Trade_Hub_Quarterly_Report_Quarter_2_FY_2015_Final_(1).pdf

Southern Africa Trade Hub Quarter 2 FY 2015 Report 1

SOUTHERN AFRICA

TRADE HUB

QUARTER 2 FY 2015 REPORT

JANUARY - MARCH 2015

APRIL 30, 2015

This publication is prepared for USAID by AECOM International Development to report on the work and milestones of the USAID Southern Africa Trade Hub under Contract No. 674-C-00-10-00075-00.

Southern Africa Trade Hub Quarter 2 FY 2015 Report i

SOUTHERN AFRICA

TRADE HUB

QUARTER 2 FY 2015 REPORT

JANUARY - MARCH 2015

Contract No. 674-C-00-10-00075-00

Submitted to:

USAID Southern Africa

Prepared by:

AECOM International Development

DISCLAIMER:

The authors’ views expressed in this document do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

Cover photo: Farmers receive hands-on training in Chimoio, Mozambique on the causes, detection, and prevention of the carcinogenic mold aflatoxin in groundnuts. The Trade Hub partnered with local organizations to train farmers and processors in Mozambique on aflatoxin reduction this quarter.

Southern Africa Trade Hub Quarter 2 FY 2015 Report ii

TABLE OF CONTENTS

Acronyms .............................................................................................................................................. iii I. Introduction and Overview II. Highlights & Results

Trade Facilitation National Single Window Namibia Trade Information Portal Sadc Comprehensive Trade Facilitation Program Other Trade Facilitation Activities Issues, Challenges and Lessons Milestones and Results Planned for Quarter 3

Agricultural Value Chains Improved Storage and Structured Trade Increased Investment and Technology Transfer Improved Standards and Quality Strengthened Regional Organizations Milestones And Results Planned for Quarter 3

Textiles & Apparel Successful Matchmaking Program at Magic Show Source Africa 2015 Milestones and Results Planned for Quarter 3

Clean Energy Supporting Clean Energy in Zambia Working with Rera Supporting Renewable Energy in Swaziland Milestones and Results Planned for Quarter 3

Enabling Environment Capacity Building on Standards and Wto Technical Barriers to Trade Enquiry Points Gender Integration Milestones and Results Planned for Quarter 3

III. Annexes Annex A – Project Management Plan Indicator Table Annex B – 2014 - 2015 Project Activities Annex C – Success Stories Annex D – Financial Report

Southern Africa Trade Hub Quarter 2 FY 2015 Report iii

ACRONYMS

ACE Agricultural Commodity Exchange ACTE Africa Competitiveness and Trade Expansion AEB Agriculture, Environment and Business AFD Agence Francaise de Developpement AFSTA African Seed Trade Association AGOA African Growth and Opportunity Act ANSI American National Standards Institute ASIF Agricultural Storage Investment Facility ATI African Trade Insurance BITC Botswana Investment and Trade Centre BOBS Botswana Bureau of Standards BPR Business Process Reengineering B-SWIFT Botswana Single Window Interface for Traders BURS Botswana Unified Revenue Service CASS Central African Seed Services CE Clean Energy CMS Content Management System CTFP Comprehensive Trade Facilitation Program CTICC Cape Town International Convention Centre DCA Development Credit Authority DCC Durban Chamber of Commerce DFI Direct Foreign Investment DOE Department of Energy DSQA Department of Standards and Quality Assurance EIB European Investment Bank ERB Energy Regulation Board ETG Export Trading Group EU European Union FAO Food and Agriculture Organization of the United Nations FMB First Merchant Bank FTA Free Trade Agreement FTF Feed the Future FY Fiscal Year HS Harmonized System ICT Information and Communications Technology IT Information Technology

Southern Africa Trade Hub Quarter 2 FY 2015 Report iv

INNOQ Instituto Nacional de Normalização e Qualidade (Mozambique) IPP Independent Power Producers ISO International Organization of Standardization JBC Joint Border Committee JICA Japan International Cooperation Agency KEBS Kenya Bureau of Standards LNDC Lesotho National Development Corporation LTE Leaders in Trade Exhibitions LuSe Lusaka Stock Exchange MOU Memorandum of Understanding MRA Malawi Revenue Authority MIS Market Information Systems MT Metric Tons NASFAM National Smallholder Farmers’ Association of Malawi NBM National Bank of Malawi NCE Namibia Customs and Excise NEP National Enquiry Point NSW National Single Window OGA Other Government Agency PMU Project Management Unit PS Permanent Secretary PTF Partnership for Trade Facilitation RE Renewable Energy REA Rural Electrification Authority REFIT Renewable Energy Feed-in Tariffs RERA Regional Electricity Regulators Association of Southern Africa RUCF Ready to Use Complementary Food SACAU Southern African Confederation of Agricultural Unions SACU Southern African Customs Union SADC Southern African Development Community SADCSTAN SADC Cooperation in Standardization SADCTBTSC SADC Technical Barriers to Trade Stakeholders Committee SADCTRLC SADC Technical Regulations Liaison Committee SAGL Southern African Grain Laboratory SANSOR South African National Seed Organization SCCI Seed Control and Certification Institute SERA Swaziland Energy Regulatory Authority SESA Strategic Environmental and Social Assessment SME Small and Medium Enterprise

