Tutwa’s first Webinar Series of 2022: Capacity-Building Webinars on Industrialisation and the  AfCFTA

Tutwa’s first Webinar Series of 2022: Capacity-Building Webinars on Industrialisation and the AfCFTA

AUDA-NEPAD, with support from JICA, commissioned Tutwa to conduct Capacity-Building Webinars on Industrialisation and the African Continental Free Trade Area (AfCFTA). The webinars aimed to create momentum on dialogue around industrialisation in the context of regional integration and intra-African trade. Three Webinars were held on 26 February, 3 March and 10 March, marking Tutwa’s first trade event of the year.

The webinars drew experts from various organisations, with participants hailing from most African countries and some international ones too. They included participants from the private sector, public and regional economic communities across the continent. Within the context of industrialisation, the webinars considered a range of topics focusing on policy-making and trade facilitation; the role of FDI and linkages to local economies; with a final session drawing on practical case studies of African countries’ readiness for the AfCFTA and ASEAN (The Association of Southeast Asian Nations) FTA agreement experience.

Through the numerous back-and-forth attempts to find speakers and send interviews into the stratosphere, our goal was always to have maximum impact. In just one month, I had learned the intricacies of Zoom webinars, how to embed a survey and how to extract attendance reports on zoom. I had built relationships with the graphic designers and various panelists and experts that I’m sure we will continue to rub shoulders with in future. After weeks of planning, and assisted by efficient Zoom Masters Marco and Cindy Jacobs, we were finally able to get the webinars off the ground.

The webinars featured keynote speakers that gave some opening and closing remarks on the work underway. These distinguished guests included AUDA-NEPAD’s Mr. Amine Idriss Adoum, the Director of Programmes Management and Delivery; JICA’s Mr. Minoru Honma, the Chief Representative of South Africa; the AfCFTA Secretariat’s Ms. Demitta Gyang, Head of Customs Cooperation, Trade Facilitation, and Transit; Dr Bernice McLean, Ag. Head Industrialisation Division at AUDA-NEPAD; with Mr George Murumba from AUDA-NEPAD closing of the last webinar.

Webinar 1: Trade Policy and Trade Facilitation was facilitated by Tutwa’s Catherine Grant Makokera and introduced participants to the trade policymaking process and how it is linked to industrialisation objectives in African countries. It outlined the policy-making cycles and introduced ideas about how trade agreements are domesticated, including through industrial policy tools. It further outlined the role of various stakeholders, including the private sector and civil society organisations in the trade policy formulation process. Speakers included Dr. Francis Mangeni, Head of Trade Promotion & Programs, AfCFTA; Ms. Demitta Gyang, and Dale Mudenda, from the University of Zambia.

The webinar also outlined the components of the trade facilitation agenda, including as set out by the WTO Trade Facilitation Agreement, relevant regional free trade agreements, and the AfCFTA. Participants were exposed to the views of the private sector on trade facilitation challenges to develop a broad understanding of the impact on business from a panel that included: Mr. Elisha Tshuma, a Customs, Tax, and international Trade Advisor; Dr. Richard Adu-Ggyamfi, a Small and Medium-sized Enterprise and Trade Expert; Mr. Tulo Makwati, Coordinator of the SADC Business Council; and Mr. Ziad Hamoui from Borderless Alliance in West Africa.

Webinar 2 was facilitated by Tutwa’s Judy Smith-Höhn and focused on the role of FDI and linkages with local industries, looking at the importance of phase II negotiations of the AfCFTA to support industrialisation. It introduced participants to the developments and changes around globalisation, regional integration, and its links to industrialisation. It outlined the renewed call for localisation and what this means for regional integration and industrialisation in the African context; while also highlighting the need for innovation, digital transformation and technology transfer. Experts unpacked how investment can support the AfCFTA and its linkages to local economies. There were presentations from Dr. Laura Páez Heredia, the Chief Market Institutions, Regional Integration, and Trade Division at  UNECA; Ms. Treasure Maphanga, Director at the African Electronic Trade Group; and Dr. Richard Adu-Ggyamfi, a Small and Medium-sized Enterprise and Trade Expert.

