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2006年10月WTO对肯尼亚、坦桑尼亚和乌干达贸易政策审议-东非共同体成员国政策声明(英文)

World Trade

Organization

RESTRICTED

 

WT/TPR/G/171

20 September 2006

 

 

(06-4343)

 

 

Trade Policy Review Body

Original:  English

 

 

 

 

 

 

 

TRADE POLICY REVIEW

 

Reports by

 

the East African Community

MEMBERS

 

 

 

 

Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), the policy statements by the East African Community (EAC) members are attached.

 

Note:    These reports are subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on the East African Community.


CONTENTS

                                                                                                                                                                                                Page

REport by kenya                                                                                                                                                               7

I.              BACKGROUND                                                                                                                                                         7

II.            ECONOMIC PERFORMANCE                                                                                                                                7

(i)            Macroeconomic Performance                                                                                                        7

(ii)           Macroeconomic Outlook                                                                                                                8

III.           SECTOR SPECIFIC PERFORMANCE                                                                                                                    8

(i)            Agriculture                                                                                                                                           8

(ii)           Manufacturing                                                                                                                                     8

(iii)          Tourism                                                                                                                                                     9

(iv)          Building and Construction Industry                                                                                         9

(v)           Information and Communication Technology                                                                      9

IV.           PUBLIC EXPENDITURE MANAGEMENT                                                                                                           9

V.            DROUGHT SITUATION IN KENYA                                                                                                                   10

(i)            Response to the Drought                                                                                                               10

VI.           INVESTMENT REGIME                                                                                                                                         10

(i)            FDI and on the Ongoing Licences Reforms                                                                              11

VII.          EXTERNAL TRADE PERFORMANCE                                                                                                               14

VIII.        TRADE POLICY REGIME                                                                                                                                      15

IX.           REGIONAL AND BILATERAL TRADE AGREEMENTS                                                                                 15

(i)            Common Market for Eastern and Southern Africa (COMESA)                                    15

(ii)           East African Community (EAC)                                                                                                   16

(iii)          ESA–EPA Negotiations in the Context of the ACP-EU Cotonou Partnership Agreement 16

(iv)          Multilateral Negotiations in the WTO under the DDA                                               16

(v)           Bilateral Trade Agreements                                                                                                      16

X.            NATIONAL EXPORT STRATEGY (NES)                                                                                                           17

XI.           PRIVATE SECTOR DEVELOPMENT STRATEGY (PSDS)                                                                              17

REPORT BY TANZANIA  19

1.             INTRODUCTION 19

                                                                                                                                                                                                Page

2.             ECONOMIC ENVIRONMENT                                                                                                                              19

3.             POLICY OBJECTIVES AND STRUCTURAL REFORMS                                                                                 23

4.             trade POLICY                                                                                                                                                      29

5.            CONCLUSION                                                                                                                                                         32

REPORT BY UGANDA                                                                                                                                                         33

1.0           INTRODUCTION 33

2.0          ECONOMIC OUTLOOK                                                                                                                                        33

2.1          Ugandan Economic Performance                                                                                                33

2.2           Overall GDP Growth                                                                                                                       34

2.3           Foreign Investments                                                                                                                         35

3.0           PUBLIC FINANCE                                                                                                                                                  36

3.1          Public Expenditure                                                                                                                           36

3.2          Domestic Revenue Performance                                                                                                 36

3.3          Expenditure Performance                                                                                                             37

3.4          External Debt Issues                                                                                                                        37

4.0          SECTORAL PERFORMANCE                                                                                                                              37

4.1          Agriculture                                                                                                                                         37

4.2          Forestry                                                                                                                                                38

4.3          Manufacturing and Industry                                                                                                      39

4.4          Construction and Mining                                                                                                              39

4.5          Services                                                                                                                                                  39

4.5.1       Financial Sector                                                                                                                       40

4.5.2       Wildlife and Tourism                                                                                                              40

4.5.3       Energy                                                                                                                                       40

4.5.4       Transport                                                                                                                                  41

5.0          UGANDA TRADE REGIME                                                                                                                                  41

5.1          Trade Balance                                                                                                                                    41

5.2          Exports                                                                                                                                                   42

5.3          Import Performance                                                                                                                        43

6.0          INVESTMENT POLICY                                                                                                                                          44

7.0           TRADE POLICY                                                                                                                                                      44

7.1          Membership in Trade Organizations                                                                                         45

7.2          Uganda and the Multilateral Trading System                                                                 45

                                                                                                                                                                                                Page

7.3          Regionalism                                                                                                                                          45

                7.3.1       The East African Community                                                                                                45

7.3.2       The Common Market for Eastern and Southern Africa                                                     46

7.3.3       The ACP-EU Cotonou Agreement                                                                                       46

7.3.4       African Growth Opportunity Act                                                                                         46

7.4          Bilateral Trade Initiatives                                                                                                         47

8.0          IMPLEMENTATION OF THE WTO AGREEMENTS                                                                                       47

8.1           Schedule of Commitments                                                                                                            47

8.2          Notifications                                                                                                                                      47

8.3          Implementation Process                                                                                                                47

 



REPORT BY KENYA

            BACKGROUND

            The Kenya government continues to undertake comprehensive economic reforms to enhance economic performance and good governance aimed at reducing poverty, unemployment, high domestic and foreign debt among others. The new reforms being implemented were as a result of a new political environment created by the election of a new administration in December 2002.  The government's priority is economic recovery, based on the current policy document entitled “Economic Recovery Strategy for Employment and Wealth Creation (ERS)”.

            The Investment Programme of the Economic Recovery Strategy for Wealth and Employment Creation (IP-ERS) therefore is Kenya's medium-term strategy to foster economic growth and reduce poverty. In order to address the multidimensional aspects of poverty, the government adopted a multi-faceted strategy to support economic growth, equity and poverty reduction and good governance. This strategy aimed at revitalizing economic growth, wealth creation and employment based on three pillars namely: promoting economic growth, reducing poverty, and promoting good governance. The focus is to ensure macroeconomic stability, financial sector development, infrastructure development through private sector participation and revitalization of agriculture, trade, tourism and the manufacturing sectors.  

            During the recently concluded AU Summit held in Banjul, Gambia Kenya was reviewed 30th June 2006. The review was conducted under the Africa Peer review mechanism (APRM), which is the principal arm of the African Union (AU). The review focused on Kenya's policies and accomplishments in the areas of democracy and political governance; management of the economy; corporate governance; and social and economic development. H.E. President, Hon Mwai Kibaki represented Kenya at the review, where the Country received high praise for its achievements in promoting peace in the region; building democracy and open society with individual freedom at home; lowering her dependency on external aid in the government budget; fighting corruption and reviving the economy after years of decline.

            ECONOMIC PERFORMANCE

            Macroeconomic Performance

            The Kenyan economy has been on a recovery path and has registered steady growth rates over the past three years, growing by 3.0%, 4.9% and 5.8% in 2003, 2004 and 2005 respectfully. This is attributed to the sound macro economic policies, which have been a key element in creating an enabling environment for private sector led growth. In addition, the far reaching structural and sector reforms being implemented since the new Government came to power have enhanced the efficiency of resource utilization, which is critical for sustainable economic growth and the fight against poverty.

            During the fiscal year 2004/05, achievements on other macroeconomic targets were somehow mixed. Inflation was 5.8 per cent against a target of 5 per cent and domestic debt/GDP ratio in percentage terms was 18.5 per cent against a target of 22.2 per cent. The target for public sector wages/GDP was 7.8 per cent against a target of 8.14 per cent and the goal for revenue expansion was 21.3 per cent against a target of 21.4 per cent.

            Macroeconomic Outlook

            The government seeks to consolidate and strengthen the economic recovery to ensure that GDP growth can be maintained at above 5% and preferably reach 7% by 2008/09 fiscal year. The Government intends to undertake key structural reforms, including public expenditure and financial management; privatization of public enterprises; and, improvements in the operations of the financial sector. The Government also seeks to maintain a flexible but stable real exchange rate to bolster external competitiveness and assist in achieving a sustainable external current account position. In Addition, the balance of payment will be strengthened to facilitate build up of gross international reserves to above 3 months of import cover.

            The Government has also introduced a policy shift towards a more predictable budgetary process by excluding both bilateral and multilateral support. This is meant to maintain fiscal discipline by relying more on predictable domestic resources of funding to achieve the medium term objectives. Notwithstanding this policy shift the government is keen to continue collaborating with the donor institutions and development partners in key sectors such as education, health, agriculture and infrastructure. 

            The focus of the medium term priorities and fiscal strategy is to further narrow the income and regional inequalities and strive to decisively achieve the Millennium Development Goals. The government is therefore putting in place sound macro economic and structural policies, which seeks to shift resources towards the social and economic sectors and fight corruption to ensure sustained economic growth to realize the stated objectives. The priority areas that the reforms will target include public expenditure and financial management, revenue administration, public enterprises, financial intermediation, private sector competitiveness and good governance.

            The overall inflation is expected to decline in view of the anticipated decline of food prices resulting from favourable weather and the prudent monetary policy being implemented by the Central Bank of Kenya. This is expected to bring down both the overall and the underlying inflation rates to 5% by June 2007. In addition the interest rates are expected to remain stable due to the decline in the overall inflation and prudent fiscal policy.

            SECTOR SPECIFIC PERFORMANCE

            Agriculture

            Agriculture continues to be one of the most important sectors of the economy contributing 24.20% of the total real GDP in 2005. The sector recorded a remarkable improved growth of 6.9% compared to a depressed growth of 1.7% in 2004. This was mainly due to improved weather conditions that contributed to good performance in most sub sectors such as horticulture, dairy and cereals production.

            Manufacturing

            The manufacturing sector grew by 5% in 2005 compared to 4.5% in 2004 on account of stable macroeconomic conditions, improved access to credit and increased exports opportunities particularly in the EAC and COMESA markets. In the first quarter of 2006, the sector had mixed performance in the production of selected manufactured goods. For example beer production and milk processing increased by 9.1% and 1.4% respectively while production of soda ash declined by 5.3% during this period. With the gradual reduction in tariffs and Non-tariff measures in the East African Community following the adoption of the common external tariff and the new emerging market in Southern Sudan, the growth momentum in the manufacturing sector is expected to accelerate in the medium term.

            Tourism

            The growth in the tourism sector continued on an upward trend in 2005 with combined earnings from international and domestic sub sectors rising from Kshs 39.2 billion to Kshs 48.9 billion which is equivalent to a growth rate of 24.7%. The international tourism arrivals grew from 1.4 million in 2004 to 1.5 million in 2005 with significant growth observed in first and third quarter of the year. The sector remains vibrant and during the period, visitors from Europe increased by 15.4% and accounted for 62.4% of the total tourist arrivals. The Government is undertaking concerted marketing campaign through the Kenya Tourist Board while necessary measures are being undertaken to improve security in the hotels and tourism sites with a view to consolidating the gains made in this sector.

            Building and Construction Industry

            The market estimates indicate that the construction sector performance improved in 2005 with cement consumption increasing by 10.9% from 1,418,300 metric tones in 2004 to 1,572,500 metric tones in 2005. The good performance was partly attributed to low interest rates, revival of stalled projects by the government and increased budgetary allocation for road construction and rehabilitation.

            Information and Communication Technology

            The Government has put in place a “Framework for improving ICT” that will create an enabling environment for private sector participation, through further liberalization of the sector and by investing heavily in the e-Government initiative, mainly to boost the current strong growth in the sector. Focus will also be on training, ICT research and development, and promotion of value added services such as incubators, telecentres, call centres, amongst others to encourage rapid growth, and create employment opportunities through out sourcing. All these efforts are geared towards ensuring Kenya becomes a regional ICT hub.

            PUBLIC EXPENDITURE MANAGEMENT

            The Investment Programme of the Economic Recovery Strategy for Wealth and Employment Creation (IP-ERS) highlights the importance of the efficient use of public resources and sound Public Expenditure Management (PEM) in stimulating economic growth and alleviating poverty. The government has therefore introduced a number of reforms including the adoption of the Medium Term Expenditure Framework (MTEF), establishment of a budget monitoring unit and introduction of the Integrated Financial Management Information Systems (IFMIS). This was aimed at linking policy making and budgeting, maintaining fiscal discipline, facilitating expenditure prioritization across policies, programs and projects and ensuring optimal use of resources.

