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ASERI RIR April 2014

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Massimiliano Riva

on 15 April 2014

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Transcript of ASERI RIR April 2014

massimiliano.riva@undp.org
UNECA/AU/AfDB ARIA
World Bank (Trade Africa)
UNDP Regional Integration Report
If you want more
Nurture alliances for export promotion, strengthen existing institutions
Develop capacity of local businesses by providing
- market information
- information standards
- communication services
- training on business, marketing and export skills
Develop microfinance schemes for traders in the cities, wholesalers in rural areas, agri-processing / packaging and bioenergy enterprises
Facilitate of people-to-people (or B2B) contacts, .e.g. with events for products for which trade corridors provide opportunities
Identify obstacles to trade for producers and SME outside the main cities
Trade flow analysis to focus on priority products/services having the biggest trade and human development potential
Provide market information to go beyond existing value chains and current sale channels
Establish linkages with extension and insurance services to provide information about the potential risks on agricultural production
Support the creation of new types of enterprises and cooperatives to open the access to markets for bio and/or fair trade products
Dairy-Processing Plant (Uganda)
Cross-Border Trade in the Great Lakes Region
2015
2006
1992
Scott Davis
Chairman and Chief Executive Officer,
UPS, USA
Lowering tariffs does stimulate trade, but it pales in comparison to the economic growth seen when supply chain barriers to trade are reduced or eliminated. This study shows decreasing these barriers could increase world GDP six times more than merely eliminating tariffs.
Increased welfare/GDP help human development, i.e. African integration can help

But economic and distribution impacts are not ideal
It tilts activity towards non-agriculture sectors
It favors capital over land (however, it favors capital over natural resources, which is good)
It favors high skill over low skill wages
Within low skill it favors non-agriculture workers

thus the call for companion/flanking policies
“The political problem of mankind is to combine three things: Economic
Efficiency, Social Justice and Individual Liberty.”
John Maynard Keynes
Regional infrastructure: transportation, power, water, and communication
Predictable, transparent, and harmonized rules and standards
Regional industrial policies to raise competitiveness, e.g. pooling of labor facilitate technology upgrading.
Benefits of integration should be shared, e.g. via social protection. Aid for Trade can bridge gaps
Growth is environmentally sustainable e.g. better stewardship of shared natural resources
CFTA holds much potential if

Accompanied by investment in infrastructure
Supported by strong regional governance/institutions
Policy reversals are avoided
Smart industrial policy based on incentives with skills and technological upgrading
Social protection systems to mitigate distributional impacts
Can (tariff) integration still produce gains?
YES
Is continental integration worthy?
YES
Should integration stop at tariffs?
NO
Should we compensate for unequal effects?
YES
Is it all nice and easy?
NO
Most recent UNECA simulations says CFTA could add up to USD 34 billion in intra-African trade by 2022

Exports to the rest of the world could increase by USD 21 billion by 2022
returns to factors of production
Continental: capital, high skill, within low skill rest
EU: land, low skill, within low skill agriculture
Doha: capital, skill-neutral, within low skill neutral
impact on employment
impact on poverty
impact on welfare of reducing applied tariffs & transport costs (av.2012-20)
impact on welfare of reducing applied tariffs & transport costs (av. 2012-20)
impact on welfare of eliminating
applied tariffs (av. change 2012-20)
Integration has a historically proven positive record
The case for African integration is supported by economics, geography, history and culture
Yet, economic “realism” says African economies are too similar and trade too little: they should go global?
On the ground progress is low (global goes fast)
is received economics naïve and unrealistic?
or
is economic “realism” misguiding policy?
we need numbers
ECCAS
ECOWS
Progress in some areas
THE PLAN: FROM ABUJA…
Applied tariffs are on average low in Africa, but high for some goods and countries

Tariffs are higher on intra-African trade than on trade to the rest of the world

Transport costs in intra-Africa trade are higher than in overseas African trade

Reduced transport costs imply stronger trade cost reduction than the elimination of tariffs
Source: McKinsey
Source: ARIA V
regional integration
can help to accelerate structural transformation
in Africa

Source: Povcalnet
Poverty is still unacceptably high, about one out of two

But poverty is falling and remarkably generally. Too slow pace!

Will MDG 1 (headcount poverty) be achieved?
+50 million Facebook
users
$1 billion people
market
+500 million mobile phones (67%)
growth
creates
interest and
political space
for regional
integration

ASERI, Milano, 15.04.2014
Regional integration and human development in Africa
Political participation
Enhanced access to services
Pollution and environment degradation
Government revenues
. Impacts on government revenues can influence social expenditures
Returns to skill
CHANNELS
Employment and productive capacity
. Integration changes incentives for individuals and enterprises and has an impact on wages and profits
Prices.
Changes in prices modify the prices at which households and individuals sell and buy products
SADC
EAC
Tripartite FTA
COMESA
CEN-SAD
AMU
IGAD
Limited
activity
Source: World Bank
GDP rose in 2000s more than twice than in 80s and 90s

Telecommunication, banking, retailing flourishing

Construction booming

Private-investment surging

Growth is driven now by investment and domestic demand
A promising future?

Is a continental agreement
better? realistic?

How can we strengthen the human development content?

Trade (volume) in selected products: EAC
Source: World Bank
Innovative VCD: UNCDF
regional integration
results so far…
but limited
in Africa has a long history,
Can we orient regional integration
to achieve sustainable
human development?

How?
Transport corridors
(but do not forget
the objective)

EXPORT STRUCTURE
http://www.kaltura.com/index.php/kwidget/cache_st/1328579585/wid/_619672/uiconf_id/4909271/entry_id/1_hfnanl7y
Local Finance Initiative: UNCDF
2014 GDP GROWTH (forecast by IMF)
Source: Africa Progress
Report 2013
Source: Africa Progress Report 2013, UNDP 2013
Africa Progress Report
Source: IMF
African Economic Outlook
M-PESA's (Kenya) mobile payments to over 18 million clients
Source: World Bank
Innovation in Africa @TED
Africa Position's 6 pillars on post-2015
(1) structural transformation and inclusive growth
(2) science, technology and innovation
(3) people-centred development
(4) sustainability, natural resources, disaster risk
(5) peace and security
(6) finance and partnerships
Airtel clients are treated as local customers in 17 countries
A commodities exchange for Ethiopia
http://www.undp.org/content/ethiopia/en/home/ourwork/povertyreduction/successstories/promoting-african-commodity-exchanges/
+ Half of top 10 in 2013 (fastest growing) from Africa
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