Audio Visual Services

According to a 2010 global cinema survey conducted by the United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute for Statistics (UIS), Nigeria has overtaken the United States for second place in the global production of motion pictures. India remains the largest film producer in the world, producing 1041 feature films in 2005 and 900 short films in 52 different languages and dialects.  The US has in the past been the next largest producer of motion pictures, however Nigeria is closing the gap, outperforming the US for second place.  For Nigeria this is certainly no small accomplishment. 


According to the survey, Nollywood produced 872 productions  and in contrast, the United States produced 485 major films. The three heavyweights were followed by eight countries that produced more than 100 films: Japan (417), China (330), France (203), Germany (174), Spain (150), Italy (116), South Korea (110) and the United Kingdom (104).

The explosive growth of Nigeria’s Nollywood film industry attracts considerable attention, especially for developing countries looking for alternatives to the US or European models of film production and distribution, which require considerable investment.  To begin with, Nigerian film makers uncovered a winning formula by relying on video instead of screen film in order to reduce production costs.  Additionally, Nigeria capitalized on economies of scale given its sizable domestic market and her exports to the African continent and the diaspora.  One reason for Nollywood's popularity in Africa lies with the South African-based cable television MultiChoice, which is a fee-based broadcaster to the continent with 24-hour channels dedicated to African content, predominantly Nigeria productions. 

I should note however that these developments are not necessarily a result of Nigeria’s participation in multilateral or regional trade in services agreements but rather a result of home-grown supply capacity, technology usage and application of low cost approaches.  Trade in services negotiations however, are useful for the elimination of barriers to trade where the capacity to supply a market is hindered by regulatory measures.  In this regard, trade in services negotiations at the WTO aim to increase the liberalization commitments undertaken by participating Member States.  However, the audio visual sector is one in which fewest WTO Members have undertaken specific commitments under the General Agreement on Trade in Services (GATS) and it attracts significant MFN exemptions; a reflection of the controversial and divergent policy and cultural views among Members. 

For instance the European Community has almost no multilateral commitments in this sector and in the EC’s EPA Services, Investment and E-commerce template, the EC has excluded the sector from the scope of the EPA negotiations with ACP countries, of which Nigeria is a Member.  African countries could however choose to include this sector in the EPA negotiations with a view to developing an international advantage in the sub sector.  However the EPA trade in services negotiations would need to give priority to the development of services supply capacity rather than traditional market opening.

As one would expect, the US is a demanduer in this area and has effectively used bilateral and regional services agreements to advance audio visual commitments undertaken by its FTA negotiating partners e.g. Morocco in the US-Morocco Free Trade Agreement of 2006.  However these bilateral commitments have not necessary resulted in increased multilateral offers in the WTO Doha round, even though the sector is a dynamic one. 

International trade in audiovisual services extends to the production (including processing and finishing), distribution (including broadcasting) and exhibition of motion pictures, television and radio services.  It also includes sound recording and other entertainment such as theatre, bands, orchestras etc and includes the sale of advertising or promotion services. Additionally, the WTO Services Sectoral Classification List termed the W/120 also includes Recreational, Cultural and Sporting Services sector, under which news agency services are classified as a subsector and hence can be considered alongside audio visual services. 

A New Policy Approach Towards Africa Unveiled by AGOA Architects

Ten years after the enactment of the African Growth and Opportunity Act (AGOA), a coalition of its original architects and supporters have unveiled a comprehensive and ambitious new trade and economic policy to be presented to the Obama Administration, that would build on AGOA’s successes and expand the growing trade relationship between Africa and the United States.

The new policy proposal, entitled Enterprise for Development: A New Policy Approach Toward Africa, calls for the continuation of AGOA’s exclusive duty- and quota-free access to the US market for African goods, as well as policies to strengthen and grow indigenous enterprises in Africa and measures that support job creation, export promotion and prosperity in both the US and Africa.  

The main policy proposals include efforts to:

a) Expand and protect AGOA and make it permanent

b) Develop tax incentives and credits for US investors in Africa

c) Support regional integration through AGOA

d) De-link AGOA from the WTO Doha Round

e) Partner to revitalise Africa's agricultural sector

f) Make US aid smart and effective

g) Expand and reform the Millennium Challenge Corporation

h) Increase funding for US exports to Africa

i) Increase support for the Overseas Private Investment Corporation (OPIC)

The proposals recognise that the private sector is pivotal to the expansion of trade and investment and that efforts to support the US private sector as well could increase investment in Africa.