Southern Africa Trade Hub Quarter 2 FY 2015 Report v

SPG Strategic Partnership Grant SPS Sanitary and Phytosanitary SOW Scope of Work SWASA Swaziland Standards Authority TBT Technical Barriers to Trade TFA Trade Facilitation Agreement TIFI Trade Industry Finance and Investment TIKZN Trade and Investment Kwa-Zulu Natal USAID United States Agency for International Development USTR United States Trade Representative WCO World Customs Organization WIBA Women in Business Association (Botswana) WRAP Worldwide Responsible Accredited Production WRS Warehouse Receipt System WTO World Trade Organization ZABS Zambia Bureau of Standards ZAMACE Zambia Agricultural Commodity Exchange

Southern Africa Trade Hub Quarter 2 FY 2015 Report 1

I. INTRODUCTION AND

OVERVIEW

The key objective of the USAID-funded Southern Africa Trade Hub (Trade Hub) project is to increase international competitiveness, intra-regional trade, and food security in Southern Africa.

The Trade Hub is supported by USAID under Contract No. 674-C-00-10-00075-00 awarded to AECOM International Development with a period of performance from 2010 until 2015. The initiatives of the United States Government that provide context and support for the Trade Hub’s activities are:

African Competiveness and Trade Expansion (ACTE);

Feed the Future (FTF);

Clean Energy (CE); and Partnership for Trade Facilitation (PTF).

In line with these initiatives and the technical direction in Contract Modification No. 8, Section C: Scope of Work of November 20, 2012, the Trade Hub provides needs-driven assistance to the Southern African Development Community (SADC), the Southern African Customs Union (SACU), governments, and private sector organizations in eight countries.

With offices in Gaborone, Botswana; Centurion (Pretoria), South Africa; and embedded advisors in offices in Malawi and Namibia, the Trade Hub works primarily in Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, and Zambia. Starting in FY2013, and in line with Modification No. 8 of the project contract, the Trade Hub reduced its technical assistance delivery from 13 to five indicative result areas, which are described below:

Southern Africa Trade Hub Quarter 2 FY 2015 Report 2

IR1.1: Trade Facilitation aims to improve efficiency in trade administration covering import, export and transit goods procedures, and transparency of border administration by promoting and facilitating the adoption of simplified trade processes and modern tools.

IR1.2: Agricultural Value Chains focuses on improving storage and structured trade; standards and quality; investment and adoption of modern technologies; and strengthening regional organizations to enhance production and availability of tradable maize, groundnuts and soy to enhance food security.

IR1.3: Textiles and Apparel focuses on business linkages between regional and international buyers and African-based garment and textiles manufacturers; and providing technical and advisory support to Botswana and Mozambique to position themselves as attractive and viable investment locations.

IR1.4: Clean Energy works in collaboration with the Regional Electricity Regulators Association of Southern Africa (RERA) and country energy regulatory bodies to build capacity to develop and implement policies, regulations and feed-in tariffs that will enable and attract new investments in clean energy generation.

IR1.5: Enabling Environment supports measures that improve the business climate, environmental compliance and gender integration as enablers of competitiveness and sustainability.

Southern Africa Trade Hub Quarter 2 FY 2015 Report 3

II. HIGHLIGHTS & RESULTS

Southern Africa Trade Hub Quarter 2 FY 2015 Report 4

Trade Facilitation

Southern Africa Trade Hub Quarter 2 FY 2015 Report 5

TRADE FACILITATION

The Trade Hub’s trade facilitation activities continue to be guided by the WTO’s Trade Facilitation Agreement that was negotiated in December 2013. The WTO’s Trade Facilitation Agreement “contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.”1 Most importantly, it provides for border administrations to be transparent in their dealings with traders and other trade-related service providers in the global trade chain.

The Trade Facilitation Agreement must be implemented among SADC’s member states, each of whose trade capacities are in various stages of development. Accordingly, the Trade Hub is engaged in a number of supporting activities. Throughout the quarter, the Trade Facilitation team continued extensive consultations with the governments of Botswana, Malawi, and Namibia to agree on and commence induction activities, action plans, resources, and organizational decisions and structures needed to start implementation of National Single Window (NSW). The Trade Hub was also engaged in the drafting of a new customs law and the implementation of a customs modernization program in Botswana in anticipation of a new SADC Comprehensive Trade Facilitation Program. These activities are being supported in a confluent and complementary manner.

The Trade Hub is promoting modernization tools to facilitate trade and address the following elements:

Efficiency of customs administration;

Efficiency of import, export and transit procedures;

Transparency of border administration;

Availability and use of ICT; and Improved regulatory environment.

All of the above will result in significant savings to both governments and the trade chain: reducing the time, costs, and burden of complying with border administration, increasing voluntary compliance, and maintaining border security and integrity.

NATIONAL SINGLE WINDOW

According to the World Customs Organization, a “Single Window Environment is a cross border, ‘intelligent’, facility that allows parties involved in trade and transport to lodge standardized information, mainly electronic, with a single entry point to fulfill all import, export and transit related regulatory requirements.”2

The establishment of a National Single Window is seen as a key element of customs modernization and trade facilitation. Following the guidelines of the World Customs Organization, the Trade Hub set the goal of facilitating the adoption and implementation of a National Single Window as a trade modernization program in Botswana, Malawi and Namibia. A number of milestones were set to measure and track progress towards the key results.

