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Under the auspices of the
Association of Senates,
Shoora and Equivalent
Councils in Africa and the
Arab world (ASSECAA)
Sponsors:
i) Arab Bank for Economic
Development in Africa
ii) Association of Yemen
Bankers
Venue – The South African
Parliament, Cape Town
Communique
1.0
Present
Delegates from the following
countries attended the
meeting:
i)
Republic of Yemen
ii) Federal
Republic of Nigeria
iii) Hashemite
Kingdom of Jordan
iv) Kingdom of
Bahrain
v) Islamic
Republic of Mauritania
vi) Kingdom of
Morocco
vii) Republic of
Guinea
viii) Republic of
Gabon
ix) Jamahiriya
of Libya
x) Republic
of South Africa
xi) Federal
Democratic Republic of
Ethiopia
2.0
Observers
i)
The League of Arab
States
ii)
Arab Bank for
Economic Development in
Africa
3.0
Special Guests
i)
US Export Promotion
Council
ii)
UK Trade Promotion
Council
4.0
Opening Session
Honourable M.J
Mahlangu, the Chairperson of
the National Council of
Provinces, South Africa
chaired the opening session
and declared the meeting
open on behalf of the
President of the Republic of
South Africa. In the
session, the following
speeches were delivered:
a)
The Secretary-General
of ASSECAA, Mr. Livinus I.
Osuji delivered the welcome
address in which he
highlighted the need for
Africa and the Arab
countries to found a strong
channel of economic
cooperation to enable them
to collectively withstand
the harsh realities of
globalisation.
He outlined that an expanded
market for the countries of
the two regions will create
room for economies of scale,
improved production and
demand levels and
consequently create more
employment and reduce
poverty in the region.
b)
H.E Mr. Abdullah
Hussein Al-Bar, Deputy
Speaker of Yemen Shoora
Council and head of Yemeni
delegation delivered the
speech of H.E Abdul Aziz
Abdul Ghani, Speaker of
Shoora Council of Yemen and
Chairman of ASSECAA. Mr.
Al-Bar expressed deep thanks
to the Chairperson and
members of the National
Council of Provinces (NCOP)
the government and people of
South Africa for hosting the
meeting in this great
African country.
He thanked the
representatives of Arab and
African parliaments, as well
as the representatives of
Arab and African Chambers of
commerce and industry, who
participated in this
meeting. He pointed out that
ASSECAA was trying to create
avenues to reach the most
important issues of
Afro-Arab cooperation.
This first meeting for
chambers of commerce and
industry in Africa and Arab
states to be held here will
enable us all to view this
great country and the
excellent examples, which
will also provide strength
to our diverse economies in
our countries so as to
establish suitable
environment for unlimited
cooperation and integration.
He also indicated that
economic development in
Yemen came as a priority for
the state and the
government. It had also
contributed to the essential
changes in democracy in
Yemen. He further indicated
that there are great
investment opportunities in
Yemen.
Regarding the current
international financial
crisis, he asserted that our
countries will be affected
by this crisis in addition
to the high increase in food
prices as well as the sharp
decrease in oil prices. All
these factors will affect
our economies and may lead
to serious repercussions
unless we combine the
efforts of our countries to
counter this crisis with the
aim of reducing its
negatives, while taking
lessons that will help us in
the future.
He highlighted that there is
limited trade exchange
between ASSECAA’s members.
He hoped that the meeting
will provide an opportunity
for mutual cooperation
between the countries of the
two regions. He urged
ASSECAA to hold these
business meetings
periodically.
c)
H.E Hon. M.J Mahlangu,
MP, the Chairperson of the
National Council of
Provinces of South Africa in
his speech emphasized the
need for co-operation among
the different role players
towards the advancement of
the agenda of developing
countries and that it was
critical to create space for
the discussion of issues in
order to address the
challenges of poverty and
underdevelopment. He said
business and civil society
had a huge role to play as
partners in building
democracy as they possess
some invaluable experiences
which serve as important
feedback mechanism when
considering laws and
policies.
He said one of the
challenges, when it comes to
the promotion of
co-operation among different
countries, was that most
states did not have clear
economic policies that are
conducive to integration and
co-operation. As a result,
he said, Africa was looking
at the issue of the
harmonisation of laws, which
must take national
peculiarities into account
towards achieving simpler
and better relations among
different countries.
He said political and
socio-economic cooperation
was important in achieving
harmony among the different
states, as a requirement for
ensuring development and
economic freedom. And that
both business and civil
society have a keen interest
in the resolution of these
issues.
d)
H.E Mr. Mohammed H.
Radhi, member of the Shoora
Council of Bahrain and head
of delegation, addressed the
meeting, indicating the
importance of this
conference being held under
delicate global financial
conditions. He pointed out
that this financial crisis,
which affected the developed
countries, will make
developing countries suffer
a lot and many will be on
the verge of collapse or
bankruptcy. In addition, he
indicated that the link
between oil prices and
exchange rates in the global
markets has affected
severely the budgets of many
developing countries and may
affect many essential
development projects.
Hence, it is obvious that
the crisis in the world may
not affect the developed
countries, but any crisis
initiated there has deep
negative effects on our
economies.
This will indicate an alarm
to us to act swiftly and
violently to confront such
crisis. In this regard, our
countries are in a dire need
of legislation and
regulation to protect
themselves from shocks and
sudden crisis. He emphasized
twelve points which will
enable Arab and African
countries to take the
required measurements.
Also, he praised the call by
his highness the prime
minister of the Kingdom of
Bahrain, Sheikh Khalifa bin
Salman Al-Khalifa in marking
the world day to combat
poverty. On Friday October
17, 2008, Sheikh Al-Khalifa
appealed to the
international community to
identify threats and
challenges facing poor
countries due to the
financial crisis afflicting
the world nowadays. The
Prime Minister also called
on the international
community and the rich
countries of the world to
give a helping hand to the
poor countries to overcome
these financial crises.
5.0
Papers presented
The following papers were
presented:
i) Role of BADEA in
enhancing economic
cooperation between
Africa and Arab world
ii) Globalization:
Challenges and Opportunities
iii)
Regional Integration
and Cooperation: Challenges
and Opportunities
iv) Business Challenges
for Developing Countries in
Africa and the Arab world.
6.0 Committee
deliberations
Committee one considered the
following issues:
a) Tariff regimes
b) Local products
c) Availability of mineral
resources
d) Business laws and
regulations
e) Indigenisation,
privatisation and
nationalisation of business
activities
Committee two considered the
following issues:
a)
Scheduled trade
exhibitions
b)
Workshops for the
creation of awareness on
economic developments in the
region and the world at
large
c)
Exchange of business
visits
d)
Date and place of
next meeting
Committee three considered
the following issues:
a)
Process of funding
for the next conference
b)
Investment
opportunities in the region
c)
Process of
cooperation investment
d)
Resource availability
in the region
6.1
Observations
In the light of the papers
presented and the
deliberation at the
Committees, the meeting
observed that:
a.
It was necessary to
restore peace and security
and political stability in
the Arab and African
countries as a pre-requisite
for economic, social and
political development in the
two regions.
b.
Peace and security is
necessary for free trade and
flow of investments between
African and Arab countries.
c.
WTO and the Doha
negotiations seem to have
reached deadlocks.
Accordingly, the countries
of Arab and Africa should
seek to enhance regional
cooperation and integration
d.
In view of the
international financial
crisis, which has raised new
challenges facing the
countries of the world,
there is a need for the Arab
and African countries to
join forces to increase
cooperative information flow
so as to harmonise stands at
international dialogues
e.
The regions of
African and Arab world need
to establish structures that
will enable them to decrease
the negative effects of
recent international crisis
on food and finances.
f.
The recent
international financial
crisis will lead to a
shifting paradigm which can
affect developing countries
adversely. Therefore
African and Arab countries
through joint efforts at the
regional level should
participate effectively
within the international
community and create
measures for new
international financial
system to prevent adverse
effects of such crisis on
the economic development of
the two regions.
g.
African and Arab
world should take cognizance
of the mobility of foreign
direct investment which
usually seeks conducive
environment.
h.
