Archives For Economic Development

WCO 2018 Theme

On 9 November 2017, the Secretary General of the World Customs Organization (WCO), Kunio Mikuriya, announced today that 2018 will be dedicated to strengthening the security of the business environment, with the slogan “A secure business environment for economic development.”

The development of international trade is not an end in itself, but rather a vehicle through which economic development can be achieved. We should, therefore, strive to create an environment for businesses that will foster their participation in trade, for the benefit of all.

With the above in mind, it is imperative that we ask ourselves, how we can, as Customs, contribute to better secure the business environment and, in doing so, boost economic prosperity. Three key elements come to the forefront:

Enabling environment

It is globally recognised that Customs can contribute to making the business environment more stable and predictable by, for example, streamlining procedures, tackling corruption, enhancing integrity, and facilitating the movement of goods, conveyances and people in general.

Safe environment

Legitimate businesses require a secure supply chain to prosper, but some threats come from within the trade itself, such as the shipment of illicit goods that could endanger peoples’ health, safety and security. Combating cross-border crime, including the illicit funding of international terrorism through trade activities, is our responsibility. By taking advantage of the WCO’s tools, instruments and expertise, Customs has the means to actively secure the global trade landscape.

Fair and sustainable environment

The importation of illegal goods, such as goods that infringe intellectual property rights (IPR), or legal goods which, for example, are smuggled into a country to avoid the payment of duty or whose value has been misreported, can do immense harm to a country’s economy. It is not only a question of financial losses for both legitimate traders and governments, such activities can also affect governance, the economy, development and human security across the globe.

“All these different aspects of securing the business environment are invariably connected to the current Customs focus on trade facilitation, in particular the implementation of the WCO Revised Kyoto Convention and the World Trade Organization’s Trade Facilitation Agreement that support the goals contained in the United Nations’ Transforming our world: the 2030 Agenda for Sustainable Development,” said Secretary General Mikuriya.

The WCO’s annual theme will be launched on International Customs Day, which is celebrated annually by the global Customs community on 26 January in honour of the inaugural session of the Customs Co-operation Council (CCC) which took place on 26 January 1953. The WCO invites the Customs community to mark 26 January 2018 in their diary.

Source: wcoomd.org

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Maputo1Mozambique has the necessary conditions to successfully adopt the Chinese model of Special Economic Zones, which helped to boost the Chinese economy, according to researchers Fernanda Ilhéu and Hao Zhang.

In the study “The Role of Special Economic Zones in Developing African Countries and Chinese Foreign Direct Investment (refer to link below),” researchers from the Lisbon School of Economics and Management noted that over 35 years, the Special Economic Zones have had “a decisive role in the development of places like Shenzhen, Zhuhai, Xiamen, Shantou, Hainan and Shanghai, and that African countries can leverage this experience.

In 2006, the Forum on China-Africa Cooperation gave “significant priority” to creating up to 50 SEZs abroad, which are being implemented, with US$700 million invested by Chinese companies in 16 EEZ, according to information from China’s Trade Ministry.

Increasingly focused on business abroad, China needs raw materials and African markets to which to export its products, but can also benefit from shifting some of its industries to Africa, as the cost of Chinese labour increases.

The approach to Africa has involved through loans and financing for the construction of infrastructure, and “the development of African countries requires China’s increasing involvement,” including “collaborating in the development of SEZs,” the authors argue.

Regarding Portuguese-speaking countries, the average annual growth of trade between 2002 and 2012 totals 37 percent, turning China into the largest trading partner and largest export market for those countries.

The relationship has proved to be “dynamic in both directions,” they added, with hundreds of companies from Portuguese-speaking countries operating in China and Chinese investment in those countries of around US$30 billion, according to China’s Trade Ministry.

As for the SEZ, the two researchers focused their attention on the Mozambican Manga-Mungassa (Beira, Sofala province) SEZ, established in May 2012, under the management of China’s Dingsheng International Investment Company (Sogecoa Group), which has plans to invest close to US$500 million.

