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Africa in focus

Africa in the News: EAC Debates EU Trade Agreement; Agriculture Forum Highlights Need for Investment; Tanzania Drops Oil and Mining Pact Review

Deadline for East African Community Economic Partnership Agreement Approaches

After years of negotiations between the East African Community (EAC)—the regional organization including Burundi, Kenya, Rwanda, Uganda and Tanzania—and the European Union (EU), early reports suggest that the two partners will sign a comprehensive trade deal, an Economic Partnership Agreement (EPA), by the end of the month. This agreement will extend duty- and quota-free access to East African exporters targeting European markets, while also expanding the EU’s reciprocal market access in EAC countries—a measure that has been contested by some observers. Earlier this year, other African regional bodies such as the Economic Community of West African States (ECOWAS) and Southern African Development Community (SADC) signed similar EPA agreements.

In recent weeks, some observers have criticized the EAC-EU arrangement, arguing that in its current form the “EPA cannot work for Africa’s development, given the extensive level of liberalization (82.6 percent) that the EU demands as part of the agreement.” Furthermore, disagreements over the EAC’s export taxes on raw materials and the EU’s subsidies on its own agricultural exports have hindered consensus. Meanwhile, the EU has set a deadline of October 1, 2014, by which time it will remove its trade preferences for all EAC countries that have not signed onto the EPA (but are currently afforded these preferences under an interim agreement.) However, EAC countries qualifying as least developed countries (LDCs), including all EAC members except for Kenya, will continue to receive preferential EU market access under the Everything But Arms (EBA) trade arrangement. This puts Kenya, which is not an LDC, in a uniquely vulnerable position, according to the Daily Nation, considering that nearly 40 percent of Kenya’s fresh produce is destined for European markets, and the failure of the EPA would subject Kenya to an immediate 12 percent duty for all products entering the EU. Concerns that the Kenyan horticultural sector will experience substantial reduction in revenues if the EPA fails to be implemented are already surfacing as the EPA deadline approaches.

Review of Tanzanian Natural Resource Deals
Cancelled

Over the past year, leaked contracts between Tanzania’s petroleum development corporation and an international oil firm, Statoil, indicated that the country may receive $12 billion less in revenue than initially proposed in a model agreement for its 15-year project with Statoil, according to The Economist. Both Statoil and the Tanzanian petroleum development corporation have disputed this figure, however, following this revelation, Tanzania announced last week that it would be reassessing its gas and mineral resource deals with international firms to ensure that the country will receive “an enhanced and fair share [of revenue] from the extraction of non-renewable natural resources” as it moves forward with the Statoil and other contracts. Yet, four days later, Reuters Africa reported that the government cancelled the review due to investor concerns over “increased regulatory pressure.”

In related news, in recent weeks, local Tanzanian civil society organizations have pushed for increased transparency in mining and gas contracts as well as extractive industry value chains so the public can hold these actors accountable and ensure that revenues are not only being collected from international companies, but also being spent by the government in ways that benefit local populations.

African Green Revolution Forum Calls for Agricultural Investments to Boost Sector

Last week, over 1,000 participants from government, civil society, the private sector, multilateral institutions and academia attended the 2014 African Green Revolution Forum in Addis Ababa to reflect on key strategies for boosting food production and improving food security in Africa. A common thread among the forum’s discussions was the role of governments in catalyzing private sector investment in agriculture and agricultural value chains. According to Strive Masiyiwa, chairman of Alliance for a Green Revolution in Africa (AGRA), these investments will translate into concrete gains for smallholder farmers because “when businesses, governments, researchers and farmers work together to strengthen our food production and distribution systems, they are seeking commercial success that will be shared across African society—and particularly for the poorest among us.” The International Institute of Tropical Agriculture (IITA) and several partner organizations also announced the launch of a campaign to boost fertilizer use across the continent from 10 kg/ha to 50 kg/ha by 2015, in line with the 2006 Abuja Declaration pledge made by African leaders. To meet this commitment, it will complement efforts to produce fertilizers locally, provide credit to smallholder farmers, invest in infrastructure, improve market linkages and train extension officers.

In other news, AGRA released a report on Tuesday calling for the adoption of “climate-smart agriculture” in response to global climate change and extreme variations in precipitation patterns, which could increase the number of malnourished people in sub-Saharan Africa by as much as 40 percent by 2050.

Author

Amy Copley

Research Analyst and Project Coordinator - Africa Growth Initiative

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