The main response to
the negative effects of
globalisation is to emplace
policies needed to assist
national businesses to
enhance their
competitiveness at the
regional and international
levels.
i.
Africa and Arab
countries need to intensify
joint research for the
reformation of legal
framework to enhance
regional integration.
j.
Regional integration
exists in the Arab and
African regions in these
forms:
a.
Free trade area
b.
Customs union
c.
Common market
d.
Monetary Union
Accordingly, the African and
Arab countries should seek
out the best process for the
joint operations of these
institutions in order to
reach common regional
agreements
k. African and Arab
countries need to develop
their businesses and service
sectors so as to attract
foreign investment.
7.0 Recommendations:
i.
The meeting
accordingly recommended that
this meeting is the first
meeting in the chain of
dialogues that will
culminate in the eventual
establishment of a common
Afro-Arab institution to
mediate economic cooperation
between the two regions.
ii.
The countries of
Africa and Arab world should
encourage the participation
of their national chambers
of commerce in the
formulation of economic
policies.
iii.
The countries of
Africa and Arab world should
activate and reactivate
agreements concerning
regional cooperation and
trade.
iv.
The Arab and Africa
countries should work to
enhance bilateral or
regional communication,
meetings and trainings
concerning trade, investment
and business promotion.
v.
The Arab and African
countries should endeavour
to internalise the
transformation of
technology.
vi.
There is need to
support investments between
the two regions. In this
regard, institutions which
guarantee investment and
provide funding should be
encouraged to meet
periodically so as to ensure
effective cooperation.
vii.
The next meeting
should take place in the
Jamahiriya Libya in
accordance with invitation
from the representative of
Libya. The details of the
date should be worked out by
the Secretariat of ASSECAA
and the authorities in
Libya.
General Secretariat
ASSECAA
26 October, 2008
REPORT OF THE FIRST MEETING
OF CHAMBERS OF COMMERCE AND
INDUSTRY IN AFRICA AND THE ARAB WORLD
Held in Cape Town, South
Africa
25th – 27th
October 2008.
Sponsored by the Arab Bank
for Economic Development
in Africa situated in
Khartoum, Sudan.
Organised by the Association
of Senates, Shoora and
Equivalent Councils in
Africa and the Arab world,
situated in Sana’a, Yemen
1.0
Preamble
The end of the cold war
between the East and the
West threw developing
countries into a form of
cold because there emerged
immediately a uni-polar
world order. As it were,
socio-economic, political
and cultural leadership of
the world appeared to be
emerging from one axis and
philosophical sphere.
1.1 The developing nations which
hitherto had played the
non-alignment game to
attract economic aids,
political sponsorship and
socio-cultural cooperation
from the competing super
powers found themselves
unable to attract these
gestures anymore in the
needed quantum to accelerate
their need for national
development.
1.2 The uncertainty of the uni-polar
world order quickly
coalesced with the
inevitably emerging
globalization which aimed at
globally standardizing
market trends, services,
goods and even political
behaviour. The developing
nations therefore realized
that it had become necessary
to form regional groupings
to enable them pool their
resources together, harness
their potentials and build
strong regional bases that
could effectively compete in
the international markets
and improve their economies
of scale.
1.3 It then became obvious that
properly systematized and
mutually agreed trading
conditions were better and
more beneficial to all
parties concerned than the
conditionalities for aids
from the industrialized
nations to the developing
countries.
1.4 The developing nations of Africa
and the Arab world cannot
individually develop the
necessary infrastructure for
their productive bases,
train the required manpower
and muster the relevant
organizational framework for
effective production and
participation in the
globalized market. This is
where the formation of a
financing and development
agency like the Arab Bank
for Economic Development in
Africa (BADEA) has become a
most desirable and welcome
development in the Afro-Arab
region..
1.5 The Association of Senates,
Shoora and Equivalent
Councils in Africa and the
Arab world (ASSECAA) has, as
one of its fundamental
objectives, the
strengthening of economic
cooperation between the Arab
and African countries. The
General Secretariat of
ASSECAA, in planning this
first meeting of the
Chambers of commerce and
Industry in Africa and the
Arab world, aimed at
creating a forum, for the
economic operators in the
private sector, in the two
regions, to meet, exchange
ideas and experience,
propose modalities for
investment cooperation and
sustainable exchange of
economic information.
1.6 This seminal meeting was held in
Cape Town, South Africa from
25th to 27th
October 2008, under the
auspices of the Association
of Senates, Shoora and
Equivalent Councils in
Africa and the Arab world
and was sponsored by the
Arab Bank for Economic
Development in Africa (BADEA).
2.0
Sponsorship and
Organization
2.1 Sponsorship by
BADEA
2.1.1 The God sent Arab Bank for
Economic Development in
Africa was founded in
November 1973 in Algeria.
This was consequent upon the
agreement reached by Arab
nations during the 6th
Arab Summit. The foresight
of the founding fathers of
this bank is most
astonishing because by 1973,
the cold war was still in
peak form and it is amazing
that the Arab world at that
time would be laying
foundations for economic
development in the African
region.
2.1.2 The Headquarters of the bank
is situated in Khartoum, the
capital of the Republic of
Sudan. The bank has been in
operation since 1975
2.1.3 Equity Holding – The Arab
Bank for Economic
Development in Africa is
owned by the Arab countries
which are members of the
League of Arab States. They
signed the agreement for the
establishment of the bank in
February 1974.
2.1.4 Operations – BADEA is a
Development Bank created as
an independent international
financial institution. It
enjoys unrestricted
international legal status
and it has unfettered
autonomy in its
administrative and financial
decisions and operations.
Its operations are guided by
the provisions of the
Agreement by which it was
set up and the principles of
international law.
BADEA as a financial
institution was founded with
the aim of creating an
enabling organization for:
(a) strengthening
economic, financial and
technical cooperation
between the Arab and the
African regions;
(b)
making the
Arab-African solidarity a
concrete and practical
reality; and
(c)
erecting the
Arab-African cooperative
venture on foundations of
equalit and friendship.
2.1.5
Projects sponsored by BADEA
– The projects usually
sponsored by the bank on one
hand are those that are of
national importance to the
countries concerned. They
are invariably parts of the
development plans or
programmes of the recipient
countries. On the other
hand, they are programmes of
regional relevance and
character which can benefit
several countries in Africa
at the same time. They can
also be programmes that are
of benefit to countries in
both Africa and the Arab
world.
2.1.6
Catalogue of BADEA’s
Projects – the list of
projects sponsored by the
Arab Bank for Economic
Development in Africa and
the Arab world, since its
inception is highly
impressive and only few of
them can be enumerated in a
short report of this
nature. It is stated in
available records that the
Arab Bank achieved the
following:
(a) financed cumulative
commitments totaling USD
3,354.127 Million from 1975
– 2007.
(b) allocated funds to
finance 427 development
projects of which 30
projects were for the
private sector
(c) 19 loans were granted
to small and micro credit
schemes
(d) sponsored 407
operations for technical
assistance which included
techno-economic feasibility
studies and institutional
support operations.
(e)
sponsored training
courses, provision of Arab
expertise and acquisition of
tools, instruments and
equipment.
(f) granted 14 special
loan commitments under the
urgent aid programme to
countries affected by
natural disasters.
(g) granted 59 loans to
African countries under the
urgent Arab Aid to African
countries faced with balance
of payment disequilibrium.
(h) sponsoring the first
forum of Arab and African
consulting firms
(i) sponsoring the first
meeting of the Chambers of
Commerce and Industry in
Africa and the Arab world.
2.1.7
The list in paragraph 2.1.6
is just a highlighting of
the brief records at the
disposal of our office.
Many more development
funding of BADEA are not
included. It is well-known
that the banks financing
operations and sponsorship
modalities have benefited
more than 40 sub-Saharan
African countries and other
organizations that cut
across the two regions of
Arab and Africa. BADEA has
sponsored projects on road
development, provision of
water, improvement of
sanitation, agricultural
development programmes,
enhancement of rural
infrastructure, land reform
and rehabilitation, animal
husbandary development,
small scale and medium
industrial development as
well as in improvement of
energy source projects.