Nearing completion, the first phase includes the construction of warehouse units, followed by the “operational” phase, with construction of additional infrastructure such as hotels and housing, and finally the free industrial zone, where high tech units will be installed.

“In terms of knowledge transfer, Mozambique has made active steps in learning from the experience of Chinese SEZs and using this model to attract foreign investment,” they said.

In 2012 the Mozambican government created the Office for Economic Areas with Accelerated Development (Gazeda) that in addition to Manga-Mungassa, is responsible for the projects of the Belulane Industrial Park, the Locone and Minheuene Free Industrial Zones and the Crusse and Jamali integrated park.

On 6 May, 2014 the Mozambican government approved the establishment of the Mocuba SEZ, a sign of the “determination to create more conditions and to look for more opportunities and economic measures to create jobs and generate wealth,” in the country, the study said.

According to the authors, Mozambique has a strategic location, the ability to attract investment through the diaspora, as well as its model of economic growth and development in its favour, although there remain difficulties in infrastructure and technological development.

“The Chinese SEZ model can be successfully applied to the Manga-Mungassa area,” they concluded. Source: macauhub / MZ

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The subject of “Aid” is perhaps the hottest topic on the African continent, but for a variety of reasons. I came across the following video clip which I believe hits the nail on the head when it comes to international donor aid. No doubt there will be many out there who will denounce the presenter, Ernest Sirolli’s message, but as an African myself I can attest to the many examples of wasted opportunity and bullying which has occurred and continues (till this day) by NGO’s who believe they know better than any what is good for this continent. Thanks to the egotism of most politicians it is easy for such NGO’s to bulldoze their way into lucrative contracts which in most instances never see the light of day, or are so poorly implemented by outsiders, that the target country inevitably has to start all over again at its own cost. Anglo-Saxon involvement and meddling is a particular case in point … brazenly advancing the argument of ‘saving Africa from the Africans!’ I have experienced this several times in the last 15 years. Africa to donors has become little more than a box of Lego – where handpicked consultants experiment – upending all the coloured blocks and after 5 years or more leave a pile of blocks in no better arrangement than what they found when they first arrived. Sadly, the ‘developed nations’ have gotten the whole world into a financial mess and, now more than ever, will apply pressure on African governments into newer and more lucrative deals, because there are no more opportunities in their own back yards. The methods are the same, even the players are the same, just the stakes are now higher. Why, because China and the East are now the new ‘trading partners’ with a bit more bargaining power. Enjoy the video!

About the speaker

Ernesto Sirolli is a noted authority in the field of sustainable economic development and is the Founder of the Sirolli Institute, an international non-profit organization that teaches community leaders how to establish and maintain Enterprise Facilitation projects in their community. The Institute is now training communities in the USA, Canada, Australia, England and Scotland.

In 1985, he pioneered in Esperance, a small rural community in Western Australia, a unique economic development approach based on harnessing the passion, determination, intelligence, and resourcefulness of the local people. The striking results of “The Esperance Experience” have prompted more than 250 communities around the world to adopt responsive, person-centered approaches to local economic development similar to the Enterprise Facilitation® model pioneered in Esperance. Source: TED.com

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Iron ore (Engineering News)

Iron ore (Engineering News)

The South African cabinet has endorsed the final report on the work of the Intra-Departmental Task Team (IDTT) on iron ore and steel, says Minister in the Presidency responsible for Performance Monitoring, Evaluation and Administration, Collins Chabane.

Briefing reporters following Cabinet’s last meeting of year on Thursday, Chabane said in keeping with prior decisions to enhance the competitiveness of the steel value chain, Cabinet endorsed the final report on the work of the IDTT and the recommendations contained in the report for urgent implementation.

He said there had been a lot of debate and interaction between the Departments of Trade and Industry, Economic Development and steel producers and mining houses with regards to the pricing of steel.