The second webinar also featured a panel with Mr. Tambe Oswarld, CEO of the Cameroon Intellectual Property Awards Association, and Legborsi Nwiabu, Esq. a Trade Lawyer and Private Sector Specialist who highlighted experiences from RECs and African organisations involved in phase II issues, with a particular focus on intellectual property rights. Mr. Victor Djemba, Chief, Regional Division Africa at UNIDO, provided some feedback on the webinar and its importance in influencing the industrialisation agenda.

I facilitated the last webinar on The AfCFTA and Member States, which introduced participants to the developments around the AfCFTA taking place and how it is linked to industrialisation objectives in African countries. It outlined how national governments can align and domesticate the objectives of the agreement towards ‘national AFCFTA strategies’ to ensure effective implementation. This was presented by Mr. Cham Etienne Bama, a Senior Trade Policy Advisor.

What was beneficial from a grassroots perspective, according to feedback from participants, were the case study presentations. The first case study presentation was by Dr. Aladdin D. Rillo, a Senior Economic Advisor for the Economic Research Institute for ASEAN and East Asia. He highlighted the evolution of ASEAN and its current initiatives, including the various FTAs that it has established with dialogue partners. He pointed to the challenges, successes and lessons that African countries could learn from the ASEAN integration process. The Nigerian case study by Dr. Adebayo Adedokun, from the Department of Economics, University of Lagos, and the Cameroonian case study by Dr. Manfred Kouty, a Lecturer, Trade Policy and Trade Facilitation Expert, educated participants on how these countries’ government institutions, private sector formations and other stakeholders have prepared and readied themselves for the AfCFTA.

As we evaluated the webinars, I believe we achieved the maximum impact we were aiming for. We had good audience participation; the first webinar had over 100 participants online for the entire duration of the session. Those who are all too familiar with zoom fatigue will know that this is a solid achievement for a 3-hour session. Similar levels of active participation were achieved for the two other sessions. The positive responses received from webinar participants are a testament to the commitment of the Tutwa and AUDA-NEPAD organising team, supported by JICA. Moreover, the feedback we received indicated an appetite for continued engagement on this particular topic. My/Our hope is that this is but the beginning of fruitful engagements that seek to address the challenges of industrialisation in Africa through programmatic interventions in support of the AfCFTA.

*Click on the links to access the information from the webinars: Webinar presentations; Recordings for  Webinar 1Webinar 2;  Webinar 3.

 

The TRIPS Waiver Compromise Draft: A promising or compromising text?

The TRIPS Waiver Compromise Draft: A promising or compromising text?

After nearly 18 months of negotiations, there has finally been some progress with regard to the request to waive certain provisions of the TRIPS Agreement in response to the COVID-19 pandemic. It was in October 2020, during the meeting of the WTO’s TRIPS Council, that India and South Africa initially tabled this waiver request. A revised proposal was subsequently submitted in May 2021.

Following intensive quadrilateral negotiations between South Africa, India, the United States and the European Union on 15 March 2022, a compromise agreement was tentatively reached that will now be presented to other WTO members for their consideration and possible adoption.[1] It will be interesting to see what benefits this is going to reap, as some have argued that there is likely to be little practical impact from any waiver of IP rights.[2]

The compromise draft text has drawn criticism from both those who support and oppose the waiver request.[3] The proponents of the waiver request find the compromise draft text disappointing. They argue that it is a very limited and narrow agreement. It only covers vaccines, and it limits “eligible members” to developing countries.[4] On the other hand, opponents of the waiver maintain the view that the compromise draft is a solution in search of a problem.[5] However, it remains to be seen if this compromise draft text would constitute the basis of any final waiver that may be adopted by the TRIPS Council.

Essentially, the May 2021 revised proposal sought a waiver of TRIPS obligations relating to the application and enforcement of copyright, patent rights, industrial designs, and the protection of undisclosed information.[6] These obligations were to be waived ‘in relation to health products and technologies including diagnostics, therapeutics, vaccines, medical devices, personal protective equipment, their materials or components, and their methods and means of manufacture for the prevention, treatment or containment of COVID-19.’ According to the revised proposal, the waiver should be in place for at least 3 years.[7]

