WHY DID THE CHICKEN CROSS THE ROAD ? Source: unknown
* KINDERGARTEN TEACHER: To get to the other side.
* PLATO : For the greater good.
* THE POPE: God knows.
* POLICEMAN: Give me ten minutes with the chicken and I’ll know why.
* ARISTOTLE: It is the nature of chickens to cross roads.
* SADDAM HUSSEIN : This was an unprovoked act of rebellion and we were justified in dropping 50 tons of nerve gas on it.
* CAPTAIN JAMES T. KIRK : To boldly go where no chicken has gone before.
* MARTIN LUTHER KING, JR: I envision a world where all chickens will be free to cross roads without having their motives being called into question.
* MACHIAVELLI : The point is that the chicken crossed the road. Who cares why? The end of crossing the road justifies whatever motive there was.
* FREUD : The fact that you are at all concerned that the chicken crossed the road reveals your underlying sexual insecurity.
* GEORGE W. BUSH (2): We don't really care why the chicken crossed the road. We just want to know if the chicken is on our side of the road or not. The chicken is either with us or it is against us. There is no middle ground here.
* DARWIN : Chickens, over great periods of time, have been naturally selected in such a way that they are now genetically disposed to cross roads.
* EINSTEIN : Whether the chicken crossed the road or the road moved beneath the chicken depends upon your frame of reference.
* NELSON MANDELA : Never again, will the chicken be questioned for crossing the road. This is an ideal for which I am prepared to die.
* THABO MBEKI : We need to establish if really there is a connection between the chicken and the road.
* MUGABE : For all of these years the road has been owned by the white farmers, the poor underprivileged chicken has waited too long for that road to be given to him and now he is crossing it in force with his fellow war veteran chickens. We intend taking over this road and giving it to the roadless chickens so that they can cross it without fear of retribution from Britain who promised money to institute road reform.
We will not stop until all roadless chickens have roads to cross and the freedom to cross them.
* ISAAC NEWTON : Any chicken in the universe shall always cross a road perpendicularly to the side of the road, and in an infinitely long straight line at uniform speed, unless the chicken stops due to an unbalanced reactive force in the opposite direction of the chicken's motion.
* ZANU (PF) Spokesman: The chicken did not cross the road. This is a complete fabrication. We don't even have a single chicken in our country as the whole world knows. All the chickens were bought and consumed by the long-suffering masses at give-away prices when we sent out our comrades to enforce what our enemies are now unpatriotically and maliciously referring to as the largest closing down sale in the world.
* JACOB ZUMA: I am gravely suspicious that this question is being asked with a malicious intention to trap me, send the Scorpions to raid my chicken run, haul me before the courts and charge me for sodomizing the chicken that walked across the road towards me as it was running away from an advancing light shower! Awuleth’ umshini wam’ ……..!!!
Sunday, April 13, 2008
Funny Lawyer Jokes - Employment Interview
There was a job opening in the country's most prestigious law firm and it finally comes down to Robert and Paul.
Both graduated magna cum laude from law school. Both come from good families. Both are equally attractive and well spoken. It's up to the senior partner to choose one, so he takes each aside and asks, 'Why did you become a lawyer?' In seconds, he chooses Paul.
Baffled, Robert takes Paul aside. 'I don't understand why I was rejected. When Mr. Armstrong asked me why I became a lawyer, I said that I had the greatest respect for the law, that I'd lay down my life for the Constitution and that all I wanted was to do right by my clients. What in the world did you tell him?''
I said I became a lawyer because of my hands, ' Robert replies.
'Your hands? What do you mean?
''Well, I took a look one day and there wasn't any money in either of them!'
Both graduated magna cum laude from law school. Both come from good families. Both are equally attractive and well spoken. It's up to the senior partner to choose one, so he takes each aside and asks, 'Why did you become a lawyer?' In seconds, he chooses Paul.
Baffled, Robert takes Paul aside. 'I don't understand why I was rejected. When Mr. Armstrong asked me why I became a lawyer, I said that I had the greatest respect for the law, that I'd lay down my life for the Constitution and that all I wanted was to do right by my clients. What in the world did you tell him?''
I said I became a lawyer because of my hands, ' Robert replies.
'Your hands? What do you mean?
''Well, I took a look one day and there wasn't any money in either of them!'
Cry my Zimbabwe
Our governments in Africa have failed us, and they will prove their failure further on Zimbabwe. In this case I see the citizens and civil society as the only hope.
Civil society organisations in Zimbabwe represented by a Working Group composed of thirteen umbrella organisations from all sectors met on 6 April to map out a strategy for civil society to respond to the ongoing election challenges. The meeting raised concerns over the incomprehensible explanations about the delay in announcing the results and perceived these explanations as intolerable, insofar as they have precipitated socio-economic paralysis. The organisations therefore unequivocally reiterated the demand for the immediate release of the presidential election results and for tangible displays of commitment by the ruling elites to respect the will of the people.
It is worrisome that ZANU-PF as an interested party continues to unduly interfere with the timely release of the results by the Zimbabwe Electoral Commission [ZEC]. The call for the ZEC to assert itself as an independent and impartial election management body was therefore re-emphasised.
Noting that the ongoing anxiety and uncertainty around election results is a breeding ground for civil unrest, Civil Society has launched a massive national campaign to call for peace and respect for the voices of the people. Communities from all over the country will from now on be encouraged to converge in their local areas to conduct different non violent social actions such as marches, prayer meetings and public meetings. The colour white will be used as a show of support for the campaign and citizens are encouraged to wear white ribbons, scarves and apparel as a sign of support for peace in Zimbabwe.
The 18th of April being Zimbabwe’s Day of Independence from colonial rule, has also been identified as an opportunity for all Zimbabweans to collectively speak out in support of peace, fundamental freedoms and respect for the people’s will.
In the event of a Presidential election run off Civil Society has put in place mechanisms for a coordinated and grassroots based civic campaign to make the peoples’ votes larger, to make the peoples’ votes count and to make the peoples’ votes last.
This intended action has gone beyond the borders of Zimbabwe. Across countries in Southern Africa, civil society are in advanced stage of planning to act; yes going beyond prayers they have been offering in order to make Bob Mugabe understand peace and sanity. For example in Malawi there will be a demonstration at the Zimbabwe High Commission on the delay of the Pres results, and intimidation taking place.
The situation in Zimbabwe has already impacted on the SADC. What picture is Mugabe giving, why should we have elections and when we loose we don’t want to admit defeat, this is very bad for Africa because all other leaders can follow Bob's way. If Bob can manage his way out why not the Levi Mwanawasa’s (Zambia), Bingu Wa Mutharika’s (Malawi), Jakaya's, Gebuza's (Mozambique) and others. Kibaki (Kenya) already managed to manipulate the results and Africa is setting a bad trend, bad for democracy
As young leaders we cannot just leave this go untapped – but we do not have a member in Zimbabwe.
Civil society organisations in Zimbabwe represented by a Working Group composed of thirteen umbrella organisations from all sectors met on 6 April to map out a strategy for civil society to respond to the ongoing election challenges. The meeting raised concerns over the incomprehensible explanations about the delay in announcing the results and perceived these explanations as intolerable, insofar as they have precipitated socio-economic paralysis. The organisations therefore unequivocally reiterated the demand for the immediate release of the presidential election results and for tangible displays of commitment by the ruling elites to respect the will of the people.
It is worrisome that ZANU-PF as an interested party continues to unduly interfere with the timely release of the results by the Zimbabwe Electoral Commission [ZEC]. The call for the ZEC to assert itself as an independent and impartial election management body was therefore re-emphasised.
Noting that the ongoing anxiety and uncertainty around election results is a breeding ground for civil unrest, Civil Society has launched a massive national campaign to call for peace and respect for the voices of the people. Communities from all over the country will from now on be encouraged to converge in their local areas to conduct different non violent social actions such as marches, prayer meetings and public meetings. The colour white will be used as a show of support for the campaign and citizens are encouraged to wear white ribbons, scarves and apparel as a sign of support for peace in Zimbabwe.
The 18th of April being Zimbabwe’s Day of Independence from colonial rule, has also been identified as an opportunity for all Zimbabweans to collectively speak out in support of peace, fundamental freedoms and respect for the people’s will.
In the event of a Presidential election run off Civil Society has put in place mechanisms for a coordinated and grassroots based civic campaign to make the peoples’ votes larger, to make the peoples’ votes count and to make the peoples’ votes last.
This intended action has gone beyond the borders of Zimbabwe. Across countries in Southern Africa, civil society are in advanced stage of planning to act; yes going beyond prayers they have been offering in order to make Bob Mugabe understand peace and sanity. For example in Malawi there will be a demonstration at the Zimbabwe High Commission on the delay of the Pres results, and intimidation taking place.
The situation in Zimbabwe has already impacted on the SADC. What picture is Mugabe giving, why should we have elections and when we loose we don’t want to admit defeat, this is very bad for Africa because all other leaders can follow Bob's way. If Bob can manage his way out why not the Levi Mwanawasa’s (Zambia), Bingu Wa Mutharika’s (Malawi), Jakaya's, Gebuza's (Mozambique) and others. Kibaki (Kenya) already managed to manipulate the results and Africa is setting a bad trend, bad for democracy
As young leaders we cannot just leave this go untapped – but we do not have a member in Zimbabwe.
Rights Based Programming in Malawi
RIGHTS BASED PROGRAMMING IN MALAWI: THE CASE OF ACTIONAID INTERNATIONAL MALAWI
By Collins Magalasi
In spite of over four decades of political independence, poverty in Malawi remains one of the highest in the world. Since ActionAid opened its operational doors in Malawi in 1991, it has spent millions of pounds providing goods and services to the poor in the country, yet poverty eradication remains an elusive objective (including in development areas that ActionAid was/is working). Reflections and related lessons from practice have led the organisation to resolve to end poverty through rights based approach (RBA).
Implementing RBA in Malawi requires us to be innovative. Despite the fact that there is no single, universally agreed rights based approach, there are basic constituent elements of RBA that we will ensure our programmes incorporate. These include (a) Accountability on the part of the state to fulfil people’s rights and the communities to communicate their needs, (b) empowerment of poor women, girls, boys and girls and ensuring their participation in contributing to, claiming and enjoying civil, economic, social and cultural rights and political development, (c) indivisibility and interdependence of rights whereby no right will be addressed at the cost of another, (d) equality and non-discrimination where there is no exclusion based on gender, ethnicity, age, colour, physical etc differences, yet paying special attention to vulnerable and marginalised groups; and (d) linkage to national and international human rights norms and standards
To ensure that our RBA efforts have great potential as a tool to engage policy makers and public managers in continuous improvement of basic services, we will ensure that we set realistic expectations; engage stakeholders at various level in defining problems and solutions; incorporate capacity building of our staff, partners and government and donor officials about the process; and create systems for eliminating unnecessary barriers and for facilitating innovation.