            However, the government recognizes the slow progress made on implementation of Integrated Financial Management and Information System (IFMIS), the lack of momentum on Public Expenditure Tracking Survey (PETS) and the effects of weak budget execution on budget credibility. As a result the Government through the 2005/2006 budget speech outlined the need to: ensure strict adherence to the financial regulations including procurement guidelines; implementation of a cash management system to ensure timely release of resources to line ministries; carry out Public Expenditure Tracking Survey to improve utilization of public resources; roll out Integrated Financial Management and Information System to line ministries; and, introduce a risk-based internal audit system.

            DROUGHT SITUATION IN KENYA

            Kenya experiences mild cyclical droughts approximately 3-5 years with severe dry periods on a ten-year cycle. These largely affect the Arid and Semi Arid Lands (ASALs) where 12 million people live. The recent drought severely affected over 3.5 million people in 25 districts otherwise known as Emergency Operation (EMOP) Districts and another 2.5 people in 20 districts that were partly affected by the drought referred to as Non-EMOP Districts. The impact of the drought was felt in almost all sectors including livestock, crops and above all people due to lack of water, starvation, poor health as well as education.

(i)                 Response to the Drought

            The President made an appeal for international and local support specifically for drought assistance in February 2006 in order to avoid mass suffering of both people and livestock. Currently several structures have been put in place to deal with food security matters and other emergencies in the country. These include: National Committee on Disaster Management; Cabinet Sub–Committee on Disaster Management; Inter-Ministerial Committee on Disaster Management; Strategic Grain Reserve (SGR) Trust Fund; Kenya Food Security Meeting (KFSM); Kenya Food Security Steering Group (KFSSG); District Steering Group (DSG); and Lead Agencies. The Government disbursed about Kshs. 14 billion towards drought intervention activities by June 2006. In addition the Kenya Red Cross Society (KRCS), which was mandated by the Government to coordinate donations from the local people and companies, received generous support from both local and International donors. In addition the World Food Program has been spearheading food relief activities in Emergence Operation (EMOP) districts and had by April raised KShs. 7.5 billion food assistance out of the expected Kshs. 16 billion. This represented about 46% of total funding requirements.

            INVESTMENT REGIME

            There is no one single investment policy document. The investment policy is however spread across other government policies in some sectors of the economy, for example tourism, infrastructure and agriculture. The investment policy is guided by the investment program (revised in 2006) emanating from the ERS. The priority areas identified include the enactment of an investment code; development of an investor road map and comprehensive review of licensing arrangements.

            So far the investment code has been enacted and under the Investment Promotion Act 2004, the Kenya Investment Authority has been established as a successor body to the Investment Promotion Centre (IPC).  The core functions of KIA include; Policy Advocacy; Investment Promotion; Investment Facilitation; Investor Tracking and After Care Services. The Kenya Investment Authority is also implementing the Investment Targeting Strategy, which is focusing on the services sector such as ICT and financial services; tourism, agribusiness (value addition, leather and related products).

            Through Acts of parliament, the government has established various bodies that also deal with the promotion of investment. These include Industrial and Commercial Development Corporation (ICDC), Kenya Industrial Estates (KIE), Kenya Tourism Development Corporation (KTDC), Export Processing Zones Authority (EPZA) and Kenya Investment Authority.

(ii)               FDI and on the Ongoing Licences Reforms

            The government is reviewing some of the licenses that directly affect trade and investment. In line with the 2006/2007 budget forecast the government will be eliminating a number of licenses while others will be simplified through harmonization and reduction of fees and charges. Further, a Business regulatory reform unit is being created in the Ministry of Finance to liaise with regulators to ensure that all future regulations on licensing conform to international best practices.  It is expected that the streamlined business environment will attract FDI and also lower the cost of doing business and encourage the existing business to expand leading to increased new domestic investment and employment opportunities. The reforms are intended to transform Kenya into an ideal and competitive investment destination.

            As a result of these reforms and in particular the enactment of the new Investment Promotion Act 2004, the government has witnessed the entry into the Kenyan Market of major Multi-nationals companies such as Nokia, General Electric, Microsoft East Africa and the expansion of Coca Cola Company. Erickson is in the process of setting up its operations in Kenya.

            Below is an analysis of investment flows processed by the Kenya Investment Authority. Table 1 presents the number of projects and the capital cost processed between 2002 and 2005, table 2 presents the employment levels generated by the investment in the same period while table 3 presents the country of origin and main sectors of investment within the same period.

INVESTMENT PROJECTS PROCESSED BY THE KENYA INVESTMENT AUTHORITY: 2002-2005

Table 1:

Projects details (number of projects and capital costs)

Year

No. of Foreign Projects

No. of Local Projects

Total No. of Projects

Foreign Capital Cost (Kshs)

Local Capital Cost (Kshs)

Total Capital Cost (Kshs)

2002

31

16

47

1.0b

0.433b

1.5b

2003

56

39

95

5.6b

5.4b

11b

2004

64

63

127

3.6b

1.7b

5.3b

2005

52

55

107

6.5b

4.0b

10.5b

Table 2:

Employment levels

Foreign Employment

Local Employment

Total Employment

136

3376

3512

213

7658

7871

439

13667

13906

346

9363

9709

 

 

 

 

Table 3:

Major country origins and main sectors of investment

Year

Number of Foreign Projects

Major Source Countries

Main Sectors

2002

31

China = 20%,
SA = 16%,
India = 16%,
UK = 10%,
Others = 36%

Manufacturing,
Services, 
Tourism

2003

56

China = 17%,
UK = 15%,
USA = 7%,
India = 4% ,
Others = 57%

Service,
Manufacturing,
Tourism

2004

64

UK = 14%,
China = 11%,
German = 10%,
USA = 8%,
India = 5 %,
SA = 5% ,
Others = 47%

Service,
Manufacturing,
Tourism,
Agriculture

2005

52

China = 22%,
UK = 22%,
India = 10%,
SA = 6%,
USA = 13%,
Others = 27%

Service,
Manufacturing,
Tourism,
Agriculture

Source:    Kenya Investment Authority.

            EXTERNAL TRADE PERFORMANCE

            The total export earnings for the year 2005 increased by 13.7% while the total import bill grew by 18.2%. However the volume of import trade increased by 16% in 2005 compared to 24.6% in 2004. The strong shilling impacted negatively on export earnings resulting in a widened trade deficit representing a 26% growth in nominal terms.  The steady import growth outstripped the increase in exports resulting to the widening of trade deficit to the tune of Khs 186,542 million in 2005 against Kshs 149,764 million in 2004. This was mainly attributable to the higher oil prices and the appreciation of the Kenyan shilling. However due to large inflows of remittances from abroad and sizable financial inflows the balance of payments was fairly stable with the foreign exchange reserves with the Central Bank of Kenya increasing to an equivalent of over Kshs 2 billion in 2005 compared to Kshs 1 billion in 2004.The key export products included horticulture, tea and coffee which accounted for 49.8% of the total domestic export earnings. On the other hand import of crude oil and petroleum products accounted for 22.7% of the total import expenditure. Other principle imports included industrial machinery, iron and steel, road motor vehicles and plastics.

Value of exports (Ksh. Million)

 

Year 2000

Year 2001

Year 2002

Year 2003

Year 2004

Year 2005

South America

312

484

290

649

1,006

 

Asia

22,241

25,395

25,914

27,781

33,038

37,050

Europe

41,804

42,499

49,478

56,579

60,933

67,175

Africa

61,935

72,513

83,085

84,653

101,809

120,327

America

3,588

4,256

4,107

3,880

6,066

6,014

Source:    Economic Survey, 2006.

            As indicated in the above table, the African region continues to be a major destination of Kenya's exports followed by Europe. The main destination for Kenyan merchandise exports in the year 2005 to February 2006 were Uganda, United Kingdom, Tanzania, the Netherlands, Pakistan, Egypt, the Democratic Republic of Congo and the Sudan which accounted for 16%, 9.9%, 8.3%, 7.8%, 6.1%, 3.9%, 3.3%, and 3.1% of the total export earnings respectively. During the same period exports to African countries accounted for 48.2% of Kenya's total merchandise exports.

            During the year 2005 to February 2006, the main source of imports were United Arab Emirates (15.2%), United Kingdom (13.4%), South Africa (9.5%), United States of America (9.5%), India (5.7%), Saudi Arabia (5.5%), Japan (5%), China (4.5%), Germany (3.6%) and Singapore(3.0%).

            TRADE POLICY REGIME

            The Ministry of Trade and Industry is responsible for trade policy formulation, implementation and coordination in collaboration with other relevant Ministries.  Currently trade policies in Kenya are derived from a number of policy statements contained in official documents such as Acts of Parliament, Sessional papers and development Plans. The major challenge in trade promotion has been the absence of a harmonized policy to guide, stimulate and manage trading activities. In this regard and in order to ensure a clear and predictable trade policy, the National Economic & Social Council (NSEC) directed the Ministry of Trade and Industry to expedite the preparation of a comprehensive national Trade and Industrial policy. This work has commenced and it is expected to be completed by the end of next year.

            This not withstanding, the trade policy framework focus is on trade promotion through diversification of products and markets while at the same time ensuring that maximum benefits from trade are derived at the regional and multilateral levels. A number of supply side constraints however continue to limit the ability to realize the full potential of the trade sector. Some of these constraints include poor infrastructure resulting to high business transaction costs, competition from imports, the stringent safety and health standards required to access external markets and other non-tariff barriers.

            In view of these challenges the government initiated the Economic Recovery strategy for Wealth and Employment Creation (ERS 2003-2007), and various measures have been put in place to address the above challenges. Some of them include incentive schemes such as Export Processing Zones and Manufacturing Under Bond. In addition the Ministry has developed a National Export Development Strategy that has taken into account all sectors of export potential. The Strategy is under implementation and focuses on export market diversification and products through value addition.

IX.  REGIONAL AND BILATERAL TRADE AGREEMENTS

            Kenya is a member of two regional trading blocks: COMESA and EAC. It is also involved in bilateral arrangements with a number of countries. These efforts are aimed at boosting trade and investment.

(iii)             Common Market for Eastern and Southern Africa (COMESA)

            Kenya is an active member of COMESA and has experienced a marked increase in trade volumes, with a share of exports to COMESA increasing by 19.7% accounting for 36.6% of the overall exports (including Tanzania). The value of imports from COMESA countries in 2005 increased by 4.9% accounting for 24.9% of the total imports from Africa.

            East African Community (EAC)

            EAC is the most important and promising market for Kenya's exports. The volume of trade has been increasing every year and as such Kenya is looking forward to a deeper integration in this sub-region.  Kenya is therefore, firmly committed into realizing this objective.

            ESA–EPA Negotiations in the Context of the ACP-EU Cotonou Partnership      Agreement

            Kenya as a signatory to the ACP-EU Partnership Agreement is committed to a successful conclusion of a new WTO compatible Economic Partnership Agreement with the EU. The aim is to gradually remove barriers to trade between the EU and ACP states and also enhance trade and economic cooperation as provided for under Art. 36 (1) of the Cotonou Agreement.

            Kenya is therefore negotiating EPAs with the EU under the East and Southern African (ESA) configuration, which comprises 16 countries namely:  Burundi, Comoros, Djibouti, Ethiopia, Eritrea, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia and Zimbabwe. These negotiations are expected to end by December 2007.

            Multilateral Negotiations in the WTO under the DDA

            Kenya as an active member of World Trade Organization is fully committed to Multilateral Trading System and its principles and rules. In addition, Kenya recognizes and is convinced that the WTO and its predecessor, the GATT, have significantly dismantled the global trade protectionism and have facilitated the flow of international trade.

            With the current negotiations on dismantling existing barriers to trade, the MTS is firmly on the road to achieve its intended objective of creating an enabling environment for the international trade to thrive.

            Regarding the on-going DDA negotiations, Kenya is fully committed to the successful conclusion of the Round with substantial development content necessary for meeting the challenges of Millennium Development Goals of reducing the global poverty by a half by the year 2015.

            Bilateral Trade Agreements

            Most bilateral agreements which Kenya signed were predominantly with the Eastern Europe countries which have been terminated after these countries joined the European Union. Currently Kenya has 29 bilateral trade agreements with both developed and developing countries which serves the following interests;

·         Reciprocal participation in Exhibitions and trade fairs as well as respective country week promotional events.

·         Exchange of both general and product specific trade missions both limited to business participation as well as at official delegation level.

·         Exchange of Market intelligence missions/surveys for market information.

·         Encouragement of institutional cooperation such as the Standards institutions, Chambers of Commerce and Industry, Customs Organizations, Research Institutions, Trade and Investment Promotion agencies among others.

·         Prompt and focused follow up of issues raised during bilateral meetings.