Additional information on this development can be found here

World Economic Forum on Africa: Dar es Salaam, Tanzania 5-7 May 2010

Tanzania will host the 20th World Economic Forum on Africa May 5-7 2010, which will be held for the first time in East Africa.  President Kikwete will host the meeting, which this year explores the theme “Rethinking Africa’s Growth Strategy”. President Kikwete said: “Africa is a continent full of potential; Africa has been growing despite the economic instability that is facing the world today. We will have the opportunity to examine the strategy of Africa for today to ensure that there is a better tomorrow.”  

The World Economic Forum has announced that nearly 1,000 participants from 85 countries will participate in the 20th World Economic Forum on Africa and the Forum’s Seventh Summit of Young Global Leaders will take place on 2-7 May in conjunction with the main event, whereby over 265 Young Global Leaders from over 70 countries representing business, government, civil society, arts and culture, academia, media and social entrepreneurs will participate. One day of the Summit will be devoted to “Learning Journeys”, which will give YGLs the opportunity to work with the Tanzanian government, civil society and private sector organizations on their challenges, innovations and models for social change.

2010 is a special year for both the World Economic Forum, which is celebrating the 20th anniversary of its Africa meeting, and Africa, which is marking 50 years since the start of the independence movement that transformed the continent’s geopolitical landscape.  Discussions will address how African nations are managing relations with key economic partners, with an increasing trend towards greater South-South cooperation. As Africa joins India and China in crossing the billion person mark, its young population, natural resources and market potential are catalysts for significant future growth and development. However, underlying blockages to social and economic progress must be addressed to harness this potential. Key issues include access to education, healthcare and affordable capital.

Debate will focus on new models of governance and a unified approach to ensuring peace and security in troubled areas and address how a more conducive business climate and regulatory reforms can encourage both local and international investment. In addition, the meeting is expected to discuss how can low-carbon, sustainable development plans can be designed for Africa’s economic drivers including its natural resources, agriculture and tourism.


The meeting continues a long-standing tradition of uniting African and global leaders to shape the agenda for the continent and in fact, the Forum’s Global Redesign Initiative, which allows business, political and civil society leaders to examine gaps in international cooperation and develop proposals to overcome some of these short-comings, will play a prominent role in this debate.

More information on this annual meeting can be obtained on the WEF website.

50 Facts About Africa You May Not Know

Selected statistics from the World Bank Regional Report on Africa 2009

3

SSA GDP growth was 5.1 percent.  Angola had the largest growth at 14.8 percent while the lowest was Botswana with a negative growth (-1.0 percent).

5

Equatorial Guinea has SSA's highest GNI per capita ($14,980); Burundi has the lowest ($140).

9

Total trade as percentage of GDP is the highest in Seychelles, 283.4 percent and lowest in Central Africa Republic, 37.5 percent.

10

In two thirds of SSA countries, one or two products are responsible for at least 75 percent of the country's total exports.

11

On average, the merchandise export within trade blocs is 8.4 percent of total bloc exports.

15

South Africa uses the most electric power per person (4,809.0kW/h); Ethiopia uses the least (38.4 kW/h).

16

In 2007, Burundi has the highest proportion of women in its labor force (90.2 percent); Sudan has the lowest (32.8 percent).

21

For the period 2007, Zimbabwe has the highest adult literacy rate (91.2 percent); Mali and Burkina Faso have the lowest (28.7 percent).

29

In 2010, starting a business in Guinea requires 213 days for each procedure; it takes 3 days in Rwanda.

32

Firms identifying corruption as a major constraint was highest in Côte d'Ivoire at 75.0 percent, whilst the lowest is Ghana 9.9 percent.

30

In 2010, Sudan has the highest number of procedures to enforce contracts of 53; Rwanda has the lowest of 24.

48

Gabon has the highest forest area as a percentage of total land area at 84.4 percent, whilst Djibouti has the lowest at 0.2 percent. (MDG7)

49

South Africa has the highest carbon dioxide emissions of 414,649 metric tons, whilst Comoros has the lowest of 88 metric tons. (MDG 7)

For the rest of the list, visit the World Bank site here 

SACU Centenary: Champagne?

The Southern African Customs Union (SACU) is commemorating its centenary and the theme of the celebrations is “Implementing a Common Agenda towards Developmental Integration in Southern Africa”. As I reflect on the theme, I am reminded that the combined population of the SACU countries is around 55 million with South Africa accounting for some 87% of the total.  South Africa also accounts for over 90% of SACU's aggregate GDP and will continue to maintain its predominant position in the region.