However, the provisions of the compromise draft text are far from the demands contained in the revised waiver proposal. According to Oke, one could convincingly argue that the text is probably closer to the positions of both the EU and the US in this regard.[8] The compromise text merely provides some concessions regarding the rules governing compulsory licensing contained in Article 31 of the TRIPS Agreement, and its scope is limited to the production and supply of COVID-19 vaccines for now at least. This is basically in line with the position of the EU and the US on the waiver request. Although initially opposed to the waiver request, the US eventually expressed its support for the waiver proposal in May 2021. This support was, however, strictly limited to the production of vaccines.[9] In June 2021, the EU subsequently tabled its own counterproposal at the TRIPS Council, which essentially revolved around clarifying the rules relating to compulsory licensing in Articles 31 and 31bis of the TRIPS Agreement.[10] Nevertheless, when compared with the permanent waiver codified in Article 31bis of the Agreement, one could say that the provisions of the compromise draft text are not as cumbersome and complex as the provisions contained in Article 31bis.[11]

The aspects of the draft text that may be considered as gains for proponents of the waiver request include paragraph 2 of the text which allows that :

“…an eligible Member may authorize the use of patented subject matter under Article 31 without the right holder’s consent through any instrument available in the law of the Member such as executive orders, emergency decrees, government use authorizations, and judicial or administrative orders, whether or not a Member has a compulsory license regime in place…”

According to the text, the ” law of a Member” referred to in Article 31 is not limited to legislative acts such as those laying down rules on compulsory licensing. It also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders.[12]

Although the scope of the compromise text is currently limited to the production of vaccines, Oke argues that paragraph 3(c) of the compromise text is an implied admission of the practical difficulties associated with the use of Article 31bis of the TRIPS Agreement. [13] Paragraph 3(c)  is a crucial departure from the strictures codified in Article 31bis, which was, ironically, originally intended to address the problems associated with Article 31(f), especially for countries with no or insufficient domestic manufacturing capacity.[14] It permits an eligible member to ‘waive the requirement of Article 31(f) that authorised use under Article 31 be predominantly to supply its domestic market’. Paragraph 3(c) further provides that an eligible member ‘may allow any proportion of the authorised use to be exported to eligible Members and to supply international or regional joint initiatives that aim to ensure the equitable access of eligible Members to the COVID-19 vaccine covered by the authorisation.’[15]

Paragraph 6 addresses the question regarding the duration of the compromise waiver. However, as can be read from the text, there is no consensus in this regard. The text refers to both 3 and 5 years. “An eligible Member may apply the provisions of this Decision until [3][5] years from the date of this Decision…”. Could this be a suggestion that the waiver could be in force for at least 3 years? It is certainly effective to clarify this in the text of the compromise waiver. Paragraph 6 goes on to state that ‘the General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council also has authority to review annually the operation of this Decision’.[16]

Before outlining some of the gains from the outcome of the quadrilateral negotiations, I highlighted some of the reasons why the proponents of the waiver are disappointed with the draft compromise text. First of all, the compromise text only covers the compulsory licensing of patents. This is not satisfactory as the waiver proposal requests for the waiver of obligations relating to copyright, patents, industrial designs, and the protection of undisclosed information. The scope of the compromise text is also limited to the production and supply of COVID-19 vaccines.

As indicated above, the definition of an ‘eligible Member’ in the compromise waiver text is another area of concern. The compromise waiver text defines, in a footnote, an ‘eligible Member’ as ‘any developing country Member that exported less than 10 % of world exports of COVID-19 vaccine doses in 2021.’[17] As noted by Oke, “this automatically excludes developed countries from the scope of the compromise waiver. It further narrows down the number of developing countries that can effectively use the waiver to export vaccines to other developing countries”.[18] This limited scope is likely to face more challenges as the compromise agreement is presented to other WTO members.

Having said the above, one may question the use of negotiations that are open to only four WTO members to deal with an issue that is affecting the entire international community?  I guess the answer will lie in the reaction of the other WTO members to the compromise waiver text as it is presented. At this point, whether or not the compromise waiver text would also constitute the basis of any final waiver decision is still subject to debate. As has been said elsewhere, it will be up to the remaining WTO members to decide whether this is a promising or a compromising text.

 

[1] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022] Available online at: https://www.afronomicslaw.org/category/analysis/trips-waiver-compromise-draft-text-preliminary-assessment.

[2] G. Quinn, “COVID IP Waiver Attempts are Becoming Harder to Justify” [accessed 30 March 2022] Available online at https://www.ipwatchdog.com/2021/10/20/covid-ip-waiver-attempts-becoming-harder-justify/id=138993/.

