Economic and Social Council
Distr.: Limited 12 December 2019 Original: EnglishEconomic Commission for Africa
Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology
First session
Addis Ababa, 11 and 12 December 2019 Item 8 of the agenda*
Consideration and adoption of the report of the first session of the Committee
Draft report of the first session of the Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology I. Introduction
1. The first session of the Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology was held at the United Nations Conference Centre in Addis Ababa on 11 and 12 December 2019. The session was convened under the theme: “Private sector development and the digital economy in support of regional integration in Africa”. The session was preceded by a number of expert group meetings and workshops, including: an inception and methodology workshop on the tenth edition of Assessing Regional Integration in Africa (ARIA X), focusing on services trade; an expert group meeting to review a study on the interface between the Agreement Establishing the African Continental Free Trade Area and the regional economic communities’ free trade agreements and customs unions; an expert group meeting to review a study on harnessing emerging technologies for sustainable development; an expert group meeting to review a study on the possibility of a common investment area in the African Continental Free Trade Area; an expert group meeting to review a study on electricity regulation for private sector investment; and a validation workshop on the African Continental Free Trade Area country business index.
II. Attendance
2. The meeting was attended by the following African member States:
Algeria, Angola, Burkina Faso, Burundi, Cameroon, Comoros, Côte d’Ivoire, Democratic Republic of the Congo, Djibouti, Eritrea, Eswatini, Ethiopia, Gabon, the Gambia, Ghana, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Namibia, Rwanda, Senegal, Sierra Leone, South Africa, the Sudan, Uganda, United Republic of Tanzania, Zambia and Zimbabwe.
3. Representatives from the United Nations Conference on Trade and Development attended the meeting.
* E/ECA/CPRTIIT/1/Rev.2
4. Representatives of the following regional economic communities also attended: the Arab Maghreb Union; the Common Market for Eastern and Southern Africa (COMESA); the Community of Sahel–Saharan States; the Economic Community of West African States (ECOWAS); the Intergovernmental Authority on Development (IGAD); and the Southern African Development Community (SADC).
5. The full list of participants will be circulated as an information document.
III. Opening of the session
6. The meeting was opened by the Chair of the outgoing Bureau (the representative of South Africa), of the tenth session of the Committee on Regional Cooperation and Integration. He thanked the Economic Commission for Africa (ECA) for organizing the meeting and expressed gratitude to the Government of the Federal Democratic Republic of Ethiopia for hosting the meeting. The Chair of the outgoing Bureau underscored the importance of the meeting and the choice of the theme: “Private sector development and the digital economy in support of regional integration in Africa”, which he said was timely considering the current debate on trade and digitization. Included in his remarks was a reference to the reconstitution of the previous committee, the Committee on Regional Cooperation and Integration into the new Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology. The Chair of the outgoing Bureau called upon experts to support the new Committee, given its mandate to address African development needs. He concluded by reiterating the support of his country for the Chair of the incoming Bureau and for the secretariat in the implementation of the programmes and activities of its work.
7. In his opening remarks, the representative of the Executive Secretary of the Economic Commission for Africa, the Director of the Regional Integration and Trade Division welcomed the participants and the representatives of other organizations to the meeting. He indicated that the African Continental Free Trade Area could not have come at a better time as it offered Africa a new engine to respond to the slowing global economy and the weakening of global trade associated with the economic slowdown. He noted that modelling work by ECA had shown that an African Continental Free Trade Area agreement could increase intra-African trade by between 15 and 25 per cent, compared to a scenario where no agreement was in place. The observation was made that, cognizant of the importance of digital trade and the digital economy, the African Union Commission and ECA were finalizing a digital transformation strategy for Africa, which would be presented at the African Union Summit in February 2020 for consideration. It was noted that the digital transformation strategy would help unlock the potential of the digital economy. He noted that the mandate of the Committee was to review the work of the Divisions of ECA.
Participants were reminded that the present meeting was the first session of the new Committee. He remarked that the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development had endorsed the establishment of the new Committee at its annual Conference in 2019.1 He indicated that the mandate of the new Committee had been broadened to more effectively support the development
1 The fifty-second session of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development took place in Marrakesh, Morocco, from 20 to 26 March 2019. In its resolution 966(LII), the Conference of Ministers endorsed […] adjustments to the intergovernmental structure of the Economic Commission for Africa … [t]o organize the sectoral subsidiary organs […]: Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology.
agenda of the continent and to align more closely the programmes of ECA with the priorities and needs of its member States.