1 http://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm 2 http://www.wcoomd.org/en/topics/facilitation/activities-and-programmes/single-window/single-window.aspx

Southern Africa Trade Hub Quarter 2 FY 2015 Report 6

MALAWI NATIONAL SINGLE WINDOW

During the quarter, the Trade Hub was fully engaged with the Malawi Revenue Authority and other ministries to support the formation of a NSW Steering Committee. The Committee has been appointed, and the body is now determining the structure and authority of the Steering Committee. The Steering Committee will in turn form the various technical committees that must be established in order to provide guidance and support to the MRA Project Management Unit (PMU) that will soon be appointed and made responsible for the design and development of the NSW. In order to prepare the PMU for its mandate, the Trade Hub provided Project Management Training for the Malawi National Single Window project implementation team from March 9-13, 2015 at the Malawi Revenue Authority national training facility in Blantyre.

The course was attended by government of Malawi officials representing agencies crucial to National Single Window: the Malawi Revenue Authority, the Ministry of Industry and Trade, the Malawi Bureau of Standards, and the Malawi Investment and Trade Centre.

Course topics included Project Management Context, Organizational Influences, and Project Life Cycle, and the training was supported by a number of practical assignments.

Participants completed group and individual projects addressing the key processes of project management in finer detail including Initiation, Planning, Execution, Monitoring and Controlling, and Closing.

As the Trade Hub Single Window Road Map progresses, it will be necessary for the government to commit to a multi-agency Single Window Project Management Unit. It is intended that participants of the Trade Hub’s project management training course will staff the PMU, bringing a higher level of expertise and familiarity with best practices to the work.

NAMIBIA NATIONAL SINGLE WINDOW

This quarter the Trade Hub met with key officials from the Ministry of Trade and Industry in Windhoek, Namibia to schedule Trade Hub training activities and obtain an update on Namibia’s progress in engaging their NSW Steering and Technical Committees.

Meetings were held with the Commissioner of the Namibia Customs and Excise Authority and with the Deputy Director of Trade, and agreement was reached on the dates for training.

During this quarter, Namibia’s Ministry of Trade and Industry appointed personnel to be dedicated full time to the NSW PMU.

The Ministry also identified dedicated office space to house the PMU, and refurbishment of the building has begun. In parallel, the Ministry of Trade and Industry identified procurement of appropriate office furniture and equipment. Of significant note, the government of Namibia allocated US$1 million for

Ambassador Daughton met with Trade Hub staff in Windhoek, Namibia

Project Management Training in Malawi

Southern Africa Trade Hub Quarter 2 FY 2015 Report 7 investment in the NSW over the next two fiscal years in order to take ownership and provide accountability for the successful development of the NSW.

Following Trade Hub NSW meetings in Windhoek, a short exit briefing was held during the quarter with Ambassador Daughton and the USAID Namibia Country Director, Mr. Primm.

BOTSWANA NATIONAL SINGLE WINDOW

On January 21, 2015, the government approved the establishment of a National Single Window for Botswana. This significant step towards implementation of a critical trade facilitation tool took place during a Cabinet session, and formal approval was subsequently issued as a Presidential Directive. The document identifies the Botswana Unified Revenue Service (BURS) as the lead agency with authority to coordinate all activities related to the development and implementation of NSW.

The Customs and Excise Division of BURS now has responsibility to oversee implementation of the NSW project, with technical assistance being provided by the Trade Hub. This cabinet decision comes after support and National Single Window promotion from the Trade Hub. NSW in Botswana is an important part of the Trade Hub’s goal to enhance effective trade facilitation in Southern Africa.

The Trade Hub gave a presentation on the regional status of National Single Window and the Trade Information Portal as a complementary platform at a Stakeholder Consultative Workshop organized by the Botswana Investment and Trade Centre (BITC) on January 27, 2015. The main objective of the workshop, held at the Gaborone International Convention Centre, was to pave the way for the development and implementation of the Botswana Trade Information Portal. The Botswana television media covered the event, and the Trade Hub Director of Trade Facilitation was interviewed for the broadcast after receiving clearance from the regional mission to do so.

National Single Window enables traders to submit all trade-related documents to a single portal, reducing the time and cost of trade, while the Trade Information Portal is a web-based system providing the business community with a comprehensive and continuously updated source of critical information related to trade in a given country. The Trade Hub’s presentation provided information to participants from both the public and private sectors on the Hub’s assistance in the SADC region, while describing how NSW and a Trade Information Portal complement each other as modernization tools critical for effective regional and international trade. The event served to increase awareness and consensus as well as aid in donor coordination.

In March 2015, the Trade Hub met with the Commissioner of BURS to commence a number of planning and preparation activities for action under the National Single Window project, including planning for the Trade Hub’s National Single Window Advisor to Botswana to be embedded in the offices of BURS Headquarters to provide enhanced technical assistance delivery. The NSW advisor will be co-located with the JICA-embedded official who developed the One Stop border Post project for Botswana. A draft agreement has been submitted to BURS for their formal approval of the embedding arrangement.

The Trade Hub team at BITC’s consultative workshop

Southern Africa Trade Hub Quarter 2 FY 2015 Report 8

NAMIBIA TRADE INFORMATION PORTAL

Work on the Namibia Trade Information Portal is nearing completion. During this quarter, the Trade Hub’s embedded advisor to Namibia worked with the project team from Namibia Customs and Excise to secure the involvement of other government agencies, ensuring that the portal provides broad and comprehensive content to its users. In addition, preliminary discussions began on the Trade Portal public launch event to be held in Windhoek.

