration rules that limit the substantial potential for cross-border trade and investment in services.

In one notable example of trade barriers, report co-editors Paul Brenton and Gozde Isik of the World Bank describe how the South African supermarket chain Shoprite spends US$20,000 a week on import permits to distribute meat, milk, and plant-based goods to its stores in Zambia alone. For all countries it operates in, approximately 100 (single entry) import permits are applied for every week; this can rise up to 300 per week in peak periods. As a result of these and other requirements, there can be up to 1,600 documents accompanying each truck Shoprite sends with a load that crosses a border in the region.

As the co-editors write, “lack of coordination across government ministries and regulatory authorities also causes significant delays, particularly in authorizing trade for new products. Another South African retailer took three years to get permission to export processed beef and pork from South Africa to Zambia.”

How the World Bank supports regional integration


Trade and regional integration are core elements of the Bank’s new Africa strategy, launched in March 2011, to help countries create opportunities for their transformation and sustained growth. The Bank has doubled its investment in regional integration from US$2.1 billion in 2008 to US$4.2 billion in July 2011, and it will rise to $5.7 billion by July 2012.

Source: World Bank

SOUTH AFRICA TO RATIFY INTERNATIONAL SOCIO-ECONOMIC RIGHTS COVENANT

South African Human Rights Groups welcome Cabinet’s approval of South Africa’s ratification of the United Nations International Covenant on Economic, Social and Cultural Rights (ICESCR)

Almost eighteen years after the South African government signed the ICESCR, Cabinet has approved that South Africa will ratify the ICESCR. This important decision to ratify, which means that the ICESCR will be legally binding, was included in a statement issued yesterday on Cabinet’s ordinary meeting held in Pretoria on 10 October 2012. The Cabinet statement describes how the ICESCR is a “key international treaty which seeks to encourage State Parties to address challenges of inequality, unemployment and poverty, which are critical to the strategic goals of governments.”

The ICESCR, together with the International Covenant on Civil and Political Rights (ICCPR) and the Universal Declaration on Human Rights, constitutes the International Bill of Rights. The ICESCR has been ratifed by over 160 states since it was adopted in 1966, 48 of which are African states and 11 of which are member states of SADC. South Africa ratified the ICCPR in 1998, and its current ratification of the ICESCR will unambiguously signal its commitment to be legally bound by the full range of human rights recognised under international law. In its statement, Cabinet indicates that the recommendation to ratify the ICESCR will be tabled in Parliament for ratification in line with Section 231(2) of the South African Constitution.

Civil society organisations have been calling for many years for the South African government to ratify the ICESCR (and its Optional Protocol, which creates an individual complaints mechanism). The Community Law Centre (CLC), Socio-Economic Rights Institute of SA (SERI), Black Sash, People’s Health Movement South Africa, National Welfare Forum, Global Call to Action against Poverty South Africa (GCAP-SA) and the Studies in Poverty and Inequality Institute (SPII) see this as a great opportunity to ensure that South Africa’s jurisprudence on socio-economic rights develops in harmony with the normative standards set by the leading international treaty on these rights.

According to Jackie Dugard, executive director at the Socio-Economic Rights Institute of SA (SERI), “although this is a momentous and long-awaited decision, South Africa has for a while subscribed to the norms and standards contained in the ICESCR as it has ratified the African Charter on Human and People’s Rights of 1981, which echoes many of the socio-economic rights contained in the ICESCR. It has also included justiciable socio-economic rights in the Bill of Rights in the South African Constitution.

Prof Lilian Chenwi, associate professor at the Wits School of Law, states that “given the role played by the international community and international human rights law in the struggle against apartheid, ratification of the ICESCR will fulfil South Africa’s express desire ‘to take its rightful place as a sovereign state in the family of nations’, which is recognised in the Preamble to its Constitution.”
Rajesh Latchman, of the National Welfare Forum, states: “This move to ratify the ICESCR is an important step towards creating a harmonious roadmap for the realisation of socio-economic rights for all in SA, and it is about time too.”

While ratification of the ICESCR is significant, the ICESCR Ratification Campaign Driver Group encourages South Africa to also ratify the Optional Protocol to the ICESCR (OP-CESCR).

The Optional Protocol is an extra treaty that promotes a culture of accountability around the ICESCR, empowering vulnerable and marginalised groups to lodge individual complaints at the international level regarding violations of their socio-economic rights. The Optional Protocol is yet to come into force, as it requires 10 states to ratify it and, at present, only 8 states have done so.