8. The speaker highlighted the importance of the theme, which he said underlined the contribution of the digital economy to the global gross domestic product (GDP), including the Agreement Establishing the African Continental Free Trade Area. He then called upon African member States to enhance their efforts in improving the use of a digital economy and strengthen the integration of digitization in their national development strategies and plans, and for the private sector to work collaboratively with Governments in both policy formulation and implementation. The speaker concluded his remarks by thanking the member States and the regional economic communities for the cordial working relationship with ECA, which, he said, had been key in the implementation of the work of the secretariat.
9. In his statement, the Minister of International Cooperation, Regional Integration and Francophonie of the Democratic Republic of the Congo, Pépin Guillaume Manjolo Buakila, thanked the host Government for its warm hospitality and congratulated ECA for successfully organizing the first session of the new Committee.
10. The Minister underscored that the realization of the African Continental Free Trade Area process was unfortunately confronted by challenges of various kinds, including the low economic level of African States; political status and governance difficulties; and industrialization problems. He made reference to the efforts of African leaders to put in place projects and programmes of regional integration, implemented by regional economic communities at national, regional and continental levels. The Minister further focused on the regulation and facilitation of intra-African trade in the area of transport, and the facilitation of intra-African tourism. He also highlighted some of the key elements to be addressed in order to facilitate the implementation of the Agreement Establishing the African Continental Free Trade Area, including road transport, railways and air transport, given the level at which they are currently competing with others on the continental market. He stressed the importance of installing pipelines for the transport of hydrocarbons, instead of tanker trucks, which were often the cause of road accidents across the continent.
11. The Minister concluded by encouraging ECA to persevere in its work in giving technical support to member States in the implementation of their policies for the achievement of the development agenda and economic development.
12. The opening statement was delivered by the State Minister of the Ministry of Trade of the Government of the Federal Democratic Republic of Ethiopia, Mesganu Arga Moach. He welcomed participants to the meeting and to Addis Ababa and commended ECA for its work in organizing the meeting.
The Minister offered words of congratulation to his country’s Prime Minister, Abiy Ahmed, who had been awarded the Nobel Peace Prize on 10 December 2019. The Minister emphasized that this award was a success for the whole continent and that it was a cause for celebration by all.
13. On the theme of the first session, he highlighted the importance of digitization, which he said was crucial for developing and expanding business, stimulating economic growth and opportunities, and generating jobs. He highlighted the example of Ethiopia, where home-grown economic reform was taking place, which focused on job creation, inclusive growth and poverty reduction. Innovation and industrialization were identified as key enablers for economic transformation and strong regional integration, including the African Continental Free Trade Area agreement. He pointed out that the full benefits of the African Continental Free Trade Area could only be realized if African countries propelled their industrialization strategies and ensured product
complementarity among nations. Furthermore, the Minister stated that a major part of the digital economy depended on the level of development and digital readiness of countries and stakeholders. He urged African Governments to develop strategies for enhancing digital literacy and the skills required to develop local digital economy, and for supporting local entrepreneurs.
14. Making reference to the importance of the theme, he said it was key to influencing African Governments in their focus on digitization as they implement policies relating to trade and regional integration. Commenting on current progress in the digital economy, the Minister noted the impressive breakthrough of the digital economy in many African countries during the past 15 years, which he said was vital for economic growth and development. He highlighted aspects of progress made in the area of digitization, including implementation of the digital free trade area, which empowered traders to perform cross-border trade using ICT tools to minimize physical barriers, infrastructure development, energy and services. The Minister further stressed the importance of the use of digitization in achieving the full benefits of the African Continental Free Trade Area. He concluded by reiterating the strong commitment of his Government in supporting the work of ECA in the area of regional integration, including Agenda 2063 of the African Union.
IV. Election of the Bureau
15. The participants elected the following countries to constitute its Bureau on the basis of rotational regional representation.
Chair: Djibouti (East Africa)
First Vice-Chair: Democratic Republic of the Congo (Central Africa)
Second Vice-Chair: Sierra Leone (West Africa) Third Vice-Chair: Libya (North Africa)
Rapporteur: Zambia (Southern Africa)
16. After the election of the Bureau, the Chair of the incoming Bureau, the representative of Djibouti, thanked participants for having trust in Djibouti. He then acknowledged the good work and leadership of the Chair of the outgoing Bureau. Further, the Chair of the incoming Bureau thanked the secretariat for its outstanding work, and for its expertise and experience, and welcomed the prospect of its continuing support. He committed to give the secretariat full support in the implementation of its programmes during its given mandate.
