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AfDB discusses relief for fragile states through innovative private sector financing solutions

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Access to concessional resources and insurance cover for pioneering investments, offer fragile nations the best tools to jump-start their economies, the African Development Bank said.

“It is important that the state provides risk-mitigating insurance for companies to promote investments in these frontier markets,” Vice President, Regional Development, Integration and Business Delivery Khaled Sherif said during a seminar, organized Tuesday by Waseda University and ICRC on the sidelines of the 7th Tokyo International Conference on African Development, TICAD7.

The seminar, on post-conflict humanitarian needs and challenges, was titled: “Building a Better World through Business – Challenges in Humanitarian Assistance in Africa and the Role of Private Sector. Sherif, joined Peter Maurer, President of the International Committee of the Red Cross (ICRC), Aiji Tanaka, President of Waseda University and Izumi Kobayashi, former Vice Chair, Japan Association of Corporate Executives on the high-level panel.

Political, socio-economic and climate change has slowed growth in countries across the continent and statistics show that two out of every three countries in fragile situations around the world are found in Africa. Yet paradoxically, Africa has six of the world’s fastest growing economies and the continent’s GDP is predicted to rise to 4.1 percent in 2020.

The panelists examined the challenges of weak economies, limited capacity of project promoters and undeveloped capital markets. These obstacles translate into a low rate of private sector financing and foreign direct investment flows.

The African Development Bank has stepped into the gap to provide a perspective to states relying on emergency assistance and humanitarian aid, Sherif said. The Bank is actively seeking to boost private sector development in low-income countries as well as private investment in Africa’s worst hit states.

“The private sector plays a particularly important role in maintaining post-conflict stability, structural transformation and economic growth in fragile states,” he noted.

Touching on how business leaders in Japan think about engaging in humanitarian assistance and investment, Kobayashi said the risk of doing business in frontier markets is high and the expected size of the returns may not always incentivize companies sufficiently to venture into these unknown markets. “Many Japanese companies don’t have the knowledge and experience to assess and mitigate these risks appropriately and being a first-mover is a risk, but it can also present an advantage,” she said.

The Bank’s innovative approach of combining private financing with concessional loans to support projects in fragile states with high social benefits is promising. Examples of blended financing instruments are its Partial Risk Guarantee (GPR), the Partial Credit Guarantee (PCG) and the Private Sector Credit Enhancement Facility (PSF). The PSF has proven to be a particularly effective tool enabling new financing opportunities for countries in transition and riskier sectors, Sherif noted.

According to Maurer, promoting income-generating activities for fragile states and creating markets, requires a “developmental approach,” and partnerships with the private sector and academia.

Waseda university’s academic courses and volunteer program in Africa, are anchored on academic excellence and “applying knowledge to reality,” Tanaka said in a response. Waseda, a private research university in Shinjuku, Tokyo, has been a pivotal source of innovative ideas and imagination in Japan.

African heads of states and key business leaders from around the world are attending TICAD7 which provides an opportunity to explore investment opportunities and learn from Japan’s experience. The event, held every 3 years, has been convened alternately in Japan and Africa since 2016. The last TICAD was held in Nairobi, Kenya.

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APEC Needs to Look Beyond Numbers, Bring Concrete Benefits to People

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The current volatility and uncertainty of the international trade environment requires APEC to be dynamic, said Dato’ Sri Norazman Ayob, Deputy Secretary General of Industry of Malaysia’s Ministry of International Trade and Industry.

“Integration of the global supply chain carries inherent systemic risk of disruption to domestic economies in the event of a major breakdown along the value chain,” he said during his remarks at a dialogue with stakeholders focused on APEC’s post-2020 vision in Putrajaya on Wednesday. “Businesses would need to constantly reassess their business models to ensure business continuity.”

Notwithstanding, the ever-changing environment requires constant rebalancing measures from regulators and industry players to encourage domestic industrial development to ensure economic growth remains sustainable. 

Norazman argued that as the premier economic forum in the region, APEC needs to realign its priorities to look at economic growth beyond creating equal opportunities and prosperity through trade and investment, “but also tangible benefits to the people.”

He noted that APEC’s goal of free and open trade in the region, otherwise known as the Bogor Goals, has brought integration to the region by reducing trade barriers and addressing regulatory issues.

Average tariffs within APEC have fallen from 17 percent in 1989 to 5.3 percent in 2018. During the same period, APEC’s share of world’s trade increased from 41 percent to 48 percent. APEC economies account for more than 80 percent of Malaysia’s total trade.

“Despite these achievements, we are very much living in a world where uncertainty is the new normal and economies have to be prepared to constantly embrace change in order to survive in the current global environment,” Norazman explained.