[3] E. MacDermott, “Latest WTO Waiver Compromise Text Targets COVID Vaccine Patents, Draws Criticism from Both Sides” [Accessed 30 March 2022] Available online at https://www.ipwatchdog.com/2022/03/16/latest-wto-waiver-compromise-text-targets-covid-vaccine-patents-draws-criticism-sides/id=147576/.

[4] J. Love, “QUAD’s tentative agreement on TRIPS and COVID 19” [Accessed 30 March 2022] Available online at https://www.keionline.org/37544.

[5] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022  [Accessed 30 March 2022].

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9]Statement from Ambassador Katherine Tai on the Covid-19 Trips Waiver: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/may/statement-ambassador-katherine-tai-covid-19-trips-waiver.

[10] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].

[11] Ibid.

[12] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members).

[13] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].

[14] Ibid. See also TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members).

[15] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members). para 3(c).

[16] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members). para 6.

[17] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members). Footnote 1.

[18] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].

Inequality vs Disinvestment: The case for a South African Wealth Tax

Inequality vs Disinvestment: The case for a South African Wealth Tax

Last week, Minister of Finance, Enoch Godongwana, delivered his maiden Budget Speech and, like many economists, I was eager to delve into the country’s financial standing. I was equally eager to attend Mazars Budget Analysis, a virtual event that took place the day after Budget 2022. The event, cleverly entitled From Viral Dis-ease to Sustainable Growth, provided expert, between-the-lines analysis of the National Budget. Among the financial successes and failures that were reiterated and the potential consequences of the Russia-Ukraine conflict that were alluded to, one area of the analysis remained with me – the mooted wealth tax and potential to reach it in South Africa.

The 2022 Budget Review indicates, inter alia, that provisional taxpayers with assets more than ZAR 50 million are expected to declare assets and liabilities at market value for their 2023 returns. Previously, the declaration would have been at cost rather than market value. This change is expected to assist with the detection of non-compliance or tax fraud.[1] It has also been speculated that another implication of government’s new requirement is that the information gathered may be used in the formulation and implementation of a wealth tax in South Africa.[2] Given the deep inequalities which plague South African society, the desire to implement such a tax is unsurprising, but the broader implications could prove harmful.

In 2019, almost three decades into its democracy, South Africa was recognized as the most unequal country in the world.[3] Figures indicate that the top 10% of the country’s earners take home 65% of total income, while 90% get the remaining 35%. Similar inequalities are apparent in wealth – the top 10% controls 93% of the country’s wealth while the other 90% controls a mere 7%.[4]  Inequalities are also found to perpetuate on racial, gender, and spatial grounds.[5] Between 2011 and 2015, whites earned an average monthly salary more than three times that of Africans, females earned 30% less than males, and individuals in Gauteng and Western Cape had the highest provincial annual mean and median expenditures while those living in Limpopo and Eastern Cape had the lowest.[6]

Figure 1. Earnings among South African race groups

Source: Own computation using information from Stats SA 2020.

Notes: The figure above displays mean real monthly earnings among South African race groups over the period 2011-2015.

Exacerbating the issue of inequality in South Africa were the harshest days of the COVID-19 pandemic and the nationwide lockdown which followed. In terms of access to water and sanitation, job security, education, internet access, and food security, the hard yet much-needed response served to highlight and indeed, deepen the gross divide between those with and those without.[7] Thus, the driving force behind the implementation of a wealth tax should be to narrow this divide. At the same time, however, it may serve to drive investment to other destinations, further dampening the country’s economic growth prospects. Over the last decade, approximately 4,200 high net-worth individuals left the country, and the prospect of higher taxes may cause this figure to grow.[8]

Should the South African government be certain about the implementation of a wealth tax, stringent monitoring is a key requirement. The South African Revenue Service, due to the upskilling of personnel and investment in their information and communications technology (also discussed at the Mazars event), may very well be able to pull this off. However, a cushion to the brain drain and disinvestment blow must be found. To this end, government must reinvest revenues received from the wealth tax in developments within the realms of water and sanitation, healthcare, energy, education, telecommunications, and stimulating innovation rather than simply handing the funds out. But even if these recommendations are followed and even if funds are correctly appropriated (which is a tough ask in South Africa), it may be long before the benefits materialize.