V. Consideration and adoption of the agenda and programme of work
17. The newly elected Chair, Mr. Aboubaker-Sadik Ismail Ahmed, introduced the theme of the first session of the Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology. The agenda was adopted, as follows:
1. Opening of the session.
2. Election of the Bureau.
3. Consideration and adoption of the agenda and programme of work.
4. Presentation of reports by the secretariat:
(a) Assessment of progress on regional integration in Africa;
(b) Overview of the policy and regulatory environment for innovative financing of sustainable energy and infrastructure development in Africa;
(c) Emerging technologies, competitiveness and regional integration;
(d) African Continental Free Trade Area: an update on the establishment of the agreement and the status of negotiations on phase II.
5. General discussion on the theme of the first session of the Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology, “Private sector development and the digital economy in support of regional integration in Africa”.
6. Review of the 2018–2019 work programme of the Committee on Regional Cooperation and Integration and priorities for 2020 of the Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology.
7. Consideration and adoption of the report of the first session of the Committee.
8. Closing of the session.
18. The programme of work was adopted with no amendments.
VI. Presentation of reports by the secretariat
A. Assessment of progress of regional integration in Africa
Presentation
19. The secretariat highlighted some of the key achievements of the continent in the area of regional integration, including the signing in Kigali of the Agreement Establishing the African Continental Free Trade Area by 44 African countries on 21 March 2018, and the launch in Niamey of its operational phase in July 2019. It was noted that these represented momentous steps in the recent integration history of Africa. The secretariat also outlined progress achieved by the regional economic communities in implementing some of the continental initiatives such as the 2030 Agenda for Sustainable Development and Agenda 2063.
20. In trade, the secretariat reported that the Regional Integration and Trade Division of ECA worked with various institutions, including the African Union Commission and the African Development Bank in promoting work related to trade and regional integration. ECA continued to support efforts in the implementation of the Agreement Establishing the African Continental Free Trade Area, including the development of the draft text that was subsequently used as the basis for the process of negotiations. Furthermore, the Regional Integration and Trade Division carried out research and disseminated policy findings on the potential benefits of that Agreement. The observation was made that further work needed to be done on the preparation of the second edition of the Africa Regional Integration Index, which was produced in collaboration with its partners, the African Development Bank and the African Union Commission. It was reported that for five of the eight regional economic communities, their poorest-performing dimension of regional integration was productive integration, indicating that most of the communities were lagging behind in terms of intraregional intermediate exports and imports, and were recording a very low merchandise trade complementarity index.
21. The secretariat also reported on the performance on macroeconomic integration in the regional economic communities, which was recorded as remarkable, with an average score of 0.399 in the eight regional economic communities. Two regional economic communities, ECCAS and the East African Community, recorded the highest performing communities in terms of macroeconomic integration. Under infrastructure integration, the secretariat emphasized the importance of infrastructure development in promoting economic growth. However, it was stressed that member States need to enhance their efforts in allocating more financing resources for infrastructure development. The work of the secretariat relating to the Africa Regional Integration Index focused on four modes of infrastructure, attesting to the need for more resources for the development of quality infrastructure in Africa.
22. The secretariat concluded by highlighting progress by African member States and the regional economic communities in the area of migration, the free movement of persons across borders, governance, peace and security in promoting regional integration and development. It was indicated that ECA would continue to track the progress of regional integration in the regional economic communities through the use of its Africa Regional Integration Index tools.
Discussion
23. There were concerns raised with regard to the slow pace at which countries are ratifying the African Union Protocol on Free Movement of Persons, Right of Residence and Right of Establishment, which seeks to promote the free movement of people on the continent. The Protocol has been signed by 32 African countries, with only four of these countries having ratified the Protocol. It was observed that since almost all regional economic communities were performing well in the regional integration dimension of free movement of people, there was need for countries to replicate the same at continental level. A number of member States cited security concerns as one of the main reasons why they were reluctant to ratify the African Union Protocol on the Free Movement of Persons, Right of Residence and Right of Establishment. ECA, however, was championing a digital transformation strategy intended to assist African member States to harness the benefits of digitization and technology through the production of digital identity cards. It was agreed that such a strategy would have the potential to manage and address security fears in concerned member States.
24. In a related discussion on the free movement of people across the continent, participants underscored the importance of the establishment of regional banking and financing institutions, facilities that assist in currency convertibility or intercurrency exchanges as well as movement towards the establishment of common currencies to conveniently facilitate cross-border transactions. It also emerged from the discussions that in assessing progress on the free movement of people, there was a need to assess the institutional regulatory architecture in regional economic communities and member States.
25. With respect to governance, peace and security, it was pointed out that there may be a need for solid strategies that would assist in maintaining peace and security in Africa given the importance of peace and security in advancing the continental integration agenda.