It is hoped that the South African government will table the recommendation to ratify the ICESCR before Parliament and submit its accession instrument the United Nations without any further delay, and also ratify the Optional Protocol to concretise South Africa’s commitment to human rights and to bring this important international human rights instrument to life.

Issued by the ICESCR Ratification Campaign Driver Group which comprises:

Black Sash
Community Law Centre (CLC), University of the Western Cape
Global Call to Action against Poverty South Africa (GCAP-SA)
National Welfare Forum
People’s Health Movement South Africa
Socio-Economic Rights Institute of SA (SERI)
Studies in Poverty and Inequality Institute (SPII)
For additional information, contact:

Lilian Chenwi, associate professor, Wits School of Law: 072 172 6346 / lilian.chenwi@wits.ac.za
Jackie Dugard, executive director of SERI: 084 240 6187 / jackie@seri-sa.org
Rajesh Latchman, coordinator of the National Welfare Forum: 083 443 0227 / rajesh@nwf.org.za

Let justice, fairness be our guide

FIRST up, I must confess that I am one of those who secretly (or maybe not so secretly) celebrated the unceremonious ousting of Thabo Mbeki from the presidency of the South African republic. He had caused so much harm to the country that it seemed okay for the ANC to give him a solid punch in the ribs and make him feel the pain that he had made others feel. As I watched his farewell address that Sunday night in September 2008, a part of me sadistically enjoyed seeing the humiliation he was being subjected to. Never mind that it was all wrong, unprocedural and, most likely, unconstitutional. I, and many other South Africans, were just happy to see the back of someone, who had suffocated the nation with his near tyrannical leadership style and his icy heart. Yes, today we miss his intellect and vision, but we should never forget the ditch into which he nearly drove us. However, nothing can detract from the fact that the bloodless 2008 coup set a bad precedent for our republic.

We should make sure that even if the ANC does not give President Jacob Zuma a second party term in December, the party should under no circumstances be allowed to cut short his presidency. As torturous as this might be, principle should trounce passions. In the past week, the demise of ANC Youth League president Julius Malema was widely celebrated. When ANC bigwig Cyril Ramaphosa - who chairs the party's national disciplinary committee of appeals - confirmed the youth leader's guilt and sentence on Saturday, there was a collective sigh of relief from Constantia to Khutsong. Finally, the Mario Balotelli of our politics had been red-carded. One might argue that this was rightly so.

Like Mbeki, Malema has done a lot of harm to the country. It is therefore easy to understand why we are all inclined to ululate as he is blindfolded and led to the raised platform where he will hang until his neck breaks. Except for the fact that he swears by the skull and crossbones that symbolise the venerable 75-year-old South African institution called Orlando Pirates, Malema has no saving graces.

I had hoped against all hope that the honourable men and women on the ANC's appeals committee would rise above self-interest politics and allow their integrity to dictate their decision-making. At this juncture, as the comrades are wont to say, we should pause and ask ourselves if it is right and proper that Malema should be executed in this fashion for the sake of political expediency.

No doubt the country will be a much better place without Malema on newspaper front pages and at the top of broadcast bulletins every other day. His divisive verbosity will not be missed. Investors will nod. Ministers and policy-makers will no longer have to waste their breath explaining that nationalisation is not official policy but one young man's thoughts in the bath. Minority interest groups will have to find a new bogey. Farmers will not see Robert Mugabe on their doorsteps. The cantankerous chief from Ulundi will be less concerned that his grandchildren will be recruited into the ANC against his will. Hellen Zille and Lindiwe Mazibuko will be subjected to fewer insults. Mazibuko can make her tea and Zille can inject herself with botox with gay abandon. South Africans will not be subjected to to the sewer rhetoric that Malema had reduced political discourse to. Most crucially, Zuma's re-election strategists will sleep easier and plan better for the ANC's Mangaung elective conference. (That is all, of course, assuming that Malema is finished, which is far from conclusive at this point. Like Mgqumeni of Nquthu, Malema might rise from the dead and wow the masses again.)

But is the imminent execution right and proper? Is the elevation of political short-term gain above principle the right thing for a country that is trying to deepen and entrench a democratic culture? This lowly newspaperman thinks not.