In August 2010, the dti announced the formation of a task team to make recommendations into the viability of local steel production. This as it had expressed concern about the high price of steel in the South African economy.

“Within the context of the beneficiation programme where the government is emphasising and wanting to expand the beneficiation of South African mineral products as it is one of the critical aspects,” said Chabane.

Among the recommendations of the task team are the amendments to the Competition Act and the introduction of export taxes on iron ore and steel where appropriate. The recommendations also include the promotion of new steel investments and prioritisation of electricity available and connections to such investments.

“Government would want, among other things, to expand the number of participants in terms of those who are producing steel as part of the reason to introduce new competition. Secondly [we] also want to take measures which are going to contain the expansion of prices of steel countrywide in order to stimulate the domestic production of various products which need to be processed in the country.

“The government is going to take several steps with regards to that in order to lower the price for domestic consumption and to redirect the steel products to provide for the South African economy,” explained Chabane.

He further added that the Industrial Development Corporation (IDC) will have to play a greater role in the industrialisation of the country through being involved in manufacturing as well as beneficiation. Source: SAnews.gov.za

Saldanha Bay IDZ?

November 25, 2012 — Leave a comment

Its difficult not to be cynical…..after several failed and half-baked attempts at IDZs whats different about this one? Have the labour and tax issues changed?

A 60 day public consultation period for the designation of an Industrial Development Zone (IDZ) in Saldanha Bay has begun. Members of the public can make use of this opportunity to voice their opinions on the proposed vision for Saldanha Bay as presented in the Application for IDZ Designation and Operator Permit for the Saldanha Bay IDZ document gazetted earlier last week. View the document here!

Collaboration between government, citizens and business is necessary to build a Western Cape that is a better place to invest, to do business, get a job and earn a living, for everyone. Saldanha Bay has long been acknowledged as an important resource for the sustainable growth and development of the West Coast region, and indeed, the whole of the Western Cape.

All indicators show that an Industrial Development Zone in Saldanha Bay would be to the benefit of the Western Cape, South Africa and the African continent as a whole in creating a functional, self-sustaining industry that contributes to economic development and sustainable employment. The Saldanha Bay Feasibility Study published in October 2011, found that there was sufficient non-environmentally sensitive land upon which an IDZ development could take place.

After a process of consolidation into an attainable business plan focussing on the Oil & Gas and Marine Repair Cluster, the socio-economic impacts were found to be that after 20 years, an IDZ in Saldanha Bay developed around these industries, would generate a minimum annual return of R11 billion for the economy and create over 25 000 sustainable jobs nationally.

The total contribution to GDP for the IDZ is expected to amount to R3.4 billion in the first year, increasing to nearly R6 billion in the second year. In the third year the contribution is expected to be slightly lower at R5.5 billion due to a decrease in capital spend, but then increasing by the twentieth year with a total annual contribution to GDP amounting to R11 billion.

Total direct and indirect jobs in the Western Cape are expected to amount to 4 492 in the first year, 8 094 in the second year, 7 274 in the third year, 10 132 in the fourth year and 14 922 in the fifth year. From the seventh year around 14 700 direct and indirect jobs would be sustained in the province as a result of the IDZ.

Saldanha Bay is an ideal location for the development of an Oil & Gas and Marine Repair Cluster. The Port of Saldanha Bay is also competitively located between the oil and gas developments on the West Coast of Africa, as well as the recent gas finds on the East Coast of Africa. South Africa is a significant industrial economy in the sub Saharan region and is logistically well connected to the region. It is therefore a natural location for providing repair and maintenance services, warehousing and logistics and professional/technical services where proximity to end location is an advantage. Source: Western Cape Minister of Finance, Economic Development & Tourism

Special Missing Zones

October 28, 2012 — 1 Comment

Since the publication of the draft bill, there has been much comment on the advantages and disadvantages of the new Special Economic Zones (SEZ) policy and process in the country. Given the renewed emphasis in economic policy debates on industrial policy and regional integration in the wider Southern Africa context, the article “Special Missing Zones in South Africa’s Policy on Special Economic Zones“, published by Tralac, serves to add to the debate by introducing some hitherto neglected aspects pertinent to the debate on the subject.