26. It was noted that the majority of African regional economic communities had productive integration as their least-performing dimension of regional integration. To that effect, it was suggested that member States should establish industrial infrastructure as a foundation for industrialization and strategy for enhancing intra-African trade.
27. Clarifications were sought from the secretariat on concerns that were raised with regard to the following factors: the Africa Regional Integration Index (ARII) calculation of composite indices for regional economic communities; extending measures to country-level indices; and the separation of some regional integration dimensions. It was explained that following concerns raised by member States and experts, the Africa Regional Integration Index had been refined and strengthened. The Index applies robust Principal Component Analysis and the forthcoming Africa Regional Integration Index Report for 2019 included both regional-level and country-level indices.
28. The special needs and challenges faced by African landlocked developing countries were discussed, in particular in terms of them integrating their economies into the continent and global trading system. In that regard, a suggestion was made that this group of countries should be referred to as interlinked countries, as was the case in other regions, in order to emphasize that they harness the benefits of their geographical location for better integration and trade.
Recommendations
29. In the light of the discussions, recommendations were made to Member States, regional economic communities, the private sector and ECA, as presented below.
30. Member States were requested to:
(a) Establish national implementation committees as well as develop African Continental Free Trade Area national implementation strategies in order to take full advantage of the African Continental Free Trade Area;
(b) Join the Single African Air Transport Market to facilitate the full implementation of the Yamoussoukro Decision on Liberalization of Air Transport Markets in Africa in order to ease the movement of goods, people and services across the continent.
31. Regional economic communities were requested to mainstream the Action Plan on Boosting Intra-African Trade (BIAT) in their programmes and policies in order to boost industrialization, economic diversification, productive integration and trade integration.
32. Regional economic communities and the private sector were requested to advocate the ratification process of the Protocol on the Free Movement of Persons, Right of Residence and Right of Establishment.
33. ECA was requested to:
(a) Continue to sensitize member States to sign and ratify the African Union Protocol on the Free Movement of Persons, Right of Residence and Right of Establishment and encourage ratification of the African Continental Free Trade Area;
(b) Expanding analytical work on the African Continental Free Trade Area business index on existing indices, knowledge products and studies by other partners and international agencies such as the United Nations Conference on Trade and Development, the International Trade Centre, World Bank, the African Development Bank, to avoid duplication of efforts;
(c) Enhance its support towards building the technical capacity of regional economic communities to implement their industrialization policies and strategies;
(d) Continue to broaden its capacity-building programme on the use of macroeconomic and forecasting models in economic planning and development for member States and Regional economic communities.
(e) Continue and expand its support to Africa’s landlocked countries in the implementation of the Vienna Programme of Action and to enable them to reap the benefits of the African Continental Free Trade AreaAfCFTA;
(f) Support efforts to enhance the interface between the African Continental Free Trade Area and the Free Trade Areas of Regional Economic Communities;
(g) Deepen knowledge generation and dissemination in respect of various dimensions of regional integration, including the production of the Report on Assessing Regional Integration in Africa.
B. Overview of the policy and regulatory environment for
innovative financing of sustainable energy and infrastructure development in Africa
Presentation
34. The secretariat underscored that financing the implementation of infrastructure projects remained one of the major challenges in many African countries and that the infrastructure financing gap was huge – estimated at
$108 billion per annum. It was indicated that notable challenges remained in respect of the African electricity market, where more than 595 million people on the continent did not have access to electricity. The secretariat reported that the continent’s infrastructure funding needs had reached an annual figure of
$170 billion, leaving an annual gap estimated at $108 billion. The greatest financing gap was in the energy sector where an annual investment of $90 billion was required. It was also noted that the infrastructure financing gap could not be met by the public sector alone and that collaborative efforts were needed by all partners for the effective implementation of programmes and activities.
35. Key interventions were outlined in the area of infrastructure financing in energy and transport (road and rail), focusing on addressing environment al concerns to enable private sector participation and financing in these key infrastructure assets. Key issues were highlighted that the Commission would focus on in the future in order to contribute to increasing the amount and number of private investments in infrastructure. In that regard, areas where such increases were planned included in public-private partnerships in transport and energy, and the digitization of infrastructure planning (such as transport and energy). The impacts of the African Continental Free Trade Area process on improved logistics and services were also highlighted as was the promotion of the single African air transport market.
36. The secretariat concluded with critical issues that needed to be explored, including: (a) addressing the challenges that the private sector faces in energy and infrastructure projects in Africa; (b) the extent to which public–
private partnerships are used to finance energy and infrastructure projects in Africa, and practical challenges they are facing; (c) the region’s principles and strategies for engaging with non-African countries and organizations in its regional infrastructure development; and (d) key performance indicators for effective infrastructure partnerships with non-African countries and organizations from an African perspective.