Implementation of RBA in Malawi does not come without challenges. Care will be taken in implementing RBA because often the approach can be seen very easily as holding the government and duty bearers accountable for results over which they have no control, and this may breed sour relations with the government. Government of Malawi often claims that they do not have enough funds to fulfil all people’s basic needs. To prevent this, we will ensure that our RBA system analysis has data indicating who is responsible for achieving results and listing factors beyond the control of the duty bearers that could affect results. We will also be on the lookout for increased fragmentation of partners because different players – staff, partners and communities alike – have differing requirements, opinions and expectations of development. The history of ActionAid as a direct service delivery relief agency contributes to this. In this vein we will civic educate the communities and partners on the ‘new’ approach that ActionAid is taking. Our staff in the field may also become frustrated with RBA when charged with identifying solutions to problems that they cannot implement due to constraints of imbedded community belief that ActionAid gives them better services than the government. To reach its potential as a tool for continuous improvement, RBA must be used as an incentive for innovation rather than as a punitive measure to staff and poor communities.
In applying rights based approach, ActionAid will transform from usurping of government responsibility of supplying goods and services to the role of facilitating the relationship between authorities and the communities to realise sustainable development priorities.
To do this, in our day-to-day work in the DAs and through partners, we will facilitate programmes that lead to government, partners and communities understanding human rights and their subsequent duties and responsibilities to respect, protect and fulfil them (through civic education, technical capacity building and resource transfer). We will also work with vulnerable, marginalised and women communities to ensure that they recognise the responsibilities of government and have the capacity to negotiate with the duty bearers to provide services and freedoms in an equitable and transparent manner. The objective of this rights based approach is to move beyond meeting specific needs to reinforcing local structures and capacities to meet human rights standards over time, as set out in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights.
Additionally, we will work with affected communities to monitor process and results of government and duty bearers meeting of development priorities. We will monitor donors too in their ensuring that government has the means and freedom to realise the development priorities provided by human rights.
Rights-based approaches to development emphasize non-discrimination, attention to vulnerability and empowerment. Women and girls are among the first victims of discrimination. They are the most vulnerable and the least empowered in many of our societies. As such all our work will be designed, implemented and evaluated with the lens of women and girls. At national level, we will measure our progress against standards set in the UN Convention on the Elimination of All Forms of Discrimination against Women and monitoring standards of the Committee on the Elimination of Discrimination against Women (CEDAW). Women and girls’ concerns will be reflected in the conceptualization, implementation and evaluation of human rights policies, strategic planning, and the setting of priorities and objectives. Our programme work will thus focus comprehensively on availability, accessibility, acceptability and adaptability of needed services for all poor and vulnerable communities.
On the government front, our national programmes will pursue rights based approach in our relationship with the government and other duty bearers, by working on results based accountability of the government. In this case the objective will be to ensure that the government facilitates collaboration among stakeholders on common goals; empowers frontline workers; reduces regulation – resulting in greater local decision making; engages the public in defining solutions to society’s problems; demonstrates the results of public investments, thereby increasing public trust in the government, and budgets for results.
ends
Collins Magalasi
By Collins Magalasi
In spite of over four decades of political independence, poverty in Malawi remains one of the highest in the world. Since ActionAid opened its operational doors in Malawi in 1991, it has spent millions of pounds providing goods and services to the poor in the country, yet poverty eradication remains an elusive objective (including in development areas that ActionAid was/is working). Reflections and related lessons from practice have led the organisation to resolve to end poverty through rights based approach (RBA).
Implementing RBA in Malawi requires us to be innovative. Despite the fact that there is no single, universally agreed rights based approach, there are basic constituent elements of RBA that we will ensure our programmes incorporate. These include (a) Accountability on the part of the state to fulfil people’s rights and the communities to communicate their needs, (b) empowerment of poor women, girls, boys and girls and ensuring their participation in contributing to, claiming and enjoying civil, economic, social and cultural rights and political development, (c) indivisibility and interdependence of rights whereby no right will be addressed at the cost of another, (d) equality and non-discrimination where there is no exclusion based on gender, ethnicity, age, colour, physical etc differences, yet paying special attention to vulnerable and marginalised groups; and (d) linkage to national and international human rights norms and standards
To ensure that our RBA efforts have great potential as a tool to engage policy makers and public managers in continuous improvement of basic services, we will ensure that we set realistic expectations; engage stakeholders at various level in defining problems and solutions; incorporate capacity building of our staff, partners and government and donor officials about the process; and create systems for eliminating unnecessary barriers and for facilitating innovation.
Implementation of RBA in Malawi does not come without challenges. Care will be taken in implementing RBA because often the approach can be seen very easily as holding the government and duty bearers accountable for results over which they have no control, and this may breed sour relations with the government. Government of Malawi often claims that they do not have enough funds to fulfil all people’s basic needs. To prevent this, we will ensure that our RBA system analysis has data indicating who is responsible for achieving results and listing factors beyond the control of the duty bearers that could affect results. We will also be on the lookout for increased fragmentation of partners because different players – staff, partners and communities alike – have differing requirements, opinions and expectations of development. The history of ActionAid as a direct service delivery relief agency contributes to this. In this vein we will civic educate the communities and partners on the ‘new’ approach that ActionAid is taking. Our staff in the field may also become frustrated with RBA when charged with identifying solutions to problems that they cannot implement due to constraints of imbedded community belief that ActionAid gives them better services than the government. To reach its potential as a tool for continuous improvement, RBA must be used as an incentive for innovation rather than as a punitive measure to staff and poor communities.
In applying rights based approach, ActionAid will transform from usurping of government responsibility of supplying goods and services to the role of facilitating the relationship between authorities and the communities to realise sustainable development priorities.
To do this, in our day-to-day work in the DAs and through partners, we will facilitate programmes that lead to government, partners and communities understanding human rights and their subsequent duties and responsibilities to respect, protect and fulfil them (through civic education, technical capacity building and resource transfer). We will also work with vulnerable, marginalised and women communities to ensure that they recognise the responsibilities of government and have the capacity to negotiate with the duty bearers to provide services and freedoms in an equitable and transparent manner. The objective of this rights based approach is to move beyond meeting specific needs to reinforcing local structures and capacities to meet human rights standards over time, as set out in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights.
Additionally, we will work with affected communities to monitor process and results of government and duty bearers meeting of development priorities. We will monitor donors too in their ensuring that government has the means and freedom to realise the development priorities provided by human rights.
Rights-based approaches to development emphasize non-discrimination, attention to vulnerability and empowerment. Women and girls are among the first victims of discrimination. They are the most vulnerable and the least empowered in many of our societies. As such all our work will be designed, implemented and evaluated with the lens of women and girls. At national level, we will measure our progress against standards set in the UN Convention on the Elimination of All Forms of Discrimination against Women and monitoring standards of the Committee on the Elimination of Discrimination against Women (CEDAW). Women and girls’ concerns will be reflected in the conceptualization, implementation and evaluation of human rights policies, strategic planning, and the setting of priorities and objectives. Our programme work will thus focus comprehensively on availability, accessibility, acceptability and adaptability of needed services for all poor and vulnerable communities.
On the government front, our national programmes will pursue rights based approach in our relationship with the government and other duty bearers, by working on results based accountability of the government. In this case the objective will be to ensure that the government facilitates collaboration among stakeholders on common goals; empowers frontline workers; reduces regulation – resulting in greater local decision making; engages the public in defining solutions to society’s problems; demonstrates the results of public investments, thereby increasing public trust in the government, and budgets for results.
ends
Collins Magalasi
Implications for Business and the Industry in Government’s Efforts to Meet the MDGs?
Implications for Business and the Industry in Government’s Efforts to Meet the MDGs?
By Collins Magalasi[1]
Introduction
Responding to the world’s main development challenges and to the calls of civil society, 147 Heads of State and Governments and 189 nations, including Malawi, signed onto the Millennium Declaration at the Millennium Summit in New York in September 2000. The Declaration is a synchronisation of a set of time-bound, inter-related and mutually reinforcing goals and targets into a global agenda of fighting poverty, hunger, disease, illiteracy, environmental degradation and discrimination against women. These are called Millennium Development Goals (MDGs) and are as follows:
• MDG 1: Reduce Extreme Poverty And Hunger
• MDG 2: Achieve Universal Primary Education
• MDG 3: Promote Gender Equality and Empowerment of Women
• MDG 4: Minimise Child Mortality
• MDG 5: Improve Maternal Health
• MDG 6: Combat HIV/AIDS, Malaria and Other Diseases
• MDG 7: Ensure Environmental sustainability
• MDG 8: Organise a Global Partnership for Development
Set for the year 2015, the Eight Goals can only be achieved if all actors work together and do their part correctly. Governments of poor countries pledged to govern better, and invest in their people, while rich countries pledged to support them, through aid, debt relief, and fair trade. Silent was the direct role of the private sector, which was assumed perhaps to be within the responsibility of the governments.
“The Millennium Development Goals have galvanised unprecedented efforts to meet the needs of the world’s poorest, becoming globally accepted benchmarks of broader progress embraced by donors, developing countries, civil society and major development institutions alike.” Kofi Annan, former UN Secretary General.
There has been talk of polarity between governments and private businesses in delivering services to the poor. The later is often listed as anti-poor. But is this correct? How can the corporate sector play a more effective part in tackling poverty? Can we assume that encouraging the corporate sector to invest in poor regions results in greater access to employment for the poor and greater tax revenues directed towards social programmes? Is it practicable to position the corporate sector as an agent in the delivery of the international Millennium Development Goals and the poverty reduction strategies of national governments? Conversely, are we right to believe that progress towards poverty reduction reinforces economic and political stability, helps markets to grow, and provides a platform for private sector development? What implications do government policies and actions on delivering on MDGs commitments have on businesses?
Businesses and Poverty Reduction
The positive contribution that private enterprises can make to development and poverty reduction is likely to be obvious to most people. They would agree that, in the long term, economic development cannot occur without dynamic private companies. They would also agree that good government and efficient public administration are equally necessary.
The growing debate over implications of government’s delivery of social services on businesses presents a paradox. It is an opportunity to make business’ business, but it can also lead to stifling of businesses. The seemingly lack of fulfilment of expectations of business have also contributed to the sceptism that ‘non-business’ actors have generally on role of businesses in poverty reduction.