Throughout the quarter, the Trade Portal website developer worked to integrate the Harmonized System (HS) classification tools into the Trade Portal website structure. The HS classification tool is a critical element of the Trade Information Portal, allowing users to search and query the Namibian Customs Tariff using natural language and without requiring specialist knowledge or experience. In addition to increasing transparency for traders, the tool will help reduce misclassification of goods, which in turn boosts customs revenue.

Also during the quarter, the Trade Hub and Namibia Customs and Excise enlisted the help of the Southern Africa Customs Union (SACU) in securing electronic copies of the SACU/Namibia Customs Tariff Schedule. These electronic documents are essential foundation data required for effective operation of the HS classification tool and Customs duty calculator tool needed for the Trade Information Portal.

With website and tool development being completed, the focus is on Namibia Customs and Excise to finalize the provision of narrative text, photographs, and institutional information to ensure the Trade Information Portal has plenty of useful content in time for launch scheduled for the next quarter.

SADC COMPREHENSIVE TRADE FACILITATION PROGRAM

The Southern Africa Development Community (SADC) is working closely with the Trade Hub to develop a Comprehensive Trade Facilitation Program (CTFP). The CTFP will act as a roadmap for SADC and member states on how best to address impediments to the cross-border flow of international goods in compliance with the WTO Agreement on Trade Facilitation, the WCO’s Revised Kyoto Convention, and other international and regional trade facilitation initiatives. The Comprehensive Trade Facilitation Program draft for the Southern Africa Development Community was prepared by the Trade Hub and delivered to the SADC Trade, Industry, Finance and Investment Directorate

(TIFI).

The draft is the culmination of research, analysis, design, and development activities and has been submitted to SADC for their review and comment before distribution to member states.

Driven by SADC’s agenda for economic integration, the requirements of the WTO TFA, and other legal instruments related to trade facilitation, the CTFP is SADC-specific and addresses regional and member states’ issues. The program takes a holistic approach to trade facilitation, building on SADC’s thematic initiatives. The program’s 24 activities are clustered around four pillars—transparency, predictability, simplification, and cooperation. As the owners of the CTFP, SADC and member states will be responsible for achieving program goals and for ensuring the high-level commitment of government and the private sector necessary to reach those goals.

The completed CTFP draft was submitted to SADC on February 24, 2015

Southern Africa Trade Hub Quarter 2 FY 2015 Report 9

The Trade Hub submitted its first draft of the CTFP to the TIFI Director and representatives from the SADC Secretariat on February 24. Following this submission, the Trade Hub awaits the scheduling of a presentation to the TIFI Directorate to discuss the comments, suggestions, and requirements resulting from review of the first draft.

OTHER TRADE FACILITATION ACTIVITIES

BOTSWANA LEGAL REVIEW OF THE CUSTOMS ACT

During the quarter, the Southern Africa Trade Hub continued work drafting the new Botswana Customs Act. The Trade Hub has provided this resource on a cost sharing arrangement, in which the Botswana Unified Revenue Service (BURS) provides facility and incidental costs associated with the involvement of BURS business and legal analysts to support the Trade Hub advisor.

The first reading of the draft law was completed in March 2015.

The second reading commenced immediately afterwards with completion scheduled for the end of April 2015.

The Trade Hub is working closely with BURS to bring the new Customs Law to Botswana. Recognizing the need to modernize and simplify its customs procedures, BURS began the process of drafting a new Customs Act in 2014.

To assist in the drafting process, the Trade Hub provides assistance to work line by line through proposed legislation with business analysts and advisors from BURS to ensure it meets international and regional requirements and standards (WCO, SACU and SADC) and that modern trade facilitation tools such as e-certificate of origin, valuation, and National Single Window are incorporated into the legislative draft.

The draft will ultimately go to Botswana’s Ministry of the Attorney General’s Chambers for language review prior to submission to Parliament

COORDINATED BORDER MANAGEMENT MONITORING ASSESSMENT IN MALAWI

As part of the Trade Hub’s Monitoring and Evaluation activities, a border assessment activity was carried out at the Mwanza and Songwe border crossings. The purpose of the assessments was to determine the capacity and sustainability of border agencies to benefit from Trade Facilitation technical assistance in developing a Coordinated Border Management (CBM) program in Malawi. This activity was designed to verify whether the border agencies participating in the CBM were still actively engaged and that the program is sustainable.

The border assessments carried out in Malawi in February, 2015 indicate the following:

Both the Mwanza and Songwe Joint Border Committees (JBCs) are still in place and meet regularly to address operational and other issues affecting their borders jointly.

The Trade Hub with the team from BURS drafting the new Customs Law for Botswana

Southern Africa Trade Hub Quarter 2 FY 2015 Report 10

The Mwanza JBC has expanded the scope of the JBC to include the local chiefs, the office of the District Commissioner, and Mwanza Town Police. The new members have special interests in the affairs of the border especially with regard to security of the border, employment of casual labor, control of movement of people, and linkage with the Ministry of Industry and Trade.

Border dwell time for exports (outbound traffic) has been reduced significantly at both Mwanza and Songwe.

However, border dwell time for imports (inbound traffic) at both borders has increased from the last assessments in 2013.

Communication and coordination among agencies working at the borders has improved.

COORDINATED BORDER MANAGEMENT FOR BOTSWANA

The Southern Africa Trade Hub sponsored a three-day workshop in Gaborone, Botswana on March 16, 17, and 19, 2015 to increase awareness of the benefits of Coordinated Border Management (CBM) and the need for this trade facilitation approach in Botswana.