Nevertheless, credit must be given to the government for requiring provisional taxpayers with assets greater the ZAR 50 million to state them at market value as it will assist in determining the structure and distribution of wealth in South Africa[9], thus, allowing for better planning should a wealth tax truly be under consideration.[10]

[1] Business Tech, ‘Government knows wealthy taxpayers are leaving the country’, February 24, 2022, https://businesstech.co.za/news/finance/562204/government-knows-wealthy-taxpayers-are-leaving-south-africa-analyst/.

[2] Business Tech, ‘Government knows wealthy taxpayers are leaving the country’, February 24, 2022, https://businesstech.co.za/news/finance/562204/government-knows-wealthy-taxpayers-are-leaving-south-africa-analyst/.

[3] Khanyi Mlaba, ‘5 Shocking facts  that show why South Africa is the “most unequal country in the world”’, Global Citizen, November 27, 2020, https://www.globalcitizen.org/en/content/facts-why-south-africa-most-unequal-country-oxfam/.

[4] Dennis Webster, ‘Why South Africa is the world’s most unequal society’, Mail and Guardian, November 19, 2019,  https://mg.co.za/article/2019-11-19-why-sa-is-the-worlds-most-unequal-society/.

[5] Dennis Webster, ‘Why South Africa is the world’s most unequal society’, Mail and Guardian, November 19, 2019,  https://mg.co.za/article/2019-11-19-why-sa-is-the-worlds-most-unequal-society/.

[6] Government of South Africa, Department: Statistics South Africa, How unequal is South Africa?, (online), http://www.statssa.gov.za/?p=12930.

[7] Lauren Graham, ‘Pandemic underscores gross inequalities in South  Africa and the need to fix them’, The Conversation, April 5, 2020, https://theconversation.com/pandemic-underscores-gross-inequalities-in-south-africa-and-the-need-to-fix-them-135070.

[8] Business Tech, ‘Government knows wealthy taxpayers are leaving the country’, February 24, 2022, https://businesstech.co.za/news/finance/562204/government-knows-wealthy-taxpayers-are-leaving-south-africa-analyst/.

[9] Business Tech, ‘Government knows wealthy taxpayers are leaving the country’, February 24, 2022, https://businesstech.co.za/news/finance/562204/government-knows-wealthy-taxpayers-are-leaving-south-africa-analyst/.

[10] Amanda Visser, ‘Wealth declaration is not all negative’, Moneyweb, February 28, 2022, https://www.moneyweb.co.za/mymoney/moneyweb-tax/wealth-declaration-is-not-all-negative/.

Coalitions of Necessity

Coalitions of Necessity

The 2021 local government elections (LGEs) were remarkable for many reasons, none more significant than the birth of an era where the African National Congress (ANC) exists with less than 50 percent of an election result. While the national incumbent’s decline has been resoundingly welcomed by the opposition, the electorate’s decision to punish the ANC in major municipalities was not in favour of any one countervailing force. Instead, the 2021 LGEs signaled a more disparate voice amongst voters, beckoning those in power to set aside their egos and exercise their capacity for cooperation and compromise to fulfil their mandate to deliver essential services to local communities.

At first glance, the complexity of the outcome is overwhelming in terms of predicting an accurate picture of who will actually govern at the municipal level. Municipalities, where the electorate delivered a clear majority, saw the ANC securing control of 161 councils, the Democratic Alliance (DA) with 13, and the Inkatha Freedom Party (IFP) securing control of 10. Nevertheless, Independent Electoral Commission (IEC) results show the largest number of hung municipalities in the country since 1994.  A total of 66 municipalities have been left hung across the country, meaning that no party was able to win more than 50% of the votes, giving rise to an intense and potentially heated negotiation for possible coalition governments.

The most interesting feature of the results is not which parties achieved the majority of votes, but which parties have secured enough votes to insert themselves as potential coalition kingmakers for the two leading parties, the ANC and the DA – both of whom experienced several humbling results in comparison to the 2016 LGEs.

The disenchantment with the status quo was most evident in major metros, where the stewardship of the country’s economic power is housed. Of South Africa’s eight Metropolitan Municipalities, the electorate failed to give one party an outright majority in five of them – namely Ekurhuleni, eThekwini, Johannesburg, Nelson Mandela Bay and Tshwane.