The growing debate over the impacts of business on poverty reduction presents yet another paradox. Big businesses have demonstrated their ability to create wealth around the world, but the benefits of the capabilities of these firms and of the global market system do not yet reach most of the 12 billion people (who include the 6.5 million from Malawi) that live in poverty. It seems clear that the world’s prosperity and security, and perhaps even the growth and legitimacy of global corporations, are linked to our ability to remedy this disconnect.
In the quest for sustainable development, eliminating poverty is the key challenge facing not only governments and civil society, but also business. Traditionally, business has played a crucial role in providing routes from poverty to prosperity of shareholders, pursuing profit and in the process generating wealth, products and services, innovation and technical advances, jobs and tax revenues. Businesses of all sizes relate to the poor as consumers, staff, suppliers and distributors, and in some cases as neighbours.
However, such a business-as-usual approach is clearly not lifting the majority of the people out of poverty: nearly 6.5 million people survive on less than US$1 per day in Malawi. The formal sector barely serves the poorest of these people, who must rely on the informal sector and their own production as their main sources for products, services and income. Furthermore, many of the poor are suffering from the negative impacts of business activities, from environmental pollution to human rights abuses. While the primary role of business is to provide the “engine of growth”, recognition is growing that the private sector can and should do more to combat poverty, and that this unrealised potential offers both a commercial and a social opportunity.
Measuring Business Contribution
There has been a lot of conference talk and coverage of business and the MDGs in recent years. Yet it has been hard to move beyond anecdotes to analytical data on private sector impacts on poverty reduction
Should your business make you feel guilty? We are not talking of what is does to consumers, but its poverty impact. The Dutch Sustainability Research (DSR) developed an MDG Scan (see annex 1 for details), that advises institutional clients on socially responsible investments. It split the eight MDGs, which originally apply to governments, into 77 measurable and comparable indicators relevant to multinational companies with significant activity in middle or low income countries.
The score for the first MDG on halving the number of people living in extreme poverty by 2015, depends on stimulating community development by measures such as promoting local entrepreneurship and providing essential products and services, provision of employment and salaries, stimulating local agricultural production, and fighting malnutrition.
The second MDG on universal primary education depends on company guidelines and programmes, its efforts to combat child labour, and promoting private education.
The scores for each indicator are weighted and aggregated to a score between 0 and 100 for each MDG. At this stage, the scan does not add up the scores for each of the eight MDGs to a final score on all MDGs. Why is this so? Ronald Lubberts, Director of DSR says "It is questionable if high performance on one of the MDGs should compensate for a relatively low performance on another.” Moreover, each industry can contribute to the MDGs in a different way. "A pharmaceutical company can diminish child mortality, stimulate maternal health and can halt the spread of HIV and AIDS solely by the nature of its products and services," Lubberts said. "A mining company cannot, but it can contribute to local community development in remote areas by improving local medical care and education opportunities."
Heineken is one of the first firms to go though the new MDG Scan.
The new scan is another step forward, although only six firms - mostly Dutch - have so far undergone the scan and it tends to emphasize the positive. The challenge is to make sure it covers the range of operational impacts given that it is time and cost intensive to measure business impacts effectively.
Getting back home, there is nothing like this. Much as there are a few businesses involved in Corporate Social Responsibility (CSR), it has been said too generally that this will bring about poverty reduction. It is a fallacy, for, some CSRs are for public relations purposes of the company that have no additional value to the day to day lives of the poor.
Why must Businesses support and align their activities to MDGs
Businesses engage in poverty elimination for a multitude of reasons; as a result, talking about a single business case is difficult. Nevertheless, we can usefully look at the justification for business action on three levels, as shown below.
Innovation can unlock commercial opportunities while meeting the needs of the poor
Ensuring good governance, a strong economy and a competent workforce can help companies and the poor to prosper.
Action on poverty can contribute to profitability for individual companies
Market Development
Bottom-Line benefits
Secure Business Environment
At the base of the business case is the recognition that poverty attacks the foundations for healthy business. Tackling poverty can help businesses to build the local spending power, skilled workforce and stable environment necessary for business development. However, the benefits are spread across the local economy and no individual company can capture all of them. Therefore, the second level of the business case looks at the balance of costs and benefits of business action on poverty for an individual enterprise.
Within the second level, a growing body of evidence shows that companies that take account of the interests of their stakeholders, that respect human rights and environmental standards, and that give back to the community in the form of social investment are able to improve their financial performance. While poverty is not the only issue of concern, many of the areas increasingly considered as part of the wider responsibility of business – such as child labour, involvement in human rights abuse and environmental destruction – cannot be addressed without understanding their links with poverty.
The top level of the business case represents an opportunity for those businesses smart enough, fast enough and innovative enough to develop business models that engage with the poor as consumers, workers and entrepreneurs. Such businesses find ways to profitably address the poor’s unmet needs for basic products and services, jobs and market access, as well as enabling services such as education, credit and ICTs (information communication technologies). This is what the MDGs are there for. To achieve this companies will need to move beyond incremental change and accepted business models to fundamentally alter the way they produce and deliver value.
So what should government – business interventions be in delivering MDGs?
A comprehensive approach to poverty elimination is needed, one in which public, private and civil sectors attack the multiple dimensions and causes of poverty. Government needs to support business interventions that would bring the following outcomes:
Increased equity, with wider distribution of productive assets and increasing returns on these assets
Enhanced opportunity to access jobs, credit, roads, electricity, markets, schools, water, sanitation and health services
Participation in the processes that control access to market opportunities and public sector services, regardless of gender, ethnicity and social status
Peace and security, and reduced vulnerability to economic, political and environmental crisis, which will enable people to invest in higher-risk, higher-return activities
A sustainable future in which people conserve natural capital and use finite resources more sustainably, from the local to the global level.
Businesses also contribute to development in other ways that are crucial to economic development and poverty reduction:
They generate a large portion of government tax revenues, without which there would be no sustainable base for funding public health care, education, social safety nets, agricultural research, and other critical expenditures.
In countries with competitive economies, leading private firms will constantly seek out information that has practical local uses; to remain competitive, other firms will emulate their behavior. In the process, executives and employees upgrade their human capital, productivity, and incomes, contributing to the diffusion of useful knowledge and techniques.
Over time, competitive firms improve the quality of products and make them more affordable, thereby boosting the purchasing power of consumers, including poor consumers. Indeed, in countries such as India and Brazil, some private companies have begun to focus on the poorer segments of the population as promising new markets.
Not all private enterprises in all environments generate jobs, investment, and human capital, however. Monopolies and oligopolies, high protection against competing imports, and government subsidies all undermine the ability of private firms to reduce poverty. Government measures that encourage competition are the best way to attack the concentration of power, oligarchy, monopoly, corruption, and other distortions that make efforts to help poor people ineffective. Government’s establishment of the Competition and Fair Trading Commission (CFTC) must be commended and we must all support the Commission.
The weakening of favoritism, the elimination of excessive red tape, the regulation of natural monopolies, and the encouragement of liberalization all work to defeat the entrenched forces of privilege that perpetuate poverty. Widening markets through regional trade and currency arrangements, and increasing internationalization and the attendant liberalization underline inviting arrangements.
So what should government do inorder to have the private sector contribute to the attainment of MDGs? - Business environment
What can governments do to support the creation and expansion of companies that are financially, economically, socially, and environmentally supporting MDGs? Besides improving health care, education, and macroeconomic conditions, and encouraging competition, governments can undertake institutional reforms that, over time, lower the costs of doing business and thus create a more favorable business environment. Such reforms encourage activities not only by foreign investors but also—and more important—by the thousands of local entrepreneurs who want to start or expand small businesses in agriculture, services, and manufacturing.
A number of enterprise surveys and other analytical work linking institutional factors and economic performance have been carried out in recent years. These analyses pinpoint areas in which reform is urgently needed in this country. Among the findings are the following:
A strong relationship exists between the quality of the business environment and long-term national economic performance, including the pace of poverty reduction.
Enforcement of the rule of law—in particular, the extent to which government enforces contracts between private parties (and between private parties and the state)—is crucial to long-term development and, as already noted, affects the poor as well as affluent members of society.
Respect for property rights (especially those of the poor) is highly correlated with long-term economic and social progress.
The efficiency of government in delivering services is also associated with economic progress.
In particular, a worldwide survey of 10,000 enterprises carried out during 1999 and 2000 under the leadership of the World Bank Group points to the leading obstacles to doing business identified by business managers and owners in developing countries. Constraints were ranked in order of perceived seriousness on a scale of 1 ("no obstacle") to 4 ("major obstacle"). The average score for perceived obstacles is, unsurprisingly, higher in developing countries (2.6) than in industrial countries (1.95). The developing country list of obstacles is topped by four items scoring an average of 2.9: taxes and regulations, financing difficulties, inflation, and political instability or uncertainty. The next most serious perceived obstacles—corruption, exchange rate problems, and "street crime, disorder, and theft"—score an average of 2.6.
Analysis of these survey data for all countries suggests that investment and economic growth are related to certain key indicators of the quality of the investment climate. For example, foreign direct investment flows are positively associated with economic predictability and predictability of changes in law and legislation, and negatively associated with constraints imposed by taxes and regulations and exchange rate instability. Likewise, GDP growth within each of the regional groupings of countries is negatively associated with the severity of constraints imposed by taxes and regulations in general and, specifically, high tax rates, tax administration, and business-registration procedures.
Conclusion: Government, Businesses and Poverty Eradication
Describing the ‘proper role of government,’ the Honorable Ezra Taft Benson, Former US Secretary of Agriculture [The Eisenhower Administration - ed.] wrote in 1968 that it is generally agreed that the most important single function of government is to “secure the rights and freedoms of individual citizens.” But, what are those rights? And what is their source? He asked. Until year 2000, these questions were not answered in universally agreed language and targets. As such the answering of these questions through the MDGs raised the likelihood that we can correctly determine how government can best secure them, in partnership with private businesses and citizenry.
Indeed, as Thomas Paine, back in the days of the American Revolution, explained that:
"Rights are not gifts from one man to another, nor from one class of men to another... It is impossible to discover any origin of rights otherwise than in the origin of man; it consequently follows that rights appertain to man in right of his existence, and must therefore be equal to every man." (P.P.N.S., p. 134)
Government should therefore never abrogate its responsibility on MDGs to any person, whether human or corporate.
The great Thomas Jefferson asked: "Can the liberties of a nation be thought secure when we have removed their only firm basis, a conviction in the minds of the people that these liberties are of the gift of God? That they are not to be violated but with his wrath?" (Works 8:404; P.P.N.S., p.141)
The Alabama State (USA) Constitution provides an interesting basis for government investment in eradication of poverty. It provides in Art1.sec 35
"That the sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty, and property, and when the government assumes other functions it is usurpation and oppression."