The event was jointly organized with the Southern African Development Community (SADC) and the Botswana Unified Revenue Service (BURS). During the workshop, SADC and WCO experts presented the results of the CBM Diagnostic Review that was carried out by the World Customs Organization in Botswana during January 2015 for review and discussion.

Coordinated Border Management promotes integration and cooperation among border agencies to avoid duplication, repetition, and delays. Improved border agency cooperation is a key provision of the World Trade Organization’s Trade Facilitation Agreement.

The CBM workshop was attended by senior officials from various government agencies operating at Botswana’s border posts and the private sector, including representatives of BURS, the Office of the President, and Botswana’s Ministries of Agriculture, Health, Trade and Industry, Transport, Communications, and Immigration, as well as police, other security services, and the Botswana Bureau of Standards.

Representatives from the private sector included the Botswana Freight Forwarders Association, BOCCIM (Botswana Confederation of Commerce, Industry and Manpower), and the Botswana Exporters and Manufacturers Association. The CBM Workshop was also an opportunity for Botswana to discuss the Presidential Directive that was signed to make way for the implementation of the key trade facilitation tool National Single Window.

In his address to the workshop, the BURS Commissioner General noted that “a special thank you goes to the Southern Africa Trade Hub [which] has been instrumental in helping us in reaching the point that we are now at with the Single Window, and we sincerely appreciate the Trade Hub as our partner.”

Trade Hub team members with Mwanza Joint Border Committee Chairperson E. Sibale

Trade Hub Transport Specialist Magdeline Mabua at the Coordinated Border

Management workshop in Gaborone

Southern Africa Trade Hub Quarter 2 FY 2015 Report 11

The BURS Commissioner of Customs and Excise introduced the Roadmap for Implementation of the National Single Window in Botswana, seeking government commitment and approval for the establishment of the multi-agency Project Management Unit, Steering Committee, and Technical Committees needed for the Botswana Single Window Interface for Traders (B-SWIFT).

These foundational elements are critical for the successful implementation of National Single Window in the country.

ISSUES, CHALLENGES AND LESSONS

NSW. As a result of the appointment of a new government in Namibia, the Trade Hub could not finalize the coordination of arrangements between the Ministry of Finance and the Ministry of Trade and Industry.

As a result, despite cabinet memoranda in place, the Trade Hub continues to work closely with counterparts to identify NSW “champions” in Namibia and Malawi to act as the link to the upper reaches of government, to spearhead inter-agency cooperation and coordination, and to drive meaningful engagement with the private sector. In addition, the various approvals for NSW require that governments provide internal funding and resourcing in order to provide dedicated effort to their respective NSW visions. To date, such funding instruments have been established in Namibia.

The Trade Hub’s current strategy and approach includes the following elements, which should expedite the implementation schedule:

Aligning technical assistance with the government’s operational environment and processes;

Facilitating meaningful dialogue and consultation between the government and private sector, and promoting participation by traders in reform processes; and Providing technical assistance to improve agency management skills and capacity in project management, change management, and human resources management.

The Trade Hub’s objective is to create a NSW environment that enhances private sector (trader) acceptance and support, allowing the NSW to develop with the confidence that it will succeed.

The Trade Hub has determined that the best approach in Namibia is to encourage and support customs modernization and creation of a customs clearance single window as “phase one” of establishing a National Single Window. Customs organizations generally have greater autonomy, resources, and advanced systems to make decisions and investments and to lead the way towards NSW. Working with other donors and SADC to support the Trade Hub’s mandate will go a long way to ensuring success.

Customs Law Review in Botswana. The Trade Hub experienced delays in completing the first reading of the Customs Act due to the absence of government lawyers, either from BURS or from the Ministry of the Attorney General. In the next quarter, the Trade Hub will continue to work with BURS to arrange its own legal service review of the draft legislation. After completion of the second reading, the Trade Hub will be supporting BURS by providing technical assistance from a legal consultant to structure the next phase of the Customs Act review, which is the drafting of a supporting regulatory regime in order to administer the new legislation.

MILESTONES AND RESULTS PLANNED FOR QUARTER 3

NATIONAL SINGLE WINDOW

PMU established and operational in Malawi;

PMU operational in Namibia;

NSW Champion, Steering and Technical Committees, and PMU operational in Malawi;

Southern Africa Trade Hub Quarter 2 FY 2015 Report 12

NSW Launch events in Malawi, Namibia, and Botswana;

Attend the WCO ICT conference in Freeport, Bahamas;

Project Management training in Botswana;

PMU established and operational in Botswana;

Change Management training completed in Malawi and Namibia;

BPR training underway in Malawi, Botswana, and Namibia;

Legal Review of OGA legislation underway in Namibia, Malawi, and Botswana; and NSW Readiness Assessments developed and underway in Botswana, Malawi, and Namibia.

SADC COMPREHENSIVE TRADE FACILITATION PROGRAMME (CTFP)

Comprehensive Trade Facilitation Program development completed;

SADC approval of the draft CTFP document;

Consultative meeting on CTFP organized for SADC Member States;

SADC sign-off on the CTFP and translation activities underway; and Adoption of the CTFP by the SADC Secretariat.

BOTSWANA CUSTOM LAW REVIEW

Second reading of Customs Law completed;

Draft Layman’s text of the Customs Law submitted to the Ministry of the Attorney General’s

Chambers; and Customs Law regulatory regime designed and developed.

