No sophisticated understanding of crisis in Rwanda – trade analysts

East Africa has covered the global economic crisis well, but mainly focused on events in the United States and other flagging economies in the developed world, two trade analysts said.

Jide Sodipo, a trade consultant in

Kigali, Rwanda.

 

Nigerian Jide Sodipo, a trade consultant in the Rwandan capital Kigali, said there was a lot of interest in Rwanda on how the crisis would pan out in the United States, and journalists reacted by asking the east African country’s policy makers how  Rwanda would be affected.

“At the time of its peak, inevitably, you will find references to the financial crisis, to the US, you will find it in the local media. We found a lot of media interest, asking policy-makers how the financial crisis was impacting Rwanda and how Rwanda was trying to mitigate the effects of the crisis,” said Sodipo, a former trade adviser to the Rwandan government.

“There was certainly a whole lot of media interest. I think it is fair to note that there was probably not a very sophisticated understanding of some of the issues amongst some of the local media here, but it was not from a lack of interest, just a lack of understanding of some of the more complex issues.

“Even some of the experts, until now, do not fully understand the issues. There was coverage of it, but it was more in terms of how it would impact on Rwanda and what the government was trying to do to address or mitigate the impacts.”

Lisa Cummins, a Barbados diplomat

that serves as a trade adviser to the

Ugandan government.

 

Lisa Cummins, a Barbados diplomat that serves as a trade adviser to the Ugandan government, said media in Uganda was fairly active in issues happening externally in terms of the US response to the financial crisis, the European response, and how other African countries were responding.

She also noted the lack of a good understanding of the issues, which she said media training could help plug.

“What I would like to see is a bit more training for the members of the media to enable them to analyse what they are seeing. What you have at the moment, a lot of times, is simply reporting on news and it does necessarily have the depth of analysis that would be very useful to the business community here, in terms of the role that the media can play.

“But they have been on top of reporting events as they have happened; what is missing is the depth in terms of their analysis.”

Please take a listen to the interview below with Jide Sodipo who is part of the Hub and Spokes programme and currently works in Kigali, Rwanda. Interviewed by Manoah Esipisu, Deputy Director of the Communication and Public Affairs Division at the Commonwealth Secretariat. Recorded in Uganda, February 2011.

An interview with Lisa Cummins, February 2011

Manoah Esipisu, Deputy Director of the Communications and Public Affairs Division at Commonwealth Secretariat, recently came back from Uganda where he had a chance to interiew Lisa Cummins, a memeber of the Hubs and Spokes project.

Take a listen...

Manoeuvring in the `spaghetti bowl’ of climate funds

You have probably heard about the `spaghetti bowl’ phrase, description of a situation that is so entangled, that when seen from above, it looks like a bowl full of cooked spaghetti...

But what does it have to do with climate finance? Or does it.

First, in the literal sense, if you have tried to eat spaghetti using a spoon, without a fork, you will know how tough it is to pick it from the plate. You dip in the spoon, pick up few strands, but before getting the spoon to your mouth, the spaghetti slides off back into the bowl. It is the same thing that happens while eating Okra, a delicacy slippery sauce enjoyed by many people in Western Africa. In Uganda, the marakwang, boo, or enderema, would be the ideal close equivalents.

But there is another way to look at the spaghetti bowl. It is very difficult picking one strand of spaghetti from a bowl. It will tend to come along with others, and hard to sort out. It essentially becomes like filling a complex puzzle or sorting out a crossword, with a lot of maze.

When Professor Jagdish Bhagwati, an economist at Columbia University, first used the term `spaghetti bowl’ in 1995, his focus was on the challenges countries face managing international trade in an environment with a proliferation of so many regional trading blocs and Free Trade Agreements. His view was that this multiplicity creates a conflict of loyalties and that it is difficult for counties to play to the rules in all the FTAs they held membership without contradiction.

By introducing discriminatory treatment into the trading system, notes Bhagwati, the movement toward preferential trade agreements sacrifices economic efficiency.