A good companion to this article (and perhaps essential prior reading) is the CDE’s “Lessons for South Africa from international evidence and local experience” which I posted on 31 May 2012 (see link under related articles below). There has essentially been little movement on the subject, yet it is clear that South Africa is losing lucrative opportunities in the global warehousing and distribution business to its neighbours. Unless government acknowledges that it has to involve business in the creation of such SEZ’s, the white elephant syndrome which befell IDZs will no doubt plague the latest programme.

 

UNECE-Trade Facilitation Implementation GuideHaving spent the better part of the last fortnight amongst customs authorities and implementors of Single Window, I’m compelled to share with you a site (if you have not already been there) which attempts in a simple but comprehensive way to articulate the concept and principles of Trade Facilitation and its relationship and connotation with Single Window. The UNECE Trade Facilitation Implementation Guide should come as a welcomed resource, if not a companion, to trade facilitation practitioners and more specifically Customs Authorities wishing to embark on a trade facilitation approach. Of course it is a very useful reference for the many avid scholars on customs and trade matters across the global village. Of particular interest are the case studies – two of which feature African countries (Mozambique and Senegal) – providing a welcomed introduction of trade facilitation and Single Window on our continent. It is good to note that Single Window has less to do with technology and more to do with inter-governmental and trade relationships and an understanding of how these are meant to co-exist and support one another  – Enjoy!

Trade facilitation is emerging as an important factor for international trade and the economic development of countries. This is due to its impact on competitiveness and market integration and its increasing importance in attracting direct foreign investments. Over the last decade, it has gained prominence in the international political agenda as part of the ongoing WTO multilateral trade negotiations as well as of wide international technical assistance programs for developing and transition economies.

The primary goal of trade facilitation is to help make trade across borders faster and cheaper, whilst ensuring its safety and security. In terms of focus, it is about formalities, procedures, and the related exchange of information and documents between the various partners in the supply chain. For UNECE and its UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT), trade facilitation is “the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment”. Such a definition implies that not only the physical movement of goods is important in a supply chain, but also the associated information flows. It also encompasses all governmental agencies that intervene in the transit of goods, and the various commercial entities that conduct business and move the goods. This is in line with discussions on trade facilitation currently ongoing at the WTO. Source: UNECE

Engineering News reports that Gauteng will require additional container terminal capacity by 2016, when City Deep, in Johannesburg, will reach its full capacity. Container movements to the province was projected to grow to over three-million twenty-foot equivalent units (TEUs) a year by 2020, she said in her Budget Vote address at the Gauteng Provincial Legislature. Gauteng’s intermodal capacity currently stood at 650 000 TEUs a year and comprised the Pretcon, Vaalcon, Kascon and City Deep hubs.

Gauteng MEC for Economic Development, Qedani Mahlangu said the next generation of inland hubs would create an integrated multimodal logistics capability connecting air, road, rail and sea. Tambo Springs and Sentrarand, in Ekurhuleni, were identified to be developed into the new improved hubs.

By 2018, Tambo Springs would handle 500 000 TEUs and will focus on economic development and job creation, among others. “Tambo Springs will serve as an incubator to stimulate the establishment and growth of new ventures, create opportunities for small, medium-sized and micro enterprises and create 150 000 new jobs,” Mahlangu said.

She added that the department was working towards reaching an agreement with State-owned Transnet in September so that funding could be committed to start implementation by June 2013, for the first phase, which would comprise the railway arrival and departure terminal, to be completed by March 2014.