Therefore, government needs to facilitate environment where businesses will further the citizens’ “enjoyment of life, liberty, and property.” Anything less that the purpose mention here-before, must never be supported. In the delivery of the MDG commitments, businesses find opportunity to provide goods and services. Businesses must therefore encourage government to stick to the MDG agenda. As it has been stated earlier on, we must recognise that poverty attacks the foundations for healthy business. Implementing the MDGs commitments will help businesses to build the local spending power, skilled workforce and stable environment necessary for business development. Together we stand, divided we fall.
Ends
Annex 1: the MDG Scan
In September 2000, the United Nations member countries made a commitment to reaching eight MDGs by 2015, such as halving the proportion of people suffering extreme poverty and hunger, achieving universal primary education, and promoting gender equality and the empowerment of women.
The Dutch Commission on Sustainable Research (NCDO) has now financed the MDG Scan as a tool to raise awareness of the MDGs in the private sector. The scan allows for detailed comparisons between companies within the same sector and evaluation of the progress of a company over time. It split the eight MDGs, which originally apply to governments, into 77 measurable and comparable indicators relevant to multinational companies with significant activity in middle or low income countries. The score for the first MDG on halving the number of people living in extreme poverty by 2015, depends on stimulating community development by measures such as promoting local entrepreneurship and providing essential products and services, provision of employment and salaries, stimulating local agricultural production, and fighting malnutrition. The second MDG on universal primary education depends on company guidelines and programmes, its efforts to combat child labour, and promoting private education. "The quantitative approach will make the discussion on private sector contribution to the MDGs less speculative and anecdotal," the NCDO states. It wants to benchmark sufficient companies to be able to launch an index and a 'Millennium Development Fund' with stocks of companies with the best MDG performance. The scores for each indicator are weighted and aggregated to a score between 0 and 100 for each MDG. At this stage, the scan does not add up the scores for each of the eight MDGs to a final score on all MDGs. "It is questionable if high performance on one of the MDGs should compensate for a relatively low performance on another," says DSR director Ronald Lubberts. Moreover, each industry can contribute to the MDGs in a different way. "A pharmaceutical company can diminish child mortality, stimulate maternal health and can halt the spread of HIV and AIDS solely by the nature of its products and services," Lubberts said. "A mining company cannot, but it can contribute to local community development in remote areas by improving local medical care and education opportunities." Six multinational companies have so far passed the MDG Scan: ABN Amro (banking), Heineken (beer brewer), Philips (electronics), Akzo Nobel (chemicals), BHP Billiton (mining) and TNT (logistics). The results indicate that all six companies contribute positively to each one of the eight Millennium goals. The MDG scan takes into account positive as well as negative contributions to the MDGs. But judged by the number of indicators, the MDG Scan currently stresses indicators that measure positive contributions. Generally speaking, companies get more chances to win than to lose points. However, the indicators that measure negative contributions are weighted substantially in order to outweigh positive indicators. Companies receive scores for negative contributions if evidence is found that the company is involved in a controversy related to the MDGs. BHP Billiton for instance had points deducted because of its involvement in controversies related to its impact on the environment. "The negative indicator in this model has been kept simple," Lubberts told IPS. "This version is meant to gain experience and needs some fine-tuning." Lubberts says more companies need to be assessed with the MDG Scan before the results of a benchmark can be properly interpreted. Only when several beer brewers have gone through the evaluation process, will it become clear if Heineken's score of 44 on MDG3 (gender) should be qualified as "average" or "good". First and foremost, MDGs are structural and long-term goals for governments, who need to levy taxes to finance these efforts. Companies are constantly looking for ways to pay as little tax as possible. Sometimes they optimise profits by shifting them from a local branch to the seat of the mother company. In this way, locally produced extra value gets lost. The United Nations Development and the Global Compact, the UN's voluntary corporate responsibility initiative, have already shown interest in the MDG Scan. The MDG Scan will be made available online later this year as a self-assessment tool in a slightly modified version. "Companies and stakeholders have asked us to attribute more weight to performance indicators that measure real impact results," Lubberts said. "That is important to them from a communications perspective".
(Mattias Creffier /2007)
[1] Collins Magalasi is Ag. Country Director for ActionAid International South Africa, Lesotho and Swaziland and is based in Johannesburg. He can be contacted on email collins.magalasi@actionaid.org.
By Collins Magalasi[1]
Introduction
Responding to the world’s main development challenges and to the calls of civil society, 147 Heads of State and Governments and 189 nations, including Malawi, signed onto the Millennium Declaration at the Millennium Summit in New York in September 2000. The Declaration is a synchronisation of a set of time-bound, inter-related and mutually reinforcing goals and targets into a global agenda of fighting poverty, hunger, disease, illiteracy, environmental degradation and discrimination against women. These are called Millennium Development Goals (MDGs) and are as follows:
• MDG 1: Reduce Extreme Poverty And Hunger
• MDG 2: Achieve Universal Primary Education
• MDG 3: Promote Gender Equality and Empowerment of Women
• MDG 4: Minimise Child Mortality
• MDG 5: Improve Maternal Health
• MDG 6: Combat HIV/AIDS, Malaria and Other Diseases
• MDG 7: Ensure Environmental sustainability
• MDG 8: Organise a Global Partnership for Development
Set for the year 2015, the Eight Goals can only be achieved if all actors work together and do their part correctly. Governments of poor countries pledged to govern better, and invest in their people, while rich countries pledged to support them, through aid, debt relief, and fair trade. Silent was the direct role of the private sector, which was assumed perhaps to be within the responsibility of the governments.
“The Millennium Development Goals have galvanised unprecedented efforts to meet the needs of the world’s poorest, becoming globally accepted benchmarks of broader progress embraced by donors, developing countries, civil society and major development institutions alike.” Kofi Annan, former UN Secretary General.
There has been talk of polarity between governments and private businesses in delivering services to the poor. The later is often listed as anti-poor. But is this correct? How can the corporate sector play a more effective part in tackling poverty? Can we assume that encouraging the corporate sector to invest in poor regions results in greater access to employment for the poor and greater tax revenues directed towards social programmes? Is it practicable to position the corporate sector as an agent in the delivery of the international Millennium Development Goals and the poverty reduction strategies of national governments? Conversely, are we right to believe that progress towards poverty reduction reinforces economic and political stability, helps markets to grow, and provides a platform for private sector development? What implications do government policies and actions on delivering on MDGs commitments have on businesses?
Businesses and Poverty Reduction
The positive contribution that private enterprises can make to development and poverty reduction is likely to be obvious to most people. They would agree that, in the long term, economic development cannot occur without dynamic private companies. They would also agree that good government and efficient public administration are equally necessary.
The growing debate over implications of government’s delivery of social services on businesses presents a paradox. It is an opportunity to make business’ business, but it can also lead to stifling of businesses. The seemingly lack of fulfilment of expectations of business have also contributed to the sceptism that ‘non-business’ actors have generally on role of businesses in poverty reduction.
The growing debate over the impacts of business on poverty reduction presents yet another paradox. Big businesses have demonstrated their ability to create wealth around the world, but the benefits of the capabilities of these firms and of the global market system do not yet reach most of the 12 billion people (who include the 6.5 million from Malawi) that live in poverty. It seems clear that the world’s prosperity and security, and perhaps even the growth and legitimacy of global corporations, are linked to our ability to remedy this disconnect.
In the quest for sustainable development, eliminating poverty is the key challenge facing not only governments and civil society, but also business. Traditionally, business has played a crucial role in providing routes from poverty to prosperity of shareholders, pursuing profit and in the process generating wealth, products and services, innovation and technical advances, jobs and tax revenues. Businesses of all sizes relate to the poor as consumers, staff, suppliers and distributors, and in some cases as neighbours.
However, such a business-as-usual approach is clearly not lifting the majority of the people out of poverty: nearly 6.5 million people survive on less than US$1 per day in Malawi. The formal sector barely serves the poorest of these people, who must rely on the informal sector and their own production as their main sources for products, services and income. Furthermore, many of the poor are suffering from the negative impacts of business activities, from environmental pollution to human rights abuses. While the primary role of business is to provide the “engine of growth”, recognition is growing that the private sector can and should do more to combat poverty, and that this unrealised potential offers both a commercial and a social opportunity.
Measuring Business Contribution
There has been a lot of conference talk and coverage of business and the MDGs in recent years. Yet it has been hard to move beyond anecdotes to analytical data on private sector impacts on poverty reduction
Should your business make you feel guilty? We are not talking of what is does to consumers, but its poverty impact. The Dutch Sustainability Research (DSR) developed an MDG Scan (see annex 1 for details), that advises institutional clients on socially responsible investments. It split the eight MDGs, which originally apply to governments, into 77 measurable and comparable indicators relevant to multinational companies with significant activity in middle or low income countries.
The score for the first MDG on halving the number of people living in extreme poverty by 2015, depends on stimulating community development by measures such as promoting local entrepreneurship and providing essential products and services, provision of employment and salaries, stimulating local agricultural production, and fighting malnutrition.
The second MDG on universal primary education depends on company guidelines and programmes, its efforts to combat child labour, and promoting private education.
The scores for each indicator are weighted and aggregated to a score between 0 and 100 for each MDG. At this stage, the scan does not add up the scores for each of the eight MDGs to a final score on all MDGs. Why is this so? Ronald Lubberts, Director of DSR says "It is questionable if high performance on one of the MDGs should compensate for a relatively low performance on another.” Moreover, each industry can contribute to the MDGs in a different way. "A pharmaceutical company can diminish child mortality, stimulate maternal health and can halt the spread of HIV and AIDS solely by the nature of its products and services," Lubberts said. "A mining company cannot, but it can contribute to local community development in remote areas by improving local medical care and education opportunities."
Heineken is one of the first firms to go though the new MDG Scan.
The new scan is another step forward, although only six firms - mostly Dutch - have so far undergone the scan and it tends to emphasize the positive. The challenge is to make sure it covers the range of operational impacts given that it is time and cost intensive to measure business impacts effectively.
Getting back home, there is nothing like this. Much as there are a few businesses involved in Corporate Social Responsibility (CSR), it has been said too generally that this will bring about poverty reduction. It is a fallacy, for, some CSRs are for public relations purposes of the company that have no additional value to the day to day lives of the poor.