            NATIONAL EXPORT STRATEGY (NES)

            In 2003 the Ministry of Trade and Industry in collaboration with the private sector, other government agencies and the development partners developed the first NES which was subsequently approved by the cabinet in 2004. The need to stimulate export growth was as a result of declining export growth in the years preceding the development of the NES which is also emphasized in the ERS as key determinant for social economic development. The objective of the NES is to improve export performance through improved national competitiveness, value addition, improved quality and reduction of the cost of production.

            The NES has identified ten priority sectors for development in the first phase of implementation. These sectors include horticulture, livestock and livestock products, fish and fish products, food and beverages, textile and clothing, commercial crafts, information communications technology, tourism and transport services. In addition six cross cutting issues including trade information, trade facilitation, export packaging, quality management, trade, finance and competency development have also been prioritized.

            During the implementation of this strategy the private sector is expected to play a central role through the NES Implementation Action Plan that has been developed by stakeholders. The Ministry is also in the process of implementing the Private Sector Development Strategy (PSDS) which underscores the need to spur economic growth through trade expansion. The PSDS therefore recognizes and supports the implementation of the strategic objectives identified in the NES.

            PRIVATE SECTOR DEVELOPMENT STRATEGY (PSDS)

            The government recognizes the important role of the private sector growth in contributing to the country's medium term objectives as outlined in the ERS. Indeed the private sector accounts for 80% of GDP and provides more than half of wage employment. There are about 40,000 formal large and medium enterprises contributing 60% of the GDP and over 1.7 million micro and small enterprises mainly in the informal sector contributing 20% of GDP.

            The country offers one of the best favourable destinations for foreign and local investors in the region. The government is therefore undertaking measures aimed at further improving the business environment for existing and potential investors.  In this regard the government has developed the Private Sector Development Strategy whose objective is to create a conducive environment for private sector growth by alleviating major constraints and to enhance the growth and the competitiveness of the private sector, especially the micro-small and medium enterprises (MSMEs).

            In order to achieve the overall objective of the PSDS, the following five specific goals have been developed:

v      Improving Kenya's business environment to enhance confidence, long term planning and investment by the private sector and globally recognized country-investment rating.

v      Accelerate public sector institutional transformation to guarantee more efficient public institutions with proven track record of service delivery.

v      Facilitate growth through greater trade expansion of at least 20% annual growth in export trade by 2007.

v      Improving private sector productivity through research and adoption of modern and appropriate technology.

v      Entrepreneurship and indigenous enterprise development.

            The implementation framework of the PSDS sets out a coordinated framework for enhanced collaboration taking into cognizance the role of different actors. The private sector is earmarked to play an important role in the implementation process and will be part of both the coordinating and technical committees. Other important players include the development partners as well as collaborating ministries.

 


REPORT BY TANZANIA

1.    INTRODUCTION

1.                   The United Republic of Tanzania, hereinafter referred to as Tanzania, constitutes of the union between the former Tanganyika and Zanzibar.  Tanganyika gained its independence in 1961 while Zanzibar, comprising of the islands of Zanzibar and Pemba, gained independence in 1964, and the two nations united to form the union in 1964.  The union has a two-Government structure, comprising of the Union Government and the Government of Zanzibar.  The mandate for defence/security, foreign and trade policies is explicitly placed under the Union Government.

            The economies of the two parts of the union are largely dependent on combined subsistence and commercial agriculture.  Subsistence agriculture includes production of food crops that include grain staple foods and legumes, livestock herding and fisheries. Commercial agriculture is largely smallholder confined to production of agricultural commodities for the export market.  Economic reform initiatives focus on increasing commercialization of the food crops and non-traditional commodities exports as well as export of value added agricultural products and other non-traditional exports as well as increasing the contribution of the services sectors and other natural resource based products such as minerals, fish and fish products.

            Tanzania is a Least Developed Country (LDC) and as such is obliged to undertake a trade policy review at least once every six years.  The first review was undertaken in 2000 and its main focus was on unfolding economic and trade policy reforms as part of measures to build a strong market economy and a private sector that will serve as the engine for export-led growth.  The current review, taking place under the aegis of the East African Community, is the second one, and it seeks to build on the objectives and foundations of the first review. 

            On the political arena, Tanzania has enjoyed democratic elections and change of Government over the past 45 years of its existence.  The fourth successive change in Government led to the inauguration of the fourth phase Government in January 2006.  The current Government was elected on the premises of deepening socio-economic and political reforms with new zeal and vigour, reiterating commitment to liberalisation of trade and policies affecting business and investment. 

            This chapter explains in brief the nature and thrust of the unfolding reforms and the envisaged impact on the primary goal of poverty reduction.  It outlines commitment to export-led growth with the goal of improving the standards of living.

2.    ECONOMIC ENVIRONMENT

            The economic diversification initiatives that have bee implemented over the last two decades are beginning to bear fruit as the structure of the economy begins to change.  To get a better insight into the emerging structure and its dynamics, this section presents a brief overview of the overall economic performance in the recent past and emerging trends.

Macro-economic Overview

            Persistent commitment to economic reforms is shifting the Tanzanian economy towards a steady higher rate of growth crucial for the realization of poverty reduction goals. A GDP growth rate of 6.7% in real terms was realized in 2004 compared to 5.7% in the preceding year.  Agriculture remains the backbone of the economy with 80% of the population depending on the sector for their livelihood.   The sector accounts for 46% of GDP, and grew by 6% in 2004.  The resultant real per capita growth rate was 3.4% in 2004 compared to 3.8% in 2003.  Policy orientation targets an average GDP growth rate of 8% in the medium to long term as the minimum, necessary for the achievement of the goal of reducing poverty by 50% in line with the objectives of the Millennium Development Goals.

            Achievements in economic growth are attributable to measures that have sustained core macro-economic fundamentals for almost 10 years.  Monetary policy management, based on a liberalized exchange regime, is stable and predictable with low single-digit inflation rates registered at 4.4% in 2003 compared to more than 30%, 10 years ago.  Interest rates have also declined considerably from an average rate of almost 40% in the early 1990s to a relatively stable rate of approximately 15% in 2005.

            Fiscal indicators are improving. The Government tax revenue ratio increased to 13.3% in 2004 compared to 11.8% in 2001 due to successful continuing reform of the tax regime based on the establishment of the Tanzania Revenue Authority and introduction of Value Added Tax (VAT). Value Added Tax has considerably reduced reliance on tariff based revenue.  The Government is running a cash budget and development expenditure which focuses on poverty reduction following the adoption of the National Growth Strategy and Poverty Reduction, NGSPR.

            Tanzania qualified for the Highly Indebted Poor Countries (HIPC) initiative and is benefiting from substantial injection of new resources from debt relief initiatives i.e. US$ 2.5 billion debt cancellation.  In addition a number of bilateral donors, including UK, Bulgaria, India and Kuwait, have agreed to reduce debt servicing obligations.   Negotiations with other creditors are continuing and a national debt management strategy is under implementation.

            The country continued to experience strong political stability.  Measures to entrench good governance and tackle corruption are under way.  The investment climate is improving steadily, culminating in substantial increase in investment flows.  For instance, Foreign Direct Investment (FDI) increased from US$ 172 million in 1998 to US$ 260 million in 2004.

            The export sector has also shown improving performance based on growth of non-traditional exports, particularly minerals, fish products and manufactured products.  The tourism sector has shown considerable improvement over the past 10 years.  Involvement in regional trading arrangements and simplified tariff and customs procedures is leading to increased trade flows.  Exports of merchandise goods experienced a growth of 18% in 2004.  Imports are also increasing in line with the demands of rapid growth, especially in the mining and tourism services sectors.

Sector Performance

            The leading economic sectors, in view of contribution to current economic performance and potential for future growth and employment generation are agriculture, livestock and fisheries, manufacturing, minerals, transit trade, tourism and construction.

Agriculture, Livestock and Fisheries

            Agriculture is the mainstay of the Tanzanian economy, employing 80% of the population.  It is becoming increasingly dynamic as evident in a growth rate of 6% in 2004, compared to the objective of 8% by 2007 based on the implementation of the agriculture sector development programme.  Some products, such as cotton, are growing considerably faster. The objective is to diversify further the export basket through building competitive advantages in new dynamic products and sectors in which Tanzania already has considerable comparative advantages.

            Evidence of a changing export basket is apparent in the data on exports.  In 1998 55% of exports comprised of traditional crops.  By 2003 the share of traditional exports had declined to 21.4% resulting primarily from exports of gold and fish products.  There is also tremendous potential in the livestock sector which maintained steady growth at 5% and the fishing sector which grew by 6.9% in 2004.

            Agriculture is important for poverty reduction as most of the poor work in this sector.  Research[1] has shown that the agriculture multiplier in Tanzania is 3.  That is for every unit of extra output produced the total contribution to the local economy is 3 units. 

            The rise of horticulture and floriculture in northern Tanzania has had a dramatic effect on the economy.  Exports of horticulture and floriculture products have been rising in recent years.  In 2004 horticulture and floriculture exports totalled US$ 14.3m and accounted for 1% of Tanzania's total exports.  Expansion in the production has seen the large estates providing market linkages to the EU for smallholder producers.  The result has been the development of local internationally competitive farms that meet EUREPGAP standards. 

            The success of the fish industry, based on fresh-water fish resources in Lake Victoria, has resulted in significant economic and social benefits.  Between 1990 and 2003 fish exports rose twenty-fold.  Ninety-nine per cent (99%) of fish caught are by artisan fishermen (estimated to be 150,000 people). There is a large potential for replicating the process in the marine waters along a coastline of more than 800 kilometres.

            Finally, it is ought to be noted that this success has come from the efforts of the private sector.  The Tanzanian government has a number of programmes[2] in place to support farmers.  Liberalization policies have been  and continue to be vital, although there is no large scale systematic support provided for farmers.  Tanzania can benefit from liberalization of agricultural markets that is likely to emerge from successful conclusion of the multilateral trade negotiations under the Doha Development Agenda. 

Manufacturing

            The manufacturing sector has shown signs of steady recovery and growth over the recent past.  The sector grew by a factor of 8.3% in 2003 and 2004.  During this period, its contribution to GDP has also shown a small increasing trend.  Nevertheless, the proportional contribution to GDP has remained at the average rate of 8% for more than 20 years, highlighting limited successes in industrialization policies.  It is worthy noting that the threat of negative growth and deindustrialization experienced in the 1980s has been reversed.

            Economic measures in the form of privatization and restructuring, implemented through the 1990s have started bearing fruit as old refurbished industries come on stream again and new ones take off.  Stabilization of macro-economic variables and the implementation of new programmes designed to improve the investment climate, including the entrenchment of property rights, legal and regulatory reforms, improvement in commercial justice delivery are beginning to send a message of a supportive investment climate that is critical for the channelling of new investments into agriculture and industry. 

            Efficiency gains due to economic reforms have contributed to increased production.  Key areas of growth include processed foods, steel, timber and in the construction sector.  The implementation of SME Development Policy launched in 2003 has encouraged the establishment of a number of small manufacturing firms that have proven a major development instrument.

Mining and Minerals

            The mining sector has shown the most dramatic results of successful transformation and contribution to exports and growth over the past ten years.  The sector grew by the high rates of 18% in 2003 and 15.6% in 2004.  Its contribution to exports was equally phenomenal at 40% of merchandise exports in 2004.  However, its proportional contribution to GDP remains modest at a mere 3% on the basis of data for 2004.  Gold has been central to this performance with other contributions coming from diamonds, gemstones and coal.

            Despite this spectacular performance, the sector has a limited effect on social indicators.  It is largely capital intensive, with limited impact on employment generation and income distribution.  The gemstone mining sector experiences a substantial proportion of production being traded through unofficial channels.  The Government is making concerted efforts to curb these leakages to enhance earnings inside Tanzania.

            For instance, available information shows that the gemstone mining industry employs more than 700,000 people and that these figures could increase dramatically if the trade can be formalized and more value adding activities undertaken in the country.  This, however, would require substantial investment in infrastructure and facilities for developing the skills that go into gemmology, gemstone cutting and polishing.

Transit Trade

            Tanzania has strong historical bonds with the countries of the Great Lakes:  Burundi, Congo DRC, Malawi, Rwanda, Uganda and Zambia.  Dar es Salaam port remains the primary gateway for these countries.  Port reforms, including the successful restructuring of the Container Terminal through a concession, have led more rapid through-put of goods on transit. Container dwell-time has been reduced tremendously.  Initiatives to improve the transportation system comprise of manifold measures that include the improvement of existing infrastructure and expansion of the road network that links highly productive agricultural regions that have the potential to serve as a regional bread-basket. 