Discussion
37. The need to close Africa’s infrastructure investment gap was broadly recognized by participants. The role of private capital in financing infrastructure development was also emphasized. It was mentioned that there were many sources of finance, including the private equity fund, where Africa could get as much as $100 billion of investment for infrastructure projects. It
was acknowledged, however, that the nature of infrastructure projects was complex, long term and capital intensive, thus it required the mitigation of several risks, particularly policy risks, which could be the result of a change in government administration.
38. Participants observed that the continent lacks bankable projects of good quality to attract the private sector. Therefore, capacity on project preparation and development needed to be enhanced. It was reported that many countries had established regulatory frameworks for public-private partnerships. However, there was a need for a regional and subregional process where public-private partnerships frameworks could be harmonized and rendered easier to manage. Such a process would also have the potential to assist member States that struggle to mobilize financing for infrastructure.
39. The Inga project has Africa-wide potential and could increase electricity access across the continent. Multiple partners from across the world were interested in it. It was noted, however, that African organizations and investors, unlike those from others parts of the world, had demonstrated limited interest in being involved in the development of the project. During the discussion, the question arose of the share of grants and loans in financing from various sources flowing into Africa. In that regard, a cautionary note was sound with respect to Africa balancing the need to close the financial gap versus debt sustainability.
Recommendations
40. In the light of the discussions, the following recommendations were made, requesting ECA to:
(a) Mobilize African partners, particularly from the private sector, to participate in the development of Inga;
(b) Ensure that there is adequate investment in science, technology and innovation, as this will ensure that Africa strengthens its own skills and competency to innovate its infrastructure development;
(c) Investigate innovative ways of financing infrastructure projects and assist countries in resource mobilization, internally and externally, including from the public and private sectors;
(d) Collaborate with other partners to assist countries to develop a pipeline of bankable infrastructure projects, as well as to assist small island developing States in infrastructure development (particularly transport);
(e) Support African countries in harmonizing the public-private partnerships frameworks with a view to promoting investment in cross-border projects.
C. Emerging technologies, competitiveness and regional integration
Presentation
41. The representative of the secretariat highlighted the importance of harnessing emerging technologies for competitiveness and regional integration in science, technology and innovation, emphasized in the 2030 Agenda and Agenda 2063. It was noted that the overall objective of the report was to support member States to harness science, technology and innovation and green economy to meet their development goals. The secretariat then indicated that the thematic report focused on three key issues: emerging technologies, nanotechnology, and regional perspectives to harness emerging technologies, including the opportunities and the steps countries could take to catch up with leading nations on technology.
42. The speaker pointed out that Africa’s science, technology and innovation capability remained small and its performance in technology use and ownership was uneven. The point was made that, globally, Africa accounted for 1 per cent of the global research and development expenditure, 0.3 per cent of high technology exports and 0.2 per cent of payment for intellectual property. The role of emerging technologies in spearheading the continent’s transformation as a subject of great interest and importance was emphasized as was digital technologies, which continued to transform every aspect of society. It was noted, however, that Africa accounted for less than 1 per cent of the global Internet traffic and less than 1 per cent of the world’s 70 largest digital platforms.
43. The speaker underscored the importance of nanotechnology as an enabler or key driver for the next industrial revolution with a broad-ranging application in many sectors, including in energy, pharmaceuticals, food, electronics, computers and transport. Despite that, it was reported that Africa’s share of the global market on nanotechnology products was very small. To address that challenge, frontrunners such as South Africa had developed strategies and built the basic infrastructure to harness nanotechnology for industrial (processing, bioprocessing and manufacturing) and social (clean water, energy and primary health-care) sectors. Similar efforts have been recorded in Egypt, Mauritius, Nigeria, Tunisia and Uganda.
44. The speaker concluded by referring to the African Continental Free Trade Area, which he said could serve both as a vehicle for developing common strategies, research infrastructure, innovation spaces and industrial application of emerging technologies. He added that it could also serve as a driver for attracting investment in and reducing the costs of emerging technologies.
Discussion
45. During the discussion, the importance was emphasized of digital technology in promoting economic growth and sustainable development.
Questions were raised regarding the measures that ECA was able to put in place to bring the informal sector into the formal sector through digital technologies.
Further questions focused on how digital technologies could be used in tax collection from the informal sector. The comment was made that informal firms already paid taxes and fees but that little information was available on the key drivers of innovation in informal firms. And furthermore, that those drivers were the factors determining a firm’s growth, interest to formalize and to compete in the marketplace.