Instead of having one common multilateral system, we now have a bewildering array of complex and overlapping bilateral and regional agreements, each with conflicting and contradictory provisions regarding trade in goods and services.

Mr. Bhagwati, says these agreements create a tangled mess of restrictions and regulations, ultimately disrupting rather than promoting free trade.

For climate change, the intertwined spaghetti example was a point of discussion when representatives from Commonwealth countries most prone to climate change met at Wiston House in Sussex, UK from 23 to 25 January 2011, to discuss ways of better accessing the cash—Climate Finance, as the money is called in environmentalists jargon-- that was promised by donors to help them deal with the effects of changing weather conditions. They participants were drawn from ministries of finance, planning, natural resources and economic development—from Africa, Pacific, Caribbean and Asia, as well as donor and regional agencies with interest in environment and climate change.

At the UN Climate Change meetings in Copenhagen in 2009, and in Cancun in 2010, the international community agreed to mobilise billions of dollars to give to the most vulnerable countries, such as small island states, low lying coastal regions and some African countries so they can prevent their homes, coasts, and livelihoods from disappearing and destruction due to floods, and rising sea level, what is commonly known as mitigation; and to adopt, where the situation has already gotten worse.

The point was that in the past, funds that have been promised by the international community to assist developing countries to deal with other challenges have been too complex, spread in so many organisations and mired in so much bureaucracy and controversy that accessing and using them has often been equated to the proverbial spaghetti in a bowl.

A presenter from UN Development Programme showed a perfect example of what a spaghetti bowl of funding by the international community looks like. He showed a slide of the multitude of different funds available to poor countries to deal with malaria: and it looked, you guessed right, like intertwined, interconnected and entangled spaghetti in a bowl. But that would not be a problem in itself. The problem is that each of these funds has a different set of rules, regulations, terms and conditions which countries have to fulfil before they are granted access.
The rules apply to the process for application, accountability, monitoring and evaluation. And that the limited number officials in ministries in these poor countries spend huge amounts of their time and energy filling complex forms—and putting together plans, what in the technical language are called, National Adaptation Plans of Action, or NAPAs-- instead of getting down to work.

So, the point was that they hoped that climate finance money would not go down the route of spaghetti bowls. That they would be easy mechanisms to access them, with less complexities. Already, there were indications that the bowl syndrome might come up.

And Commonwealth deputy Secretary-General, Ransford Smith couldn’t have put it better: Speaking at the opening of the meeting, he said: “ “Although there is some $2 billion of climate finance available to developing countries, only around $400 million has been disbursed according to a study by the Overseas Development Institute. We see this low level of disbursement and absorption as indicative of a potential capacity challenge to the recipient countries.”

At the Sussex meeting, the blockages that currently prevent climate finance from flowing quickly and effectively to the Commonwealth’s poorest and most vulnerable members were explored, with a view to overcoming them.

“Mechanisms are needed to attract climate financing to the neediest countries in an effective manner. This means paying great attention to the many lessons learned from the decades of experience with development. Specifically, developing countries must be in the driving seat, using these funds for national priorities and complex and fragmented sources of financing must be avoided so that countries with limited institutional resources can still access them easily,” Mr Smith added.

Some of the people that attended the Sussex meeting complained that when they make funding requests to donor agencies, they are turned away without even the courtesy of providing feedback on what is wrong.

But here was the irony: representatives of funding agencies in the room complained that they had millions of unspent cash.

Clearly, there is a problem. A problem of ensuring the meeting of the minds--of creating understanding between those who have the money and those looking for the cash.

However there was a point that needed to be emphasised. That money meant for climate finance must be used in a prudent manner, accounted for fully to ensure that the value accruing from it goes to the main objects and subjects at the frontline of climate change.

This is how the concluding statement from the meeting put it:

They recognised that climate finance spending should be incorporated in national budgets and be subject to the full rigours of national accountability and effective public expenditure management.” The hope was that by doing all the above, the spaghetti bowl situation would be avoided.