            The Ministry of Works is undertaking a system of improvements to key arterial routes in the country.  The Southern Highlands and neighbouring countries in this direction i.e. Zambia and Malawi are already linked by a high quality cross country all weather highway.  Northern Tanzania including the regions of Arusha, Kilimanjaro and Tanga are also interconnected with the main port in Dar es Salaam and the secondary port in Tanga through an all-weather highway.  Other infrastructure development programmes seek to link the North-Western part, including regions rich in mineral deposits, tourism attractions and agricultural production with the main port in Dar es Salaam.  The country has also adopted the Spatial Development Initiative (SDI) with the Central Corridor that links the port of Dar es Salaam with Western and North-Western Tanzania as well as Rwanda, Burundi and Uganda being accorded top priority.  Other SDI programmes include the TAZARA corridor which links Tanzania with Zambia and Congo DRC., and the Mtwara Corridor which brings Mozambique, Malawi and Tanzania together. 

            Twenty per cent (20%) of transit trade is moved through the country by rail.  This is with two train operators.  The TRC serves Western and North-Western Tanzania as well as Rwanda, Burundi, Uganda and Eastern DRC through the Central Corridor railway line, while the TAZARA railroad serves the Southern regions of Tanzania as well as Zambia and Malawi through the TAZARA corridor network. It is estimated that more than 50% of the population lives in regions that have tremendous unexploited potential in agriculture, tourism, mining and the forestry industry and the SDI provides an opportunity for tapping these resources as the basis of growth through investment and trade.

Tourism

            Tanzania is endowed with a unique heritage of the world's fauna and flora that is preserved in a wide range of national parks and game reserves.  The most spectacular include the Serengeti National Park, the Ngorongoro Crater and Mount Kilimanjaro National Park.  Tanzania features the only national park that combines beach tourism with game viewing.  This rich variety of tourism attractions include the possibility of climbing Africa's tallest mountain and a wide range of activities based on coastal and marine tourism.

            Major reforms based on unilateral liberalization of the tourism and hospitality industry, above and beyond what has been formally declared under the schedules of specific commitments under the WTO's General Agreement on Trade in Services has brought about dramatic growth in the sector.  The tourism sector has been the fastest growing sector over the past ten years.

            The hotel and restaurant sector accounts for 16% of GDP and is growing at 4% per annum.  Between 1993 and 2003, tourism accounted for 30% of total services and merchandise exports.   The sector currently provides about 200,000 jobs.  The rate of growth of direct and indirect job creation in this sector stands at the average of 11% per annum.

            The National Tourism Policy[3] is based on a strategy that targets the low volume high value tourism segment, ostensibly to maximize earnings while sustaining the resource base.  The policy also provides for benefit sharing through corporate social responsibility that targets the inclusion of local communities in sharing of earnings.  As much as 44% of inputs are currently sourced from the domestic economy compared to only 26% for other sectors.  Tanzania is also implementing a National Tourist Development Programme (2006-2015) which seeks to encourage a development process oriented towards increasing the number of visitors while preserving the environment, raising job creation and contributing to overall poverty reduction.  The longer term objective is to double the current number of approximately 600,000 visitors per annum over the coming ten years based on policies that aim at the improvement and increase in the number and quality of hotel accommodation and ground services including transportation. 

3.   POLICY OBJECTIVES AND STRUCTURAL REFORMS

            Tanzania's over-riding policy goal is economic transformation based on a sustainable high rate of growth, at least 8% of GDP growth, as the primary instrument for achieving the national objective of poverty eradication and building an industrializing economy by year 2025.  This process started with the implementation of the Structural Adjustment Programmes in 1986.  Since then, implementation has been extended to include public service reforms and institutional capacity building, agricultural sector marketing reforms, divestiture of state owned enterprises, financial sector reforms as well as legal sector reforms.  The process is now targeting the fundamentals of private sector development through the establishment of a suitable investment climate and building the core competencies for the competitiveness of the domestic private sector through raising productivity and quality.  This section presents a summary of the initiatives and achievements made in this area since the first Trade Policy Review which was undertaken in year 2000.

Tanzania's Policy Objectives

            The primary goal of the policy agenda remains that of transformation and graduation from the Least Developed Countries category.  The National Development Vision 2025 envisions the following features or objectives underpinning successful transformation[4]:

  • High quality livelihood;
  • Peace, stability and unity;
  • Good governance;  
  • A well educated and learning society; and
  • A competitive economy capable of producing sustainable growth and shared benefits.

            These objectives are similar to but more ambitious than the millennium development goals.  They emphasize the desire to eliminate abject poverty by 2025, full gender and race equality, primary health care for all, universal primary education, universal reproductive heath care, universal access to clean water,  as well as ambitious political, governance and economic targets.  It is estimated that to achieve this the economy has to grow by  a minimum of 8% of GDP, a target that is already within conceptual sight.

            Tanzania's economic goals are equally ambitious.  The Government has adopted and is implementing a Mini-Tiger Plan, based on the Chinese growth model that is seen as the instrument to transform Tanzania into a semi-industrialized economy with a GDP per capita of US$ 2,000 by 2025. This goal will be achieved by focusing on development of strategic industries, resource-based activities such as manufacturing and mining, and encouraging export oriented investment.  The primary instruments include the Special Economic Zone and the Export Processing Zone concepts. 

            In addition, Tanzania is implementing its second Poverty Reduction Strategy cycle, known as the National Growth and Poverty Reduction Strategy (NGPRS). The NGPRS targets three areas:

(i)         growth and reduction of income poverty;

(ii)        improved quality of life and social well-being; and

(iii)       good governance and accountability.  

Legal and Regulatory Reforms

            Tanzania is implementing fundamental legal sector reforms through two major programmes:  the Legal Sector Reform Programme (LSRP) and the programme for Business Environment Strengthening for Tanzania (BEST). 

            The main goal of the Legal Sector Reform Programme is the maintenance of law and order through dispensation of justice for all. The LSRP is a long-term programme whose realization will take time and considerable resources that are difficult to mobilize in the short and medium terms.  To address issues of major concern the programme has adopted a two-pronged approach involving the implementation of a “Quick Win Version” whose implementation is currently under way and the design of a Medium Term Programme covering the span of three years.  Reforms are taking place in the judiciary, the police, i.e. prosecution system.

            The approach to reforms for efficient and expeditious delivery of Commercial Justice is under implementation as a component of the BEST Programme, which comprises  five components:  Achieving Better Regulation;  Improving Commercial Dispute Resolution;  Strengthening the Tanzania Investment Centre;  Changing the Culture of Government; and  Empowering Private Sector Advocacy. 

            Priority activities include extending the services of the Commercial Court to other high growth regions by establishing branches in Mwanza and Arusha and reforming the Civil Procedure Code as an instrument of expediting cases in the magistrate courts.  Other measures include increasing recourse to alternative dispute resolution mechanism.  The overall goal is to ensure expeditious resolution of commercial conflicts and effective enforcement of contracts.

            Primary instruments for the realization of this goal include the establishment of a Law School to increase the number of qualified advocates to match with the demands of a growing population and expanding economy.  Another objective is the expeditious delivery of justice as a basic human right through a range of instruments that include separation of the functions of investigation from that of prosecution which are currently vested in the Police Force. 

            Other priority measures under the Better Regulation component include:  improvements in the areas of business registration including the streamlining of the Business Registration and Licensing Agency (BRELA); land law reforms; commercial law and justice and labour law reforms.

Privatisation

            The Government of Tanzania embarked on an extensive privatization programme in 1992 as part of the Structural Adjustment Programme initiated in 1986. The objective of privatization was to re-orientate the Government's role and economic function away from direct involvement in productive and commercial activities and to encourage the growth and development of the private sector as the engine of economic growth.

            The divestiture programme has been highly successful.  Up to March 2006 a total of 357 SOEs out of 394 had been privatized and most of them have become more competitive and are contributing positively to employment and income generation.  Divested firms now employ more than 45,000 people and are paying taxes.  This compares well with the situation before privatization where a good number of them depended on Government subsidy for survival.  The restructuring and divestiture programme is now focusing on a few remaining public enterprises, mostly public utility companies in the energy and transport sectors.  This is in line with the Government's solid commitment to economic liberalization measures.

Private Sector Development

            Apart from the divestiture of SOEs other measures aiming at private sector development include programmes for building initiatives and core competencies for competitiveness in select priority subsectors and/or products based on the concepts of cluster development.  There are also initiatives targeting further improvements in the investment climate, and easier access to skills and to finance.  A World Bank financed “Micro, Small and Medium Enterprises Development (MSMEs) Project, has been launched in response to commitment to effective implementation of an SME Development Policy adopted in 2003.  Tanzania is also implementing the Integrated Framework for Trade and the requisite Diagnostic Trade Integration Study has been undertaken in line with initiatives to address the concerns of marginalization of Least Developed Countries (LDCs) in the Multilateral Trading System.  The DTIS is seen as the major programme for implementing the National Trade Policy also adopted in 2003.  Further, the government has enacted the Special Economic Zone Act and implementation is under way.  The first special economic zone is already under construction and is expected to come on stream by April 2007.  The expectation is that it will create a total of 20,000 jobs.

Economic Infrastructure

            Modernization and expansion of economic infrastructure is a key factor in raising the competitive platform upon which firms can create competitive advantages in the global market.  Ongoing initiatives focus on improvement of transportation and communication systems as well as access to reliable water, energy and power supplies at affordable rates.

Transport

            Ocean freight remains the most cost-competitive route for international trade. Tanzania has three international ports linking the country with the rest of the world:  Dar es Salaam, Tanga and Mtwara.   Alternatives routes include air transportation for which there are four international airports at Dar es Salaam, Kilimanjaro, Zanzibar and Mwanza.  A fifth one is under construction in Mbeya.  There are several other small airports and air strips served by regular flights and charter flights.

            Nevertheless, seventy five per cent of all cargo is transported by road.  The government has substantially increased budgetary allocation for road transportation over the past five years.  For instance, the budget for road improvement in 2005/6 is US$ 317 million.  Moreover initiatives are under way to embark on public private partnerships in infrastructure development as a tool of expediting investment in this area.  As Tanzania forges closer links with SADC and the EAC, regional rules on road transport are being harmonised on the basis of regional standards.

            Apart from road transport, Tanzania has a fairly extensive rail network that reaches out to 14 out of 21 regions in mainland Tanzania. There are three main lines, from Dar es Salaam to Tabora, where the line splits and goes on to Kigoma in the west and Mwanza on Lake Victoria. A second line goes down through Mbeya and links with the rail network in Zambia. The third links Dar es Salaam with Tanga and Moshi / Arusha to the north. Much of the transit trade to Burundi and Uganda is by rail.  Freight on most lines has remained constant with the exception of the line to Zambia which witnessed 47% increase in tones of freight between 1999 and 2003. 

            Movement of persons within the country is fast and affordable through reliable bus services network.  All major destinations can be reached by bus in less than a day.  There are bus services linking the three East African partner states.

Ports and Customs

            The Economic Reform Programme incorporates measures for the modernization of Dar es Salaam port and the other ports.  The concession on the Container Terminal has raised efficiency in container through-put, and dwell-times to internationally competitive levels in spite of rapid expansion of economic activity.  In 2005, the terminal handled more than 300,000 containers.  Ship turn around time has been reduced from 4.1 days in year 2000 to 2 days at present, while waiting time has been reduced from 0.5 days to 0.2 days over the same duration. Measures for concessioning the bulk handling terminal and the grain handling facilities have been initiated.

            Tanzania is implementing a major Tax Administration Programme that includes extensive customs reforms.  The objectives of these reforms include the transformation of customs into a modern customer-friendly agency offering fast and efficient services to promote business competitiveness. The reforms have included computerization of operations.  The UNCTAD supported ASYCUDA has been upgraded to ASYCUDA++.  The underlying strategy comprises an Import Facilitation Strategy introducing major reforms in six areas that would transform the Tanzania Revenue Authority into an efficient agency.

i.          Shifting from pre-shipment inspection to destination inspection, accomplished in 2005;

ii.         Pre-arrival electronic reporting arrangements, a process that is already under way but is not        yet fully operational;

iii.         One-stop pre-arrival checking arrangements that became operational in early 2006;

iv.         Streamlined examination arrangements became operational in early 2006;

v.         Introduction of Electronic Data Transfer (EDI); and

vi.         One Stop Payment and Clearance arrangements in place by mid 2006.