The SACU agreement was formalized in June 1910 between the then Union of South Africa — Territories of Basutoland, Swaziland and the Bechuanaland Protectorate.  The Agreement was renegotiated into the 1969 SACU Agreement, signed by the sovereign states of Botswana, Lesotho, and Swaziland (BLS) and South Africa, on December 11, 1969.  The second SACU Agreement provided two major changes: the inclusion of excise duties in the revenue pool and a multiplier in the revenue sharing formula that enhanced BLS revenues annually by 42 percent.  

With the independence of Namibia in 1990 and the end of apartheid in South Africa in 1994, SACU members embarked on a third round of new negotiations in November 1994, which culminated in a new SACU agreement in 2002. Namibia therefore joined SACU following her independence in 1990 and is the newest Member to the regional community.

Over the decades, intra-SACU trade has intensified but the traditional importance of South Africa as a regional hub has remained broadly unaltered. More than 95% of commercial flows within the customs union involved South Africa as a destination or supplier.  Moreover, South Africa accounts for around half of total BLNS trade, whereas the intra-SACU component of South Africa's total trade is relatively minor, reflecting SA’s greater diversification in terms of export destinations and import sources.

The EC continues to absorb the largest share of overall SACU exports, followed by the United States.  However, similar to the trend in the rest of Africa, the U.S. market remains the single most important single country destination (outside SACU) for exports from Lesotho and Swaziland, mainly due to the preferences granted under the African Growth and Opportunity Act (AGOA).  Exports to China from SACU, although still relatively modest, registered the fastest growth during the period reviewed (2003-2009).  Imports into SACU originate largely from the EC, China, and the United States.  Since 2005, imports from China have exceeded those originating in the United States and SACU's imports consist mainly of machinery and transport equipment, fuels, and chemicals.

However despite the longevity of the agreement, the results of regional integration have been imbalanced and fall far short of a century of progressive progress.  For instance, according to the WTO Third Trade Policy Review of SACU of November 2009, deeper integration is necessary for more balanced development in the SACU region and even though SACU economies have  collectively expanded at an average annual rate of about 4% in real terms since 2003, there is variation in growth rates in each economy and a generally unsteady performance.  The mixed growth record may reflect severe infrastructure bottlenecks, fluctuations in mining output, volatile national currencies, polarisation as well as the global economic downturn in recent years.

According to World Bank Trade data, SACU countries over the period 2006-2009 generally shrunk in average annual growth rate of total trade i.e. exports, imports of goods (merchandise) and services at constant 2000 U.S. dollars. As shown in the chart, Lesotho (the smallest economy of the five) shows to be the only exception to this trend.  

As a customs union, SACU policy harmonization efforts aimed at achieving a more cohesive, integrated regional market with balanced export-led growth is vital.  Considering the centennial theme has been acknowledged by the SACU Heads of State, one can only say "a 100 years later, its about time". 

Deeper Regional Integration among SACU Member States

The Southern African Customs Union (SACU) will be transformed from a customs union into a body to deepen regional integration (See attached Communique by Heads of State) in southern Africa beyond the existing five member states and to "serve as building block of an ever closer community" among the peoples of Southern Africa.

The decision was taken yesterday by the heads of state and government of the five member countries: Botswana, Namibia, Lesotho, Swaziland and South Africa.  A joint communiqué to declare that a new vision and mission had been defined for SACU was signed by President Hifikepunye Pohamba and the visiting heads of state King Mswati III of Swaziland, President Jacob Zuma of South Africa, Botswana President Ian Khama and Prime Minister Pakalitha Mosisili of Lesotho.

They held a closed-door meeting yesterday morning and then proceeded to the site where the new SACU headquarters will be built, in order to sign the communiqué during a ceremony that also marked the start of the centenary celebrations of the world's oldest customs union.  Although the communiqué stopped short of declaring that SACU might become the envisaged larger customs body for the 15-member state Southern African Development Community (SADC), this might well be so, a well-placed source told The Namibian.

In December last year, the SACU Council of Ministers decided in Windhoek to work towards "a defined roadmap for moving towards and economic community and monetary union" and further decided to "position SACU at the centre of the SADC economic integration agenda," according to a statement released afterwards.  "This underscores the aim to make SACU the nucleus for the envisaged SADC Customs Union," the source added.  President Hifikepunye Pohamba said yesterday that all five SACU states had underscored unity and vowed to hold a common position when it would come to trade negotiations with external trading partners.

"Our negotiations with third parties over the years have brought to the fore the need to develop common positions. This is particularly true of the ongoing talks for an Economic Partnership Agreement (EPA) with the European Union.  This situation, if not arrested, has the potential to undo all the gains realised in our deepening economic integration, both in SACU and SADC," Pohamba stated. According to South African President Jacob Zuma, the founding of SACU in 1910 was based on colonialism by the then Union of South Africa.