Why must Businesses support and align their activities to MDGs
Businesses engage in poverty elimination for a multitude of reasons; as a result, talking about a single business case is difficult. Nevertheless, we can usefully look at the justification for business action on three levels, as shown below.
Innovation can unlock commercial opportunities while meeting the needs of the poor
Ensuring good governance, a strong economy and a competent workforce can help companies and the poor to prosper.
Action on poverty can contribute to profitability for individual companies
Market Development
Bottom-Line benefits
Secure Business Environment
At the base of the business case is the recognition that poverty attacks the foundations for healthy business. Tackling poverty can help businesses to build the local spending power, skilled workforce and stable environment necessary for business development. However, the benefits are spread across the local economy and no individual company can capture all of them. Therefore, the second level of the business case looks at the balance of costs and benefits of business action on poverty for an individual enterprise.
Within the second level, a growing body of evidence shows that companies that take account of the interests of their stakeholders, that respect human rights and environmental standards, and that give back to the community in the form of social investment are able to improve their financial performance. While poverty is not the only issue of concern, many of the areas increasingly considered as part of the wider responsibility of business – such as child labour, involvement in human rights abuse and environmental destruction – cannot be addressed without understanding their links with poverty.
The top level of the business case represents an opportunity for those businesses smart enough, fast enough and innovative enough to develop business models that engage with the poor as consumers, workers and entrepreneurs. Such businesses find ways to profitably address the poor’s unmet needs for basic products and services, jobs and market access, as well as enabling services such as education, credit and ICTs (information communication technologies). This is what the MDGs are there for. To achieve this companies will need to move beyond incremental change and accepted business models to fundamentally alter the way they produce and deliver value.
So what should government – business interventions be in delivering MDGs?
A comprehensive approach to poverty elimination is needed, one in which public, private and civil sectors attack the multiple dimensions and causes of poverty. Government needs to support business interventions that would bring the following outcomes:
Increased equity, with wider distribution of productive assets and increasing returns on these assets
Enhanced opportunity to access jobs, credit, roads, electricity, markets, schools, water, sanitation and health services
Participation in the processes that control access to market opportunities and public sector services, regardless of gender, ethnicity and social status
Peace and security, and reduced vulnerability to economic, political and environmental crisis, which will enable people to invest in higher-risk, higher-return activities
A sustainable future in which people conserve natural capital and use finite resources more sustainably, from the local to the global level.
Businesses also contribute to development in other ways that are crucial to economic development and poverty reduction:
They generate a large portion of government tax revenues, without which there would be no sustainable base for funding public health care, education, social safety nets, agricultural research, and other critical expenditures.
In countries with competitive economies, leading private firms will constantly seek out information that has practical local uses; to remain competitive, other firms will emulate their behavior. In the process, executives and employees upgrade their human capital, productivity, and incomes, contributing to the diffusion of useful knowledge and techniques.
Over time, competitive firms improve the quality of products and make them more affordable, thereby boosting the purchasing power of consumers, including poor consumers. Indeed, in countries such as India and Brazil, some private companies have begun to focus on the poorer segments of the population as promising new markets.
Not all private enterprises in all environments generate jobs, investment, and human capital, however. Monopolies and oligopolies, high protection against competing imports, and government subsidies all undermine the ability of private firms to reduce poverty. Government measures that encourage competition are the best way to attack the concentration of power, oligarchy, monopoly, corruption, and other distortions that make efforts to help poor people ineffective. Government’s establishment of the Competition and Fair Trading Commission (CFTC) must be commended and we must all support the Commission.
The weakening of favoritism, the elimination of excessive red tape, the regulation of natural monopolies, and the encouragement of liberalization all work to defeat the entrenched forces of privilege that perpetuate poverty. Widening markets through regional trade and currency arrangements, and increasing internationalization and the attendant liberalization underline inviting arrangements.
So what should government do inorder to have the private sector contribute to the attainment of MDGs? - Business environment
What can governments do to support the creation and expansion of companies that are financially, economically, socially, and environmentally supporting MDGs? Besides improving health care, education, and macroeconomic conditions, and encouraging competition, governments can undertake institutional reforms that, over time, lower the costs of doing business and thus create a more favorable business environment. Such reforms encourage activities not only by foreign investors but also—and more important—by the thousands of local entrepreneurs who want to start or expand small businesses in agriculture, services, and manufacturing.
A number of enterprise surveys and other analytical work linking institutional factors and economic performance have been carried out in recent years. These analyses pinpoint areas in which reform is urgently needed in this country. Among the findings are the following:
A strong relationship exists between the quality of the business environment and long-term national economic performance, including the pace of poverty reduction.
Enforcement of the rule of law—in particular, the extent to which government enforces contracts between private parties (and between private parties and the state)—is crucial to long-term development and, as already noted, affects the poor as well as affluent members of society.
Respect for property rights (especially those of the poor) is highly correlated with long-term economic and social progress.
The efficiency of government in delivering services is also associated with economic progress.
In particular, a worldwide survey of 10,000 enterprises carried out during 1999 and 2000 under the leadership of the World Bank Group points to the leading obstacles to doing business identified by business managers and owners in developing countries. Constraints were ranked in order of perceived seriousness on a scale of 1 ("no obstacle") to 4 ("major obstacle"). The average score for perceived obstacles is, unsurprisingly, higher in developing countries (2.6) than in industrial countries (1.95). The developing country list of obstacles is topped by four items scoring an average of 2.9: taxes and regulations, financing difficulties, inflation, and political instability or uncertainty. The next most serious perceived obstacles—corruption, exchange rate problems, and "street crime, disorder, and theft"—score an average of 2.6.
Analysis of these survey data for all countries suggests that investment and economic growth are related to certain key indicators of the quality of the investment climate. For example, foreign direct investment flows are positively associated with economic predictability and predictability of changes in law and legislation, and negatively associated with constraints imposed by taxes and regulations and exchange rate instability. Likewise, GDP growth within each of the regional groupings of countries is negatively associated with the severity of constraints imposed by taxes and regulations in general and, specifically, high tax rates, tax administration, and business-registration procedures.
Conclusion: Government, Businesses and Poverty Eradication
Describing the ‘proper role of government,’ the Honorable Ezra Taft Benson, Former US Secretary of Agriculture [The Eisenhower Administration - ed.] wrote in 1968 that it is generally agreed that the most important single function of government is to “secure the rights and freedoms of individual citizens.” But, what are those rights? And what is their source? He asked. Until year 2000, these questions were not answered in universally agreed language and targets. As such the answering of these questions through the MDGs raised the likelihood that we can correctly determine how government can best secure them, in partnership with private businesses and citizenry.
Indeed, as Thomas Paine, back in the days of the American Revolution, explained that:
"Rights are not gifts from one man to another, nor from one class of men to another... It is impossible to discover any origin of rights otherwise than in the origin of man; it consequently follows that rights appertain to man in right of his existence, and must therefore be equal to every man." (P.P.N.S., p. 134)
Government should therefore never abrogate its responsibility on MDGs to any person, whether human or corporate.
The great Thomas Jefferson asked: "Can the liberties of a nation be thought secure when we have removed their only firm basis, a conviction in the minds of the people that these liberties are of the gift of God? That they are not to be violated but with his wrath?" (Works 8:404; P.P.N.S., p.141)
The Alabama State (USA) Constitution provides an interesting basis for government investment in eradication of poverty. It provides in Art1.sec 35
"That the sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty, and property, and when the government assumes other functions it is usurpation and oppression."
Therefore, government needs to facilitate environment where businesses will further the citizens’ “enjoyment of life, liberty, and property.” Anything less that the purpose mention here-before, must never be supported. In the delivery of the MDG commitments, businesses find opportunity to provide goods and services. Businesses must therefore encourage government to stick to the MDG agenda. As it has been stated earlier on, we must recognise that poverty attacks the foundations for healthy business. Implementing the MDGs commitments will help businesses to build the local spending power, skilled workforce and stable environment necessary for business development. Together we stand, divided we fall.
Ends
Annex 1: the MDG Scan
In September 2000, the United Nations member countries made a commitment to reaching eight MDGs by 2015, such as halving the proportion of people suffering extreme poverty and hunger, achieving universal primary education, and promoting gender equality and the empowerment of women.
The Dutch Commission on Sustainable Research (NCDO) has now financed the MDG Scan as a tool to raise awareness of the MDGs in the private sector. The scan allows for detailed comparisons between companies within the same sector and evaluation of the progress of a company over time. It split the eight MDGs, which originally apply to governments, into 77 measurable and comparable indicators relevant to multinational companies with significant activity in middle or low income countries. The score for the first MDG on halving the number of people living in extreme poverty by 2015, depends on stimulating community development by measures such as promoting local entrepreneurship and providing essential products and services, provision of employment and salaries, stimulating local agricultural production, and fighting malnutrition. The second MDG on universal primary education depends on company guidelines and programmes, its efforts to combat child labour, and promoting private education. "The quantitative approach will make the discussion on private sector contribution to the MDGs less speculative and anecdotal," the NCDO states. It wants to benchmark sufficient companies to be able to launch an index and a 'Millennium Development Fund' with stocks of companies with the best MDG performance. The scores for each indicator are weighted and aggregated to a score between 0 and 100 for each MDG. At this stage, the scan does not add up the scores for each of the eight MDGs to a final score on all MDGs. "It is questionable if high performance on one of the MDGs should compensate for a relatively low performance on another," says DSR director Ronald Lubberts. Moreover, each industry can contribute to the MDGs in a different way. "A pharmaceutical company can diminish child mortality, stimulate maternal health and can halt the spread of HIV and AIDS solely by the nature of its products and services," Lubberts said. "A mining company cannot, but it can contribute to local community development in remote areas by improving local medical care and education opportunities." Six multinational companies have so far passed the MDG Scan: ABN Amro (banking), Heineken (beer brewer), Philips (electronics), Akzo Nobel (chemicals), BHP Billiton (mining) and TNT (logistics). The results indicate that all six companies contribute positively to each one of the eight Millennium goals. The MDG scan takes into account positive as well as negative contributions to the MDGs. But judged by the number of indicators, the MDG Scan currently stresses indicators that measure positive contributions. Generally speaking, companies get more chances to win than to lose points. However, the indicators that measure negative contributions are weighted substantially in order to outweigh positive indicators. Companies receive scores for negative contributions if evidence is found that the company is involved in a controversy related to the MDGs. BHP Billiton for instance had points deducted because of its involvement in controversies related to its impact on the environment. "The negative indicator in this model has been kept simple," Lubberts told IPS. "This version is meant to gain experience and needs some fine-tuning." Lubberts says more companies need to be assessed with the MDG Scan before the results of a benchmark can be properly interpreted. Only when several beer brewers have gone through the evaluation process, will it become clear if Heineken's score of 44 on MDG3 (gender) should be qualified as "average" or "good". First and foremost, MDGs are structural and long-term goals for governments, who need to levy taxes to finance these efforts. Companies are constantly looking for ways to pay as little tax as possible. Sometimes they optimise profits by shifting them from a local branch to the seat of the mother company. In this way, locally produced extra value gets lost. The United Nations Development and the Global Compact, the UN's voluntary corporate responsibility initiative, have already shown interest in the MDG Scan. The MDG Scan will be made available online later this year as a self-assessment tool in a slightly modified version. "Companies and stakeholders have asked us to attribute more weight to performance indicators that measure real impact results," Lubberts said. "That is important to them from a communications perspective".