Water and Energy

            The Government is implementing a National Water Policy introduced in 2002.  The objective of the policy is to attract investments into the water sector.  Measures to rehabilitate and expand city and town water supply networks are well under way.  Seventy four per cent of urban population now have access to clean drinking water.  There is also significant improvement in sewerage systems.  Rural water supply is being improved through a combination of government investment initiatives in collaboration with rural communities and NGOs.

            Measures to extend the national electricity grid to the Western geographical regions were completed in 2004.   The main sources of electricity remain a combination of hydro and thermal generation.  Generating capacity has been increased substantially and there are initiatives to lower power tariff rates to more competitive levels in the regional context.  Expansion of supply is being accomplished from a variety of national and international sources including:  linkage into the SADC power pool through interconnection with the Zambian grid and expansion of domestic generation capacity through thermal production from natural gas and coal.  Other sources that are increasingly becoming popular especially in rural areas include solar and bio-fuel.

Communication

            Tanzania has benefited tremendously from the unfolding communication revolution due to the proliferation of mobile phones.  Tanzania has four companies providing mobile connections.  The competition is bringing down prices.  Almost 2 million Tanzanians had mobiles by 2004.  Fast internet connections are found all over the country, including in remote urban centres, making business and private communication instant.  There is an increasing number of postal services rendered by International delivery firms such as DHL and domestic firms.  The Government has established the Tanzania Communication Regulatory Authority to regulate and coordinate the sector.

Finance

            The first generation of financial sector reforms focused on the restructuring and privatization of state owned banks and implementation of measures to raise efficiency as well as establishment of new financial institutions.  Today, there is a total of 26 banks in Tanzania.  Success has made it possible for the current shift of policy emphasis to focus on financial sector deepening through introduction of a wider range of instruments to ensure access to finance for various interest groups in society.  Particular emphasis is on access to finance for Small and Medium enterprises which are excluded from micro-financing schemes and are not specifically targeted by most of the larger banks.

            Success in interest liberalization policies has reduced the costs of borrowing to an average of 15% for the average borrower and as little as 11% for valued customers (reflecting the lower levels of risk).  There is a continuing pattern of interest rates decline.  Given the inflation rate of around 4% the real cost of borrowing is reasonable. 

            The effect of the decline in interest rates and proliferation of financial institutions has had a positive impact on the private sector's access to commercial credit.  Financial sector lending to the private sector increased by a factor of 36.6% between 2002/03 and 2003/04.

Property Rights and Security

            A good investment climate depends on the entrenchment of property rights as well as a peaceful and secure socio-political environment.  The nation is endowed with a unique sense of national unity underlying the prevailing political tranquillity, peace and social stability.  The Constitution provides for national elections once every five years for an Executive President and a Parliamentary system under a democratic multiparty system.  Multiparty democracy was introduced during elections held in 1995 and since then, the incumbent President can rule for a maximum of only two terms of five years each.  In the Transparency International survey on corruption published in 2005 Tanzania faired much better than its neighbours; indeed it had the highest score in East Africa.  Crime in Tanzania is lower than in many parts of the region and with normal sensible precautions, can usually be avoided.  The Government is also implementing a major programme for the formalization of property rights based on the Hernando de Soto model that has been so successful in Peru.

The Labour Force

            Building a pool of trainable manpower and skilled labour force is critical to initiatives for private sector development and growth. The establishment of an adequate social infrastructure to ensure a healthy and educated population is critical to building the skilled labour force that must underpin a successful knowledge-based economy.

            Primary healthcare to the poorest is free while, the basic policy for access to health-care involves cost-sharing. There are a number of excellent private healthcare facilities providing international standards healthcare.  The health threat from HIV/AIDS, TB, malaria and other endemic tropical diseases is being addressed through a combination of preventive measures and sensitization of the vulnerable.

            With respect to the education sector, the Primary Education Development Plan (PEDP) whose objective is universal primary education is now in its third year of implementation.  Primary enrolment is already quite high, with a net enrolment ratio averaging 90.5% in 2004 of whom 49.9% of those enrolled being girls, providing ample evidence of gender balanced policies. 

            Efforts to raise the number transition ratio from primary to secondary schools already show evidence of success as 20% of those who complete primary school today continue to secondary school.  The government is committed to increase this ratio further.  The ratio of enrolment in tertiary education, i.e. technical and higher education is also growing fairly rapidly.  In 2004, a total of 26,475 students enrolled in government universities while the number enrolled in government technical training institutions was 2,292 students.  In addition, there are 14 private tertiary education centres.  The impact of rising education levels is yet to bear fruit in terms of higher investment in employment creating areas and unemployment levels are high, particularly amongst the young. 

4.    trade POLICY

            Trade policy in Tanzania is primarily mandated to the Union Government. International trade agreements responding to development at the regional level and in the Multilateral Trading System are, therefore, binding on the Union as well as the Zanzibar governments.  However, Zanzibar has a large degree of autonomy in deciding on specific export promotion and development measures that do not impinge on trade policy obligations resulting from international agreements.  For instance, the Zanzibar government has published a policy document that focuses on export development and other issues pertaining to trade facilitation.  The following is a review of national trade policy objectives and instruments, implementation measures and the status of trade-related assistance.

The National Trade Policy

            The first market oriented National Trade Policy[5] was adopted by the Government in 2003. The policy document considers all aspects of trade policies that play a role in the process of trade development and growth.  The over-riding concern and theme of the policy is to stimulate a process of export led growth based on structural transformation and production as well as market diversification.  Product development focuses on raising the level of competencies to achieve competitive levels of productivity and quality while bearing in mind the importance of inclusiveness of the poor and the disadvantaged in mainstream economic activity.  The approach adopted is that of strategic trade liberalization combined with export development based on implementation of dynamic sectoral complimentary policies.  The policy also emphasizes the importance of proactive engagement in multilateral and bilateral trade negotiations.

Export policies

            Export development is the primary goal of Tanzania's Trade Policy.  Extensive reforms over the past 20 years have focused on the systematic removal of restrictions.  The Board of External Trade (BET) and the Ministry of Industry, Trade and Marketing are the key public institutions spear-heading the export-development, promotion and facilitation process.  The Tanzania Bureau of Standards is building capacity for conformity to international standards through accredited laboratories on SPS requirements and other quality standards.  BET advises and supports exporters in responding to, and meeting product and market development issues in line with objectives for economic diversification and export expansion.

            The goal of export-led economic growth requires the adoption of dynamic instruments to build the culture of exporting amongst emerging SMEs as well as attracting FDI into export-oriented manufacturing sectors.  The Export Processing Zone (EPZs) and Special Economic Zones are the primary policy instruments for the realization of export development objectives.

            Key features of the EPZ programme include a corporate tax rate of 0% for 10 years and exemptions from withholding taxes, local taxes as well as exemption from pre-shipment inspection.  Sectors where licenses to operate within the EPZ are particularly encouraged are: Agro-processing; Textiles and Garments; Fish processing; Leather and Leather goods; Lapidary industry and mineral beneficiation; Wood and wood products; Electrical appliances and electronics; and Information & Communication Technology.

Import policies

            As a WTO member, Tanzania has bound many (755) of its tariff lines at 120%.  However, the actual applied rates are considerably lower.  Tanzania, together with Kenya and Uganda are founding members of the East African Customs Union, which entered into force in January 2005 and will become fully effective within a time span of five years.  Its primary impact is considerable simplification and harmonization of import policies and tariffs as the community moves steadily towards a common external tariff.

            The internal tariff structure comprises of three band structure:  0% tariff for raw materials, 10% for intermediate goods and 25% for finished goods.  All tariffs are ad valorem and do not vary by season or by quantity imported.  Each country is however permitted a few products for which their tariff rate differs from the East African rates.  The region has selected a few sensitive products for which tariff rates are currently higher.   Furthermore there is provision for asymmetry in application over the transition period of five years to take into account the different levels of development among the three founding partner states.  2006 is year two of implementation.  Implementation has resulted in a further reduction of the average tariff rate in Tanzania to just 12.3%.   In addition to the lowering and simplification of tariffs, all quantitative restrictions, suspended duties and minimum dutiable values have also been removed.

Multilateral Trading Arrangements

            Tanzania was party to the GATT, is a founding member of the WTO and plays an active role in ongoing negotiations and implementing the obligations arising thereof. 

The Agreement on Agriculture

            As an LDC, Tanzania is exempt from tariff reduction commitments and is eligible for concessions made to this group for capacity building necessary for the country to participate effectively in the multilateral trading system.  All agricultural tariffs are currently bound at 120%.  Average agricultural tariffs consequent to tariff harmonization due to membership in the EAC is an average of 22%.  Tanzania provides very little domestic support and there are no export subsidies and has not yet submitted notification of intent to do so.

Non-Agricultural Market Access

            Tanzania, based on the concessions granted to LDCs, has bound 1.5% of her tariff lines and initiatives to increase this coverage are under way. This will focus on adding value to agricultural produce and natural resources in the forestry and mineral sectors.  The EAC customs union and the obligation to implement the common external tariff have the de facto effect of binding tariffs to an average of about 10.5%.  In-spite of its LDC status, there is limited use of domestic support measures in the form of subsidies. 

Services

            Tanzania submitted an initial schedule of commitment relating to the tourism services sector.  A number of requests have been received from major trading partners and there is participation in a joint LDCs request on Mode IV services to trading partners.  There are initiatives to expand the schedule of commitments in line with national policy objectives to further open up the economy and attract FDI in realization of the potential role of the services schedules of commitments in this context.  It is also the intention to improve the delivery of services that are critical for improved competitiveness in the productive sectors as an instrument of raising productivity and reducing costs.

TRIPS

            Much work has been undertaken on TRIPS. A review of the Intellectual Property legislation conducted in 2005 shows Tanzania's patent legislation has elements exceeding the TRIPS requirements or in effect is TRIPS+.  There is a need for concerted efforts in building capacity for effective administration and enforcement, including the raising of awareness on patents and the rights and obligations of producers based on the patent system that is supported by the WTO TRIPS agreement.  Priority issues include making effective use of the TRIPS flexibilities on access to affordable essential medicines.  The country also has the potential of benefiting from negotiations on geographical indications should these lead to an agreement.

Trade Related Assistance

            Tanzania is eligible for market access opportunities resulting from multilateral and regional trading arrangements as well as the technical and financial support that results from the development track of the trade agenda.

Trade Preferences

            The larger proportion of Tanzania's exports faces no customs duties, either because the products exported do not incur tariffs or because of preferences.  In 2003, 82.7% of Tanzania's exports went to OECD countries, two thirds of which faced no tariffs.

            OECD countries provide significant preferences to Tanzania. Key markets are the EU (GSP, Cotonou, EBA) USA, (GSP and AGOA) and Japan (GSP).  In 2003 Tanzania exported US$ 465.3m duty free to the EU, US$ 13.8m to the US and US$ 92.4m to Japan.  These exports constitute about 50% of total exports.  For this reason preference erosion is a matter of concern.

            Virtually, all exports to Japan, were eligible to preferential treatment  Uptake on EU preferences is 78% compared to just 67% in the USA case. For example, Tanzania does not have the capacity to produce manufactured goods for export without imported inputs.  The ratio of imported inputs reduces the potential for benefiting from preferential markets due to rigorous rules of origin.

Technical Assistance

            Tanzania is the recipient of substantial bilateral multilateral support for trade development initiatives and measures.  Multilateral intervention measures include those falling under the JITAP Programme and the Integrated Framework.  Bilateral

            Programmes include a DANIDA supported Business Sector Programme Support Phase II.  There are initiatives for the adoption of a sector-wide approach programming for trade development intervention under the umbrella of implementing the recommendations of the Diagnostic Trade Integration Study (DTIS) for Tanzania.  The DTIS study was undertaken in 2005 and a validation workshop held in November, 2005.  Current efforts focus on initiating implementation.  The DTIS provides the core recommendations for programmes to address supply side constraints that range from capacity for the policy process, infrastructure development as well as measures for stimulating private sector development.

5.   CONCLUSION

            Tanzania is a fast growing, politically and economically stable country with abundant natural resources. The strategic movement of all economic and social policies is oriented towards deepening liberalization reforms subject to putting in place the optimal regulatory framework.  The private sector is being developed as the engine of growth to take advantage of market access opportunities and capacity building initiatives emerging from the international arena.  There is determination to build on these opportunities to transform the economy and the lives of the people in line with the goals of National Development Vision 2025.  Above all, this determination translates into a degree of diligence and commitment in implementing trade policy and complimentary policies that are bound to lead to success.