As per the Gauteng Employment, Growth and Development Strategy, freight and logistics were key drivers in stimulating sustainable growth in the province and the country. “Logistics efficiency will have positive spin-offs to the country‘s ability to export and import goods. In terms of freight, the intention is to move to rail… thereby reducing congestion on roads, air pollution and the impact on the surface of roads. The overall objective is to optimise Gauteng as the gateway to the emerging African market,” Mahlangu said. Source: Engineeringnews.co.za

Hardly a week goes by without some or other African politician waxing lyrical about continental integration, continental trade diversification, and a wholesome analysis of the ‘barriers’ which prevent the African continent  from reaching its full economic potential. No doubt I’m a bit biased in relaying the recent ‘public lecture’ of our deputy President Kgalema Motlanthe at the University of Finlandread the full speech here! Plenty of insight clearly delineating a plethora of barriers; yet, are we African’s so naive not to have identified these barriers before? Evidently yes.

In recent weeks, on the local front, we have learnt that One Stop Border Posts (OSBPs) is the solution to non-tariff barriers. This topic was drilled amongst the press till it got boring. The focus soon thereafter shifted to the implementation of a border management agency (BMA) – all of government under one roof – so simple. The reality is that there is no silver-bullet solution to African continental integration. Of this, affected business, Customs administrations and the international donor community is acutely aware. While the WTO and the multitude of trade lawyers will ‘yadder’ on about ‘diversification’ in trade, the reality is that Africa’s raw materials are even more sought after today than at an any time before. Certainly those countries which contain vast resources of oil and strategic minerals are about to reap the benefits. So why would African countries be concerned about diversification when the petro-dollars are rolling in? Perhaps greed or lack of foresight for the medium to long-term well-being of countries and their citizens? The fact remains, without homegrown industries producing goods from raw materials, most of  Africa’s eligible working class will continue to be employed by foreign mineral moguls or the public service.

Several customs and infrastructure solutions have over the last few years emerged with the usual credential of “WCO or WTO compliant”. Africa has been a guinea pig for many of these solutions – ‘experiments’ if you prefer. Literally millions of dollars are being spent every year trying out so-called ‘best-of-breed’ technology which users unfortunately accept without much questioning. The cart is being placed before the horse. Why? because the underlying route cause/s are not being identified, understood (sufficiently) and prioritized. Insofar as there exists no silver bullet solution, neither is there a single route cause in most cases. Unfortunately, donor aid often comes with its own pre-conceived outcomes which don’t necessarily tie in with those of the target country or the well-being of the continent.

While governments like to tout the ‘big-hitting’ projects, there are several ‘less exciting’ (technical) areas which countries can address to kick-start the process. One of these has even been recognised by the likes of the World Bank and OECD notwithstanding capital-intensive programs which promised much and have not delivered fully on their promise.  The issue at hand is the harmonisation of customs data. It might at first sound irrelevant or trivial, yet it is the key enabler for most Customs Modernisation initiatives. While there is still much anticipation in regard to the forthcoming deliberation and outcome of the WCO’s Globally Networked Customs (GNC) initiative at June’s WCO Policy Commission session in Brussels, there is significant support for this approach on the African continent. The momentum needs to be maintained.

 Related articles

You may recall earlier this year the African Development Bank and the WCO agreed to a partnership to advance the economic development of African countries by assisting Customs administrations in their reform and modernization efforts.

The AfDB’s regional infrastructure financing and the WCO’s technical Customs expertise will complement each other and improve the efficiency of our efforts to facilitate trade which includes collaboration in identifying, developing and implementing Customs capacity building initiatives by observing internationally agreed best practice and supporting Customs cooperation and regional integration in Africa.

In addition, the partnership will seek to promote a knowledge partnership, including research and knowledge sharing in areas of common interest, as well as close institutional dialogue to ensure a coherent approach and to identify comparative advantages as well as complementarities between the WCO and AfDB. Customs professionals, trans-national transporters and trade practitioners will find the featured article of some interest. It provides a synopsis of the key inhibitors for trade on the continent, and will hopefully mobilise “African expertise” in the provision of solutions and capacity building initiatives.