46. To promote innovation among African young people, participants agreed that educational curricula needed to be amended. In that regard, it was recommended that African universities and centres of innovation form partnerships in order to foster the inclusion of research and development in their educational curricula. The point was made that, in order to avoid the brain drain, options needed to be given to young professionals. It was observed that the promotion of start-ups and hubs of innovation in the region was essential to the economic growth of the continent. Following this, a number of member States requested information on start-ups, starting with the definition of start- ups, the number of start-ups in Africa, and the levels of support and investment that existed already in start-ups. Given the importance of start -ups to the economy, participants recommended that start-ups should be supported on their business development to allow them to grow.
47. There was significant debate on the quality of data and the relationship between the numbers on research and development personnel and expenditure development. The observation was made that African research and development institutions needed to collaborate with one another and globally, and the same held for researchers. It was felt that this would improve the
quality of teaching, research and development. It was noted that many graduates from African technical and vocational training institutes and universities were brilliant but poorly prepared to provide solutions to real-life challenges. A number of experts underscored the need to improve data infrastructure, regulation on data exchange, cooperation on cybersecurity and personal data protection, taking a leaf from the approach of the European Union. The observation was made, however, that the benefits of such regulations in building the digital economy remained poorly studied in developing countries. There were discussions on the capacity of member States to copy, acquire and meaningfully use emerging technologies or to mitigate the negative impacts of emerging technologies in social, economic and environmental sectors. There was general agreement that harmonizing standards and regulations could enable the continent to benefit from pockets of excellence around Africa and the world in order to build the needed capacity and to manage the associated negative impacts of emerging technologies, particularly the health and environmental risks of nanotechnology.
Recommendations
48. In the light of the discussions, a number of recommendations were made as described below.
49. Member States were requested to:
(a) Support research and development, technology acquisition and infrastructure development in a bid to foster and enhance the inclusive growth of the digital economy;
(b) Adopt policies and strategies and build basic infrastructure to harness innovation for sustainable development, in particular to protect intellectual property rights and update educational curricula with the aim of promoting a culture of innovation;
(c) Promote research and development, specifically through public – private partnerships;
(d) Develop minimum acceptable standards and regulations at the regional level to increase intra-African collaboration and attract investment in emerging technologies.
50. ECA was requested to:
(a) Support research that focuses on the key drivers of innovation in informal firms, and how informal firms use digital technologies to expand their businesses and compete in the marketplace;
(b) Undertake in-depth research to uncover the African market for start-ups, the institutions that support them and the levels of support, and the policies that target start-ups;
(c) Provide information on the methods used by member States to build their research and development systems and to increase both the number of researchers and the expenditure on research and development, to enable countries to draw lessons;
(d) Develop a virtual platform that will enable African research and development institutions to collaborate with each other, with African researchers in the diaspora and with other researchers around the world.
D. African Continental Free Trade Area: an update on the establishment of the agreement and the status of negotiations on phase II
Presentation
51. The representative of the secretariat provided background information on the work that had been conducted since the final session of the Committee on Regional Cooperation and Integration on 1 and 2 November 2017. It was explained that the activities that had been undertaken since then, including the establishment of the present Committee, responded to reform efforts to ensure a more coordinated and streamlined approach, under the new strategic directions and core functions of the Commission.
52. The speaker highlighted some of the main accomplishments of ECA Subprogramme 2 for the biennium 2018–2019, including: further analysis of the effect of the Agreement Establishing the African Continental Free Trade Area, focusing on its expected impact and on how member States may be able to maximize its benefits; issues relating to the elaboration of phase II negotiations relating to the African Continental Free Trade Area (investment, intellectual property rights and competition policy); the launch of a new work stream on digital trade and the digital economy; collecting and compiling data on intra-African investments; the launch of seven electronic investment guides (iGuides); an assessment of the linkages between double taxation agreements and bilateral investment treaties and of drivers on intra-African investment;
and the preparation of the second iteration of the Africa Regio nal Integration Index.
53. The presenter underscored that, as African Continental Free Trade Area negotiations evolve, member States will be in need of more analytical work, as well as technical support to be able to engage and implement the agreement. In anticipation of and in order to fulfil such requests, the Subprogramme therefore foresaw conducting future work on a more comprehensive evaluation of the expected economic impact, together with impacts on employment and poverty of the African Continental Free Trade Area. Future work will also include deep quantification and analysis on trade in services, to enhance support to the African Continental Free Trade Area negotiations and national implementation strategies. In addition, further analytical work was expected to be undertaken on the movement of persons, investment, competition, intellectual property and the digital economy, especially to support countries in the build -up to global e- commerce negotiations. ECA sought to work on those issues in the coming years, while tackling the data gaps in order to breach the knowledge divide concerning the African Continental Free Trade Area and thereby contribute to and advocate for Africa’s position at the global level and developing regional responses.