"Today, as we mark one hundred years of SACU, we must look at how to strengthen the arrangement, how to eliminate all vestiges of colonial systems of domination and dependency, and how to operate within a changing geopolitical environment," Zuma said. The combined trade contribution of developing countries now stood at 37 per cent and was rising rapidly towards 50 per cent, he said. "We must therefore engage with this international reality to enhance our collective development objectives. "We feel strongly that SACU's external strategy could include serious exploration of South-South cooperation, since this has excellent prospects for advancing our economic development," he said, hinting at Brazil and India, among others.

The vaguely drafted communiqué stated that the heads of state agreed that SACU had to be transformed into "a vehicle for regional economic integration capable of protecting equitable development."

Tasks that have not yet been completed are the establishing of a SACU Tariff Board, the SACU [trade] tribunal, a common negotiating mechanism and strengthening the Secretariat.  A common industrial and agricultural policy must still be drawn up and four of the five member states must still set up their own SACU national offices. Yesterday's meeting was preceded by three days of talks by the Council of Ministers. Another meeting of the SACU Heads of State will be held in July in South Africa.

By Brigitte Weidlich 23 April 2010 WINDHOEK

Unraveling Africa’s Insufficient Power with the Continents Abundant Energy Resources

Ironically, Sub-Saharan Africa (SSA) is richly endowed with both renewable and exhaustible energy resources yet the continent suffers from power shortages.  The fact is the continent’s energy resources tend to be concentrated in a handful of countries where physical and political barriers to trade make it difficult for countries to access centers of power supply and their economies are too small for  them to develop their own resources. For example, the Democratic Republic of Congo (DRC) alone accounts for about 40 percent of sub-Saharan Africa’s hydroelectric potential, although sources indicate that the Congo River has the potential to power a continent. Additionally, Ethiopia accounts for another 20 percent of the continents potential. However both countries are relatively far from the economic centers in southern, western, and northern Africa, and the multi-billion-dollar investments needed to exploit hydro potential are massive.  In addition, national economic and political considerations in the Africa for Africa models seemingly cannot be set in stone. 

For instance the multi-billion dollar Inga 3, the largest hydroelectric project in Africa, which would have been developed in the Congo River by the Western Power Corridor (Westcor) consortium consisting of Namibia, Angola, Botswana, South Africa and the DRC, was supposed to start generating electricity in DRC by 2012 for the participating countries. However the project is reported to have backfired when the DRC's National Electricity Society (SNEL), announced that Westcor would be dissolved.  Instead, the DRC government has opted for a proposal by BHP Billiton, the world's biggest mining company, to build a 2 500-megawatt hydropower plant in the country to support its proposed aluminum smelter.  The DRC government also expressed the view that it would be good for the DRC to retain more electricity for its own use. 

Currently, only 6% of DRC’s population has access to electricity and some NGOs have advocated that if projects are developed, the first priority should be to increase the rate of access to electricity to 60% of DRC’s population. Without such a national benefit from the development, some fear it would cause new civil unrest. They argue that lighting the rest of Africa while leaving most of DRC in the dark would be politically and morally unacceptable.

While national interests are important, the development of regional power pools in Africa is crucial to the development of abundant power resources.  Currently regional power pools have been formed in Central (CAPP), East  Africa (EAPP), Southern (SAPP), and West (WAPP) Africa and the pools are at very different stages of development, both technically and institutionally. For instance, the political process is most advanced in the WAPP, supported by political agreements at the head of state level through the ECOWAS. The pools, particularly the WAPP and SAPP, have facilitated significant cross-border exchanges of power and a number of countries, such as Botswana and Niger, rely on imported power while others, such as Nigeria and Mozambique, are major exporters of power. However, none of the pools are yet at the point where the arrangements are fully competitive.

A Look at Power Shortages in Sub Saharan Africa

According to the IMF Regional Economic Outlook on Africa 2008, Africa’s overstretched electricity systems have become exceedingly vulnerable to supply shocks and these acute electricity shortages have resulted in widespread outages and load shedding. As shown in the figure below, shortages of electricity in 2008 were caused by 4 main reasons: drought, conflict, structural issues and oil price shocks.

For instance, in recent years, when droughts reduced power in the hydro-dependent countries of East Africa, prolonged blackouts became commonplace. In countries like South Africa, plant outages for maintenance in a context of low reserve margins have also had serious consequences. Additionally, countries whose power infrastructure has been damaged by conflict have also suffered severe shortages. And finally, high petroleum prices have created enormous cost pressure for countries in West Africa, that depend on imported oil products for power generation.