 


REPORT BY UGANDA

1.0  INTRODUCTION

2.                   The second Trade Policy Review for Uganda was conducted in 1995 and, since then, Uganda has continued to implement its policy of liberalization. This is being done within the overall strategic framework of enhancing economic growth and structural transformation. Within this framework, the private sector plays a lead role as the engine of growth while government supports the process by providing an enabling environment. Economic growth and structural transformation are prerequisites for poverty eradication to be achieved through strategic areas with high growth potential. The strategic areas must have demonstrated comparative advantages or the potential to, through diversification of the agriculture sector in particular, and the economy in general. Value addition is an important factor but must be complemented by increasing market share for manufactured and agro-industrial products.

            For more than ten years, Uganda has been registering high growth rates. These rates must be sustained through continued consistent economic transformation. In this regard, a number of existing weaknesses, many of which have been identified under the Medium Term Competitiveness Strategy for Private Sector (MTCS), must be addressed.

            The MTCS was  approved in 2000 as a five year government policy for developing the Private Sector. It outlines strategies for creating a favourable environment for increased private investment and savings, and for removing constraints that impede the competitiveness of Uganda's private sector.

            Priority actions in the MTCS include: (i) expansion of infrastructure and utilities, to address the high costs of production, improve access to markets and the quality of services; (ii) strengthening the financial sector and improving access to financial services; (iii) reforming commercial justice; (iv) improving the efficiency and effectiveness of government institutions and the business environment for small and medium enterprises; (v) addressing human capital development; and (vi) emoving impediments to export sector growth. The decline in investment and growth at the end of the 1990s was indicative of a slow down in the real GDP growth rate, partly due to drought and the deterioration in terms of trade. This demonstrates the high level of vulnerability of the economy to both internal and external shocks.

            Uganda is fully committed to the attainment of the Millennium Development Goals, in particular the poverty reduction target of 10% of the population by 2017. In order to meet this target, our economy must grow at an average rate of 7% or above. Therefore higher rates of both foreign and domestic private investments will be needed.

2.0        ECONOMIC OUTLOOK

2.1        Ugandan Economic Performance

            The central objectives of Uganda's macroeconomic management are to control inflation and maintain supportive economic conditions for private sector-led growth.  These include a competitive and stable exchange rate as well as low interest rates for exporters and private sector investors. Government has therefore set out explicit targets for macroeconomic management, including the maintenance of underlying inflation at less than 6.0% and the reduction of the fiscal deficit to 6.5% by fiscal year 2009/10.

            There have been deliberate Government efforts to develop a sound economy, which have registered a number of positive results.  The economy has expanded from 4.7% in 2002/03, to 5.3 % in 2005/06. The growth is largely attributable to developments in services and industry. Specific achievements include real GDP growth rate averaging 5% per annum, per capita GDP growth of 20%, underlying inflation contained within an average of 4.0%. In addition, there has been a reduction in overall budget deficit by 2% and the  NPV of debt stock-to-exports ratio also reduced by 6% while total private sector credit increased to almost 2% of GDP. By the end of June 2005, international reserves stood at 6.5 months of imports of goods and non-factor services. Notwithstanding these achievements, the economy experienced challenges in the form of a declining trend in  agricultural output, volatile headline inflation and a high population growth rate of 3.3%.

2.2  Overall GDP Growth

            Growth in real GDP at market prices, improved from 4.7% in 2002/03 to 5.9% in the 2003/04 fiscal year, but declined marginally to 5.8% in 2004/05 and 5.3% during the 2005/06 fiscal year. The decline can largely be attributed to domestic factors: the prolonged drought conditions in most parts of the country, which affected agricultural output and more recently the effect of the energy shortages on industrial production. Furthermore, world prices of Uganda's main commodity exports, especially the low prices for cotton and coffee among other commodity prices, continue to impact significantly on the domestic economy. The energy crisis and the high and volatile oil prices in the world resulted in a slow down of industrial production, which grew at only 4.5% in 2005/06 as compared to 10.8% in 2004/05. Growth in agricultural production also slowed to 0.4%, in the same period. This growth trend is reflected in Table 1:

Table-1

Annual Real GDP Growth Rates by Sector and Major Activity (% per FY)

Real GDP Growth

2001/02

2002/03

2003/04

2004/05

2005/06

Agriculture

3.9

2.3

0.8

1.5

0.4

  o/w Food crops (monetary)

5.7

3.7

1.7

1.7

0.9

  o/w Cash crops

7.4

4.6

0.3

4.2

-7.4

Industry

8.2

6.7

8.2

10.8

4.5

  o/w Formal manufacturing

5.4

4.4

4.9

13.5

-3.5

  o/w Electricity & water

5.3

4.5

6.7

5.9

-1.2

  o/w Construction (monetary)

13.4

11.6

13.8

11.9

13.7

Services

8.1

5.7

8.4

8.7

9.2

  o/w Wholesale and retail trade

6.2

4.7

3.3

9.1

4.2

  o/w Hotels and restaurants

18.1

7.5

19.1

4.5

21.8

  o/w Transport & communications

12.3

16.8

21.2

21.4

20.7

  o/w Community services

7.0

2.6

6.0

5.0

6.2

GDP at factor cost (basic prices)

6.4

4.5

5.4

6.4

5.1

Net taxes on products and imports (indirect taxes)

6.2

7.0

6.4

8.0

6.7

GDP at market prices

6.4

4.7

5.5

6.6

5.3

Source: Uganda Bureau of Statistics.

            The services sector grew at 9.2% in 2005/06 compared to 8.7% during 2004/05, while the industry sector expanded from 8.1% growth rate during 2004/05 to 9.1% in 2005/06. On the other hand, agriculture grew by 2.1% in 2004/05 but declined to 1.6% in 2003/04. The average growth between 2002/03 and 2004/05 was 5.5% per annum. The sector contributions to GDP are reflected under Table 2 below.

Table-2

Sector contributions (in %ages) to GDP and GDP Growth (at basic prices)

Contribution to GDP

2001/02

2002/03

2003/04

2004/05

2005/05

Agriculture

39.9

39.1

37.4

35.6

34.0

Industry

18.9

19.3

19.8

20.6

20.5

Services

41.2

41.7

42.8

43.8

45.5

Total GDP at factor cost

100

100

100

100

100

Contribution to GDP growth

 

 

 

 

 

  Agriculture

1.6

0.9

0.3

0.6

0.1

  Industry

1.5

1.3

1.6

2.1

0.9

  Services

3.3

2.3

3.5

3.7

4.0

Total growth in GDP at factor cost

6.4

4.5

5.4

6.4

5.1

Source:    Uganda Bureau of Statistics.

2.3  Foreign Investments

            Government is aware that investment, especially Foreign Direct Investments (FDI), can play a major role in revamping the economy. FDI creates jobs and in the manufacturing sector, can positively impact on both domestic consumption and export capability to improve declining terms of trade. FDI is also important for the technology and skills it brings, and a good strategy for improved access to foreign markets. Therefore, Government, through Uganda Investment Authority (UIA) has made efforts to promote investments into the country. Table 3 below shows the results of these efforts in terms of growth of investment into the country. Investment is now targeted to increase by 24.6% in 2005/06, of which private investment, largely composed of foreign investments, is projected to increase by over 19.6%.  This trend should encourage investment in various sectors, particularly that of natural resources which offers a wide range of investment opportunities. The richness and diversity of the natural resources is exemplified in the opportunities within mining (cobalt, limestone, gold), agriculture (coffee, tea, fruits), fishing and  horticulture and most recently the oil industry. The recent economic dynamism has opened up opportunities in manufacturing and services.

            Uganda's strategic central location in the heart of Africa, being endowed with rich and diverse natural resources and its favourable tropical climate are some of the key factors that have contributed towards our ability to attract foreign investments. This central location is being utilized to transform Uganda into a regional hub in terms of supplying hinterland neighbouring countries and beyond with industrial manufactured goods and agro-processed products. Government is pursuing a policy to modernize Entebbe International Airport so as to make it a competitive hub in air transport while the Northern Corridor arrangements will link Uganda by road, rail and inland water ways to southern, central, western and northern Africa regions.

 

3.0  PUBLIC FINANCE

3.1        Public Expenditure

            Government's policies are subordinated to the objective of restricting government expenditure to a level that is compatible with fiscal capabilities. It is Government's policy to control the fiscal deficit. 

3.2        Domestic Revenue Performance

            Over the period under review, domestic revenue-to-GDP ratio rose from 12.2% in 2002/03 to 12.6% and 12.7% in 2003/04 and 2004/05 respectively. In line with government's commitment to reduce fiscal deficit to 6.5% by 2013/14, the revenue-to-GDP ratio is projected to grow by 0.5% per annum over the medium-term.  Nevertheless, the actual revenue outturn for 2005/06 is 13.1% against estimated 13.2%, translating into 99.2% performance. 

            The major challenge for revenue performance includes: the narrow tax base as a result of the structure of the economy since it is largely agricultural and subsistence in nature. Subsistence agriculture contributes approximately 70.0% of the GDP while a substantial level of business activity in the country is informal and lack proper financial records and accounts. Other challenges include: a poor tax paying culture; corruption in tax administration and pressures to reduce taxes on account of investment incentives and social welfare concerns. Like other countries in the region, Uganda faces pressure to provide tax incentives to investors, which poses a threat to the already fragile tax base. Finally, it is expected that with globalization and trade liberalization, earnings from trade taxes, which currently contribute about 50% of our total revenue, will be progressively eroded.

3.3        Expenditure Performance

            Government has undertaken a number of Strategic Financial Management reforms aimed at supporting the goal of poverty eradication. Government's Public Expenditure Reform initiatives seek to improve the efficiency and effectiveness of public expenditure management processes, to promote accountability and transparency, and thereby enhance the quality of public service delivery. The overall performance has since demonstrated prudent and effective fiscal management. Nevertheless the country experiences a large  budget deficit, financed by donor assistance, due to the slow growth rate in domestic revenue collections.  Given the undesirable effects of a large fiscal deficit on export competitiveness and private sector development, Government has adopted, and remains committed to, a policy of gradual deficit reduction over the medium-term.

3.4        External Debt Issues

            Total inflow of donor financing (grants and loans) reduced over the period as a percentage of GDP, from 11.3% in 2002/03 to 10.1% in 2004/05. This is consistent with Government policy to reduce dependence on external aid and the associated macroeconomic impacts.

            The Poverty Reduction Support Credit (PRSC) has been shifted from loan to grant resulting in the financing of the fiscal deficit through new external loans. The external loans portfolio has become significantly lower, declining from 4.9% of GDP in 2002/03 to 1.9% in 2004/05. The cornerstone of this debt reduction is the Highly Indebted Poor Countries (HIPC) initiative from which Uganda benefited through debt write off. In addition, Uganda reached further agreements with non-OECD creditors to increase the proportion of debt coming under the HIPC umbrella.

4.0        SECTORAL PERFORMANCE

4.1        Agriculture

            Despite the decline in growth, agriculture[6] continues to provide a significant share of the GDP, 85% of export earnings, 77% of total employment (UBoS, 2005) and the bulk of raw materials used by the industrial sector. The current performance indicates that the sector continues to make a key contribution to the achievement of sustained economic growth and the realization of the PEAP objectives.  It could be a reflection of the strong comparative advantage in agricultural production that Uganda has, in spite of its shrinking share in total output and contribution to overall growth, remained the largest employer and the means from which a majority of the Ugandan population derives its livelihood.

            The main challenge affecting the growth of the agricultural sector is its vulnerability to  weather conditions. Moreover the sector is largely small holder and is heavily rain-fed and therefore the erratic and uneven distribution of rainfall increasingly affects output. In recent years, there has also been an increasing incidence of crop diseases (coffee and banana wilt) as well as animal diseases. These are compounded by declining soil fertility, land fragmentation and environmental degradation. However, livestock and cash crops have shown the most consistent positive GDP growth rates in the sector, while the food crops sub-sector has lagged behind. See Table 4.

Table-4

Agricultural sub-sectors' GDP growth rate, 1999/00-2004/05 (%, in real terms)

 

1999/00

2000/01

2001/02

2002/03

2003/04

2004/05

Cash crops

7.0

-4.9

7.4

4.6

0.3

4.8

Food crops

6.1

6.2

3.2

1.2

1.5

0.7

Livestock

3.9

4.4

5.0

4.6

1.1

5.3

Total

5.9

4.6

3.9

2.1

1.3

1.8

Source:   Poverty Status Report 2006.

            Though the agriculture sector has experienced decline in general terms, the slightly improved international coffee prices encouraged improved crop husbandry and partly mitigated the impact of the drought.