TRADE REPOSITORY IN NAMIBIA

Completion of website and tool development;

Narrative and photographic content finalized and uploaded to the portal;

Trade documentation prepared for publication;

BPR of existing documentary maintenance procedures to ensure portal is regularly updated; and Official public launch.

Southern Africa Trade Hub Quarter 2 FY 2015 Report 13

Agricultural Value Chains

Southern Africa Trade Hub Quarter 2 FY 2015 Report 14

AGRICULTURAL VALUE CHAINS

As a partner of the Feed the Future program, USAID’s Southern Africa Trade Hub works hand-in-hand with FTF countries (Malawi, Zambia and Mozambique) to develop their agriculture sectors and break the vicious cycle of poverty and hunger to promote global prosperity and stability.

The Agricultural Value Chains component focuses on the following four primary result areas across the targeted value chains of maize, groundnuts, and soybeans:

Improved storage and structured trade;

Improved standards and quality;

Increased investment and technology transfer; and Strengthened regional organization.

IMPROVED STORAGE AND STRUCTURED TRADE

WAREHOUSE RECEIPT SYSTEM

The Trade Hub is working in three countries to establish a Warehouse Receipt System (WRS), which enables the creation of certified warehouse receipts storage facilities.

WRS allows farmers to store grain and sell when prices are favorable, using their warehouse receipt as collateral for inputs and other expenses in the meantime. Without such a finance facility, small farmers and traders are forced to sell their grain virtually immediately after a harvest when markets are usually in surplus and prices are low.

MOZAMBIQUE

In January 2015, the Trade Hub facilitated the first official Stakeholders Coordination meeting at the USAID AEB (Agriculture, Environment and Business) offices in Maputo. The meeting for the Pilot WRS included industry members from banking and insurance, grain merchants, and donor organizations. The Trade Hub presented an overview of WRS recommendations, rules, and procedures to support the pilot project.

Following the Stakeholders Coordination meeting, an operational Steering Committee was established in February 2015 to provide management and local coordination of the WRS.

The Trade Hub provided the Steering Committee a first view of the IT systems to be implemented into the web-based data collection platform. IT and MIS (Market Information Systems) will be developed using a South African-based service provider, which will support the warehouse receipt systems for five selected warehouse pilot sites in Mozambique.

Parallel developments in the quarter to support the pilot included selected ETG and Cargill warehouse site preparations in Beira, Chimoio, Catandica, Gurue, and Nampula using Strategic Partnership Grant support. These warehouse sites will be ready for WRS system implementation by June 2015.

Accredited warehouses enable farmers to store grain and sell when the market is favorable

Southern Africa Trade Hub Quarter 2 FY 2015 Report 15

MALAWI

ACE (Agricultural Commodity Exchange) Malawi has continued operating WRS in the country. The Trade Hub worked with ACE Malawi in 2012 to improve their Warehouse Receipt System, resulting in the first-ever bank financing for warehouse receipts involving ACE.

The Trade Hub successfully hosted an African Trade Insurance Agency (ATI) visit to Malawi during March in which meetings with ACE Malawi, local bankers, and insurance companies identified appetite for ATI to underwrite credit risk for WRS in Malawi. While the rapid growth in warehouse receipt finance in Malawi is a great achievement, all the finance is currently coming from only one bank (First Merchant Bank - FMB). As a result, the Trade Hub has been pro-actively seeking ways to increase the capacity of FMB and to find other entities with lending capacity.

Using ATI’s superb A+ credit rating from Standard and Poor’s, ACE, local banks, and Insurance companies will have access and capacity to finance and/or facilitate finance for WRs and forward grain contracts in Malawi.

In a series of successful discussions in March 2015 between the Trade Hub and ATI, the decision was made to roll out credit insurance from ATI for forward contracts concluded through ACE. The roll-out is forecasted to occur early in Quarter 3, well in time for the 2015 grain harvest.

ZAMBIA

In February 2015, the Trade Hub completed the first technical assessment evaluation of Zambia Agricultural Commodities Exchange (ZAMACE) structures for WRS development. The Trade Hub conducted a broad based fact finding assessment with industry stakeholders to identify technical support and recommendations needed for the ZAMACE WRS to be established for the 2015 season.

As part of the assessment, meetings were held with traders, millers, producers, and banks to provide a technical overview of procedures needed for a WRS to function.

ZAMACE has engaged the Trade Hub as the preferred Technical Partner to assist in the development and delivery of a WRS for Zambia, with a targeted launch date of June 2015. Following the approval of Statutory Instrument #35 of the Agricultural Credits Act in November 2014, ZAMACE is now legally authorized to license warehouses and silos to be certified for WRS use. A second assessment is required and will be conducted once the IT systems needed for the web-based data collection platform are available to ZAMACE from the Lusaka Stock Exchange.

The Lusaka Stock Exchange has signed an MOU with ZAMACE to acquire a controlling interest. The acquisition will allow ZAMACE to access IT systems to support WRS online data collection platforms to issue electronic warehouse receipts. ZAMACE intends to roll out the first certified warehouses (five to six) in June 2015. WRS improves farmer incomes and supports the Trade Hub’s goal to increase grain storage and structured trade in the region.

AGRICULTURAL STORAGE INVESTMENT FACILITY (ASIF) DEVELOPMENT

In collaboration with ACE, the Trade Hub developed the Agricultural Storage Investment Facility concept and hosted a conference in Johannesburg in September 2014 as a first step to developing it. ASIF was developed in response to stakeholders in Malawi’s agricultural value chain who identified the lack of available warehouse financing as a major obstacle to growth and productivity in the industry. ASIF addresses the bottleneck in warehouse financing with earmarked credit lines provided to Malawian banks for on-lending to agribusiness and SMEs so they can build new warehouses, particularly in rural areas.