2.1.8
These projects aim at
contributing to the
realization of the
development programmes of
the beneficiary countries by
giving impetus to the
improvement of standards and
conditions of living,
ensuring food supply to the
citizens and food security
to the country, increasing
the reduction of poverty by
expanding employment
opportunities.
Consequently, BADEA’s
allocations in sponsored
programmes have focused on
agricultural and rural
development sectors and
infrastructure,
afforestation to reduce
desertification and the
combating of the degradation
of the environment.
2.1.9
It is greatly appreciated
that BADEA in its funding
policies concedes flexible
conditions that suit rural
and national projects in
view of the observable
economic conditions of the
recipient countries. There
is also an obvious trend in
BADEA’s policies that it
aims at reducing the burden
of international debt of the
poor African nations as it
financially supports their
development of human
resources through training
and the participation of
women in national
development programmes.
3.0
Objectives of the Meeting
3.1
At the end of the cold war,
the developing nations of
the world which had before
then benefited from the
divided east and west in
their quest for allies,
found themselves in a
unipolar political and
economic world order. The
end of the cold war was
quickly followed by
globalization as a necessary
concomitant to
standardization of
specifications for
production of goods and
services for the world
market. Expectation of aids
from the United Nations
agencies and former
colonialist governments
became unreliable
3.2
The different parts of the
world contrived
regionalization of economic
groups as a measure to
expand internal markets,
increase productivity and
create employment within
their regions and thus be
able to have a strong
bargaining position in the
new world market. It became
obvious that international
loans and aids have failed
in most part to solve the
problems of receiver
countries essentially
because the conditionalities
for loans and prescriptions
for aids are usually at
variance with the prevailing
conditions in most
developing economies of the
third world
3.3
This first meeting of the
chambers of commerce and
industry in Africa and the
Arab world was therefore
held with the objectives of
a. Providing a genuine
and conducive forum for the
captains of industry, trade
and business and those with
legislative competence, to
regulate industrial and
commercial activities in the
countries of the two
regions, to exchange
experiences, views and
information on economic
activities and cooperation;
b. To seek opportunities of
reviewing and harmonizing
laws and regulations
concerning economic
activities in the two
regions;
c. To assess opportunities,
challenges and prospects for
investment cooperation
between the entrepreneurs of
the two regions and
stimulate same
d. To institute regular
meetings and contacts
between the economic and
commercial entrepreneurship
of the two regions, in order
to reveal through regular
trade exhibitions, workshops
and exchange of business
visits, the available
investment opportunities and
resources in the two
regions;
e. To establish an enduring and
functional framework for
Afro-Arab economic
cooperation.
3.4
In the main, the success of
the meeting, in the long
run, will lead to an
expansion of markets for
industrial ventures and
services in the two
regions. The availability
of a large market will lead
to the expansion of
productive bases and
capacities. The need for
expansion of production and
capacity utilization will
necessitate increased
employment. Enhanced
employment level will
accentuate demand, leading
to more production and
attracting more investment.
Consequently, the level of
general poverty will be
reduced as regional standard
of living will improve.
Thus, a new course of
economic growth for the Arab
and African countries will
be charted.
3.5
At the same time, an
Afro-Arab economic bloc will
be created and
strengthened. The bloc will
conversely be better
organized, institutionalized
and able to participate more
effectively in the new
globalised market. The
attraction for international
investments and technology
to the region will become
enhanced
4.0
The Role of ASSECAA
4.1
Naturally, it became the lot
of the Association of
Senates, Shoora and
Equivalent Councils in
Africa and the Arab world (ASSECAA)
and its young secretariat to
organize this first
meeting. This is an
inalienable role for ASSECAA
as it is the only
organization at governmental
level, which seeks to
mediate cooperation between
the Arab and African
countries.
4.2
The Association of Senates,
Shoora and Equivalent
Councils in Africa and the
Arab world, was founded in
response to the prevailing
world order, by the Heads of
Senates and 2nd
Chambers in the two
regions. The Association is
an enhancement of
parliamentary diplomacy and
a timely contribution to
Arab-Afro regional
cooperation
4.3
The Association aims at:
a. Contributing to the
strengthening of
socio-economic, political
and cultural cooperation
between the two regions and
the reduction of poverty
b. Contributing to the
resolution of conflicts and
the establishing of peaceful
co-existence among Arab and
African nations and the
world at large
c. Deepening of democratic
awareness in the two regions
and the propagating of the
essence of second chambers
in legislative institutions.
d. Encouraging the existence of
responsible civil right
organizations, the
observance of human rights
by governments and the
participation of women in
national institutions.
4.4
Activities of
ASSECAA
4.4.1
The Association is seeking
to achieve its objectives
through regularly organized
meetings, workshops,
retreats, exchange of study
visits among its members and
interaction with similar
regional and global
organizations
4.4.2
ASSECAA convenes annual
conferences for its members
and invites regional
organization such as the
Arab League, the African
Union, the Arab
Parliamentary Union and the
African Parliament to the
conference. The meeting
deliberates on matters of
regional and global concern,
issues affecting democratic
governance in the region and
the world over, maintenance
of peace and conflict
resolution, regional
economic development and
poverty alleviation in the
regions of Africa and the
Arab world. The conference
issues resolutions on these
developments and pursues
necessary courses of action
through its Secretariat.
4.4.3
The Association organizes
annual retreats for its
members and invites regional
bodies as well as
international parliamentary
organizations to the event.
The retreat deliberates on
the role of parliaments in
enhancing regional and world
developments in
socio-economic, political
and cultural spheres. The
meeting considers the
institution of parliament as
the symbol of national
democratic governance and
the effectiveness of
parliaments in:
a.
building of national
consensus;
b.
forging national
reconciliation;
c.
harmonization of interests
d.
adequate representation of
national constituencies,
polity and gender;
e.
harnessing of public opinion
f.
safeguarding of national
resources and ensuring fair
distribution;
g.
oversight of governance and
agencies of policy
implementation; and
h.
the impacting of national
interest on public policy.
4.4.4
ASSECAA presents views
affecting social, economic,
political and cultural
developments and concern in
the Arab and African regions
as well as global linkages
in these respects, at the
Inter-Parliamentary Union
meetings twice, every year.
ASSECAA has bilateral
relationships with the
European Association of
Senates and is engaging
similar organizations in
other regions for mutual
cooperation and deliberation
on global concerns such as:
a) good governance
b) fostering of democratic
values
c) alleviation of poverty
d) cancellation of foreign
debts for developing nations
e) eradication of corruption
in public offices
f) global peace and
resolution of conflicts.
4.4.5
The Association has a
Committee on Peace and
Conflict Resolution which
meets annually to deliberate
and take resolutions on
reported incidents of
conflict in the African and
Arab regions. Based on the
resolutions, the Association
takes steps to coordinate
with other international
bodies involved in making
efforts aimed at the
resolution of such
conflicts
5.0
Programme of the Meeting
(Annex A)
Day One
· Speech by the Chairman of
the Local Organizing
Commiittee in South Africa
· Speech by H.E Livinus I.
Osuji, Secretary-General of
the Association of Senates,
Shoora and Equivalent
Councils in Africa and the
Arab world
· Speech by the Chairperson of
the National Council of
Provinces of the Republic of
South Africa
· Speech by the chairman of
ASSECAA, Speaker of the
Shoora Council of Yemen
· Presentation of paper by
BADEA on "The Role of BADEA
in enhancing Economic
cooperation between Africa
and the Arab world"
Presentation and
Discussion Paper One
"Regional Economic Groupings
to Cushion the Harsh
Realities of Globalisation,
Challenges and
Opportunities. Presentation
by the Trade Law Centre for
Southern Africa (TRALAC)
·
Presentation of Discussion
Paper Two "Multi-racial
regions in search of
socio-economic and political
cooperation; challenges and
opportunities" Presentation
by the Trade Law Centre for
Southern Africa (TRALAC)
· Presentation of Discussion
Paper Three – "Large Scale
Entrepreneurial Challenges
for Developing Nations;
Africa and Arab case study"
· Presentation by the Trade
Law Centre for Southern
Africa (TRALAC)
Speeches by delegates on the
Agenda Items
Day Two
-
Committee Sittings
-
Presentation of committee
reports
-
Presentation and adoption of
resolutions
6.0
Participation at the meeting
This first meeting of the
chambers of commerce and
industry in Africa and the
Arab world was attended by
delegates from the 21 member
councils and senates of the
Association of Senates,
Shoora and Equivalent
Councils in Africa and the
Arab world. Delegates from
the chambers of commerce
and industry of non-member
countries in the Arab and
African regions were equally
in attendance. The
representative of the Arab
Bank for Economic
Development in Africa was
present. Observers from the
United States Export
Promotion Council and the
United Kingdom Trade
Promotion Department were
present.