An increasingly common response to the crisis has been short-term leases for emergency power generation by a handful of global operators. Though this capacity can be put in place within a few weeks, it is expensive. The costs of small-scale diesel units, for example, are typically about US$0.35/kwh. The equipment is typically leased for up to two years, after which it reverts back to the private provider. An estimated 700 megawatts (MW) of emergency generation are currently operating in sub-Saharan Africa which represents more than 20 percent of output capacity. The total price tag is substantial and ranges from 0.5 percent of GDP in Gabon to 4.3 percent in Sierra Leone.

Interestingly, this energy crises is a symptom of a deeper malaise, the cause of which needs to be understood in order to be addressed.  In this regard, I will discuss the four paradoxes highlighted in the report which shed light on the complex challenges that need to be addressed: abundant energy but little power; high prices but even higher costs; widespread but ineffective reform; and high expenditure yet inadequate financing

Africa's Acute Power Problems

According to the IMF Regional Economic Outlook Report of 2008 Sub-Saharan Africa (SSA) faces major infrastructure challenges in the power sector.  The report finds that SSA’s electricity infrastructure is the least developed, least accessible, least reliable, most expensive to operate, and the highest priced of any region in the world. 

For instance as stated in the Report, the entire generation capacity of the 48 countries of SSA, at 63 gigawatts (GW), is comparable to that of Spain. If South Africa is excluded, SSA’s generation capacity falls to 28 GW, about the same as Argentina (2008 figures).  Moreover, the region’s generating capacity has been stagnant for many years and the growth of the sector is barely half those in other developing countries. To make matters worse, as much as one-fourth of SSA’s plants are currently not in operating condition.

Additionally, rates of electrification in SSA are correspondingly low. About 24 percent of SSA’s population has access to electricity versus 40 percent in other low-income countries, and electrification is proceeding more slowly than in other low-income countries.  Furthermore, the region has a fraction of the consumption rates in other regions and, excluding South Africa, SSA’s consumption is only about 124 kilowatt hours (kwh) a year, less than one-tenth that of China.

On cost, although electricity tariffs in some SSA’s countries have been kept low, the cross-country average tariff is rather high at US$0.13 per kwh—about double those in other parts of the developing world and almost as high as in OECD countries. Nevertheless, the prices fail to cover costs and unreliable power supply further adds to the cost.

The issue of power outages is also of critical concern.  African manufacturing enterprises report power outages on an average of 56 days a year, costing firms 5–6 percent of revenues. That is why many firms operate their own diesel generators, at a cost of about US$0.40/kwh. In the informal sector, where firms rarely have the capital for backstop generation, lost revenues from power outages can be as high as 20 percent.

The issue of electricity is central to not only trade and investment but also crucial for advancement of social issues in SSA e.g. schools, hospitals and hence worthy of reform.

Impact of Transport on Landlocked Countries

At present, about one out of five countries in the world are landlocked and only three high-income economies out of 35 are landlocked. Of the 31 Land Locked Developing Countries (LLDC) in the world, 15 are in Africa. Being land locked significantly affects the GDP per capita of these countries. For instance, over the period 2003-05, GDP per capita of LLDCs was approximately 50% of the GDP per capita of transit developing countries and only about one quarter of GDP per capita of developing countries in general.

The main problem with regard to being landlocked is the geographical remoteness from the sea and transit dependence complicates the export and import processes.  As a result LLDCs trade less, grow more slowly than neighbouring coastal countries and for example countries like Burundi, Central African Republic and Mali spend an average of 15% of export earnings on transport and for some the cost can be as high as 50%.

According to World Bank Study, Improving Trade and Transport for Landlocked Developing Countries the cost of transporting a container from an LLDC to a port in a developed country is 20% higher than transporting from a coastal country.  The main causes of the higher costs are inadequate transit transport inter-modal connections, regulation and poor service.

The cost of importing from a LLDC is also rising and the Study also suggests that improving road infrastructure alone is not sufficient to eradicate inefficiency and high transport costs.  As indicated in previous posts in this Blog, the other main problems are associated with port infrastructure and the quality of port services which affect the cost and process of dispatching goods in and out of transit countries.

In addition,  it is estimated that manufacturers shipping from SSA pay nearly three times more in container handling charges at African ports than manufacturers shipping from Europe.   As shown in the above chart, in some SSA countries the cost of importing a standard-sized container is reportedly more than twice the world average. Added to these charges are the indirect costs associated with time delays at the port of entry and costs of transporting  goods to inland destinations and  in particular onward delivery to landlocked countries.