Julius Mucunguzi is an assistant spokesperson for Africa at the Commonwealth Secretariat in London. j.mucunguzi@commonwealth.int

Trade in services: an option for diversifying economies, jobs, livelihoods

While in Washington DC for the finance ministers meeting from Commonwealth countries in October 2010, I wanted to change the flight details of a ticket I had bought online while in London.

While in Washington DC for the finance ministers meeting from Commonwealth countries in October 2010, I wanted to change the flight details of a ticket I had bought online while in London. I looked at the print out of the ticket and saw a phone number which I was advised to call to make the changes.

When I dialled the number, a sweet female voice picked the call, introducing herself as Nishana and asked how she could help me.

“I want to change my flight details,” I said. “I am pleased to help you out Sir, can I take your booking reference number?” she asked.

I gave her the details and she took me through the various options that were available to me. We finally sorted out my travels, but before I put down the hand set, I asked where in UK their offices were located? And she said. “Oh No! The company is registered in UK, but I am speaking to you from India. That is where the customer service centre is based!”



Nishana told me that she was a business student at one of India’s universities, and that she was doing this job to pay her tuition fees and look after her siblings. The fact that someone in India was handling queries for a company based in UK was a further demonstration of the role technology plays in making the world one small global village, as Canadian communication scholars, Marshal McLuhan once said. But it spoke even more.

This incident came back vividly to mind during the first week of December 2010 at a workshop on promoting trade in export in professional services in the Caribbean region that took place in St Kitts and Nevis.

Trade in services? What is that? Many people asked when I posted a note from the meeting on my facebook page. What are services? And can you trade in them?

Trade in Services refers to the sale and delivery of an intangible “product”-, a service, between a producer and consumer. These services include tourism, construction, finance and banking, catering, wellness and medical tourism, and music and film production, etc.

The workshop in St Kitts which was organised by Trade Section of the Commonwealth Secretariat and St Kitts Ministry of Trade focussed on other services other than tourism.

But one may ask whether trade in services really makes any serious contribution to national economies. Yes, is the answer? In 2003, forexample, according to the OECD and WTO, global trade in Services was estimated at over US$2.5 trillion and growth was expected to remain brisk at an average rate of over 7 percent per annum.

“Yes, absolutely,” asserts, Estella Aryada, a trade adviser at the Commonwealth whose portfolio involves supporting member countries to improve their competitiveness in trade in services.

“For a service like providing call centre advice, one can export their skills without having to leave their home countries—and cash just flows into their bank accounts. This is especially important for Small Island States which are grappling with brain drain,” she said.

And the importance of this sector for Caribbean countries, and other developing Commonwealth countries cannot be underestimated. For a long time, most of the economies in the Africa Caribbean and Pacific (ACP) region were dependent on exporting commodities to the European markets on a preferential basis—i.e—having lower tariff access to European consumers on an assured quota basis and secured prices. And for most of the countries, notably those in the Caribbean, the major export goods were Sugar and Bananas.

Indeed, even in Uganda, I remember in 2002, when the country’s President Yoweri Museveni told students at a graduation ceremony at Makerere University that he had been contacted by a Canadian company looking to employ call centre advisers to their clients, as well as accountants and book keepers.

How the trade preferences started...

In 1968 the United Nations Conference on Trade and Development (UNCTAD) recommended the creation of a ‘Generalised System of Tariff Preferences’ under which developed countries would grant trade preferences to all developing countries.

The EU was the first to implement a GSP scheme in 1971. The EU's GSP grants products imported from the 178 GSP beneficiary countries and territories either duty-free access or a tariff reduction.

Under the EU GSP between 1999-2003 developing countries share in total EU imports grew from 33% to 40%. The EU is the largest trading partner for the world’s poorest countries: 40 % of EU imports originate in developing countries, amounting to €362 billion worth of trade.
But this arrangement was not to last forever. Indeed, some countries which were producing similar products started complaining that the EU was unfair in giving preferential treatment to access of good from poor countries to their market, and demanded a share of the same cake. They argued that the EU-ACP arrangement was not compatible to free trade, under the WTO rules.