Discussion
54. Participants underscored the need for the informal sector to leverage the opportunities available through the digital economy, which would require that the informal sector develop digital literacy and skills to harness such opportunities. The discussion gave examples of how ICT technologies could be used to help the informal sector formalize or transition to some degree of formality. Examples were also given of the rural sector in East Africa and how mobile applications had been used to obtain fair prices for products and to facilitate the marketing of those products. In that regard, digital ID was also seen as an opportunity to help those who did not have formal identification, which, in the African context, represented half of the population of the continent. The observation was made that, in addition to those advantages, a digital ID could make it possible for individuals to obtain critical services such as voter registration, social services and mobile banking services.
55. Participants commended ECA for the technical support given to member States, with particular reference to the project on the iGuides. It was recommended that a mechanism be put in place by ECA to ensure platform track policy developments such as e-regulation, in order to give feedback to policymakers. In the course of the discussion, the data problem that countries were facing was also highlighted. An appeal went out to ECA, requesting that it continue to prioritize in its work programme issues of capacity in addressing such data gaps. It was deemed critical that the iGuides be interactive with investors to support them and address their needs, while at the same time be able to improve investor tracking, by obtaining information in terms of areas of interest when making investment decisions. The need to improve online translation was also highlighted.
56. Focusing on the second phase of the process involving the African Continental Free Trade Area, participants underscored the need to include the role of small and medium-sized enterprises in the envisaged continental market. In terms of the African Continental Free Trade Area negotiations, participants voiced concern over the potential reduction of fiscal space and associated adjustment costs due to tariff reductions. In that context, the question that arose was how digitization could be harnessed so as to capture taxes from the informal sector and thereby counter the expected negative impacts. Despite the decrease in tariff revenues, ECA research showed that African welfare gains were set to be positive and were likely to be larger once services and investment were opened up. At the conclusion of the discussion, it was noted that the issue of fiscal space had been extensively discussed during the 2019 Conference of African Ministers held in Marrakech, Morocco (see footnote 1). Taking up that point, the comment was made that technologies could be used to increase fiscal space through taxation, an example of which was mobile banking, which captured the transaction of many informal business operators.
Recommendations
57. In the light of the discussion, the following recommendations were made, requesting ECA to:
(a) Deepen the understanding, in its analytical work, of economic impacts in pending sectors such as services and investment, with a view to helping member States obtain a better grasp of where to look for opportunities for greater gains;
(b) Review and improve the iGuides, with a view to optimizing their functioning and building the capacities of the investment promotion on agencies in charge of these instruments;
(c) Support more member States in developing their national strategies for implementation of the agreement and in dealing with the negotiations around the African Continental Free Trade Area, with a particular focus on technical inputs and tools for negotiation, including support for member States to set up fully functioning African Continental Free Trade Area national committees;
(d) Assist member States, in collaboration with its partners, particularly the African Union Commission, in negotiating phase II issues and implementing the Agreement Establishing the African Continental Free Trade Area;
(e) Provide support for countries in identifying and implementing actions that will support small and medium-sized enterprises in their efforts to transition from the informal to the formal sector while making full use of digital tools.
VII. General discussion on the theme of the first session of the Committee on Private Sector Development, Regional Integration, Trade, Infrastructure,
Industry and Technology, “Private sector
development and the digital economy in support of regional integration in Africa”
Panel discussion
58. The discussion began with the panellists giving their views on the theme of the tenth session of the Committee. Notably, all concurred with the view that African countries should support the establishment of the continental free trade area.
59. The first panellist highlighted the breadth of digital initiatives already being undertaken by COMESA, including the COMESA digital free trade area, Africa cloud ecosystem and 100 per cent paperless meetings. It was emphasized that the focus and concentration should not only be on technology but in considering ICT as an enabler for broader objectives. ICT can be leveraged to enhance key pillars of regional integration, including production, trade, industrialization and transport.
60. The second panellist emphasized the value of the digital economy for women and commented that digital solutions could bring women to markets and contribute to overcoming traditional gender barriers. The speaker noted, however, that women had less access to digital technologies, digital infrastructure, electricity and the digital economy, and that, for that reason, gender mainstreaming was vital to empower women. The point was made that there were many digital technology interventions being undertaken by the African Development Bank, including in agriculture, electricity and data protection, highlighting that the African potential was vast, but that support was lacking. A deficient intellectual property rights regime was identified as one of the causes of insufficient protection to African entrepreneurs, making it, in turn, difficult for them to source funding from commercial banks. The African Continental Free Trade Area could provide policy solutions to some of the challenges surrounding intellectual property rights.