ASIF will provide warehouse access to smallholder farmers and SMEs, which will reduce post-harvest losses and increase access to finance and markets.

Southern Africa Trade Hub Quarter 2 FY 2015 Report 16

A recent progress report on ASIF released this quarter disclosed that five leading agribusinesses in Malawi have provided Expressions of Interest for US$40 million in financing to construct 50 new warehouse facilities with over 125,000 metric tons of new capacity. An SME pipeline is also being developed.

An European Investment Bank (EIB)/National Bank of Malawi (NBM) credit line (US$25-30 million) for Malawi was provisionally agreed to in the quarter. EIB is finalizing the term sheet after which (if acceptable) NBM will officially request the credit line.

The incorporation of USAID’s DCA facility into ASIF was pursued and is expected to be a key success factor in the AFD/FMB facility to reduce the risk of loans from banks to borrowers such as agribusiness and SMEs.

ASIF Zambia development began in close cooperation with ZAMACE, the Grain Traders Association of Zambia (GTAZ), and NGO Musika.

Interest was confirmed for the following financing models:

Direct DFI line for some of the bigger storage operators. Credit line will be a minimum of US$10 million, which could apply to 3-4 operators;

DFI credit line to Zambian bank which could cater to smaller storage operator warehouse investment: expected credit line approximately US$25 million;

SME warehouse financing model interest, modalities (e.g. leasing model, etc.) to be further reviewed.

ASIF development includes the development of technical assistance collaborations. To this end, discussions have been held with FAO and AGRA in the areas of farmer and SME financial literacy training. EIB, AFD, and the European Union (EU) are engaging to synergize EU agricultural support and rural road development programs

From March 9-13, 2015, the Trade Hub facilitated the first ever investment mission by the Agence Francaise de Developpement (AFD) to Malawi in partnership with the Agricultural Commodity Exchange for Africa (ACE). AFD, an agency of the French state, is a development finance institution that provides investment, de-risking, and technical assistance in support of social and economic development across emerging markets. AFD is active in the region in countries such as South Africa, Zambia, and Zimbabwe but has not yet engaged in Malawi. The aim of the mission was for AFD to understand the activities and impacts of ACE as a warehouse receipt system and commodity exchange, and the role of warehousing as the key access point for commodity value chain participants to storage, finance, and markets. AFD met with government, private sector (banks, agribusiness as well as SMEs), international organizations, and civil society in Blantyre and Lilongwe.

An AFD/First Merchant Bank (FMB) credit line in development for Malawi is now in progress. The credit line will target SME warehousing (with ACE technical assistance) valued at US$15 million and Farmers World (a large Malawian agribusiness) for US$10 million investment in rural warehousing.

The Trade Hub and GTAZ members at a lunch convened to discuss the Agricultural Storage Investment Facility

Southern Africa Trade Hub Quarter 2 FY 2015 Report 17

IMPROVED GRAIN STORAGE MANAGEMENT

Through its Strategic Partnership Grant with Sierk Ybema Grain Services, the Trade Hub supported a Regional Mobile Grain Training Unit Training Course in Lilongwe, Malawi from March 23 to April 2, 2015 for ACE certified warehouse managers. The course was held at ACE (Agricultural Commodity Exchange) Malawi and was designed to equip newly hired warehouse managers with the technical knowledge and practical techniques needed to run effective warehouses and combat post-harvest losses. ACE warehouse managers (of which ten were women) were trained on four modules: Basic Concepts, Maize Grading, Soybean Grading, and Warehouse Management and Basic Pest Control.

The comprehensive course included both hands-on and lecture training, and was conducted by expert Dr. Jan Ybema, who has led numerous grain management courses for the Trade Hub. Future trainings are scheduled for May and June 2015 in Mozambique.

A Ybema Grain Service marketing/branding plan for Zambia and Malawi was developed through Trade Hub support.

The Trade Hub also identified new demand in the milling and breweries industries with specialized training services to be conducted by Ybema Grain Services for wheat and barley grading and sampling.

DEVELOPMENT OF E-CERTIFICATION SYSTEM FOR AGRICULTURAL EXPORTS

An SOW was approved by USAID Southern Africa.

Trade Hub consultant Njeleka Malata was engaged for the assignment; she has since produced her inception report which has been endorsed by USAID Southern Africa.

INCREASED INVESTMENT AND TECHNOLOGY TRANSFER

The Trade Hub has continued to put major focus on increased investments and technology transfer through the development of the Strategic Partnership Grant (SPG) program during the quarter.

SPG ADMINISTRATION AND MANAGEMENT

The Grantee Handbook was reviewed and updated.

Visits were conducted with all active SPG grantees in South Africa to discuss grant administration, reporting requirements, cost share documentation, and other administrative and compliance-related matters.

The revised Grantee Handbook was reviewed with the grantees, and they were provided copies.

All grantee deliverables were reviewed with the grantees to ensure they are on track with the implementation timeline. Any potential delays were discussed and solutions agreed upon.

Grantee files were maintained.