4.2        Forestry

            Forestry contributes 6% of Uganda's GDP, although this figure excludes the aesthetic and environmental values of forests. Forests provide both products and services that are key in sustaining livelihoods, particularly of the rural poor.  Though forestry contributes significantly GDP and is vital to the livelihood of the rural poor, the trend is towards accelerated rate of deforestation. See Table 5. Through the National Forest Authority, Government is addressing the challenge of loss of forest cover.

            Increased deforestation has had a direct impact on livelihoods in relation to declining firewood sources, changing rainfall regime, soil erosion control and related environmental services. To address the crisis, Government through the National Forest Authority has put in place  initiatives for tree planting. The Tree Planting Act is in force and provides a legal framework for the divestiture of the Forestry Department, culminating into the establishment of the Forestry Inspection Division (2003), the National Forestry Authority (2004) and the District Forestry Services (2005).

4.3 Manufacturing and Industry

            The industry sector currently remains the smallest, but fast growing sector of the economy. In 2004/05 the sector grew by 9.1%, and over the period 2002/03 to 2004/05, its growth averaged 8.0% per year. Accordingly, the share of industry in total output has increased from 19.3% in 2002/03  to 20.4% in 2004/05. Industry is one major sector that government policy is encouraging to speed up poverty reduction because prices of industrial products tend to be more stable compared to those of agricultural or un-processed primary products. The increase in the sector share is mainly resulting from increased output from the formal manufacturing sub-sectors, which have benefited a lot from the stable macro economy and peace in most parts of the country.

            Though the Industry sector is growing at a fast rate, the impact of the current energy crisis is likely to greatly affect the sector.

4.4 Construction and Mining

            Uganda has a variety of mineral deposits occurring in different parts of the country. These include vermiculite, copper, cobalt, gold, beryl, bismuth, columbite-tantalite, phosphate, tin, wolfram, clays, glass-sand, feldspar, limestone and marble. Not much is known about the nature and quantity of most of these minerals as they have not been yet mapped and the sector remains largely under-developed.

            In order to stimulate investments in this sector, Government put in place a Mineral Policy in 2001 and the Mining Act 2003 was passed in December 2004. The Policy promotes private sector participation in mineral development, aims at strengthening local capacity and improving artisan and small-scale mining. Due to the improved in regulatory framework and investment climate in this sector, mineral production quantities and value increased four-fold. In 2004, the minerals produced were worth Ushs 86.4 billions as compared Ushs 21.2 billions in 2003.

4.5 Services

            Since 2001/02 the services sector has become the largest sector of the economy. It contributed 43.3% of the total output produced in the economy in 2004/05 against a registered growth rate of 8.1% in the same year. Growth of this sector remains robust and it has become the leading driver of Uganda's economic growth. In 2004/05 fiscal year, services contributed 3.1% of the overall GDP growth of 5.8%, while industry and agriculture contributed 1.8% and 0.8%, respectively.  On a sub-sectoral level, the hotels and restaurants sub-sector grew strongly, registering a growth of 21.8 percent while the communications sub-sector continues to drive the services growth as more and more of the population subscribe to cellular mobile telephones. Other drivers for the growth of the sector include transport, wholesale and retail and community services.

4.5.1     Financial Sector

            Private sector led economic growth requires, among others, macroeconomic stability, as well as availability of capital for investment.  Provision of such capital depends on a strong financial sector; large and varied to meet the demand for credit, and disciplined to select good loan risks.  This is recognised as a priority in PEAP with an explicit target of increasing the credit to the private sector to 10.4% of GDP by 2007/08 and to 17.5% by 2013/14.

            Uganda's banking system continues to be stable, sound, and more resilient than in the past years. The improvement in the banking system's performance was due to enhanced supervision of banks, consolidation in financial institutions, and better service delivery. These have contributed towards building up of public confidence in the financial sector.  Deposits held by the commercial banks increased by an average of 14% in the three financial years to 2004/05, while activities of credit institutions continue to witness growth.    

            The regulatory framework was strengthened by the Financial Institutions Act (FIA), which passed in 2004.  The Act sets out new limits, regulations, compliance requirements and penalties for commercial banks; thus, upgrading Uganda's financial institution legislation to international best practice as set out in the Basle Core Principles for Effective Banking Supervision. Bank of Uganda has also undertaken a number of programmes to modernize and strengthen the financial sector, in conjunction with commercial banks. 

4.5.2     Wildlife and Tourism

            The promotion of Uganda as a tourist destination and the proper management of wildlife and cultural resources have potential in bringing additional income into households, communities and the national economy. The number of tourist arrivals has been increasing from the 205,287 recorded in 2001 to 512,378 during 2004/05[7].  The largest number of tourists originates from Africa, followed by Europe, America, Asia and other regions. The major challenge facing the sector is the need to expand and improve infrastructure, accommodation and transport facilities to be able to accommodate the tourist inflows and bring down the costs associated with tourism. In order to stimulate growth of the sector and to enhance performance, government has introduced legal and policy reforms.  The Tourism Bill is before parliament and the Uganda Wildlife Authority has prepared a five-year strategic plan.

4.5.3     Energy

            Availability and affordability of Energy is vital for the socio-economic and rural development of the country. It supports productive activities and facilitates investments in all the sectors of the economy. The Government of Uganda has successfully implemented several reforms aimed at removing the monopoly in the power sector and meeting the energy demands of the country as indicated in Table 6.

            The main challenge facing the energy sector is the severe power shortage arising from the reduced generation capacity. The prolonged drought and the increased demand for energy have contributed considerably to this shortage. This shortage has severe negative consequences on all sectors of the economy because energy is a major input in the various production processes. It also contributes towards the uncompetitiveness of the economy since it leads to increases in the cost of doing business.  In response to this crisis, Government is working with the private sector to develop small renewable energy sources like Kakira Co-generation Plant which will produce 14MW from sugar waste (baggasse). Government also encourages initiatives; for example over 3150 solar PV systems have been installed since 1998 using private sector delivery mechanisms. There are plans to increase generation to meet the current shortfall through the development of thermal sources and more hydro generation at Bujagali (250MW) and Kuruma (200MW) as well as improvements in the quality and efficiency of power distribution.

Table-6

Trends in power generation for 2000-2005

Energy Source

Capacity/Generation (MW)*

2000

2001

2002

2003

2004

2005

Owen Falls

260

260

300

265

220

215

Thermal

3

3

3

3

3

53

Total

263

263

303

268

223

265

* Note:    Generation by private institutions and individuals is not included.

Source:    Ministry of Energy and Mineral Development.

4.5.4     Transport

            The objective of the Government's Medium Term Transport Sector Policy is to promote efficient and effective transport services that facilitate the achievement of the PEAP outcomes and other priorities. The country's transport infrastructure comprises of road, rail, water and air transport. To strengthen the Road Sector, which provides for over 90% of passenger and cargo traffic, Government has committed substantial funds to road improvement (mainly national roads) under the Road Sector Development Programme (RSDP1) covering the period 1996/97–2005/06 and which has been rolled over into the second phase.  

            In order to revamp the railway sector and to make the railway infrastructure more attractive to investors, Government has made joint concessioning of the railway system between Uganda and Kenya. Arrangements are underway to modernize the inland water system; repair of lake landing sites infrastructure, provision of more ferries and improvement in enforcement of water transport regulations. Finally, Uganda being a landlocked country, air transport plays a vital and strategic role in facilitating trade, investment and regional cooperation. Plans have been made to modernize the sector.

5.0        UGANDA TRADE REGIME

5.1        Trade Balance

            Uganda's overall trade performance over the past three financial years is as shown in Table 7. Analysis of the data indicates that Uganda has not made substantial progress towards the elimination of its structural trade deficit.

            The highest growth recorded in 2005 could be attributed to improved coffee and fish prices on the world market.  During 2005, the growth in expenditure on imports reduced to 18.9%, from 25.5% in 2004. Although the export sector recorded substantial growth in earnings of 24.1% and a reduction in imports bill in 2005, the trade deficit increased by 15.8% in the same period.

 

Table-7

Summary of Uganda's External Trade in Million US$

Year

2003

2004

2005

Domestic Exports

467.2

569.4

697.0

Re-exports

66.9

84.1

113.9

Total Exports (X)

534.1

653.5

810.9

Imports (M)

1,375.7

1,726.2

2,054.1

Total Trade (X+M)

1,909.8

2,379.8

2,865.0

Trade Balance (X-M)

(841.6)

(1,072.7)

(1,243.2)

% increase in X

14.2

22.4

24.1

% increase in M

28.1

25.5

18.9

Source:   Uganda Bureau of Statistics.

5.2        Exports

            Although Uganda is experiencing a trade deficit, exports during the year 2005, grew substantially by 24.1% to US $810.9 million from US $653.5 million in 2004.  In 2003 and 2004, export earnings increased by 14.2% and 22.4% respectively as indicated in Table 8 below.

Table-8

Domestic Exports Percentages Shares by Region

Year

2001

2002

2003

2004

2005

Africa

29.4

32.3

34.0

30.1

30.5

  COMESA

23.6

20.4

25.4

24.4

26.1

  Other Africa

5.8

11.9

8.6

5.8

6.6

Europe

48.9

53.0

46.6

50.2

46.9

  European Union

30.7

36.0

29.9

30.6

35.8

  Other Europe

18.3

17.0

16.7

19.6

11.1

Asia

12.6

9.6

8.5

9.2

8.0

Middle East

2.3

2.1

3.9

6.2

11.2

North America

1.9

2.3

3.0

3.2

2.6

South America

0.3

0.3

0.1

0.1

0.1

Rest of the World

4.5

0.4

3.9

0.9

0.7

Total

100

100

100

100

100

Source:    UBOS, (2004), External Trade Statistics Bulletin Volume 3-2004, Entebbe;  UBOS, (2006), External Trade     Statistics Bulletin Volume 4-2006, Kampala.

            Europe was the major destination for Uganda's exports with a market share of 46.6% of domestic exports in year 2003, 50.2% in year 2004 and 46.9% in the year 2005. The fluctuating market prices for coffee and fish, could have led to the drastic reduction in the market share for exports destined for Europe from 50.2% in 2004 to 46.9% in 2005.  European Union (EU) alone had a market share of total domestic exports worth US$ 139 million during 2003, US$ 174 million in 2004 and US$ 249 million in the 2005. Among the EU countries, the Netherlands took the largest share of Uganda's domestic exports followed by France, Belgium, Germany, the United Kingdom and Spain.

            The COMESA region had a market share of domestic exports of 25.4% during 2003, 24.4% in 2004 and 26.1% in year 2005.  However, the COMESA region registered a substantial increase in the market share of about 7% where Kenya was the largest export market for Uganda's products, followed by Sudan, DRC and Rwanda.  The African continent ranked second in importance as a destination of Uganda's domestic exports after Europe in 2005. Exports to South America and Middle East accounted for less than 10% combined from 2003 to 2005, although, there was a slight increase in export market share for North American continent from 3.0% in 2003 to 3.2% to 2004. Uganda's regional export earnings are summarized in Table 9 below.

Table-9

Domestic Exports by Region ('000 US$)

Year

2001

2002

2003

2004

2005

Africa

121,952

139,399

158,774

171,648

212,662

  COMESA

97,766

88,163

118,523

138,783

181,853

  Other Africa

24,186

51,236

40,251

32,865

30,809

Europe

202,886

228,813

217,767

285,800

327,109

  European Union

127,224

155,608

139,788

174,298

249,708

  Other Europe

75,662

73,206

77,979

111,502

77,400

Asia

52,172

41,553

18,334

35,495

77,916

Middle East

9,650

8,903

14,037

18,320

18,192

North America

8,021

10,107

39,572

52,426

55,827

South America

1,138

1,286

342

367

788

Rest of the World

18,670

1,778,

18,343

5,346

4,531

Total

414,490

431,839

467,170

569,400

697,025

Source:   UBOS, (2004), External Trade Statistics Bulletin Volume 3-2004, Entebbe; UBOS, (2006), External Trade          Statistics Bulletin Volume 4-2006, Kampala.

5.3 Import Performance

            Africa remained the main source of Uganda's imports, which have  been growing from US $490.7 million in the year 2003 to US $742.9 million in the year 2005. Table 10 below summarizes Uganda's imports per region.