7.0 Opening Ceremony
A) The Secretary-General of the
Association of Senates,
Shoora and Equivalent
Councils in Africa and the
Arab world, H.E Livinus I.
Osuji delivered the welcome
address in which he outlined
the origin of the
Association and pursuit of
the objective which has led
to the convening of the
first meeting of the
chambers of commerce and
industry in Africa and the
Arab world. He stressed the
need for the Arab and
African countries to found a
strong platform of economic
cooperation to enable them
to collectively withstand
the harsh realities of
globalization. He posited
that an expanded market for
the countries of the two
regions will create
desirable environment for
economies of scale, improved
production and enhance
capacity utilization.
The situation, he stated,
will increase employment
level and result in a
corollary increase of demand
levels. In the long run, he
averred, poverty will be
reduced in the region,
standard of living will
rise, crime rate will be
lowered and social tension
and conflict will be
abated. He added that
improved safe and lucrative
production environment and
large market will eventually
attract investments from
outside the region.
He expressed gratitude to
BADEA for sponsoring this
pioneer effort to chart a
new course of economic
cooperation for Africa and
the Arab world.
(B) The Chairman of ASSECAA and
Speaker of the Shoora
Council of Yemen, H.E Abdul
Aziz Abdul Ghani, in his
opening speech, which was
read by the Deputy Speaker
of the Shoora Council of
Yemen, H.E Abdullah Hussein
Al-Bar, expressed deep
thanks to the members of the
National Council of
Provinces, the government
and the people of South
Africa for hosting the
meeting in their great
country. He equally
expressed gratitude to the
representatives of the Arab
and African Chambers of
Commerce and Industry who
participated at the
meeting. He pointed out
that ASSECAA in organizing
the meeting was trying to
create avenues to reach the
most important issues of
afro-Arab cooperation.
He revealed that the meeting
would enable participants to
view the excellent examples
of development set by South
Africa which in turn, will
provide strength to the
diverse economies in the two
regions and spur the
countries to establish a
suitable environment for
unlimited cooperation and
integration. He indicated
that economic development in
Yemen was a priority for the
people and the government
and that urge has
contributed to the essential
changes in democratic
governance in the Republic
of Yemen. He informed the
meeting that there are great
investment opportunities in
Yemen.
He observed that the regions
of Africa and the Arab world
will certainly be affected
by the raging international
financial crisis in addition
to the increasing high cost
of food and the sharp
decline in oil revenue. He
cautioned that these trends
might lead to serious
repercussions in the Arab
and African countries unless
the two regions combined
their efforts to counter the
crisis and acquire enduring
lesson from the impact. He
noted that there was limited
trade between the two
regions and urged the
meeting to work towards
providing an opportunity for
effective mutual cooperation
between the Arab and African
countries. He enjoined
ASSECAA to continue
organizing the meeting
periodically until visible
results are achieved.
(C) H.E Hon. M.J Mahlangu,
Chairperson of the National
Council of Provinces of
South Africa, in his
inaugural speech emphasized
the issues before the
meeting as follows:
a) The Challenges and
Prospects for Multi-racial
regions in search of
Socio-economic and
political cooperation
b) Large Scale
Entrepreneurial Challenges
for Developing Nations;
Africa and Arab case
study
c) Regional Economic Groupings to
Cushion the Harsh Realities
of
Globalization, Challenges and
Opportunities.
He averred that African and
Arab countries cannot
overemphasize the need for
co-operation and more
cooperation, among the
different role-players
towards the advancement of
our developmental agenda.
It is therefore important to
always remember that
business and civil society
have a huge role to play in
this regard as partners in
building our democracies.
It is critical that together
we allow space for the
discussion of issues,
especially those facing
developing countries, in
order to address the
challenges of poverty and
underdevelopment. This
includes, among others, the
need for good governance,
especially in international
institutions tasked with
providing resources for
development.
We are often surprised,
pleasantly so, at how the
issues raised by members of
business and civil society,
when they engage with our
public representatives, end
up enhancing the quality of
our policies. This is
because business and civil
society possess some
invaluable experiences which
serve as important feedback
mechanism when we consider
laws and policies. Business
and civil society are better
placed to alert the
government to the impact of
policies and laws on the
environment in which they
operate. This symbiotic
relationship requires
cooperation.
The recent developments in
the financial sector that
have hit the developed world
as a result of the collapse
of big financial
corporations, thus
inflicting a financial melt
down on developing
countries, is yet another
strong indication that
government, business and
civil society need one
another. This is more
significant when it comes to
developing countries as they
need partnerships for:
·
Socio-economic development,
and;
·
Trade and economic growth;
In order to achieve the
targets of the Millenium
Development Goal Number 8
for the development of a
global partnership for
development. One of these
targets is the further
development of an open,
rule-based, predictable,
non-discriminatory trading
and financial system.
We have come to accept that
regionalism is a route
towards global
competitiveness, growth and
development, through
commonality and political
and economic practices and
wider trade and investment
opportunities. However, to
achieve this some challenges
are to be overcome. These
relate mainly to
co-operation inside and
outside these regional
bodies.
In the context of our
continent, the African Union
adopted NEPAD as the
blueprint for African
development and recovery, in
which the Regional Economic
Communities are designated
as implementing agencies for
the programme. This shows
how important economic
integration is.
Article 16 of the Protocol
establishing the Peace and
Security Council of the
African Union recognizes the
regional mechanisms for
conflict prevention,
management and resolution as
part of the overall security
architecture of the Union,
which has the primary
responsibility for promoting
peace, security and
stability in Africa.
Forming a regional trading
bloc is seen as Africa’s
best chance for promoting
sustainable development and
becoming a viable trading
partner in the global
economy.
For regional groupings to
work effectively one area
that needs a priority focus
is “harmonization of laws”.
This is so because member
states in regional groupings
follow different legal
systems and it is difficult
for the regional groupings
to operate using different
legal systems.
At continental level,
Pan-African Parliament has
been engaged in a project of
harmonization of laws for
about three years now as one
of the goals of its
“Strategic Plan 2006 –
2010”. However, despite
this and the existence of
other achievements and
foundation, at the
continental level, our
performance remains poor
with regard to harmonization
of laws.
One of the main problems
that lead to this poor
performance is political
policies of member states.
Most states do not have
clear economic policies that
are conducive to integration
and co-operation.
However, harmonization
alone, without taking
national peculiarities into
account, will not happen.
But if we want deeper,
simpler relations between
the various countries, we
must be prepared to accept
more harmonization.
The issues you have placed
on the table for this
meeting underscore the
importance of political and
socio-economic co-operation
in order to achieve harmony
among the different states,
which is necessary for
development and economic
freedom. Without doubt,
members of the business
community and civil society
have a keen interest in the
resolution of these issues.
(D) Mr. Amin Kurban who represented
the Arab Bank for Economic
Development in Africa, in
his presentation said that
it was his great pleasure to
deliver the statement on
“The Role of BADEA in
Enhancing Cooperation
between Africa and the Arab
world”, on behalf of the
Arab Bank for Economic
Development in Africa (BADEA),
on the occasion of the
opening of this
distinguished gathering for
the First Meeting of
Chambers of Commerce and
Industry in Africa and the
Arab world, organized by
ASSECAA and co-sponsored by
BADEA, under the theme “The
strengthening and
Institutionalizing of
Effective Economic
Cooperation between Africa
and the Arab world”.
