By EA Trade Reporter and Agencies

The UN Conference on Trade and Development (UNCTAD) has warned African countries to reduce external borrowing to avoid debt crisis similar to what was witnessed two decades ago.


The UNCTAD Economic Development in Africa Report 2016 finds that Africa’s external debt ratios appear manageable, but warns that African Governments must take action to prevent rapid debt growth from becoming a crisis, as experienced in the late 1980s and 1990s.

“Borrowing can be an important part of improving the lives of African citizens,” UNCTAD Secretary-General Mukhisa Kituyi says.

“But we must find a balance between the present and the future, because debt is dangerous when unsustainable.”

According to the report, at least $600 billion will be needed each year to achieve the Sustainable Development Goals in Africa, subtitled Debt Dynamics and Development Finance in Africa.


Leonce Ndikumana, a professor of economics at the University of Massachusetts, spoke about a groundbreaking UNCTAD-commissioned study he has written into misinvoicing in commodities trading -- a phenomenon that has led to massive loss of revenues to poor countries who depend on trading commodities like oil, copper and cocoa.

Mr. Ndikumana presented his findings at the Global Commodities Forum at UNCTAD14 on 15 July, 2016 in Nairobi, Kenya.

Q: Can you explain how trade misinvoicing works?

A: Trade misinvoicing consists of manipulations of exports and imports invoices by operators seeking to either secure foreign exchange advantages not reported to the relevant authorities, such as a central bank, and/or to avoid taxation or customs duties. It is detected by comparing the trade statistics of a country with those of its trading partners. Trade misinvoicing can occur both on the export and import side.

Q: How so?

A: On the export side, exporters, both firms or individuals report an amount which is less than the true value of the goods exported, so as to keep the difference abroad. On the import side, importers exaggerate the cost of the goods to be purchased abroad so as to obtain extra foreign exchange from the central bank. The extra foreign exchange is invested or spent abroad.

In both cases, the country incurs a loss in foreign exchange, hence capital flight. Imports may be "underinvoiced" to minimize customs duties. Imports may also simply not be reported at all -- which is basically smuggling (Editor's note: The loss is often larger when goods are exported without reporting. When the goods are imported, the loss is mainly lost customs revenue - otherwise, the country may benefit from having the goods). Also exports may "overinvoiced" -- this benefits operators where tax incentives have been established to promote export-oriented activities.

Q: Why has no-one done a study like this before (by country / by commodity)?


By EA Trade Reporter and Agencies

Developing countries should grasp the rapidly growing opportunity of electronic commerce – e-commerce – worth around $22.1 trillion.

According to the UN Conference and Trade Secretary General Dr Mukhisa Kituyi, e-commerce was worth that much in 2015, up 38 per cent from 2013 and developing countries risk falling quickly behind.

UNCTAD on Monday launched a new e-commerce initiative, called “eTrade for All”, that brings international organizations, donors and businesses under one umbrella, easing developing country access to cutting-edge technical assistance and giving donors more options for funding.

He said by providing new opportunities and new markets, online commerce can help generate economic opportunities, including jobs but lamented that while more than 70 per cent of people are shopping online in Denmark, Luxembourg and the United Kingdom, the story is different in most developing countries. In Bangladesh,Ghana and Indonesia where just two per cent or less of the population buy online.

“A huge divide is opening between countries that are exploiting those opportunities and those that are not,” UNCTAD Secretary-General Mukhisa Kituyi said, ahead of the initiative’s launch at UNCTAD 14.


By Agencies

Some commodity dependent developing countries are losing as much as 67 per cent of their exports worth billions of dollars to trade misinvoicing reveals a new study by the UN Conference on Trade and Development (UNCTAD).

The study which for the first time analyses this issue for specific commodities and countries says trade misinvoicing is thought to be one of the largest drivers of illicit financial flows from developing countries, so that the countries lose precious foreign exchange earnings, tax, and income that might otherwise be spent on development.

Released during UNCTAD's Global Commodities Forum, the study uses data from up to two decades covering exports of commodities such as cocoa, copper, gold, and oil from Chile, Cote d'Ivoire, Nigeria, South Africa, and Zambia.

"This research provides new detail on the magnitude of this issue, made even worse by the fact that some developing countries depend on just a handful of commodities for their health and education budgets," said UNCTAD's Secretary-General, Mukhisa Kituyi..

Commodity exports may account for up to 90 percent of a developing country's total export earnings, he said, adding that the study generated fresh lines of enquiry to understand the problem of illicit trade flows.


By Agencies

The slowdown in global trade and lack of productive investment are intensifying deep divides, protectionism, and even xenophobia said  United Nations Secretary-General Ban Ki-moon during the opening of the fourteenth United Nations Conference on Trade Development (UNCTAD) in Nairobi, Kenya.

The conference, UNCTAD 14, was opened Sunday by Kenya's President Uhuru Kenyatta in the presence of Mr. Ban and UNCTAD Secretary-General Mukhisa Kituyi.

"There are worrying signs that people around the world are increasingly unhappy with the state of the global economy," said Mr. Ban, who noted high inequality, stagnant incomes, not enough jobs - especially for youth - and too little cause for optimism.

"The global trade slowdown and a lack of productive investment have sharpened the deep divides between those who have benefited from globalization, and those who continue to feel left behind," he said. "And rather than working to change the economic model for the better, many actual and would-be leaders are instead embracing protectionism and even xenophobia."

Linking UNCTAD's mission to bring "prosperity for all" to the Sustainable Development Goals agreed by the United Nations' member States in 2015, Mr. Ban told delegates: "You can count on the UNCTAD secretariat and the entire UN system to support your efforts and implement your vision."

President Kenyatta said that making decisions on development aspirations were "meaningless without action."


By EA Trade Review Reporter

The World Bank Group has approved $500 million for the development of the transport and trade corridor in north-western Kenya and improve the livelihoods of the communities in Turkana and West Pokot counties.

The bank says the East Africa Regional Transport, Trade and Development Facilitation Project will enhance regional competitiveness by improving the movement of goods and people in Eastern Africa.

It will support upgrading of the road linking Kenya to its neighbors in the north-western border and also enhance internet connectivity between the countries and the rest of world. The project will cost an estimated $676 million, with the balance being contributed by the Kenya Government.

Kenya has a long established transport and trade link to the north-west but the poor state of the road constrains growth opportunities along this important corridor,” says Diarietou Gaye, World Bank Country Director for Kenya.


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