In the City of Johannesburg, the ANC received 33.60%, the DA received 26.47%, and ActionSA – led by its founder and DA-divorcee Herman Mashaba – garnered 16.05% of the vote.  While the ANC obtained the most votes in each metro except for the DA’s stronghold in the City of Cape Town, and in Nelson Mandela Bay where the ANC and the DA will occupy 48 seats each, the pattern of the former liberation party’s reduced results echoed through Ekurhuleni, where it obtained 38.19% in comparison to the DA’s 28.92%; in eThekwini, where it obtained 42.02% to the DA’s 25.62%;  and in Tshwane, where its 34.31% narrowly beat the DA’s 32.34%. It is in these metros where the balance of power will rest with several of the smaller parties, whose allegiance will be cajoled in the horse-trading to follow.

“The manner in which our people spoke should be indicative of their wish to have us as leaders working together,” President Cyril Ramaphosa said on Thursday night at the IEC’s official announcement of the results. The president is correct – the electorate’s disillusionment with previous majorities is a clear signal to the under-fire elite that South Africans would rather entrust a plethora of alternatives to serve their interests at the local level. However, the personal and ideological posturing of several parties has complicated the permutations of potential coalitions.

Predictably, the national opposition party has ruled out forming coalitions with ANC,  with party leader John Steenhuisen saying “It is not the DA’s role to save the ANC”, thereby excluding the possibility of the most mathematically feasible partnership, forcing the DA to embark on the challenging road of persuading several smaller parties that curtailing the country’s historically entrenched socio-economic disparities is at the core of its manifesto. The DA has also said it will not enter into any coalition agreements with the EFF or any other party that does not subscribe to constitutionalism, the rule of law, a social market economy, a capable state as well as non-racialism. “These are the non-negotiables for the DA,” Steenhuisen added.

The EFF’s agenda on land expropriation without compensation could play a key role in who the party decides to partner within coalition talks. Having re-asserted itself as the country’s third-largest party with a revolutionary mandate, the EFF could have a deciding vote in several hung municipalities and metros, particularly in Tshwane and Nelson Mandela Bay. The party’s chief, Julius Malema, has also celebrated the dwindling majority of the ANC, reiterating that the ‘elephant is being eaten piece by piece. However, a lack of options for the ANC could see its National Executive Council moving its position on land expropriation to force a last-ditch partnership capable of blocking DA-led coalitions.

The apparent deadlock between the ANC, DA and EFF empowers the seats taken by a number of other parties who will have to weigh their options in the coming days. Newcomers in the political space, ActionSA will be in high demand as a centrist force in Gauteng’s split metros of Johannesburg and Tshwane, and they too have ruled out working with the ANC, though their leader has decried the DA’s institutional arrogance and tendency to overlook the suffering of the country’s poorest as reasons for his exit from the party in 2019. Further to the right of the political spectrum, the Freedom Front Plus (FF+) doubled its number of seats. Taking a more pragmatic approach that focuses on achieving the objectives of its manifesto over party-political grievances, the Patriotic Alliance (PA) could also influence outcomes in some areas. These are only a few of the parties that will garner the attention of the bigger players.

It is a political fact that many of the extreme positions espoused by campaigning candidates are inevitably tempered by the realities of governance. This is particularly true in the wake of LGEs, where communities will place more importance on their candidate’s role in securing the amenities that facilitate their daily lives, caring less about their affiliate party’s ideological posturing in the National Assembly. Parties, on the other hand, will have to consider the risk of destabilizing their core vote at the 2024 national elections by sidelining some of their more divisive ideological stances.

However, the greater risk is undoubtedly to subject local communities to a cycle of governance that fails to deliver on the basic needs of the people. The outcome, whichever coalitions are formed, is indicative of a new era of multi-party democracy for South Africa, and its politicians have the power to determine the success of its maturation at the local level.

Image Rights: https://www.dailymaverick.co.za/article/2021-11-16-coalition-talks-while-parties-push-for-control-of-hung-councils-the-clock-ticks-relentlessly/

The 2021 LGE voter turnout marks a shift in our political culture that is likely to impact our political stability

The 2021 LGE voter turnout marks a shift in our political culture that is likely to impact our political stability

The 2021 Local Government Elections (LGE) took place against the backdrop of the Covid-19 pandemic, which saw electioneering activities severely constrained due to the ongoing state of disaster – characterized by Non-Pharmaceutical Interventions (NPIs) such as social distancing and limitations on the number of people who can attend gatherings. That said, lockdown regulations were relaxed to adjust Level 1 in time for the final stretch of political party campaigns and election day.