The rules governing international trade are complex—but the gist of the matter is that there has been an erosion of the preferential treatment given to ACP countries, and as such, they (ACP) have to compete with big producers. But ACP countries argue that the ground is not levelled, and for example, a number of them have been out competed of the market.

In St Kitts and Nevis for example, the country had to abandon the 300 year old sugar production in 2005 after the country incurred huge losses to keep the business afloat in a market that was flooded by cheap sugar from other producers. Many jobs and livelihoods were lost. And the only option left to the country was tourism and the related services.

The same experience is being faced by other countries such as St Lucia, whose mainstay was export of Bananas to Europe. Again, this market is closing in.

Michael Smith, a 55 year old Kitittian knows what the impact of the closure of the sugar industry on the 40,000 population Islands means so well. For many years, Michael and his family lived off the sugar plantation in Basseterre. They never imagined life without working on the sugar cane crop. And then with time, they started hearing that the factory was making loses and that there were plans to close it.

“It was the last thing we could ever expect. Sugarcane was part and parcel of our heritage. It was more than just work,” Michael told me recently.

But after deep soul searching, and seeing that they could not take the losses any further, the St Kitts and Nevis Government swallowed the bitter pill and closed the sugar factory in 2005.
“It was one of the most painful decisions that our government had to make,” Dr Timothy Harris, the country’s Trade minister told a workshop of Commonwealth parliamentarians in November.
And with that decision, Michael, and his family of seven were left with no livelihood.

“It was after that incident that I started driving a taxi, taking tourists to different parts of the Island on a tour,” Michael said.

There are hundreds of families in St Kitts and Nevis, and indeed, other Caribbean countries who share Michael’s story. And for such, governments and other policy makers have the duty to create a conducive environment in which they can be able to make a livelihood, not just from agriculture, but other services sectors.

With the closure of the sugar industry, St Kitts and Nevis has been trying to find ways of diversifying her economy. The farmers who had had the livelihood on the sugar are being trained and encouraged to start growing other crops, such as pineapples, cabbages, tomatoes, peas, beans, carrots and other vegetables.

“ Our food import bill is very high,” says Gene Knight, an official from the Planning Unit of the ministry of Agriculture.

“If we could grow enough food locally and reduce the bill, we would be able to use the money we spend on food imports on other critical social services,” he says.

He however says that the culture of depending on the plantation agriculture entered people’s mindsets that it is difficult and will take long to change.

“On the sugar plantation, workers were used to being instructed on what to do. On personal private farms, they are expected to take care of the whole farming calendar—and we have found that to be a challenge. Most wait to be told when to plant, weed, harvest, etc—which is a bit of a challenge,” Mr Knight says.

“But we are keeping the momentum.”

So, participants at the workshop in St Kitts were trying to explore ways of enhancing export in services as a means of diversifying their economies, so that people like Michael’s taxi driving business can thrive.

But speaker after speaker lamented how there is limited understanding and appreciation of services as a viable option for diversifying their economies. They spoke of how there was limited or no supportive policy framework for the sector to flourish.

There were however some best case scenarios and sharing of best practices of what has worked elsewhere. Dr Brown from Bahamas spoke passionately about medical tourism at the Heart Centre in the country. Another speaker mentioned his venture in wellness and spur business in Barbados.

Professional services have been experiencing the fastest growth within the sub-sector. This vast and growing market is underexploited by many Commonwealth countries and this may be due to their limited capacity to access the markets brought about by the limited knowledge of professionals and governments to participate in this global services trade.

Trade in services provides a wider dimension for the socio-economic development in many countries in the Commonwealth. The benefits that can be derived from the professional services sector are immense, including; improvement in healthcare and education, reduction in unemployment, sustained development and a reduction of migration.

