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Africa seeks ways to make international trade cheaper, faster and easier

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Complex, time-consuming and inefficient import and export procedures are a major barrier to trade and hamper development, especially for low and middle-income countries.

In response, African countries seeking to make interregional and international trade in goods and services cheaper, quicker and more straightforward will gather for the First African Forum for National Trade Facilitation Committees in Addis Ababa, Ethiopia, on 27–29 November.

The landmark event, organized by UNCTAD and seven partner organizations including UNECE, comes as Africa scales up its trade-easing efforts after the World Trade Organization’s Trade Facilitation Agreement entered into force in February 2017 and as they prepare to implement the Africa Continental Free Trade Agreement signed in March 2018.

A central tenet of the Trade Facilitation Agreement is the obligation of each country to set up a National Trade Facilitation Committee (NTFC) with both public and private sector stakeholders to facilitate both domestic coordination and implementation of the provisions of this agreement.

With well-functioning NTFCs, countries will be able to make trade, easier, faster and cheaper. For developing countries, and especially least developed countries – the majority of which are in sub-Saharan Africa – implementation of the Trade Facilitation Agreement could lead to a reduction in trade costs of up to 15%.

“The Centre for Trade Facilitation and Electronic Business (UN/CEFACT), hosted at UNECE, has been a pioneer of trade facilitation. For many decades, it has been developing policy recommendations, standards and guidelines, including for the establishment and operation of trade facilitation bodies. UNECE stands ready to join forces with international partners to support countries’ efforts for effective integration in the international trading system”, highlighted UNECE Executive Secretary Olga Algayerova.

The recommendations and guidelines developed by UN/CEFACT are a key reference for advisory services to NTFCs in the African region provided by partner organisations, like UNCTAD and ITC. UNECE has also joined UNCTAD and other partners in training NTFCs and assisting them in the development of National Trade Facilitation Roadmaps. This has been the case for Benin, Gabon, Cameroon, and Sudan.

Furthermore, UNECE has supported Morocco, Nigeria, Mozambique and Senegal for the establishment and operation of their Single Windows and Port Community Systems, with real impact in terms of time and money saved. For example, thanks to Senegal’s Single Window system, the time associated with the custom clearance process has been cut by 50%, from an average of 18 to just 9 days. In the first three years of the system’s mandatory use in the country, customs’ revenue collection increased from USD 625 million to more than USD 1 billion.

Correctly implemented trade facilitation measures not only boost trade but also improve revenue collection, safety and security compliance controls (for example, improving food safety) and can help to streamline government agencies.

Such reforms help small traders, often women, enter the formal sector, make economic activities more transparent and accountable, promote good governance, generate better quality employment, strengthen information technology capabilities and generally modernize societies by bringing about benefits related to administrative efficiency. Trade facilitation reforms are also positive steps towards human, enterprise and institutional development.

For these benefits to be realized it is essential that the Trade Facilitation Agreement is implemented as foreseen. According to the WTO, the rate of implemented commitments under the agreement as of October 2018 stood at 60% – but broken down by level of development a new picture emerges, with developed countries having achieved 100% of commitments, developing countries having achieved 60% of commitments and least developed countries just 22% of commitments.

The Forum is the result of close collaboration between multilateral and international organizations and is supported by several bilateral donors. The alliance showcases the collaborative effort of these institutions and donors to assist in moving forward opportunities for developing and least developed countries to integrate in globalized trade.

Topics covered during the three-day event include the role of the African regional organizations, the role of NTFCs in the implementation of trade facilitation provisions in the AfCFTA, paperless initiatives at entry points, the involvement of the private sector in NTFCs, how to coordinate border agencies, and the role of transit corridors. There will also be sessions on the gender dimension in cross-border trade, and the application of digital technologies in future modes of trading.

The forum is co-organized by:

  • UNCTAD
  • United Nations Economic Commission for Africa
  • United Nations Economic Commission for Europe / Centre for Trade Facilitation and Electronic Business
  • International Trade Centre
  • World Bank Group
  • World Trade Organization
  • World Customs Organization
  • Global Alliance for Trade Facilitation

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Guterres: We must do everything possible to avoid global ‘fracture’ caused by US-China tensions

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Tensions around global trade and technology continue to rise and the international community needs to “do everything possible” to prevent the world being split into two competing spheres, led by the United States and China. 

That was the message from UN Secretary-General António Guterres on Saturday, speaking during the World Bank Group and International Monetary Fund (IMF) Annual Meetings in Washington DC. 

In remarks to the International Monetary and Financial Committee, the UN chief said that “during tense and testing times” he continued to “fear the possiblity of a Great Fracture – with the two largest economies splitting the globe in two – each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capacities and its own zero-sum geopolitical and military strategies.” 

A trade war between the two economic giants is threatening to wipe out gains across the global economy, which could shrink global GDP next year “equivalent to the whole economy of Switzerland” said the new head of the IMF, Kristina Georgieva, just a few days ago.  