Southern Africa Trade Hub Quarter 2 FY 2015 Report 18

IMPLEMENTATION OF GRANTS AWARDED IN 2013

CAPSTONE/PEACOCK MALAWI

Through a Strategic Partnership Grant, hybrid seed is introduced to address productivity and maximize yield potential in small scale, rain-fed, drought-vulnerable farming systems. An assessment completed during the quarter revealed that the second seed variety developed, Peacock 10, and the initial hybrid seed developed, Cap9001, together achieved increased sales. The seeds are in high demand, and new distribution channels for the hybrid seed now include government, larger seed companies such as Seedco, NGOs, and commercial buyers. Capstone Seeds exported 0.5 metric ton of parent seed to Malawi for the 2014/15 growing season while establishing trials in Mozambique for new seed maize varieties.

Capstone successfully tested four maize hybrid seed varieties and 17 soybean seed varieties in four provinces—Maputo, Nampula, Manica, and Tete—in preparation to register the seeds in Mozambique and commercially multiply them for the local market.

The seed trials provided valuable information about which varieties will flourish in the provinces, with certain seeds emerging as clear winners ready to begin the process of seed registration. Though registration of some seed varieties will happen after the life span of the current grant, multiplication of the drought-tolerant CAP9001 maize seed is now underway in Chimoio, with an expected yield of 10 metric tons in the first season. The SPG is now at the first stage of grant close out.

SAGM/JUNGLE BEAT ZAMBIA

The SPG was closed out during the quarter.

NWK/NWK ZAMBIA

The SPG was closed out during the quarter.

IMPLEMENTATION OF GRANTS AWARDED IN FY2014 AND FY2015

MALAWI

PMD PACKAGING/VALUE NUTRITION MALAWI

Valid Nutrition Malawi is developing a Ready to Use Complementary Food (RUCF) product that targets children under five and pregnant women. As groundnuts are a major ingredient of RUCF, this will create a new market for Malawian farmers to supply aflatoxin-compliant groundnuts. During the quarter, the Trade Hub provided Valid Nutrition with technical assistance in the area of marketing/business development to support market uptake of the new RUCF product. Equipment for a new PMD packaging line has been shipped to Malawi and will be commissioned in Q3 FY2015.

MH BOERDERY/NATIONAL ASSOCIATION OF SMALL HOLDER

FARMERS OF MALAWI (NASFAM)

The grant focuses on groundnut value chain development in Malawi.

NASFAM has begun training field staff, lead farmers, and farmers as well as developing a radio message for broadcast. MH Boerdery has completed the first phase of equipment and supply development and will conduct the second phase as well as commissioning and training for all equipment in Q3 FY2015.

The hybrid maize seed is designed to withstand drought conditions

Equipment from VNM’s new processing line

Southern Africa Trade Hub Quarter 2 FY 2015 Report 19

VERMEULEN ANDELE TRUST

This grant enables soybean product upgrading and marketing development in Malawi. Vermeulen has procured the first round of equipment and supplies and will complete the second phase of procurement as well as commissioning and training in Q3 FY2015.

MOZAMBIQUE

CARGILL

This grant enables maize and soybean marketing development in Mozambique. Cargill has begun establishing grain storage sites with outstanding site completion anticipated in Q3 2015. Cargill is preparing for targeted training on WRS, MIS, and extension services at the grain storage sites which will take place at site completion.

CENTRAL AFRICAN SEED SERVICES (CASS)/AGSEED

This grant focuses on groundnut and soybean certified seed development within Mozambique to remove a major impediment for development of this target crop in the country. CASS has begun implementation, including procurement of equipment and supplies as well as development of training manuals.

ETG

This grant enables ETG to establish the first ever warehouse receipt system (WRS) in Mozambique by piloting WRS in four locations. ETG has begun implementing the grant and is in the process of procuring equipment and supplies as well as preparing for extension training and sensitization workshops for the four warehouse locations. They have conducted market surveys to inform the establishment of a management information system and will install, commission, and provide training in Q3 FY2015.

INTERTEK

This grant supports laboratory development for mycotoxin analysis and testing and aflatoxin mitigation and testing in Mozambique. Intertek has procured the necessary laboratory equipment to upgrade their Beira facility to conduct mycotoxin and aflatoxin testing. The laboratory will be commissioned, training conducted, and operational in Q3 FY2015. Intertek is also preparing to conduct awareness training on aflatoxin mitigation for farmers, traders, and buyers.

SOLIDARIDAD

This grant enables maize and groundnut value chain development, including outgrower linkages, within Mozambique. In this quarter Solidaridad completed the selection and training of lead farmers and the establishment of demo plots that will be used to provide training to beneficiaries in Q3 FY2015.

ZAMBIA

AMMTECH/COMACO

This grant is assisting in the development of groundnut processing facility in Zambia. Ammtech has begun the development of peanut processing equipment. Installation and commissioning will take place in Q3 FY2015, along with the development of a quality control system including HACCP certification of the peanut butter.

DELTAMUNE/VETLAB

This grant is assisting VETLAB in attaining an accredited grain and oil seed laboratory service, including aflatoxin testing, in Zambia. This will be the first laboratory accredited with these services within the Southern Africa Development Community not in South Africa. In Q2, the Deltamune laboratory manager designed the training program for VETLAB, developed training materials, and commenced training VETLAB staff.

Southern Africa Trade Hub Quarter 2 FY 2015 Report 20

ZHAUNS/LUMUNO ORGANIC FARMS

This grant supports vegetable processing and outgrower development in Zambia. Lumuno, with Zhauns’ support, has mobilized 300 farmers into supply groups within an outgrower…