I would like first of all to
thank the Government and the
National Council of
Provinces of the Republic of
South Africa and the
Organizing Committee for
convening this meeting which
reflects a strong resolve
and joint commitment to
further consolidate South-
South cooperation. Through
economic cooperation
between Africa and the Arab
commercial and industrial
counter parts and business
communities, higher levels
of economic development can
be realized.
Therefore contributing to
promoting African and Arab
economies and strengthening
regional trade, products,
resources and service
linkages. Moreover, this
meeting aims to deliberate
on practical modalities for
cooperation and mutual
foreign direct investment
and entrepreneurship
opportunities.
For us at BADEA, this
meeting comes within the
framework of stated
objective to develop and
strengthen Afro-Arab
co-operation on the economic
and financial levels,
through participating in
financing economic
development in sub-Saharan
African countries,
stimulating the contribution
of Arab capital to African
development and helping
provide the technical
assistance required for the
development of Africa.
As we know, the early
1970’s of the last century
has witnessed the evolution
of a concept of political
Afro-Arab solidarity and
investing in it to serve the
mutual interests as well as
to open new horizons for
mutual economic and social
relations.
To this end, BADEA was
accorded the role of
strengthening economic,
financial and technical
cooperation between the Arab
and African regions.
Since then, BADEA has been
devoted to the economic
development and Afro-Arab
integration through
fostering economic growth,
trade capacity building and
infrastructural
development. It has
oriented its financing
modalities in the recent
years to be in line with the
changes witnessed in the
area of development finance
and to better serve emerging
global social objectives, of
which, combating poverty and
promoting human development
are the two main axes.
In addition to coping with
the changes that engulfed
the economies and economic
development of the African
developing countries
recipient of BADEA’s aid and
on matching its funding with
the objectives and needs of
these countries.
BADEA continues within the
framework of its
establishing agreement and
the guidelines of its five
year plan (2005 – 2009), to
finance development projects
and provide technical
assistance on the national
and regional levels,
stimulate the contribution
of Arab capital in African
development and provide
support to the private
sector due to its leading
role in economic development
of its nations.
Among other activities,
BADEA gives special emphasis
for funding national
development banks and
institutions that directly
benefit the private sector,
funding components of
government projects which
support the private sector
including small and micro
credit schemes, supporting
the development of new
partnerships between Arab
and African service
providers, supporting the
participation of Arab
consulting firms and
contractors in implementing
development projects
financed by BADEA in many
African beneficiary
countries and export trade
promotion from Arab to
African countries through
lines of credit.
In the same context, BADEA
accorded special attention
to expanding and
diversifying its technical
cooperation activities to
include organizing and
sponsoring forums, meetings
for Arab and African
counterparts from the
different sectors of the
Arab and African economies
aiming at strengthening
Afro-Arab economic relations
thus serving the mutual
interest of the Arab and
African regions.
Presenting BADEA, Role and
Scope of Services Offered in
the Context of Afro-Arab
Cooperation
Now let me take this
opportunity to present
briefly, the historical
context and justification
for the creation of our bank
BADEA. Emanating from the
historical geographical and
cultural relations that bond
the Arab and African nations
and in order to enhance
Afro-Arab cooperation in the
economic fields and foster
investment in the human and
natural resources for
achieving sustainable
development of the people of
the Arab and African
regions, the Arab Bank for
Economic development in
Africa (BADEA) was
established pursuant to the
resolution of the 6th
Arab Summit Conference in
Algeria (28th
November 1973). The bank
began its operations in
March 1975. Its
headquarters is based in
Khartoum.
BADEA is a financial
institution owned by 18 Arab
countries, members of the
League of Arab States which
signed its Establishing
Agreement on 18th
February 1974. The bank is
an independent international
development finance
institution having full
international legal status
and complete autonomy in
administrative and financial
matters.
The bank was created for the
purpose of strengthening
economic, financial and
technical cooperation
between the Arab and African
regions and for the
embodiment of the Arab
African solidarity on
foundations of equality and
friendship. To achieve this
end, the bank was given the
mandate to
·
Firstly participate in
financing development in
African countries.
· Secondly, to stimulate the
contribution of Arab capital
to African development and
· Thirdly to help provide the
technical assistance
required for the development
of Africa.
Prospective Glance at
BADEA’s Priorities for
Economic Cooperation and
Sustainable Development in
Africa
Here we can pose the
question of how does the
bank help south-south
cooperation policy to be
implemented to help
Afro-Arab cooperation. The
following main points
represent BADEA’s strategic
emphasis and they relate to
the allocation of its
development resources.
· Agricultural, rural
development and
infrastructural sectors are
accorded priority without
neglecting the other sectors
like industry, energy,
health, education and
environment.
· Secondly, focusing
assistance on operations
targeting poverty
alleviation, food security
and encouraging women’s’
participation in
development. In addition to
maintaining support to the
social sector projects and
projects in countries that
face disasters, we also
accord special attention to
countries that suffer local
or regional conflicts.
· Increasing support to the
private sector through lines
of credit, by providing
technical assistance which
includes institutional
support, feasibility studies
and training.
· Utilizing Arab and African
expertise, commodities,
services and technological
transfer in the execution of
projects financed by BADEA.
· We also serve as trade
capacity building and
financing expanded trade
among the two regions
through funding Arab exports
to African countries, in
addition to funding related
studies in the field of
promoting public private
partnerships and improving
foreign investment climate.
· Paying special attention to
regional co-ordination and
integration projects
connecting African countries
and those linking African
with Arab ones, in addition
to the NEPAD initiative
project which is the new
partnership for development.
Highlight of BADEA’s
Sectorial Lending Activities
and Technical Assistance
Commitments.
In addition to strict
strategic direction
mentioned earlier, BADEA
tries to be high demand
direct institution. It
finances government priority
projects in beneficiary
countries which usually form
part of its strategic
development plans. In some
instances, these projects
are of regional character,
benefiting several countries
simultaneously thus helping
in their economic
coordination and
integration.
BADEA also provides
technical assistance in the
form of non-repayable grants
to finance the preparation
of techno- economic
feasibility studies, for
projects institutional
support to execute training
courses for the national
cadres, the provision of
equipment and experts to
African countries and
organizing 6 Afro-Arab trade
fairs, 2 businessmen weeks
and forums. BADEA also
finances trade from Arab
countries to African
countries, in addition to
its contribution in the
capital of African export
and import banks.
In term of BADEA’s
development financing
operation, the cooperative
commitments during the
period 1975 – 2007 stood at
US$3354.127 million and
allocated to finance 427
development projects of
which 30 projects were
allocated to the private
sector. 19 loans were
granted to small and micro
credit schemes, 438
operations for technical
assistance which included
techno-economic feasibility
studies and institutional
support operations like
sponsoring training courses,
provision of Arab experts,
providing tools, instruments
and equipment, 14 special
loan commitments under the
urgent aid programme to
countries affected by
natural catastrophes to
ameliorate their impact and
59 loans provided to African
countries under the urgent
Arab aid to Africa in
support of their balance of
payments.
BADEA’s activities in the
field of technical
assistance operations have
registered a notable
increase during the last
decade. Since its
establishment, BADEA has
granted over US$104 Million
in technical assistance
operations, funding over 178
feasibility studies and 229
institutional support
operations in the form of
purchasing equipment,
funding the services of Arab
Experts and sponsoring more
than 161 training sessions
and benefiting more than
3889 African trainees; 43
African countries, 5
regional groups and 17
regional institutions.
These training sessions
serve the purpose of
building the capacities of
the human resources
available, enhance skills
with the purpose of
achieving sustainable
economic growth; and aid
African countries in facing
the new policy challenges
and performing to the
satisfaction of their
development partners and
other donors, as well as to
implement their respective
economic and social
development programmes more
effectively.
BADEA’s financing modalities
have expanded to benefit 43
sub-Sahara African countries
and 17 regional
organizations. In
appreciation of the needs of
the beneficiary countries,
BADEA’s projects aim to
contribute to improving
living conditions and
standards, contributing to
food security, reducing
poverty and providing work
opportunities. Allocations
cover areas of food
security, agricultural and
rural development sectors,
infrastructure (roads, water
supply and sanitation),
rural irrigation, land
rehabilitation, animal
resource development,
agricultural drainage to
combat desertification and
improve conservation of the
environment, as well as the
industry and energy sectors.