This meant parties could hold rallies – an inherent feature of political activity prior to an election -, and made it possible for citizens to come out in their numbers to cast their votes on 1 November 2021. However, this was not the case as South Africa witnessed it lowest voter turnout of any election ever held since 1994 – with only 45.86% of registered voters coming to the polls to cast their ballots. In contrast, voter participation in the 2016 LGE was comparatively high at 57,94%. Previous LGE’s witnessed lower voter turnouts (48,07% in 2000; 48,4% in 2006; and 57,6% in 2011).

Whilst the 2016 LGE marked a shift in voter behaviour – what we could refer to as a mass partisan dealignment, particularly the attitude of many voters towards the hitherto dominant ANC  – the 2021 LGE could be seen as marking a shift in the country’s political culture. Consider, for example, the 2006 LGE, where a mere eight municipalities across the country were hung; or the 2016 LGE with 27 hung municipalities.; to the staggering 66 hung municipalities in 2021. The dominant ANC’s loss of majority in key municipalities in 2016, was in part due to swing voters. This was further aided by the huge number of political organisations contesting these elections (205). Fast forward to 2021, and we see an even greater number of parties contesting, a total of 325.

The decline in the ANC’s dominance in 2016 was also attributable to the fact that a number of eligible voters in its strongholds  did not show up to cast their votes. A number of factors played a role here, such as the public standing of its leader at the time, the state of the economy – especially given that there tends to be a link between a government’s popularity and economic variables such as employment and income levels to name a few.  The latter brings the nature of our democracy under scrutiny.

South Africa is regarded as a democratic state. We hold free and fair elections at regular intervals, there is universal suffrage, there are mechanisms to hold elected representatives accountable and there is a guarantee of the respect for human rights. The nature of our democracy tends to be fixated on institutions and mechanisms that anchor a constitutional political system. However, for democracy to be meaningful, it ought to move beyond a focus on institutions and mechanisms to be more substantive in nature.

Substantive democracy tends to focus on decreasing socio-economic inequalities towards fostering social justice. This would level the playing field and in turn facilitate enhanced political participation. With South Africa boasts one of the highest unemployment rates in the world (almost half of the population over the age of 18 falling below the upper-bound poverty line) and is considered the most unequal society in the world, the gradual disillusionment with democracy comes as no surprise.

The 2016 LGE outcomes can be viewed, in part, as disenchantment with the political institution that is the ANC and the political system in its entirety. The dominant nature of the ANC has made the governing party synonymous with the state. As such, the failures of the ANC government are inherently failures of the state. The failure of the ANC government to meaningfully transform the material conditions of many South Africans, and at a decent pace, has ultimately generated disinterest in political institutions.

The Covid-19 pandemic also did the country no favors as it intensified existing structural inequalities. The poor were further kept in poverty by the lockdown-induced economic disruptions as many of them could not earn an income for most of 2020 – this against the backdrop of food price increases and the generally high cost of living. All of these factors are at play in the absence of permanent social security provision for unemployed persons. Essentially, there is no support for people who are willing and able to work – but unable to find any employment.

The low voter turnout can be construed as a protest action by many of South Africa’s voters, who have lost faith in the political system’s ability to positively transform their lives. The danger of this is that people, particularly the poor, are now left to their own devices to fulfill their basic needs. The July unrest was merely a teaser of what may be to come if South Africa’s democratic deficiencies are not expeditiously attended to. The shift in our political culture, the transformation in societal attitudes and beliefs about political institutions, charts a path to political volatility which tends to breed instability.

 

Emerging Tensions in the African Continental Free Trade Area

Emerging Tensions in the African Continental Free Trade Area

The African Continental Free Trade Area (AfCFTA) is one of the most ambitious regional integration initiatives taking place in the world today. Full implementation is still at least a decade away but there is significant value for the countries participating in the process of engagement itself.  Beyond market access preferences, the AfCFTA is a potential catalyst to strengthen productive capacity, build trade-supporting infrastructure and prepare the required institutions for achieving inclusive economic development across the continent. It will bring together 54 countries, some of which are not members of the World Trade Organization and have limited experience in negotiating trade agreements, like Ethiopia and Sudan. The majority of the world’s least developed countries (LDCs) will be part of the AfCFTA and it will be the first time that some of these countries are required to make significant changes to their tariff structures as well as negotiate rules in areas such as investment and electronic commerce.