Brussels, 30, January 2012 – The African Development Bank (AfDB) and the World Customs Organization (WCO) will work together, to enhance the capacity of Customs administrations in Africa. This declaration was made today in Addis Ababa, Ethiopia, during the signing ceremony of a comprehensive Memorandum of Understanding, on the margins of the 18th African UnionSummit. The summit, which is taking place in Ethiopia from 23-30 January, is focusing on boosting intra-African trade – an area in which Customs administrations can play a vital role in strengthening national and regional economies in Africa.

The enhanced cooperation between AfDB and the WCO will help advance the economic development of African countries by assisting Customs administrations in their reform and modernization efforts.

The partnership includes collaboration in identifying, developing and implementing Customs capacity building projects by observing internationally agreed best practices and supporting Customs cooperation and regional integration in Africa. For the full article follow this link or the WCO News feed below in the left margin.

Department of Trade and Industry (South Africa)Heard this before? In line with the Industrial Policy Action Plan and the New Growth Path, the Department of Trade and Industry (the dti) aims to continue fostering its efforts to create employment and economic growth by establishing a strong industrial base in South Africa. The new initiative aims to improve on the concept of industrial development zones (IDZs) which have enjoyed mixed success since being introduced in December 2000 through the Manufacturing Development Act. 

An IDZ is a purpose-built industrial estate linked to an international airport or seaport which is tailored for the manufacturing and storage of goods. It offers investors certain rights within the zone, in addition to incentives such as customs duty and VAT relief. One important priority of the IDZs is to boost job creation and skills in underdeveloped regions. The IDZ programme led to the establishment of five zones – Mafikeng, OR Tambo International Airport, Richards Bay, East London and Coega. The Richard’s Bay IDZ only commenced its first phase of development in September last year while OR Tambo International Airport is not yet fully operational.  The Industrial Policy Action Plan, issued by the Department of Trade and Industry in February 2011, has also identified, as a key milestone, the establishment of an additional IDZ at Saldanha Bay. 

The Special Economic Zones (SEZs) programme is one of the most critical instruments that can be used to advance government’s strategic objectives of industrialisation, regional development and job creation. Moreover, the programme can assist in improving the attractiveness of South Africa as a destination for foreign direct investment.

In order to ensure that the SEZ programme is an effective instrument for industrial development, the dti has developed the SEZ Policy and Bill. Through the Bill there will be a dedicated legislative framework for special economic zones.

The main objectives of the SEZ Bill are to provide for the designation, development, promotion, operation and management of Special Economic Zones; to provide for the establishment of the Special Economic Zones Board; to regulate the application and issuing of Special Economic Zones operator permits; to provide for the establishment of the Special Economic Zones Fund; and to provide for matters incidental thereto.

Furthermore, the SEZ Bill will enable government to move towards a broader Special Economic Zones Programme, through which a variety of special economic zones can be designated in order to address the economic development challenges of each region and address spatial development inequalities.

Although national laws may be suspended inside industrial zones, government is currently not offering regulatory incentives to derogate from labour rules, a concession which is seen by some as crucial to stimulate investment in special zones. It is however unlikely that a relaxation of labour laws will be considered under the SEZ initiative. Benefits are rather expected to come in the form of enhanced incentives for labour intensive projects and additional tax relief for investors. A further question arises – just how flexible an inventive will the customs and VAT requirements be allowed to be?

The key provisions include the establishment of a Special Economic Zones Board to advise the Minister of Trade and Industry on the policy, strategy and other related matters; establishment of the Special Economic Zones Fund to provide for a more coherent and predictable funding framework that enables long-term planning; strengthening of governance arrangements including clarification of roles and responsibilities of key stakeholders. Source: Department of Trade and Industry.