Mr. Guterres told world financiers that “it is not too late to avoid” the division, but “we must do everything possible to avert this…and maintain a universal economy with universal respect for international law; a multipolar world with strong multilateral institutions, such as the World Bank and IMF.” 

He noted three main areas where fiscal policy and investment in the future would be pivotal. First, make tax systems “smarter, greener, and more aligned behind the sustainable development and climate action agendas”, he urged. 

Secondly align the whole financial system behind the 17 SDGs, or Sustainable Development Goals, incentivizing longterm public and private finance, and “revisiting financial regulations that may inadvertently encourage short-termism in financial markets.” 

Third, “it is time to break the cycle of excessive debt build-up followed by painful debt crises”, meaning taking a systemic approach to lend and borrow more responsibly. 

And we must keep a focus on countries particularly vulnerable to the impacts of the climate crisis, namely Small Island Developing States.  I fully support proposals to convert debt to investment in resilience such as through the Debt for Climate Adaptation Swap initiative”, noted the UN chief. “We should move this from idea to reality. 

Together, let us raise ambition for development finance, climate finance, and finance that is inclusive and enables markets to grow, businesses to thrive and people to live in dignity.” 

‘Great opportunities’ ahead, for climate action 

Speaking at a meeting of the Coalition of Finance Ministers for Climate Action, Mr. Guterres said that the 44-member group launched just six months ago, was “a vital part of our response to the climate emergency”. 

The Climate Action Summit last month in New York had shown “the world is waking up to the crisis”, with “great opportunities” ahead to reduce air pollution, save billions of dollars on disasters fueled by global warming, and unlock the true benefits of the green economy. 

Despite a “glaring gap in ambition and finance” finance ministers can turn the tide: “You come to the table with a mix of tools, including tax policy, controlled spending and climate budgeting…And you can end counter-productive subsidies for fossil fuels and pave the way for what I would like to see as a major trend: shifting taxation from income, to carbon.” 

Sweden and Colombia are already using carbon taxes; Uganda is implementing a Climate Change Budget Tagging System; and the island of Dominica has used fiscal policy to improve preparedness for climate shocks, following a devastating hurricane. 

“Your Coalition is taking the ‘whole of government’ approach we need for systemic change. We need to have in place by COP26, country-level road maps and fiscal policies for economic, technological and energy transitions”. 

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New Target: Cut “Learning Poverty” by At Least Half by 2030

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The World Bank introduced today an ambitious new Learning Target, which aims to cut by at least half the global rate of Learning Poverty by 2030. Learning Poverty is defined as the percentage of 10-year-olds who cannot read and understand a simple story.

Using a database developed jointly with UNESCO Institute of Statistics, the Bank estimates that 53 percent of children in low- and middle-income countries cannot read and understand a simple story by the end of primary school. In poor countries, the level is as high as 80 percent. Such high levels of learning poverty are an early warning sign that all global educational goals and other related sustainable development goals are in jeopardy.

Success in reaching this learning target is critical to our mission,” World Bank Group President David Malpass said. “Tackling learning poverty will require comprehensive reforms to ensure domestic resources are used effectively. The target points to the urgency of investments in better teaching and better coordination of vital learning priorities.”

This new target aligns with the Human Capital Project’s efforts at building the political commitment for accelerating investment in people. Much of the variation in the Human Capital Index – used to track countries’ progress in health, education, and survival – is due to differences in educational outcomes.

“We know that education is a critical factor in ensuring equality of opportunities,” said Annette Dixon, Vice President, Human Development, World Bank Group. “Many countries have almost eliminated learning poverty – with levels below 5 percent.  But in others, it is incredibly high, and we are putting at risk the future of many children. That is morally and economically unacceptable. This Learning Target aims to galvanize action toward an ambitious but reachable goal.”

Several developing countries are showing that accelerated progress is possible. In Kenya, progress has been accomplished through technology-enabled teacher coaching, teacher guides, and the delivery of one textbook per child (in both English and Kiswahili) with contents suitable to the level of students. In Egypt, the government has changed its curriculum and assessment systems, so students are evaluated throughout the year, with the key element of the reforms focused on learning, instead of getting a school credential. And in Vietnam, the clear and explicit national curriculum, the near-universal availability of textbooks, and the low absenteeism among students and teachers are credited for contributing to the country’s outstanding learning outcomes.

Unfortunately, in many other countries the current pace of improvement is still worryingly slow. Even if countries reduce their learning poverty at the fastest rates seen over the past 20 years, the goal of ending it will not be attained by 2030.

“Cutting learning poverty by at least half is feasible but requires large political, financial and managerial commitments and a whole of government approach,” said Jaime Saavedra, Global Education Director, World Bank Group. “Taking learning poverty to zero -assuring that all children are able to read- is a fundamental development objective, as is eliminating hunger or extreme poverty.  All children have the right to read – and in each country, a national dialogue is needed in order to define how and when learning poverty can be eliminated, and to set intermediate targets for the coming years.