The framework agreement of the AfCFTA has been ratified by 38 countries as at the beginning of September 2021 while it entered into force on 7 July 2019. It sets out an overall ambition to remove duties on 97% of all goods traded in the AfCFTA over a two-stage implementation process. Trade in services and non-tariff barriers are also the focus of Phase 1 of the agreement. Although it was possible for trade to commence from 1 January 2021, negotiations are ongoing with rules of origin still to be finalized for key sectors, such as clothing and textiles. All of this is happening at a time when it has not been possible for in-person interactions and negotiators have had to adapt to a virtual process.

It is not surprising therefore that some tensions are starting to emerge in the negotiations of the AfCFTA. First, there is a tension between the political ambition to complete this agreement in a short period of time and the technical process that is needed to achieve consensus on the complex rules that will govern African trade going forward. On the one hand, the strong political commitment to the AfCFTA is welcome and has been an important contributor to the momentum behind the process. There are however challenges when the technical process cannot keep up and meet the deadlines set by African leaders. In these circumstances, negotiators could run the risk of cutting corners and not agreeing on the level of detail required for the smooth implementation of the agreement. Following high profile events to mark milestones in the AfCFTA process and the announcement of trade commencing from the beginning of 2021, the fact that the negotiations are ongoing is causing confusion among traders about the status of the agreement. The advice to under promise and over deliver comes to mind.

A second area of tension is between the vision of the AfCFTA and the national economic development priorities of the participating countries. This is not unique to this trade agreement and is often at the heart of any modern negotiation process. Where the AfCFTA has a particular test is in the way that the process has unfolded with few specifics included in the framework agreement.  It is in the ongoing phase 1 negotiations that countries and customs unions are required to put forward offers that meet the framework criteria. This requires, for example, identifying 3% of goods that will be excluded from AfCFTA tariff reductions. In those African countries that rely on tariff revenue as a key part of domestic resource mobilization or that use tariffs as a tool of industrial policy, this could involve some difficult choices – a situation that is further complicated by an increasing focus on local content requirements and import substitution by African policymakers.

The framework agreement of the AfCFTA has also left some key concepts to be fleshed out as the negotiations proceed. For example, it is not clear how ‘reciprocity’ will be assessed in terms of the trade in goods negotiations – on a product by product basis, in terms of commercial benefit or based on a broad overall balance in commitments. In terms of the time available to implement tariff reductions, the provision of 10-13 years for LDCs is now being used by more developed countries that are taking up the longer implementation period as a member of a customs union. Special and differential treatment is an important principle of the AfCFTA but LDCs will only have the same period for adjustment to the liberalization impact of the agreement as their more advanced neighbours.

Thirdly, there is also a tension between the reality emerging of how the AfCFTA will be implemented and the overarching objective to create a more streamlined and less complex trade architecture in Africa. The AfCFTA will not replace the existing regional trade arrangements, such as the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), but will create an additional layer that plugs the gaps where there is no bilateral or regional agreement in place between members of the AfCFTA. This could create additional complexity for traders, especially where there are differences in the rules applied.

In conclusion, the AfCFTA has enormous potential to progress the integration of African economies but it should be viewed as a long term initiative. There are difficult issues that still need to be resolved under phase 1 of the negotiations, and implementation of commitments is likely to only be delivered in 10-15 years’ time. This needs to be clearly communicated to stakeholders, including the private sector. Greater transparency would go a long way to ensuring that the process is better understood. The tensions emerging require African trade ministers and officials to recommit to the overarching aims of the AfCFTA. There is room for the more developed, larger economies on the continent, such as South Africa, Kenya and Nigeria, to lead by example by opening up their markets in line with the original ambition.

Phase 2 and 3 negotiations on investment, competition policy, intellectual property rights and electronic commerce will be particularly challenging. There is however value in the process and not just in the end outcome. African countries should continue to build on the momentum created by the AfCFTA to strengthen productive capacity, build trade-supporting infrastructure and prepare the required institutions for achieving inclusive economic development.

 

The views and opinions expressed in this blog are solely those of the author. These views and opinions do not necessarily represent those of Tutwa Consulting Group and/or the Tutwa editorial team.

Blog first published: https://www.tradeexperettes.org/blog/articles/emerging-tensions-in-the-african-continental-free-trade-area

Image Rights: https://archive.uneca.org/afcfta/pages/online-course-making-african-continental-free-trade-area-afcfta-work