(Mattias Creffier /2007)
[1] Collins Magalasi is Ag. Country Director for ActionAid International South Africa, Lesotho and Swaziland and is based in Johannesburg. He can be contacted on email collins.magalasi@actionaid.org.
Letter to the Malawi State President Dr. Bingu Wa Mutharika
H.E. The State President Dr. Bingu Wa Mutharika
Office of President and Cabinet
Capital Hill
Lilongwe
15 December 2007
ECONOMIC PARTNERSHIP AGREEMENTS
Your Excellency, allow us to submit our views on the Economic Partnership Agreements under negotiation.
Your Excellency, we realize that the approach of end of December 2007 which has been declared ‘end of the ‘honeymoon’ for the Africa, Caribbean and Pacific (ACP) poor countries’ calls on Malawi to make difficult decisions to sign (or not to sign) the Interim EPAs. These interim EPAs lack the important ingredients that the ACP countries need as they are negotiated in a hurry and only a handful of their provisions were actually negotiated. The EC continued to ignore both suggestions for alternatives and calls for more negotiating time, and instead threatened to raise tariffs on January 1st 2008 on exports from any ACP country that has not initialed an Interim EPA. Surely this is arm-twisting and places immoral pressure on ACP negotiators and governments. It therefore comes without surprise that more and more ACP countries with larger trade with the EU are giving in to the force to lower their expectations regarding what EPAs could deliver and have been pressed to secure any agreement that will provide continued market access.
In early December 2007, the Malawi civil society submitted their position on EPAs for Malawi. In their well researched assessment, they submitted that the EPAs in their current form and process are not going to benefit Malawians nor add value to their ability to get out of poverty and integrate into the global economy. To this effect, they joined hands with the leadership of Africa, which attended the EU-Africa Summit that took place in Lisbon, Portugal from the 8th-9th December 2007, in condemning this Partnership Agreement together.
The African leaders, Your Excellency, in their discussions on trade with the EU underlined the importance of trade and development cooperation to the partnership they share with the EU. They stated that now more than ever, Africa needs economic partnerships that will see its people grow in economic power, and live at a standard commensurate to their dignity as human beings. The leaders were very eloquent in stating that the current Economic Partnership Agreement being negotiated between the EU and African and Caribbean Pacific Countries does not represent an agreement that can benefit their people economically and socially. Specifically they confirmed that
The negotiations as they stand will cause further de-industrialization on the continent as our countries are expected to open to EU exports deeply and broadly.
The EU wants to tie the poor countries into an agreement that reduces the latter’s policy space to consider other perhaps more profitable agreements with other regions like Asia.
Impact assessments are clear on the fact that the EPAs will bring with them a lot of adjustment and economic costs (like loss of revenue) to which the EU is non-committal to support entirely.
What is wrong with the proposed interim EPAs?
The current EPAs have many flaws. Among them:
a) Opening of Markets by ACP countries
The EC agreed in principle to accept offers of tariff liberalisation from ACP countries of 80% over 25 years. However, in these Interim agreements, tariff elimination starts from the entry into force of the agreement (2008) and the elimination of other barriers (export taxes) is not always gradual, and may have to be implemented as early as 2008. Moreover, only a marginal share of trade volume is subject to long implementation periods for tariff elimination. Even for least developed countries the pace of liberalization is very fast.
We also find the EC insisting on the inclusion of a standstill clause which is not required by WTO rules. In the ESA text which Malawi is party to, it is even stricter than the other configurations (SADC and EAC) as it freezes tariffs on all trade between the parties, whether or not these products are subject to liberalization. As a result, even if a product is on the ‘exclusion list’, the tariff on this product cannot be raised after the entry into force of the agreement.
Malawi has been asked to liberalise 80% of all trade with the EU. Our assessment shows that this is too much for Malawi. We are a small and emerging economy with a lot of potential. History tells us that for the EU to reach it’s current scale of economic muscle, it was a combination of policies aimed at boosting local production and local industries and one of such policies is the protection of local industries against unfair foreign competition. At this time the EPAs are eroding our policy and developmental space in this area.
b) There are inadequate safeguard clauses for ACP countries
We just ended another 25 year trade and development agreement with the EU that lasted from 1975 to 2000. In this partnership our exports to the EU dwindled; and supply side constraints remain an issue of our industries. What has changed to make us believe that these next 25 years with EPAs will be any different?
In the absence of tariffs, effective safeguards are the main policy instrument that can be used to protect the agricultural sector and existing industries from import surges, ensure food security, and nurture the development of new ‘infant’ industries. As currently structured in EPAs, the safeguards will not provide adequate protection for ACP producers.
The safeguard clauses in the ESA EPA text are limited by a number of onerous procedures that have impeded their effective use in the context of other trade agreements. In addition, safeguards are of limited duration and any safeguards exceeding one year 'shall contain clear elements progressively leading to their elimination at the end of the set period, at the latest.'
c) Coverage Of EU Market Opening
The commercial gains arising from the Duty Free Quota Free offer itself are limited because of the failure of the EU to substantially improve rules of origin, the retention of transition periods on two key products (sugar and rice) and strict safeguards that limit ACP access to EU markets.
The latest EU offer on Rules Of Origin (Regulation COM (2007) 717 final, November 13 2007), which will be applied until a ‘Full EPA’ comes into force, contains only minor improvements to existing rules but even these are still disputed by several EU Member States. However, cumulation is restricted to those ACP countries that have signed an EPA, potentially destroying production processes that span ACP countries that have not signed. Looking at specific sectors in details, we find that:
Significant improvements are made for textiles and clothing (Product level RoO) but these are partly undermined by provisions on value tolerance (Article 4) which are stricter than under Cotonou.
The requirements for fish (Product level Rules of Origin) remain largely unchanged and continue to form a significant barrier. There are some minor improvements only applicable to the export of fish from the Pacific but in order to benefit, countries are subject to a range of administrative and reporting requirements (Article 4)
No industrial products other than textiles and clothing have seen any change
Unlike Cotonou, the only ACP countries that will benefit from cumulation are those that have concluded a free trade agreement (Article 2 of Title II), potentially destroying exports that rely on inputs from ACP countries that will have not initialled Interim EPAs.
Such an approach could also undermine capacities to add value between countries that are party to and those not party to an EPA, since no cumulation is allowed on rules of origin for exports under different EU preferential regimes
d) Benefits to Malawi?
The Ministry of Trade and Industry and stakeholders in the negotiations through the National Trade and Development Policy Forum (NDTPF) estimated that Malawi would need a capital injection of 5.7 Billion Euros to take care of supply side constraints and other adjustment costs if it could stand a chance of benefiting from the proposed EPA trading framework. Without such an injection, Malawi would remain an exporter of primary commodities with little or no diversification. In other words Malawi would remain the way it is with full exposure to shocks that take place in the commodity market from time to time. The EU’s response to this assessment is a mere 12 million euro donation. Not that we are suggesting the government should beg the EU to sort our problems, but that we are asking them not to cause further problems to the country.
Legality of EPAs in Malawi
Legally, EPAs pose a threat to poor Malawians. Following is excerpt of legal opinion we got on whether the laws of Malawi are conducive for EPAs:
Whether or not the laws of Malawi are conducive for the EPAs to strive is not clear. In Malawi there is the Competition and Fair Trading Act 43 of 1998 (hereinafter referred to as Competition Act) which provide for standards for trading within Malawi and for doing business. Any violation of the competition law for instance will mean that the competition commission will have to investigate and fine any party involved in uncompetitive practices and may also constitute a crime. The Section 32 (2) Competition Act prohibits the following practices
(a) The use of cost pricing to damage, hinder or eliminate competition
(b) Overcharging or undercharging for goods or services purchased or supplied as compared with prices for similar or comparable transactions
These practices are relevant to issues such as the importation of subsidized goods. The import and sell of a subsidized good could amount to undercharging as the cost of the good is lower than its production price. However it would seem that such an importer would not be liable under the Competition Act because section 3 (e) states:
Nothing in this Act shall apply to activities expressly approved or required under a treaty or agreement to which Malawi is a party;
The above section specifically excludes the application of the Competition Act to the EPAs since the EPAs are a treaty.
Another law that could exclude the application of the Competition Act is Article 28 of the Vienna Convention which states that a party cannot refuse to perform its obligations under a Treaty simply because its internal laws do not prohibit it. This article therefore means that even if the EPAs where in conflict with the Competition Act, a State would be prohibited from suing the importer who is undercharging.
The mere fact that the Competition Act does not apply to international trade agreements means that Malawi has to have a law that specifically deals with importation of goods such as an Antidumping and Safeguard Measures law. This law is important to protect the Malawian market from dumping of goods from not just the EU once the EPAs are signed, but from other countries due to liberalization in general. Dumping occurs if a company sells at a lower price in an export market than in its domestic market. If such dumping injures the domestic producers in the importing country, under certain circumstances the importing country authorities may impose anti-dumping duties to offset the effects of the dumping.
The liberalization that will occur from signing an EPA as well as all other trade agreements is bound to lead to an influx of goods within Malawi which could displace local manufacturers. A safeguard measures law also protects local manufacturers by providing that where this influx occurs, Malawi can impose certain restrictions in order to slow down these imports and protect its manufacturers. Protection can be in the form of imposition of higher tariffs on goods that are being dumped onto the Malawian market or for goods which have been entering the Malawian market in such large numbers that they distort the market. A good example is the importation of second hand clothes in Malawi which affected textile clothing manufacturers to the extent that some of them had shut down. If there was a safeguard measures law, these manufacturers would have been protected.