61. The fourth panellist called for greater attention paid to and investments in science, technology and innovation –areas that were fundamental to the digital economy, but in which Africa tended to underperform. Investments were needed to address Africa’s skills gap – and to create a “citizen science-ship”.
The speaker noted that, nevertheless, intra-African information and knowledge sharing was also critical.
62. The fifth panellist linked the issues of digitization, the private sector a nd regional integration as a virtuous circle, in which each leads to and deepens the other. Improved infrastructure was called for, including continental cloud platforms and greater smartphone uptake, and production in Africa. The observation was made that regional integration had a role to play in addressing regional digital barriers and in allowing greater scalability of the African technology private sector– the significance of that was highlighted by the African Continental Free Trade Area concept . The speaker concluded with the comment that while the challenges were large, Africa had within its continent the resources to finance such developments.
General discussion on the theme
63. Concerns were raised about the limited interoperability among African digital technologies, which were isolated to only a few markets. Improved regional integration could therefore support scalability.
64. Participants acknowledged the pressing need to develop human capacities to achieve the “Africa We Want” and to continue the quest for the
“Africans we want”. Solutions proposed included digital means to provide for education, such as peer-to-peer learning, and investing in science, technology and innovation for “citizen science-ship”.
65. In regard to supporting the digital economy, several challenges were raised: access to markets, logistics, information and data could be limited.
Added to which, access to, and affordability of, finance, electricity, the Internet and digital identities posed fundamental obstacles. The observation wa s made that there was a lack of an “enabling policy framework”, which was inclusive and tolerant and included the dimension of intellectual property. The view was expressed that rural-urban divides were exacerbated by the digital divide.
66. The discussion focused on success factors for digitization in Africa, including broadband infrastructure, smartphone-facilitated infrastructure, upskilling, data access, the development of appropriate intellectual property rights regimes, and the promotion of “FabLabs”.
Recommendations
67. In the light of the discussions, the following recommendations were made, requesting member States to:
(a) Focus on their niches, but at the same time, learn from each other.
Strong links between African universities, communities and Governments were called for, together with links and collaboration among countries;
(b) Allocate more resources to invest in education and in gender mainstreaming to support science, technology and innovation.
68. In the light of the discussions, the recommendation was made to member States and regional economic communities, to prepare for the fourth industrial revolution: business as usual would not be an option, nevertheless, approaches needed to be predictable and stable, as well as inclusive and tolerant.
69. In the light of the discussions, the following recommendations were made, requesting ECA to:
(a) Prepare, in collaboration with its partners, a comprehensive and coherent digital agenda for the African continent, cognizant of all the key pillars necessary to drive the regional integration agenda, including establishing an AfCFTA digital platform, and the funding options available, without leaving any country behind;
(b) Provide technical assistance to streamline regional digital policies and strategies;
(c) Consider dedicating more time for discussions on the theme during future sessions of the Committee.
VIII. Review of the 2018–2019 work programme of the Committee on Regional Integration and priorities for 2020 of the Committee on Private Sector
Development, Regional Integration, Trade, Infrastructure, Industry and Technology
70. The review of the 2018–2019 work programme and priorities for 2020 were adopted without amendments. The representative of ECA presented a review of the proposed programme plan for 2020 and the review of programme performance for 2018/2019. Participants commended the good work done by ECA, evidence of which was the outstanding research products. Given that the committee session had been enlarged to cover three Divisions, the presentation
focused on the work of the sections: Regional Integration Section; Market Institution Section; Infrastructure, Energy, and Services; Green Economy, Innovation Technology, and Section 11 (NEPAD).
71. The review of the 2018–2019 work programme of the Committee on Regional Cooperation and Integration was adopted without amendments.
72. Participants requested more information on the following programmes:
(a) Gender mainstreaming in African universities in terms of their programmes;
(b) The area of coverage in terms of countries by the ECA work programme, given that the continent has over 50 member States. It was explained that ECA subregions contributed to the identification of countries of focus;
(c) Clarifications were sought on the implementation of programmes and the mechanisms for tracking progress. It was reported that the programme report was part of the annual report on the activities of ECA, which was considered by the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development.
IX. Consideration and adoption of the report of the first session of the Committee
73. The Committee adopted the report with some amendments and requested the secretariat to incorporate all the amendments and forward the final report to the participants.
X. Closing of the session
74. Closing remarks were made by the Director of the Regional Integration and Trade Division.
75. Following those remarks, the Chair declared the session closed at 6 p.m.
on Thursday, 12 December 2019.
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