One of the key deliverables for Malaysia as the host of APEC this year is to lead the development of the new APEC vision that will guide the forum’s work in the next decades.

Guided by the overarching concept of “Shared Prosperity”, Malaysia plans to introduce initiatives to enable trade and investments to generate concrete outcomes for the people in the region.

According to Norazman, Malaysia will promote the development of the digital economy and encourage effective use of advanced technologies to improve living standards, create equal employment opportunities and achieve a more balanced growth across the region.

“The Post-2020 Vision has to ensure that people are put at the core of the discussion,” he concluded. “A more holistic approach that includes inclusivity, equality and sustainability can be explored in ensuring that no one is left behind.”

Senior Officials from APEC economies will gather in Putrajaya on 21-22 February 2020 to discuss the initiatives and work plans for the year.

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Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

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More than 10,000 civilians in Afghanistan were killed and injured last year, according to a new United Nations report that details record-high levels of civilian harm in the ongoing conflict.

“Almost no civilian in Afghanistan has escaped being personally affected in some way by the ongoing violence,” Tadamichi Yamamoto, the UN Special Representative for Afghanistan and head of the UN Assistance Mission in Afghanistan (UNAMA),  said  on Saturday. 

The report, entitled Afghanistan Annual Report on Protection of Civilians in Armed Conflict: 2019, documents 3,403 civilians killed and 6,989 injured – with the majority of the civilian casualties inflicted by anti-Government elements. 

It is the sixth year in a row that the number of civilian casualties has exceeded 10,000.

Grim milestone

After more than a decade of systematically documenting the impact of the war on civilians, the UN found that in 2019 the number of civilian casualties had surpassed 100,000.

“It is absolutely imperative for all parties to seize the moment to stop the fighting, as peace is long overdue; civilian lives must be protected and efforts for peace are underway”, stressed Mr. Yamamoto.

The figures outlined in the report, released jointly by UNAMA and the UN Human Rights Office, represent a five per cent decrease over the previous year, mainly due to a drop in civilian casualties caused by the terrorist group ISIL. 

However, civilian casualties caused by the other parties rose, including a 21 per cent increase by the Taliban and an 18 per cent surge by the international military forces, mainly due to an increase in improvised explosive device attacks and airstrikes. 

Protect civilians

“All parties to the conflict must comply with the key principles of distinction, proportionality and precaution to prevent civilian casualties,” said Michelle Bachelet, the UN High Commissioner for Human Rights. 

To ensure accountability, the report calls on all conflict parties to conduct prompt, effective and transparent investigations into all allegations of violations of international human rights law and international humanitarian law. 

“Belligerents must take the necessary measures to prevent women, men, boys and girls from being killed by bombs, shells, rockets and improvised mines; to do otherwise is unacceptable”, concluded the High Commissioner.

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UNIDO and Switzerland expand cooperation to support cocoa value chain in Nicaragua’s mining triangle

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photo: UNIDO

LI Yong, Director General of the United Nations Industrial Development Organization (UNIDO), and Federal Councillor Ignazio Cassis, Foreign Minister of the Swiss Confederation, have signed an agreement for a second phase of PROCACAO, a project to improve the productive and organizational capacities of cocoa producers in the so-called mining triangle in the northeast Nicaragua.

With a budget of US$4.845m over four years, the project will increase the productivity and competitiveness of actors along the cocoa value chain. By the end of the project, the income of at least 1,250 cocoa-producing families will have increased, as will the overall production of cocoa. Eighty per cent of producers will be certified with the Rainforest Alliance seal.

To obtain these results, the project is built on the dialogue with the main investment companies and the public sector; the project supports cocoa cooperatives and producers to be able to apply the protocol set up by large private buyers. It will establish agribusiness services driven by young people in order to improve the yield and the quality of the cocoa. Quality certification and best environmental practices will be target to improve and sustain the income from cocoa. 

The partnership between UNIDO and the Swiss Agency for Development and Cooperation started in 2015. The first phase of the PROCACAO project achieved impact changes for producers, cooperatives and the cocoa market in the region. In the productive field, relevant technological advances were introduced by incorporating high-quality genetic material in cooperatives, establishing best practices for grafted cocoa, improving post-harvest work and advancing with the UTZ certification process in at least six cooperatives. At the market level, commercial relations were established with the main cocoa buyer present in the country. The commercialization options for fermented dry cocoa were expanded, ensuring the uptake of cocoa in the region.

Today, the scope of the initiative is to be widened even as the environmental challenges have increased. Thanks to the experience gained in the first phase, UNIDO believes that the region will emerge as a player in the international cocoa value chain, demonstrating a sustainable model that is able to integrate women and youth empowerment, as well as preserve biodiversity.

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