The lack of an Antidumping and Safeguard measures law within Malawi is not per se a problem when it comes to EPAs because the EPA agreements provide for these safety valves. For instance Article 20 of the interim agreement of the 15th of November 2007 provides that
(1) Subject to the provisions of this Article, nothing in this Agreement shall prevent the Signatory ESA States and the EC Party from adopting measures in accordance with Article XIX of the General Agreement on Tariffs and Trade 1994, the Agreement on Safeguards, and Article 5 of the Agreement on Agriculture annexed to the Marrakech Agreement Establishing the World Trade Organization. For the purpose of this Article, origin shall be determined in accordance with the non-preferential rules of origin of the Parties.
(2) Notwithstanding paragraph 1, the EC Party shall, in the light of the overall development objectives of this Agreement and the small size of the economies of the ESA States, exclude imports from any ESA State from any measures taken pursuant to Article XIX of the GATT 1994, the WTO Agreement on Safeguards and Article 5 of the Agreement on Agriculture.
Article 21 of the same agreement also states that
2. Safeguard measures referred to in paragraph 1 above may be taken where a product originating in one Party is being imported into the territory of the other Party in such increased quantities and under such conditions as to cause or threaten to cause:
(a) serious injury to the domestic industry producing like or directly competitive products in the territory of the importing Party;
(b) disturbances in a sector of the economy, particularly where these disturbances produce major social problems, or difficulties which could bring about serious deterioration in the economic situation of the importing Party; or
(c) disturbances in the markets of agricultural like or directly competitive products or mechanisms regulating those markets.
As far as dumping is concerned Article 19 of the Interim Agreement states
(1) Subject to the provisions of this Article, nothing in this Agreement shall prevent the EC Party or Signatory ESA States, whether individually or collectively, from adopting anti-dumping or countervailing measures in accordance with the relevant WTO agreements. For the purpose of this Article, origin shall be determined in accordance with the non-preferential rules of origin of the Parties.
From these provisions it is clear that measures to protect the Malawian market from an influx of goods from EU countries are in place. What is required is first that the public is made aware of these provisions so that the public could notify government about any negative consequences and so that government can take the necessary steps to check these problems.
Secondly, in the absence of an Antidumping and Safeguard Measures law, parliament will have to ratify the EPAs so that there isn’t uncertainty as to whether or not a court within Malawi can apply the antidumping and safeguard clauses of the EPAs in protecting the Malawian market. This will also take away the uncertainty of whether or not the safeguard measures apply. Furthermore by ratifying the EPAs, an individual or entity that has been affected by the importation of goods could sue on its own and will not have to wait for government to actually institute the claim.
In conclusion, the legal opinion states that “though there are laws that make it conducive for EPAs to operate, and even if there aren’t such laws, the EPAs have in built mechanisms that will make them work. However these mechanisms can only be implemented if the institutions tasked with implementing them have the proper capacity as well as the right funding. This will be the main obstacle in implementing the EPAs. If government institutions are not well funded and do not have the right capacity, then it will be hard for the safety measures incorporated in the EPAs to take effect. In these circumstances, it would be best to have additional legislation in our laws that provide that the private sector itself can take these measures on their own and at a court. We could learn from South Africa which has an Anti-dumping legislation which has been applied successfully to protect the South African market.
What options does Malawi have?
1. Malawi already has duty and quota free market access to the EU market under the Everything But Arms (EBA) Agreement without being requested to open up its markets in return.
2. Even without an EPA, Malawi continues to receive development support from our brothers and sisters from the EU through the European Development Fund (EDF) under the Cotonou Partnership Agreement. This is evidenced by the recent signing of the MK90 billion between the two parties.
3. Malawi is now going to sign an EPA with the EU as a single country rather than a bloc of countries as was originally envisaged. The EPAs now are putting Malawian market in direct competition with the European market unnecessarily at a time when we are slowly on the up, with Malawians hopeful of building up the jobs, industries and livelihoods that had been lost in the past through initiatives such as the Structural Adjustment programmes (SAPs) similar to this one.
Consequently the government of Malawi
1. Can ask the WTO members for a waiver allowing the EU to continue granting Malawi duty free access.
2. Needs to consider all alternatives other than having this Free Trade Agreement with a Union whose industry and agriculture sector is far more advanced and heavily subsidised than our own.
3. Conduct a review of Malawi’s position in the negotiations and the EPA process as a whole (as was agreed during the African Union meeting in Ghana).
4. Prioritise in the negotiations the hard working Malawians for their tireless efforts to secure a livelihood through agri-business or entrepreneurship by looking beyond the European Community.
Conclusion: What if the government goes ahead signing the EPAs (interim inclusive)?
If the government goes ahead signing EPAs in this non-developmental agreement, it will be demonstrating that it does not care about the rights of its people. In an ideal situation, as citizens, we could be compelled to challenge the government in court for violating our rights and possibly seeking compensation. But we realise however, that the mere fact that the EPA violates the right to development does not make them invalid and poses irrevocable challenge to the government. The EPA is a Treaty and under Article 27 of the Vienna Convention on The Law of Treaties, Malawi if it signs as party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. Thus, once the EPA is signed Malawi cannot use its internal laws as reason not to comply with the EPA. Hence the government needs to demonstrate it Is prioritising the people, who under no constitution can challenge the EPAs even where the EPAs violate the right to development. Thus the Malawi Government will have to ensure that its acts are not detrimental to the objectives of the EPA that it signs.
Thus by signing on to the EPAs in their current form, the government of Malawi may be tying the citizens into 25 years of acrimony. We, therefore, call on you NOT to sign the agreement in its current form.
Finally, your Excellency, we wish you a Merry 2007 Christmas and Happy and Progressive 2008.
Submitted today 15 December 2007, by
Collins Magalasi
Under the endorsement of
· ActionAid International Malawi (AAIM)
· Malawi Economic Justice Network (MEJN)
· Malawi Health Equity Network (MHEN)
· Maphunziro Foundation
· Manerela
· Institute for Policy Interaction (IPI)
· Centre for Human Rights and Rehabilitation (CHRR)
· National Smallholder Farmers Association of Malawi (NASFAM)
· Joint Oxfam Programme in Malawi
· Youth and Children Shield
Office of President and Cabinet
Capital Hill
Lilongwe
15 December 2007
ECONOMIC PARTNERSHIP AGREEMENTS
Your Excellency, allow us to submit our views on the Economic Partnership Agreements under negotiation.
Your Excellency, we realize that the approach of end of December 2007 which has been declared ‘end of the ‘honeymoon’ for the Africa, Caribbean and Pacific (ACP) poor countries’ calls on Malawi to make difficult decisions to sign (or not to sign) the Interim EPAs. These interim EPAs lack the important ingredients that the ACP countries need as they are negotiated in a hurry and only a handful of their provisions were actually negotiated. The EC continued to ignore both suggestions for alternatives and calls for more negotiating time, and instead threatened to raise tariffs on January 1st 2008 on exports from any ACP country that has not initialed an Interim EPA. Surely this is arm-twisting and places immoral pressure on ACP negotiators and governments. It therefore comes without surprise that more and more ACP countries with larger trade with the EU are giving in to the force to lower their expectations regarding what EPAs could deliver and have been pressed to secure any agreement that will provide continued market access.
In early December 2007, the Malawi civil society submitted their position on EPAs for Malawi. In their well researched assessment, they submitted that the EPAs in their current form and process are not going to benefit Malawians nor add value to their ability to get out of poverty and integrate into the global economy. To this effect, they joined hands with the leadership of Africa, which attended the EU-Africa Summit that took place in Lisbon, Portugal from the 8th-9th December 2007, in condemning this Partnership Agreement together.
The African leaders, Your Excellency, in their discussions on trade with the EU underlined the importance of trade and development cooperation to the partnership they share with the EU. They stated that now more than ever, Africa needs economic partnerships that will see its people grow in economic power, and live at a standard commensurate to their dignity as human beings. The leaders were very eloquent in stating that the current Economic Partnership Agreement being negotiated between the EU and African and Caribbean Pacific Countries does not represent an agreement that can benefit their people economically and socially. Specifically they confirmed that
The negotiations as they stand will cause further de-industrialization on the continent as our countries are expected to open to EU exports deeply and broadly.
The EU wants to tie the poor countries into an agreement that reduces the latter’s policy space to consider other perhaps more profitable agreements with other regions like Asia.
Impact assessments are clear on the fact that the EPAs will bring with them a lot of adjustment and economic costs (like loss of revenue) to which the EU is non-committal to support entirely.
What is wrong with the proposed interim EPAs?
The current EPAs have many flaws. Among them:
a) Opening of Markets by ACP countries
The EC agreed in principle to accept offers of tariff liberalisation from ACP countries of 80% over 25 years. However, in these Interim agreements, tariff elimination starts from the entry into force of the agreement (2008) and the elimination of other barriers (export taxes) is not always gradual, and may have to be implemented as early as 2008. Moreover, only a marginal share of trade volume is subject to long implementation periods for tariff elimination. Even for least developed countries the pace of liberalization is very fast.
We also find the EC insisting on the inclusion of a standstill clause which is not required by WTO rules. In the ESA text which Malawi is party to, it is even stricter than the other configurations (SADC and EAC) as it freezes tariffs on all trade between the parties, whether or not these products are subject to liberalization. As a result, even if a product is on the ‘exclusion list’, the tariff on this product cannot be raised after the entry into force of the agreement.
Malawi has been asked to liberalise 80% of all trade with the EU. Our assessment shows that this is too much for Malawi. We are a small and emerging economy with a lot of potential. History tells us that for the EU to reach it’s current scale of economic muscle, it was a combination of policies aimed at boosting local production and local industries and one of such policies is the protection of local industries against unfair foreign competition. At this time the EPAs are eroding our policy and developmental space in this area.
b) There are inadequate safeguard clauses for ACP countries
We just ended another 25 year trade and development agreement with the EU that lasted from 1975 to 2000. In this partnership our exports to the EU dwindled; and supply side constraints remain an issue of our industries. What has changed to make us believe that these next 25 years with EPAs will be any different?
In the absence of tariffs, effective safeguards are the main policy instrument that can be used to protect the agricultural sector and existing industries from import surges, ensure food security, and nurture the development of new ‘infant’ industries. As currently structured in EPAs, the safeguards will not provide adequate protection for ACP producers.
The safeguard clauses in the ESA EPA text are limited by a number of onerous procedures that have impeded their effective use in the context of other trade agreements. In addition, safeguards are of limited duration and any safeguards exceeding one year 'shall contain clear elements progressively leading to their elimination at the end of the set period, at the latest.'
c) Coverage Of EU Market Opening
The commercial gains arising from the Duty Free Quota Free offer itself are limited because of the failure of the EU to substantially improve rules of origin, the retention of transition periods on two key products (sugar and rice) and strict safeguards that limit ACP access to EU markets.