BADEA continues to provide
its loans in concessionary
and flexible terms that suit
funded projects and economic
realities of the borrowing
countries, mostly low-income
countries and has continued
to increase its lending
grant element and its
contribution to the HIPC
initiative. An indication
of BADEA’s effort to reduce
debt burden on the African
countries in recognition of
their economic and financial
situation and supporting
their human resources
development.
BADEA also accords great
importance to con-financing
development projects with
various development
financing institutions due
to the possibility such
approach provides in
financing large programmes
proposed for funding by
beneficiary countries.
BADEA’s contribution with
the Arab and non Arab IFI
(International Funding
Institutions) in such
projects amounts to around
US$13405 million. Such
institutions include: The
Saudi Fund for Development,
Kuwait Fund for Arab
Economic Development, Abu
Dhabi Fund for Development,
Islamic Development Bank,
African Development Bank,
World Bank and OPEC Fund for
international Development,
representing around 35% of
the total cost of financed
projects.
In order to better achieve
BADEA’s objectives to
strengthen Arab-African
economic cooperation and to
maximize the benefit from
Arab and African expertise,
resources as well as goods
and services available in
the two regions, BADEA’s
procurement guidelines and
procedures have been
oriented to stipulate that
consultancy services of
BADEA’s operations (projects
and techno-economic and
financial feasibility
studies, contracting,
supervising engineering
works and project
management) be done through
Arab, African or
Arab-African joint venture
firms; except for special
cases depending on the
nature of the project and
also provides for a defined
margin of preference to Arab
and African contractors and
suppliers in international
competitive biddings.
Exploring New Avenues of
Economic Cooperation for
Improved and Veritable
Afro-Arab Business
Partnerships
It is BADEA’s sincere hope
that this meeting shall be a
platform that will provide
first hand account of
investment climate and
opportunities in the two
regions; and that its
deliberations would reach
recommendations for
establishing practical
economic cooperation
modalities together with
concrete proposals for
establishing an
institutional framework
between Arab and African
Chambers of Commerce and
Industry that shall help
promote the level of
business, entrepreneurial,
direct investment and trade
relations between the two
regions; as an additional
enduring business knowledge
channel for the development
of Africa, foster Arab-Afro
cooperation and find new
means to avail communication
and networking channels and
facilitate information flow
between the Arab and African
commercial and industrial
economic communities for
better Afro-Arab
partnership, thus
contributing to promoting
the economic interests of
both regions.
He concluded by assuring the
meeting that BADEA would
continue to support
organizing similar forums,
meetings and trade expansion
schemes to bring various
economic, commercial and
industrial communities
together to deliberate on
the different matters
related to development
issues and stakes in Africa
in its continuous efforts to
promote Afro-Arab economic
cooperation.
(E) H.E Mr. Mohammed H.
Radhi, member of Shoora
Council of Bahrain and Head
of the delegation from
Bahrain, in his address to
the meeting said:
This important conference is
being held under delicate
global financial condition.
The rich north has suffered
a financial crisis, which
affected almost the entire
world. Also the developing
south has also suffered a
lot of financial problems
due to the global crisis in
the west. Many financial
institutions in the third
world countries have been
affected and were on the
verge of collapse and
bankruptcy.
In addition, stock markets
also suffered large
fluctuations and the savings
of individuals- in some
developing countries-
underwent a reduction, as a
result of these financial
tremors.
Moreover, the size and the
inevitability of the link up
between oil prices in global
markets and exchange rates
made the budgets of many
developing countries
continue to dwindle
affecting many developmental
projects and slowed down
their implementation.
What happened did not start
in an African or the Arab
countries but it started in
Downing street or Geneva or
Paris and we were affected
tremendously by it and on
the contrary, those
countries were not affected
by any financial problem in
the third world. The time
has come for our governments
to bear in mind what
happened, it is only an
alarm bell and a kind of
warning, telling us that the
danger is coming.
Let us observe the powerful
economies such as the
Chinese and the Indian
economies, which were not
affected by the crisis
because these economies had
a vision and rigorous
application of economic
standards, one of which and
most significant is the non
association and dependence
on the west economies.
We are now in a dire need of
legislation and regulations
to protect ourselves from
similar shocks, let us
convey to our governments
our fears and worries about
what will happen to us in
the future, if there was no
vision and independence in
the economic decisiveness.
Therefore, we emphasize the
following:
1. Lay down economic
legislation which backs,
supports and bolsters the
independence.
2. Create an economic
system or a league of
countries to develop
alternative set up for the
economic cooperation with
the western countries
3. Benefiting from the
experiences of Chinese and
Indian economies and review
their legislation and
regulations
4. Stressing on the core
of commodity based economy,
not services based economy
5. Develop a new vision
based on economic
parallelism rather than
economic dependence
6. Filling the gap in
the banking transactions
legislations and emphasize
on the cooperation between
the union of Arab Banks and
the union of African banks,
if any
7. Discuss thoroughly
the causes of the crisis and
realize its roots
8. We think, the time
has come to develop an
integrated banking system
among Arab countries and
Africa
9. Discuss the reasons,
which led into no
significant financial losses
in Islamic banks and the
possibility of drawing on
their experiences
1 0. A question raises
itself, if the mortgage
crisis has created this
major financial catastrophe,
has the time come to unpeg
the currency from the U.S
dollar.
11.
An Arab-African
mechanism should be found
for settling debts
accumulated by the
development process. Ways
should be found to organize
this mechanism and lay down
broad spectrum laws as well
as studying the poverty
line, which goes in parallel
with the security.
1 2.
Study the effects of
international bilateral
agreements especially after
what has happened (for
example, the convention on
international trade).
We hope and count on you
greatly in transferring this
image and aspirations to
officials in your respective
countries, in order to avoid
future shocks either
man-made or unexpected that
are caused by poor planning.
Please be confident that we
now have an opportunity to
progress beyond this crisis
if we were to act carefully
and give the situation a
very deep thought.
Finally, I would like to
praise the call by His
Highness the Prime Minister
of the Kingdom of Bahrain
Sheikh Khalifa bin Salman Al
Khalifa in marking the world
Day to Combat Poverty on
Friday, October 17, 2008. He
appealed to the
international community to
identify threats and
challenges facing poor
countries, due to the
financial crisis afflicting
the world nowadays and also
called upon the
international community and
the rich countries of the
world to give a helping hand
to the poor countries to
overcome these financial
crises.
8.0
Presentation of Papers and
Discussions
8.1 Paper One –
Globalization -
Challenges and Opportunities
Introduction
1.
Globalisation or the
growing integration of
economies and societies, is
a complex process that
affects all aspects of the
economy and society. The
implications of
globalisation are important
for national development
strategies; affecting
government policies on
trade, industrial
development as well as
health, education and other
social development policies.
From a business perspective
globalisation presents both
challenges and
opportunities. Increased
competition in both export
markets and domestic markets
requires business to assess
their strategies for
sourcing inputs, their use
of technology in the
development of products and
services as well as in
marketing those products and
services in existing and new
markets
The impact of globalisation
on society is pervasive
influencing cultural norms
and standards, through the
communication and spread of
ideas and education. The
increase in the movement of
people across borders in
search of better economic
opportunities encourages
cultural interaction, but
also brings challenges. An
important challenge in the
developing world and
especially in Africa has
been the spread of
HIV/AIDS.
What drives globalisation?
Global integration is the
result of lower costs of
transportation, reduction of
trade barriers, faster
communication and
dissemination of ideas
through the use of the
internet and other
communication technologies,
increasing capital flows and
the increased migration of
people.
The impact of technological
developments in information
and communication technology
is significant. These
developments impact on many
different sectors of the
economy. The use of new
technologies in the
financial sector impacts on
international payments
systems, and the
facilitation of financial
transactions, as well as the
flows of capital. The
current financial crisis
provides an indication of
how quickly the financial
crisis in the United States
has spread to other parts of
the global economy. The
inter-connectedness of the
financial systems of
countries is facilitated by
communication technologies.