The Bank will use three pillars of work to help countries reach this target and improve the human capital outcomes of their people:

A literacy policy package consisting of country interventions that have proven to be effective in promoting reading proficiency at scale: ensuring political and technical commitment to literacy grounded in adequately funded plans; ensuring effective teaching for literacy, through tightly structured and effective pedagogy; preparing teachers to teach at the right level and providing practical in-school teacher training; ensuring access texts and readers to all; and teaching children in their home language.

A refreshed education approach to strengthen entire education systems — so that literacy improvements can be sustained and scaled up and all other education outcomes can be achieved. This approach comprises of five pillars: i) prepared and motivated learners, ii) effective and valued teachers, iii) classrooms equipped for learning, iv) safe and inclusive schools, and v) a well-managed education system.

An ambitious measurement and research agenda – to include measurement of both learning outcomes and their drivers, as well as a continued action-oriented research and innovation, including smart use of new technologies, on how to build foundational skills.

Change is needed at scale, quickly, and for large populations. That cannot be done without technology. Open-source digital infrastructure and information systems will be used to assure resources reach all teachers, students and schools.

Tracking progress calls for a dramatic improvement in the capacity to measure learning, particularly in low-income countries. A World Bank-UNESCO Institute for Statistics partnership will help countries strengthen their learning assessment systems and improve the breadth and quality of country data on learning to better monitor performance over time and in internationally-comparable ways. Further, the World Bank’s new Learning Assessment Platform will enable countries to evaluate student learning more efficiently and effectively.

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African financial centres step up efforts on green and sustainable finance

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When we talk about climate change and sustainable development, the continent that is often highlighted as facing the greatest socio-economic challenges is Africa.

It is in many African nations that the impacts of climate change are hitting the hardest and that communities need the most support to ensure food security, decent housing, access to clean energy and so much more, including jobs for the ballooning youth unemployment which is seeing more than 12 million youth enter the labour market each and every year.

The will and the knowledge exist to turn things around. A survey for Africa Climate Week in March showed that most African nations were already starting to implement their mitigation and adaptation commitments under the Paris Agreement.

But over half of the countries have struggled to mobilize climate finance, less than one quarter have a financing strategy, and only one third have appropriate financial instruments.

There is some movement. The World Bank Group has promised US$22.5 billion over 2021-2025 in climate support in Africa, while nations are increasingly able to secure money from the Green Climate Fund.

Private finance is desperately needed, however, which is why the UN Environment Programme (UNEP)-convened International Network of Financial Centres for Sustainability (FC4S) is launching a new work programme for the continent.

Financial Centres for Sustainability, a global network of 30 financial centres, will work with its five Africa member centres—Abidjan, Cairo, Casablanca, Lagos and Nairobi—to encourage strategic action, collaborate with peers across the continent, and facilitate engagement with major international hubs.

“There is an appetite for investing in Africa, in recognition of the fact that of all the investment bets you can make, this is the one that is sure to come up trumps,” said Patrick Njoroge, Governor of the Central Bank of Kenya, at the launch of the new work programme at the Financial Centres for Sustainability’s annual meeting in Geneva. “There is also an appetite to use the members’ investment muscle to do good and help defend the planet against the ravages of climate change and environmental degradation.”

There is, despite many old-fashioned notions about Africa, plenty of private money in the continent. Nairobi, for example, is a thriving regional hub for banks, businesses and entrepreneurs with money to invest.

But there are many barriers to boosting sustainable finance in African countries, including a lack of clear policies and regulatory frameworks on climate change, a lack of awareness on the sources of climate finance and limited engagement from the private sector.

These barriers, and the different levels of development on the sustainable finance agenda in African financial centres, requires a coordinated strategic effort to help mainstream sustainable finance as a foundational element of financial centre development strategies.

The programme will help the centres assess the green finance landscape in their countries and set strategies for sustainable finance development. It will provide technical assistance on specific green and sustainable finance projects, including support on the development of a green bond market in Abidjan, activating the green bond market in Egypt, and a proposal to advance “green tagging” of bank loans in Lagos.

“Financial centres generate a powerful clustering effect by concentrating banking, capital markets, investing, insurance, professional services with policy and regulation,” said Mohammed Omran, Executive Chairman, Financial Regulatory Authority of Egypt. “Financial centres in Africa are no different. We have a real opportunity to turn African centres into global green hubs and provide the finance the continent needs for a brighter future.”

Financial Centres for Sustainability will also increase policy dialogue and engagement, and collaboration between African centres and the rest of the international network.

Specific actions will include setting clear definitions for green or sustainable finance, integrating sustainability priorities relevant for a given national context into the design and execution of strategies, and identifying options to create strong enabling environments to attract international investment into green and sustainable investment options in local markets.

The message is that with the over 3.5 trillion of financing gap for both the nationally determined contributions and the Sustainable Development Goals implementation, social-driven financing will not be optimal. Africa as a region urgently needs to move from this socially inclined financing to investment financing where returns are environmental, social, economic and financial. This should build on already ongoing initiatives like the innovative financing mechanisms across the continent like the risk-sharing facilities coming up across the continent.

UN Environment

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