The latest EU offer on Rules Of Origin (Regulation COM (2007) 717 final, November 13 2007), which will be applied until a ‘Full EPA’ comes into force, contains only minor improvements to existing rules but even these are still disputed by several EU Member States. However, cumulation is restricted to those ACP countries that have signed an EPA, potentially destroying production processes that span ACP countries that have not signed. Looking at specific sectors in details, we find that:
Significant improvements are made for textiles and clothing (Product level RoO) but these are partly undermined by provisions on value tolerance (Article 4) which are stricter than under Cotonou.
The requirements for fish (Product level Rules of Origin) remain largely unchanged and continue to form a significant barrier. There are some minor improvements only applicable to the export of fish from the Pacific but in order to benefit, countries are subject to a range of administrative and reporting requirements (Article 4)
No industrial products other than textiles and clothing have seen any change
Unlike Cotonou, the only ACP countries that will benefit from cumulation are those that have concluded a free trade agreement (Article 2 of Title II), potentially destroying exports that rely on inputs from ACP countries that will have not initialled Interim EPAs.
Such an approach could also undermine capacities to add value between countries that are party to and those not party to an EPA, since no cumulation is allowed on rules of origin for exports under different EU preferential regimes
d) Benefits to Malawi?
The Ministry of Trade and Industry and stakeholders in the negotiations through the National Trade and Development Policy Forum (NDTPF) estimated that Malawi would need a capital injection of 5.7 Billion Euros to take care of supply side constraints and other adjustment costs if it could stand a chance of benefiting from the proposed EPA trading framework. Without such an injection, Malawi would remain an exporter of primary commodities with little or no diversification. In other words Malawi would remain the way it is with full exposure to shocks that take place in the commodity market from time to time. The EU’s response to this assessment is a mere 12 million euro donation. Not that we are suggesting the government should beg the EU to sort our problems, but that we are asking them not to cause further problems to the country.
Legality of EPAs in Malawi
Legally, EPAs pose a threat to poor Malawians. Following is excerpt of legal opinion we got on whether the laws of Malawi are conducive for EPAs:
Whether or not the laws of Malawi are conducive for the EPAs to strive is not clear. In Malawi there is the Competition and Fair Trading Act 43 of 1998 (hereinafter referred to as Competition Act) which provide for standards for trading within Malawi and for doing business. Any violation of the competition law for instance will mean that the competition commission will have to investigate and fine any party involved in uncompetitive practices and may also constitute a crime. The Section 32 (2) Competition Act prohibits the following practices
(a) The use of cost pricing to damage, hinder or eliminate competition
(b) Overcharging or undercharging for goods or services purchased or supplied as compared with prices for similar or comparable transactions
These practices are relevant to issues such as the importation of subsidized goods. The import and sell of a subsidized good could amount to undercharging as the cost of the good is lower than its production price. However it would seem that such an importer would not be liable under the Competition Act because section 3 (e) states:
Nothing in this Act shall apply to activities expressly approved or required under a treaty or agreement to which Malawi is a party;
The above section specifically excludes the application of the Competition Act to the EPAs since the EPAs are a treaty.
Another law that could exclude the application of the Competition Act is Article 28 of the Vienna Convention which states that a party cannot refuse to perform its obligations under a Treaty simply because its internal laws do not prohibit it. This article therefore means that even if the EPAs where in conflict with the Competition Act, a State would be prohibited from suing the importer who is undercharging.
The mere fact that the Competition Act does not apply to international trade agreements means that Malawi has to have a law that specifically deals with importation of goods such as an Antidumping and Safeguard Measures law. This law is important to protect the Malawian market from dumping of goods from not just the EU once the EPAs are signed, but from other countries due to liberalization in general. Dumping occurs if a company sells at a lower price in an export market than in its domestic market. If such dumping injures the domestic producers in the importing country, under certain circumstances the importing country authorities may impose anti-dumping duties to offset the effects of the dumping.
The liberalization that will occur from signing an EPA as well as all other trade agreements is bound to lead to an influx of goods within Malawi which could displace local manufacturers. A safeguard measures law also protects local manufacturers by providing that where this influx occurs, Malawi can impose certain restrictions in order to slow down these imports and protect its manufacturers. Protection can be in the form of imposition of higher tariffs on goods that are being dumped onto the Malawian market or for goods which have been entering the Malawian market in such large numbers that they distort the market. A good example is the importation of second hand clothes in Malawi which affected textile clothing manufacturers to the extent that some of them had shut down. If there was a safeguard measures law, these manufacturers would have been protected.
The lack of an Antidumping and Safeguard measures law within Malawi is not per se a problem when it comes to EPAs because the EPA agreements provide for these safety valves. For instance Article 20 of the interim agreement of the 15th of November 2007 provides that
(1) Subject to the provisions of this Article, nothing in this Agreement shall prevent the Signatory ESA States and the EC Party from adopting measures in accordance with Article XIX of the General Agreement on Tariffs and Trade 1994, the Agreement on Safeguards, and Article 5 of the Agreement on Agriculture annexed to the Marrakech Agreement Establishing the World Trade Organization. For the purpose of this Article, origin shall be determined in accordance with the non-preferential rules of origin of the Parties.
(2) Notwithstanding paragraph 1, the EC Party shall, in the light of the overall development objectives of this Agreement and the small size of the economies of the ESA States, exclude imports from any ESA State from any measures taken pursuant to Article XIX of the GATT 1994, the WTO Agreement on Safeguards and Article 5 of the Agreement on Agriculture.
Article 21 of the same agreement also states that
2. Safeguard measures referred to in paragraph 1 above may be taken where a product originating in one Party is being imported into the territory of the other Party in such increased quantities and under such conditions as to cause or threaten to cause:
(a) serious injury to the domestic industry producing like or directly competitive products in the territory of the importing Party;
(b) disturbances in a sector of the economy, particularly where these disturbances produce major social problems, or difficulties which could bring about serious deterioration in the economic situation of the importing Party; or
(c) disturbances in the markets of agricultural like or directly competitive products or mechanisms regulating those markets.
As far as dumping is concerned Article 19 of the Interim Agreement states
(1) Subject to the provisions of this Article, nothing in this Agreement shall prevent the EC Party or Signatory ESA States, whether individually or collectively, from adopting anti-dumping or countervailing measures in accordance with the relevant WTO agreements. For the purpose of this Article, origin shall be determined in accordance with the non-preferential rules of origin of the Parties.
From these provisions it is clear that measures to protect the Malawian market from an influx of goods from EU countries are in place. What is required is first that the public is made aware of these provisions so that the public could notify government about any negative consequences and so that government can take the necessary steps to check these problems.
Secondly, in the absence of an Antidumping and Safeguard Measures law, parliament will have to ratify the EPAs so that there isn’t uncertainty as to whether or not a court within Malawi can apply the antidumping and safeguard clauses of the EPAs in protecting the Malawian market. This will also take away the uncertainty of whether or not the safeguard measures apply. Furthermore by ratifying the EPAs, an individual or entity that has been affected by the importation of goods could sue on its own and will not have to wait for government to actually institute the claim.
In conclusion, the legal opinion states that “though there are laws that make it conducive for EPAs to operate, and even if there aren’t such laws, the EPAs have in built mechanisms that will make them work. However these mechanisms can only be implemented if the institutions tasked with implementing them have the proper capacity as well as the right funding. This will be the main obstacle in implementing the EPAs. If government institutions are not well funded and do not have the right capacity, then it will be hard for the safety measures incorporated in the EPAs to take effect. In these circumstances, it would be best to have additional legislation in our laws that provide that the private sector itself can take these measures on their own and at a court. We could learn from South Africa which has an Anti-dumping legislation which has been applied successfully to protect the South African market.
What options does Malawi have?
1. Malawi already has duty and quota free market access to the EU market under the Everything But Arms (EBA) Agreement without being requested to open up its markets in return.
2. Even without an EPA, Malawi continues to receive development support from our brothers and sisters from the EU through the European Development Fund (EDF) under the Cotonou Partnership Agreement. This is evidenced by the recent signing of the MK90 billion between the two parties.
3. Malawi is now going to sign an EPA with the EU as a single country rather than a bloc of countries as was originally envisaged. The EPAs now are putting Malawian market in direct competition with the European market unnecessarily at a time when we are slowly on the up, with Malawians hopeful of building up the jobs, industries and livelihoods that had been lost in the past through initiatives such as the Structural Adjustment programmes (SAPs) similar to this one.
Consequently the government of Malawi
1. Can ask the WTO members for a waiver allowing the EU to continue granting Malawi duty free access.
2. Needs to consider all alternatives other than having this Free Trade Agreement with a Union whose industry and agriculture sector is far more advanced and heavily subsidised than our own.
3. Conduct a review of Malawi’s position in the negotiations and the EPA process as a whole (as was agreed during the African Union meeting in Ghana).
4. Prioritise in the negotiations the hard working Malawians for their tireless efforts to secure a livelihood through agri-business or entrepreneurship by looking beyond the European Community.
Conclusion: What if the government goes ahead signing the EPAs (interim inclusive)?
If the government goes ahead signing EPAs in this non-developmental agreement, it will be demonstrating that it does not care about the rights of its people. In an ideal situation, as citizens, we could be compelled to challenge the government in court for violating our rights and possibly seeking compensation. But we realise however, that the mere fact that the EPA violates the right to development does not make them invalid and poses irrevocable challenge to the government. The EPA is a Treaty and under Article 27 of the Vienna Convention on The Law of Treaties, Malawi if it signs as party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. Thus, once the EPA is signed Malawi cannot use its internal laws as reason not to comply with the EPA. Hence the government needs to demonstrate it Is prioritising the people, who under no constitution can challenge the EPAs even where the EPAs violate the right to development. Thus the Malawi Government will have to ensure that its acts are not detrimental to the objectives of the EPA that it signs.
Thus by signing on to the EPAs in their current form, the government of Malawi may be tying the citizens into 25 years of acrimony. We, therefore, call on you NOT to sign the agreement in its current form.
Finally, your Excellency, we wish you a Merry 2007 Christmas and Happy and Progressive 2008.
Submitted today 15 December 2007, by
Collins Magalasi
Under the endorsement of
· ActionAid International Malawi (AAIM)
· Malawi Economic Justice Network (MEJN)
· Malawi Health Equity Network (MHEN)
· Maphunziro Foundation
· Manerela
· Institute for Policy Interaction (IPI)
· Centre for Human Rights and Rehabilitation (CHRR)
· National Smallholder Farmers Association of Malawi (NASFAM)
· Joint Oxfam Programme in Malawi
· Youth and Children Shield
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