In addition the
dissemination of the news of
the financial crisis has
affected business confidence
across the world, bringing
the impact of the financial
crisis very swiftly to
individuals making decisions
at household level too.
Globalisation, through the
faster dissemination of
ideas, influences consumer
behaviour and consumer
demand. Trends in consumer
demand spread very rapidly
from the developed world to
developing countries, and
consumers have access to
goods and services produced
in the developed world
through e-commerce, as well
as through the increased
flows of international
trade. This influences not
only business decisions, but
also affects the social and
cultural norms in our
countries
Globalisation: Winners and
Losers
Globalisation, besides many
positive outcomes, also
generates some concerns.
There are winners and losers
from globalisation. This
raises issues of
competitiveness and what is
required to be competitive
in a globalised world. As
trade barriers are reduced,
increased competition in the
domestic markets will have
important results.
Technological developments
such as the internet and
other communications
technologies are important
not only for the integration
of business across national
borders but also for the
growing integration of
societies. Concerns about
the development of cultural
uniformity and the loss of
national identity are also
important
From the consumer’s
perspective, global
integration may result in
the availability of cheaper
products and services, as
these are imported from
cheaper producers in other
countries. This is an
important benefit.
Consumers will have a
greater variety of products
and services to choose from,
and may get access to a
greater variety of quality
products and services.
Cheaper products can enhance
consumer welfare, allowing
households more expenditure
options
However increased imports
may pose challenges to
domestic producers,
especially to small and
medium sized firms, as they
struggle to compete with
cheaper imports. Small and
medium sized firms are often
owned by nationals of the
country, while both in the
Arab world and in Africa,
many large firms may be
foreign owned or
multinationals. The impact
of increased competition in
the domestic market on small
and medium sized firms is
therefore an important
concern. Some small and
medium sized firms may close
down, being unable to
compete with cheaper
imports. This can create
unemployment, thus having
important social
implications. The economic
empowerment of the country’s
nationals will be negatively
affected.
Responding to Globalisation
A key challenge for
government is to consider
what kind of policies are
needed to assist business to
enhance their
competitiveness in a
globalised world. Market
intelligence, information
about opportunities in
export markets, as well as
support to harness new
technologies are important
support interventions that
government could consider
Business associations and
Chambers of Commerce can
also assist their member
companies by providing
information about new
technologies, new market
opportunities and new trends
in consumer demand, in a
globalised world
For business the process of
globalisation affects
decisions related to
production, distribution and
marketing of products and
services. The
liberalisation of
international trade, among
members of the World Trade
Organisation, for example,
has opened new market
opportunities for business,
in both developed countries
and developing countries.
It is important when
participating in
international trade
negotiations to consider
very carefully the potential
opportunities that business
could benefit from, and to
work with government to
negotiate trade agreements
that facilitate access to
those opportunities. In
this context it is also
important to note that many
countries are negotiating
trade and cooperation
agreements with specific
partners through regional
integration arrangements or
bilateral agreements.
The pursuit of efficiency
has led firms in developed
countries to outsource
production to developing
countries. For example
multinational companies
often produce branded
consumer products in
developing countries because
costs, especially labour
costs are much lower.
While this does result in
job creation, it is
important to consider also
other impacts such as for
example the environmental
impact of such production
activities.
Production Fragmentation
An important feature of the
globalised economy, is the
increase in production
fragmentation. Production
fragmentation refers to the
separation of production
activities in the supply
chain across different
geographic locations. For
example, the leather for the
production of shoes may be
produced in Botswana, this
leather may then be shipped
to Italy where it is tanned
and prepared for the
production of shoes, this
shoes leather may then she
shipped to China where the
shoes are produced.
This fragmentation of the
production process takes
place to increase efficiency
and lower costs of
production. Companies seek
out the competitive
advantage of different
locations in the global
economy and separate the
production activities in a
supply chain to take
advantage of these.
The implications of
production fragmentation are
an important impact of
globalisation, affecting,
business, government and
society.
First, production
fragmentation means that
production activities are
very mobile. A producer can
move specific parts of the
supply chain to different
producers in different parts
of the world very easily
since they themselves are
not investing in production
capacity. For the firms who
are performing the
outsourced activities, this
increases risk as the
contracts may be short term,
rather than long term.
Second, production
fragmentation highlights the
importance of the role of
services in the globalised
world. Services, such as
transport, communication and
financial services provide
the links between the
different stages of the
supply chain. This means
that the competitiveness of
manufacturing is closely
linked to such services
sectors.
Trade and Investment
Integration in a Globalised
World
During the past three
decades, in particular,
international trade has been
liberalised significantly.
The establishment of the
World Trade Organisation (WTO)
in 1995, provided an
institutional anchor for the
development of international
trade rules and for
facilitating the
liberalisation of
international trade.
The liberalisation of
international trade has
opened up markets to imports
ranging from agricultural
products to manufactured
products and services. It
is true that there is still
much to be done specifically
as regards agricultural
trade liberalisation,
however.
Trade liberalisation does
mean that we find new
products and services in our
domestic economies, as well
as increased participation
of our firms in export
markets. This does bring
challenges as our domestic
firms have to develop and
enhance their
competitiveness to encourage
consumers to buy from them
rather than to buy imported
products. In many of our
countries this requires
significant effort as
consumers may assume simply
that imported products and
services are better than
those locally produced.
A significant development,
especially in the last
decade, is the increase in
exports from developing
countries. India, China and
Brazil are key leading
participants in the global
economy, with exports to
both developed and
developing countries. In
fact countries such as these
now represent the new
clusters of manufacturing
competitiveness for many
manufactured products
(consumer goods, automobiles
are good examples).
As a result of the economic
growth of these countries,
they have also become
important importers of
commodities such as coal,
steel and minerals such as
gold and platinum. They are
now playing an important
role in the determination of
these commodity prices in
international markets. This
used to be the role of
developed countries only.
In addition there have been
significant changes in the
global economy as regards
investment. Traditionally
developed countries were the
sources of investment for
developing countries. This
is no longer true. The
faster growing developing
countries such as India and
China have become important
sources of investment, in
other developing countries
as well as in developed
countries. An example from
India is Mittal. Mittal
has invested significantly
in the steel industry in
several developed and
developing countries.
Responses to Globalisation
Concerns of global
governance: brief review of
the current financial crisis
Developments, especially in
large economies such as the
United States, India and
China will have an impact
throughout the world
economy. The current global
financial crisis is a good
example. A closer
examination of this crisis
can provide important
lessons on globalisation.
A key question is how did
this crisis arise, and what
is needed to avoid such a
crisis in the future.
Although this is a very
complex issue, beyond the
scope of this note, it is
useful to consider some
aspects of the crisis.
There is no doubt that the
integration of the global
financial system is an
important feature of the
crisis. The fact that banks
are linked internationally
means that if banks or
other financial institutions
such as insurance companies
are global companies and are
linked to other financial
institutions, then if they
encounter problems in, for
example, the United States,
the impact will be felt far
beyond the United States.
Thus the fact that many
financial institutions are
multinational firms has
contributed to the spread of
the financial crisis. In
addition the fact that
finance and capital can flow
quite freely in the global
economy is also a
contributing factor
A key question is however,
why did the crisis happen?
The answer to this is
complex, however the lack of
global governance of the
global financial system may
well be an important
consideration. There does
not exist the equivalent of
the World Trade Organisation
that oversees global trade
rules, for the global
financial system.
What lessons are we learning
from the financial crisis?
An important lesson relates
to the incentives. Bank
officials have been able to
achieve significant reward
by lending, even to high
risk clients. This was
essentially the start of the
crisis in the United States
with the Sub-Prime Market,
as home loans were granted
to clients who presented a
high risk of default
How are the incentive
structures determined within
financial institutions and
what oversight exists to
prevent such high risk
lending? These are
important questions to
prevent behaviour that can
put institutions and a
financial system at risk.
Governance, or rules that
provide assurance for
integrated economic systems,
such as the global financial
system require scrutiny in a
globalised economy
Regional Integration: A
Strategy for Global
Integration?