Julius Mucunguzi is an assistant spokesperson at the Commonwealth Secretariat in London. Email: j.mucunguzi@commonwealth.int

Objective, Relevance and Impact of Hub and Spokes

Objective

The aim of the Hub & Spokes project is to promote the effective participation of African, Caribbean and Pacific (ACP) countries in international trade negotiations and to strengthen their capacity to formulate and implement trade policies. International trade is a key component of overall development strategies in ACP countries and the Hub & Spokes project seeks to facilitate the ACP’s gradual integration into the world economy and contribute to sustainable development and poverty reduction in these countries.

Relevance

The Doha Declaration issued at the Fourth WTO Ministerial Conference in November 2001 identified trade capacity building as a critical element of the development dimension of the multilateral trading system. Since the launch of the Doha Development Round and commencement of negotiations on Economic Partnership Agreements (EPAs) with the European Union, the scale of the challenge facing ACP countries has warranted support from the international donor community.


In response, in 2004 the European Commission, Commonwealth Secretariat and Organisation Internationale de la Francophonie (OIF)—with the support of the ACP Secretariat—launched a joint initiative titled ‘Building the Capacity of ACP Countries in Trade Policy Formulation, Negotiations and Implementation’. The project is structured around the experienced trade policy advisers and analysts that have been deployed across the ACP region. It is this delivery of support to regional organisations and government ministries on trade policy matters that spawned the project title—‘Hub & Spokes’.

Impact

Hub & Spokes project has made a real contribution to the negotiating capacity and trade policy settings in the ACP. While the focus of the project varies region to region in the ACP, broadly speaking, the project has focused on three main activities:


1. Training and sensitising key stakeholders in ACP countries on trade policy issues.

2. Supporting ACP countries in formulating, negotiating and implementing trade policies.

3. Supporting ACP countries in developing national and regional consultative networks.


These activities are delivered by the Regional Trade Policy Advisers (or ‘Hubs’) and Trade Policy Analysts (or ‘Spokes’) that have been deployed to the regional organisations and government ministries in the ACP.

What is Hub and Spokes

The 'Building the Capacity of ACP Countries in Trade Policy Formulation, Negotiations and Implementation' ("Hub and Spokes") Project is a joint initiative concluded by the European Commission (EC), the Commonwealth Secretariat (ComSec) and the Organisation Internationale de la Francophonie (OIF) with the support of the ACP Secretariat. The project, which forms part of the European Commission's Trade.

Com Facility, will seek to promote the effective participation of ACP countries in international trade negotiations and to strengthen their capacity to formulate and implement trade policies.
The Project aims to promote the effective participation of ACP countries in international trade negotiations and reinforce their capacity to formulate trade policy in compliance with their overall development strategy. The Project has three main components:

• Establishment of trade negotiation networks at national and regional levels to be actively used to define trade policy and negotiation positions.
• Establishment of national and regional participatory mechanisms for improved stakeholder consultation and involvement in trade policy formulation.
• Establishment of appropriate mechanisms for notification of trade policy measures to WTO.

To achieve these aims, the Project will place Regional Trade Policy Advisers (RTAs) in the following regional bodies:

• African Union (AU);
• Common Market for Eastern and Southern Africa (COMESA);
• Economic Community of West African States (ECOWAS);
• Economic and Monetary Community of Central Africa (CEMAC);
• West African Economic and Monetary Union (UEMOA);
• Caribbean Community (CARICOM);
• Southern Africa Development Community (SADC);
• Organisation of Eastern Caribbean States (OECS); and
• Pacific Islands Forum (PIF)

The services of up to 48 Trade Policy Analysts (TPAs) will be made available at both regional and national levels. ComSec will be responsible for the implementation of the Project in ACP member states of the Caribbean, Pacific, Eastern and Southern Africa regions and the African Union (AU). AIF will be responsible for the implementation of the Project in the regions of West and Central Africa.