Let's just take a cold look at the sins Malema is said to have committed against the ANC. As leader of the ANC Youth League, he led the charge against Botswana's governing party. He called for regime change in that country, labelling Ian Khama's government a puppet of Western imperialism. He did not call for a military overthrow of the government, but rather the unification of opposition forces for the democratic removal of the Botswana Democratic Party. By the way the "D" part of the party's name is almost as appropriate as North Korea's depiction of itself as democratic.

Now many in the ANC - including the secretary-general, members of the national executive and officials of other party structures - have pronounced themselves on foreign policy issues. Be it Zimbabwe, Israel, Swaziland or Tibet, we have heard differing views from individual members of the ANC leadership. Having read the national disciplinary committee's reasoning on the matter, I am still none the wiser as to why Botswana should be a holy cow, other than the fact that it has more cattle than human beings in its sovereign territory.

Malema's other serious offence was the unfavourable comparison of Zuma's leadership to that of Mbeki. Now what, pray thee, is the crime comparing the talents of the country's leaders? How are we to grow if we do not publicly share our views on the respective qualities of those who lead us? It would be a travesty if we were to create a culture where South Africans - and ANC functionaries in particular - were not able to evaluate the contribution of leaders to the development of our republic and our world. There were many other pots, spoons and saucers (euphimistically known as charges) thrown at Malema during a process in which the kangaroo court label can be deemed apt. It is a process that, as much as we may resent Malema, we will live to regret.

Rather than rushing to execute Malema, the ANC and the country should take some lessons from his rise and fall. In the rise of Malema, we should take care not to empower a demagogue to occupy centre stage in our discourse. Malema the hero and Malema the ogre were not the creation of the media and the South African public. The ANC gave birth to him, fattened him and unleashed him on an unsuspecting nation. It suited Zuma and his leadership to have an uncontrollable bloodhound to take on their opponents and external opponents. He was empowered to be the Malema that he was. The more despicable he became the more useful he was. Not once did the ANC give a care about the negative effect he was having on our body politic or the damage he was doing to our international standing. In its centenary introspections, the ANC should give careful thought to how it creates and nurtures monsters such as Malema.

Those outside the ANC should also think about how we deal with the monsters that the governing party creates. Do we empower the monsters by demonising and fearing them? Do we in the media give undue attention to the monsters that the ANC or any other societal force creates? Do we have a choice? Having done so, the ANC and the country should think seriously about the place of principle in our public discourse and the conduct of our politics.

We should make sure that no matter how much we resent, hate and fear an individual, these emotions should never compromise our commitment to justice and fairness.

Principle should always be our guide. Yesterday it was Mbeki. Today it is Malema. Tomorrow? ...

Written by Mondli Makhanya, editor-in-chief of Avusa Media newspapers

Source: The Sowetan

ECONOMIC FREEDOM IN OUR LIFETIME: Can we have a proper debate this time?

Joel Netshitenzhe

As the delegates of the ANC Youth League rose from their 24th Congress, the slogan of 'economic freedom in our lifetime' on their lips, the "lost generation" seemed to be returning the favour of generational stereotyping. We, the older lot in society, bemused by a misshapen movement taking root in spite of our apprehensions, had by some quirk of fate become the "bewildered generation". Mesmerised by the antics of individuals, irritated by the seeming immaturity of it all, and bedazzled by the media focus on palace politics, the historic nature of the moment seemed to escape us.

In its January 8th Statement this year, the ANC asserts: "Political emancipation without economic transformation is meaningless. That is why we have to commit ourselves to economic freedom in our lifetime, and the ANC must continue to be in the forefront of that transformation."

What indeed is "economic freedom" and how can it be attained? Is there a common and coherent storyline across society on the final destination and how to reach it?

This historical moment calls for serious societal debate. Imploring the ANC leadership to put its foot down and suppress the debate will not put the genie back in the bottle. Launching ideological missiles about who is more Left and the vanguard of workers, or speculating whether this campaign is a proxy for ANC palace politics, will not smother the appeal of a sentiment.

It is no accident that this issue emerges in this stark form 17 years after the attainment of democracy. Having obliged Kwame Nkrumah's injunction to "seek ye first the political kingdom", economic liberation is an issue that post-liberation states on the continent and elsewhere had to come back to.

The efforts sometimes resulted in welcome success. In many other situations, failure by society honestly and rationally to engage the issue, poor policy choices on the part of leaders, and a brittle and corrupt state produced disastrous results. On the extreme, predatory elites used so-called economic liberation policies such as nationalisation, indigenisation, price controls and tariff barriers for self-enrichment.