Table-10

Imports Percentage Shares by Region

Year

2001

2002

2003

2004

2005

Africa

37.6

39.4

35.7

34.4

36.2

  COMESA

29.4

31.5

27.5

25.2

27.5

  Other Africa

8.2

7.9

8.1

9.3

8.7

Europe

23.1

19.7

19.5

18.9

19.9

  European Union (EU)

19.7

17.1

18.6

18.2

18.8

  Other Europe

3.4

2.6

0.9

0.7

1.1

Asia

25.8

27.2

27.8

29.0

26.3

Middle East

6.9

6.9

7.4

6.8

10.1

North America

3.8

4.0

6.4

7.1

5.1

South America

0.7

0.2

0.4

1.5

1.5

Rest of the World

2.0

2.6

2.8

2.3

0.8

Total

100

100

100

100

100

Source:    UBOS, (2004), External Trade Statistics Bulletin Volume 3-2004, Entebbe; UBOS, (2006), External Trade          Statistics Bulletin Volume 4-2006, Kampala.

            Imports from COMESA region were  US $378.6 million during the year 2003 and US $565.0 million in the year 2005.  The import expenditure share on goods to COMESA region increased from 25.2% in 2004 to 27.5% in 2005. This trend indicates that there is significant intra-African trade that should be strengthened under the African Union (AU) initiative. Within COMESA region, Kenya was the biggest source of Uganda's imports followed by Swaziland and Egypt. Outside COMESA, the Republic of South Africa was the biggest source of imports. The Asian continent was the second biggest source of Uganda's imports with total imports bill growing from US $382.1 million in year 2003 to US $540.8 million in the year 2005. The Asian market share reduced marginally by about 3% in 2005, as a result of possible increase in Middle East and COMESA' share.  The EU followed with total expenditure on imports growing from US $268.3 million in year 2003 to US $408.9 million during the year 2005. The EU market share fluctuated between 18.2 and 18.8% throughout the period under review. Table 11 below summarizes Uganda's import performance during the period under review.

Table- 11

Imports by region/country of origin ('000 US$)

Year

2001

2002

2003

2004

2005

Africa

378,150

422,678

490,676

594,323

742,892

  COMESA

295,695

337,711

378,638

434,177

565,011

  Other Africa

82,455

84,968

112,038

160,147

177,881

Europe

232,824

211,494

268,308

325,865

408,861

  European Union

185,566

198,181

256,098

314,033

387,158

  Other Europe

34,643

27,921

12,210

11,831

21,703

Asia

259,761

292,580

382,110

499,957

540,808

Middle East

69,319

73,904

101,707

118,129

206,879

North America

38,439

43,149

88,031

122,984

105,723

South America

7,457

2,175

5,521

26,116

31,550

Rest of the World

17,349

20,607

38,753

38,864

17,424

Total

1,006,557

1,073,732

1,375,106

1,726,238

2,054,137

Source:    UBOS, (2004), External Trade Statistics Bulletin Volume 3-2004, Entebbe;  UBOS, (2006), External Trade       Statistics Bulletin Volume 4-2006, Kampala

6.0        INVESTMENT POLICY

            Investment is the principal mode of delivering goods and services to markets, and the major factor in the organisation of production and it influences the size, direction and composition of trade. In order to  promote local and foreign investment, the GOU has put in place a number of policies which include: (i) an appropriate set of macroeconomic policies including a convertible currency that makes manufacturing for export profitable and a corporate tax that is reasonable; (ii) a method under which firms can import (without duty or bureaucratic impediments) components and materials for export manufacture (iii) an investment authority and law to promote investment; and (iv) an investment promotion programme.

            In order to implement these policies, the Government created the Uganda Investment Authority (UIA) in 1991 to advise the Government on policies conducive to investment and provide information to investors. The core function of UIA is to attract FDI and promote investments by Ugandans. UIA is a one-stop centre because it handles all investment issues and services such as immigration, customs, land and utilities under one roof.  The Investment Code provides for licensing of investment, certain facilities and incentives for investors, protection of foreign investment, the transfer of foreign technology and the externalisation of funds. Under the Code all tax benefits and the incentives regime have been harmonized so that eligible investors enjoy the benefits directly without need for a certificate of incentives as long as they make investments of a capital nature.

7.0  TRADE POLICY

            The GOU recognizes the role of trade as a tool of economic growth and development. The key objective of Uganda's trade policy is to contribute towards poverty reduction, job creation and export promotion and diversification. In order to achieve this objective, Uganda is striving to enhance trade by promoting trade liberalization through multilateral, regional and bilateral trade initiatives and consequently is a member of a number of trade organisations.

            In order to implement trade liberalization, Government has drafted a consolidated National Trade Policy, which contains elements that can respond to the dynamics of globalisation and trade liberalization. It locks in past trade liberalization programmes like the deregulation programme, trade and structural policy reforms, the Public Enterprises Reform and Divestiture (PERD) programme, and commercial law reform programme. In particular the draft Trade Policy puts the Private Sector at the lead in implementing the various policy initiatives that will drive the economy out of poverty into wealth.

7.1        Membership in Trade Organizations

            Uganda is a member of, and signatory to, a number of trade and related institutions and agreements.  We enjoy trade preferences – with some reciprocal and others not- through our membership in the East African Community Customs Union, the Common Market for Eastern and Southern Africa (COMESA), the African, Caribbean and Pacific-European Union (ACP/EU) Cotonou Partnership Agreement and the World Trade Organization (WTO).  Uganda is also a beneficiary of non-reciprocal unilateral trade preferences such as; the Everything But Arms (EBA) Initiative by the European Union, the African Growth and Opportunity Act (AGOA) by the United States and offers by Canada, Japan and China under the Generalized System of Preferences (GSP).  All these arrangements provide Uganda with varying levels of improved market access opportunities into the respective markets.

7.2        Uganda and the Multilateral Trading System

            Uganda was a contracting party to the General Agreement on Tariffs and Trade (GATT) and is a founding member of the WTO.  Uganda is therefore bound by all WTO multilateral agreements and has made special efforts to establish appropriate machinery to implement and comply with the WTO agreements as well as take advantage of opportunities arising there from. Uganda has undertaken reform of its commercial laws to bring them into conformity with WTO requirements.  A  WTO Implementation Bill has been drafted to provide the legal basis to domesticate Uganda's commitments in the WTO. Uganda upholds all the basic principles of the WTO.

7.3        Regionalism

            One of the major trends in the world today is regionalism. Regional integration a major strategy for integrating national economies into the global economy because it facilitates the generation of sufficient economic activity, improvement of efficiency, heightens competition, attracts investments, and creates jobs. Globalization requires closer regional integration if developing countries and their firms are to be competitive. The economic foundations of regionalism include efforts to form free-trade areas and the creation of common markets, which leads to the coordination and implementation of joint economic policies. Consequently, Uganda has signed a number of Regional Trade Agreements including: the Common Market of Eastern and Southern Africa (COMESA), the East African Community (EAC), and the ACP-EU Cotonou Agreement.

7.3.1     The East African Community

            The Treaty establishing the EAC was signed in Arusha on 30 November 1999 and came into force on 7 July 2000 after its ratification by the Partner States. The new EAC aims to be private sector driven, internationally competitive and people-centred. It has programmes for political, economic, social and cultural fields, research and technology, defence, security, legal and judicial affairs. On the economic front, the EAC will focus on the regional integration of trade and investment policy, monetary and fiscal policy, and labour and capital markets. To deepen the integration of the EAC States, the Protocol establishing the EAC Customs Union was signed in March 2004 and came into force on 1st January 2005. It is expected that the EAC will eventually evolve into a Common Market, a Monetary Union, and ultimately a Political Federation.

            The CU seeks to achieve a number of objectives, including liberalization of intra-regional trade in goods, promotion of efficiency in production, enhancement of cross-border trade and investment, promotion of economic development, diversification and industrialization.  According to Article 75 (1) of the Treaty, the CU covers a number of areas, including (a) the application of the principle of asymmetry, (b) elimination of internal tariffs and other charges of equivalent effect, (c) elimination of non-tariff barriers, (d) establishment of a common external tariff in respect of goods imported into the region from other countries, and (e) rules of origin.  It provides for subsidies and countervailing duties, security and other restrictions to trade, competition, duty drawback and remission of duties and taxes, customs cooperation, re-exportation and harmonization of trade documentation and procedures. 

7.3.2     The Common Market for Eastern and Southern Africa

            Uganda is a founding member of COMESA, following its transformation from the Preferential Trade Area (PTA). The regional integration grouping comprises twenty member states, with a total population of about 380 million people and a combined GDP of US$ 170 billion.

            Following the launching of the COMESA FTA, trade between COMESA FTA and non-FTA members is conducted on the basis of reciprocity. Member states agreed to also gradually establish a Common External Tariff (CET) in respect of all goods imported into the Member States from third countries, 10 years from entry into force of the treaty. COMESA envisages becoming a Common Market in 2014 and an Economic Union in 2025.  Under COMESA, Uganda reduced its tariffs by 80% in line with the agreed trade liberalization agenda.  Uganda has not, however, joined the COMESA free trade area (zero tariffs on goods produced in COMESA), given concerns about the revenue, industrial and economic growth implications.

7.3.3     The ACP-EU Cotonou Agreement

            Uganda is one of the 77 ACP (African Caribbean Pacific) countries that signed the Cotonou Agreement with the European Union (EU) in June 2000. The Cotonou Agreement is a comprehensive aid and trade agreement that replaces the four successive Lomé Conventions that governed the relationship between the EU and ACP States since 1975. The duration of the Cotonou Agreement is 20 years with a clause for revision every five years. The Cotonou Agreement extended the non-reciprocal trade arrangements between EU and ACP group for 8 years up to end of 2007 during which period the parties agreed to negotiate new Economic Partnership Agreements (EPAs) that would be WTO compatible.

7.3.4     African Growth Opportunity Act

            AGOA was signed into law on May 18, 2000 as Title I of The Trade and Development Act of 2000. The law provides preferential access for imports from beneficiary SSA countries by providing reforming African countries with the most liberal access to the U.S. market. The potential investment in Uganda under the programme include: Manufacturing sector; Energy sector, which includes hydroelectric, geothermal and solar; Forestry sector and forest products; Textiles and apparel, Electronics products, Transportation; Minerals and metals; General machinery; Chemicals and related products and Agriculture.

7.4        Bilateral Trade Initiatives

            Uganda has bilateral trading agreements with many countries. Under these agreements, Uganda and its partners accord each other most favoured nation treatment in all matters relating to their mutual trade relations. Bilateral agreements signed with developing countries include: Egypt, The Sudan, Libya, Pakistan, India, Algeria, Nigeria, The Islamic Republic of Iran, The Republic of South Africa, The Republic of Rwanda, and Pakistan. Bilateral agreements have also been signed with a number of EU countries, China, Japan, Russia and Canada.

8.0        IMPLEMENTATION OF THE WTO AGREEMENTS

8.1  Schedule of Commitments

            Uganda offered the first schedules of commitments in both trade in goods and services that include binding agricultural products at 80%, industrial products at 70% and in services, offers were made in tourism and travel related sectors. Later in 1996, further commitments were made in Basic Telecommunications. More offers are to be made once the Law Reform Program that will put in place a new national legal framework is complete.

8.2        Notifications

            Uganda has made all the basic notifications as required by various agreements of the WTO and has made attempts at fulfilling all the notification requirements on the basis of their frequency.

8.3 Implementation Process

            Uganda has formed an Inter-Institutional Committee together with four Sub-Committees as a mechanism for consultation and continuous compliance with the WTO obligations. Uganda started implementing the WTO Customs Valuation Agreement on 1st July 2000 and continues to keenly follow the negotiations at the WTO, mainly through its mission in Geneva. From time to time senior officials from the capital join the negotiations. This is in the process of being improved with the approval of the formation of a National Trade Negotiations Team.

            Uganda is committed to the WTO, the promotion of multilateralism, free trade and economic development. The WTO is a strong framework for progressive trade liberalization and predictable rules-based system for governing international trade. Therefore, Uganda will continue to participate in the WTO activities as a strategy for integrating into the multilateral trading system.

 

__________



[1] World Bank DTIS 2005.

[2] The input trust fund has been established and is assisting with the provision of fertilizers and to some extent machinery, in 2001 the national irrigation master plan was implemented which has rehabilitated irrigation channels and provided farmers with training, In 2003 the participatory agriculture development and empowerment project was started and is running small projects in 192 villages, also in 2003 the agriculture sector programme support scheme was introduced to assist high living standards for the rural poor.

[3] Initiated in 1991 and reformed in 1999.

[4] See http://www.tanzania.go.tz/vision.htm for details.

[5] MITM, (2003) National trade Policy: Trade Policy for a competitive Economy and export led growth. 

[6] Throughout this paper, 'agriculture' is taken to include both crops and livestock (information on the fisheries sub-sector can be found in Section 3.3.3).

[7] Tourism Development Division BFP 2006/07.

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