Many economies in Africa and
the Arab world are by
international standards,
small economies, both in
terms of population and
economic size. This has
important implications with
respect to an important
trend in the current era of
globalisation.
Alongside the growth of
globalisation, an important
and growing trend is
regionalism. Regional
integration or regionalism
refers to the process
whereby countries enter into
agreements to cooperate in
specific areas of economic
development and to integrate
their markets and
economies.
Within the context of the
World Trade Organisation,
the number of Regional Trade
Arrangements has increased
significantly during the
past decade. It seems that
regionalism is a response to
the challenges of global
integration; as especially
smaller economies form
regional groupings.
Regional groupings may be
motivated by many different
reasons. Small markets may
be an important
consideration. Through
regional integration
countries offer their firms
larger markets and the
opportunity to attain
economies of scale and thus
enhance their efficiency and
competitiveness. As they
achieve such economies of
scale and greater
competitiveness they are
also able to compete more
effectively in the global
economy. Some countries and
regional groupings therefore
choose regional integration
as a strategy for global
integration. This is
referred to as Open
Regionalism. South East
Asia has followed this
strategy with success.
Other regional groupings are
formed specifically to
address security concerns or
to enhance their bargaining
capacity in international
negotiations. Some
groupings may have multiple
objectives. For example in
Southern Africa, the
Southern African Development
Community (SADC) focuses on
broad development
objectives, aiming to
support sustainable regional
development, peace and
security as well as economic
development and integration
into the global economy.
Thus far the model of
regional integration that
has been piloted by the
European Union, has
influenced many regional
integration arrangements.
This model started with the
political objective of
preventing another war,
after the Second World War,
but has also focused on
economic or market
integration, by liberalising
trade amongst member states,
and then also seeking policy
harmonisation in certain
areas such as agriculture.
Regional integration in
Africa and the Arab world is
also a key strategy. In the
Arab world the Gulf
Cooperation Council is a
good example, in Africa
regional economic
communities are well
established and a
Pan-African plan for
integration of the continent
is a high priority.
A key question is how
regional integration can
assist countries to address
the challenges and take
advantage of the
opportunities of
globalisation. In this
regard it is important for
member states of a regional
economic community to
determine their regional
strategy. This is important
also when the member states
are negotiating agreements
with third parties. A good
example is the current
negotiations that African
countries are negotiating
with the European Union to
conclude Economic
Partnership Agreements.
Globalisation, Power and
Culture
Globalisation is not just
an economic phenomenon.
Globalisation changes power
relationships, and in
particular the relationship
between developed and
developing countries.
Developing countries have a
significant interest in the
development of robust global
governance systems. Global
governance systems provide
the best prospects for
forcing powerful countries
to comply with international
rules. Rules-based systems
offer security to smaller
and weaker members of the
international community.
In some respects
globalisation limits the
scope of governments to make
policy. For example if a
country is a member of the
World Trade Organisation (WTO),
certain areas of domestic
policy such as industrial
policy need to comply with
WTO disciplines.
Globalisation can both
increase and limit cultural
diversity. Diversity can be
enhanced through increase in
communication across
national boundaries and by
marketing and
immigration. But it is
also true that globalisation
can reduce diversity as
foreign culture replaces
local culture. Both
effects cause concerns.
Social diversity can be
increased by globalisation
as different cultures
co-exist, but it is also
possible that foreign
culture can displace local
culture. Migration also
promotes diversity. Greater
cultural diversity can make
a society more dynamic but
it can also cause challenges
as conflict between cultures
can develop. In an African
context, migration is a very
sensitive issue as a result
of the economic challenges
that many of our countries
face. With high
unemployment and poverty,
the migration of foreigners
may be seen as a threat by
locals leading to conflict
situations.
Globalisation and
Environmental Issues
There is evidence that with
globalisation in some
countries, income levels
have risen, and as a result
consumption has increased
and consumption patterns
have changed. A potential
problem associated with this
increase in income is more
pollution. Intensified
competition may result in
compromise of environmental
standards, and this may lead
to damage to the environment
which may have negative
impact on future development
prospects. This again
raises the issue of global
governance. Instruments
such as the Kyoto Protocol
can assist to provide
standards that will support
environmental protection for
sustainable development. Of
course this will only
provide the basis for
sustainable development if
all countries especially the
large, developed economies
comply.
Concluding Comments
Globalisation is a complex
process. The process
involves decisions by firms
to seek opportunities in
export markets, by
individuals to seek better
income earning or education
opportunities in other
countries. It is also
enhanced by governments
concluding agreements with
other countries to promote
investment and trade.
Globalisation has both
positive and negative
outcomes. Some of the
challenges require global
solutions in the form of
rules-based governance
systems, while others
require responses at the
national level, for example
to address challenges
related to cultural
diversity.
From a business perspective,
globalisation increases
competition. Greater
competition requires that
firms assess their sources
of competition and
competitiveness carefully,
taking advantage of the
opportunities to outsource,
to harness new technologies
and to respond to new
consumer demands. Business
associations and governments
can assist by providing
information to business and
involving business in the
negotiations of agreements
with trade and investment
partner countries.
Discussion of Paper One
by participants
8.2
Paper
Two – Business
Development Challenges for
Developing countries
Introduction
Key trends in the global
economy have important
implications for
entrepreneurial development
and large scale business in
developing countries. This
note will briefly review the
process of globalisation and
the implications for
developing countries and
then focus on key
developments in the global
economy. The development
of global supply chains and
the geographic
disaggregation of stages of
the supply chain (this
process is also referred to
as production fragmentation)
and the role of services in
the economy will be
addressed.
It is also important to note
that the diversity among
developing countries is
significant. Developing
countries like China, India
and Brazil now represent the
clusters of competitiveness
in many manufacturing
sectors, from consumer goods
to electronics and
automobiles. While least
developed countries (and
Africa is the continent with
the largest number of least
developed countries) may
still be focusing on
agriculture rather than
industrial development,
there are some that have
attracted investment into
manufacturing activities,
but many still have weak
manufacturing sectors. This
increasing diversity among
developing countries makes
it necessary to ensure that
any analysis of business
development challenges takes
into account the specific
characteristics of the
developing country. Some
developing countries are
participating effectively in
the globalised economy,
while others are becoming
more marginalised.
Furthermore new challenges
related to the environment
and sustainable development
are important. For example,
it is important for those
countries that are rich in
natural resources or are
exporters of commodities
(oil, gold, coal, copper,
tea, coffee) to assess the
need to diversify their
economies. For countries
that are dependent on
commodities this may require
assessment of the potential
to develop a manufacturing
sector or services sectors.
These are concerns not only
for government but also for
business. In the United
Emirates for example, the
growth of the education
sector is noteworthy. This
region could become an
educational centre for not
only the Middle East but
also for other regions.
Several countries in this
region have become
competitive players in the
air transportation
market. Their airlines
and the airports that have
been developed in the region
are making them an important
transport hub connecting for
example Africa and Europe.
Mauritius provides an
important case study in the
development from an
agricultural economy
(producing sugar) to a
strong focus on
manufacturing (garment
production) to a services
economy (tourism, financial
services). This shift of
economic focus from the
primary sector to
manufacturing and services
is a response to changes in
the global economy as well
as development at the
regional and national
levels.
A very important challenge
for governments in
developing countries is to
develop policies that can
support competitive business
development. This requires
a renewed look at particular
policies that can directly
support business
development. These include
trade policy, industrial
policy, competition policy
as well sector development
policies and regulation for
services and other sectors.
Developing Countries in the
Global Economy
Globalisation involves the
integration of economies and
societies as firms engage
in economic activities
across national
geo-political borders, and
individuals seek economic
and social opportunities in
other countries and
governments enter into
agreements at the
multilateral, regional and
bilateral levels to
encourage such activities.
This process is
multi-dimensional, affecting
business, government and
society. Business in
developing countries face
increased competition as a
result of globalisation,
both in their domestic
markets as well as in export
markets. Strategies to
respond to this increase in
competition are important
from business but also from
government. It is important
for business to engage
government to develop
policies that will enhance
the competitiveness of
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