It should be expected that youth in our country would be at the forefront of the economic freedom campaign. Just on access to economic opportunities: the employment ratio among 15 - 24 year olds is 13.2% compared to 40% in Asia and Latin America. 48.2% of those available to work in the 20 - 24 age cohort are jobless. 86% of unemployed youths have not gone beyond Grade 12; and two-thirds of these have never worked. This not only has major macro-social implications including crime and youth mortality as well as socio-political stability especially at local level. It is patently unsustainable.

It can be argued that this problem affects many countries. Besides the youth of the Arab Spring, there is concern in Japan about the so-called freeters (freelance arbeiters), mileuristas in Spain and the UK's NEETS (not in education, employment or training). This is what Peter Coy of Bloomberg Business Week describes as "the common element [of] failure - not just of young people to find a place in society, but of society itself to harness the energy, intelligence, and enthusiasm of the next generation".

The irony which is not irrelevant to our own discourse on economic freedom is that in Spain, for instance, the youth's "May 15 movement" of massive demonstrations has led to the recent defeat of the Socialist Party in regional and local elections. According to the Financial Times (17 June 2011), the right-wing Popular Party is expected to win the next general election. And so, counter-intuitively, socio-economic difficulties result in the rise of the right-wing, as the Left is unable to pose and mobilise around alternatives to the status quo. Under such circumstances, phenomena such as Louis Bonaparte's lumpen proletariat in 19th century France, the Tea Party extremists currently in the United States and the Green Bombers across the Limpopo river can gain prominence.

While there may be structural causes to youth marginalisation in many countries, a major contributor to the current problem is the global economic crisis.

South Africa differs in the sheer size of the problem, the low education and skills levels, the very high levels of inequality and the historical and racial dimensions to the phenomenon of youth unemployment. In our situation it is systemic, manifesting even during high growth periods. As the National Planning Commission (NPC) points out in its Diagnostic Overview, the central problem in our country is that too few people are involved in economic activity.

If the slogan, "economic freedom in our lifetime" has to have any meaning, it should aim at addressing this fundamental challenge. The root causes of the problem, the NPC argues, relate among others to the structure of the economy, the quality of education, poorly located and inadequate infrastructure, a resource-intensive path dependency, and spatial economic and settlement patterns.

A growth story line

South Africa needs a growth storyline that addresses these issues and clearly describes:

* how we can use the infrastructure programme not only to crowd in the private sector, but also to build supplier industries that will absorb more labour;
* the competitive advantages that we need to forge, to be able to manufacture many of the mass market goods that we currently import;
* a strategy fully to take advantage of our massive mineral endowments to exploit the commodities super-cycle and more critically to build a mature industrial cluster around these endowments;
* how we can take advantage of these and other endowments and potential to build a green economy that is more than just cost-neutral; and
* a clear strategy to take advantage of the high economic growth rates on the continent through regional integration and the pooling of sovereignty.

We should build "an economy in which cutting edge technology, labour-absorbing industrial development, a thriving small business and co-operative sector, utilisation of information and communication technologies and efficient forms of production and management all combine to ensure national prosperity" (2007 ANC Strategy and Tactics document). This will ensure that we escape the middle income country syndrome - where countries reach a level of development and then stagnate, unable to break out because of path dependency and sheer inertia.

However, the immediate challenge of unemployment, particularly among the youth, cannot wait until high growth over some 5 years starts to have qualitative impact. By then, the ticking time-bomb may have gone off. As such, specific programmes to address this deficit need to be pursued. Besides the public works programme, this should include measures such as massive artisanship training, learnerships, a school-to-work transition programme, job transition through the state and so on.

At the same time, programmes to address asset poverty including housing and land reform need to be intensified. And the approach to BEE should also focus on community trusts for youth and women as well as employee share ownership schemes. With regard to land, policy and planning should take account of the reasons why measures such as the audit of state land, the Communal Land Rights Act, the Land Use Management Bill, revival of collapsed agricultural schemes and other support programmes in rural areas are taking so long fully to materialise.
It is this kind of methodology, firstly, to identify the objective, and then the processes and mechanisms required to achieve it, that should inform the approach of the 'economic freedom movement'.

Source: ANC Umrabulo

Brandenburg Gate in West Berlin, Germany on June 12, 1987

President Reagan's remarks on East-West relations at the Brandenburg Gate in West Berlin, Germany on June 12, 1987.

For more information on the ongoing works of President Reagan's Foundation, visit us at http://www.reaganfoundation.org

Source: Regan Foundation