legal frameworks: existing statuses, lessons, and the way ......2/22/18 4 partnership for enabling...

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Partnership for Enabling Market Environments for Fertilizer in Africa (PEMEFA)


Legal Frameworks: Existing Statuses, Lessons,

and the Way Forward Katrin Kuhlmann (New Markets Lab) on behalf of the PEMEFA team

Academic Affiliations: Lecturer on Law, Harvard Law School Adjunct Professor, Georgetown University Law Center

IFDC Workshop on “Developing Private Sector Agro-Input Markets: Lessons Learned and Emerging Perspectives on Subsidy Programs”

22 February 2018 – Jinja, Uganda



About the New Markets Lab •  Non-profitlawanddevelopmentcenterfocusedontheintersectionbetweenlaw,economicdevelopment,entrepreneurship,andsocialimpact•  Programswithadiversesetofpartnersaroundtheworlddesignedtoleveragelegalsystemsinsectorswithgrowthpotential(agriculture–includingfertilizerandseed,services,technology)thatareheavilyregulated•  Setofinterventionsandtoolstoimproverulesonpaperandtheirimplementationinpractice•  Buildmarketcapacitythroughhands-ontrainingforlawyersfromaroundtheworld

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Gaps in the Enabling Environment •  InformationGap:

•  Enterpriselevel(manyenterpriseslacklegalresources)•  LegalSector(marketrulesspanjurisdictionsandlegalsystems;agriculturallawnotafocus)•  PublicSector(notalwaysawareofmarketneeds)

•  ImplementationGap:Significantdifferencesexistbetweenlawsonthebooksandlawsinpracticeatnationalandregionallevels•  RuleofLawGap:Bestpracticesandmodelsshoulddrawfromdevelopingcountries’experiences;customizedandincrementalapproachnotcommon•  ScaleGap:Issuesaddressedoncase-by-casebasiswithoutimpactingsystemasawhole

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•  ApproachLawandRegulationasSystem•  Designregulatorysystemtoencouragemarketinnovationandgrowth•  Focusonimplementationgap•  Highlightpriorities,tradeoffs,andsequencingforpolicymakers•  Benchmarkagainstgoodregulatorypractices

•  InnovatethroughHumanCenteredDesignSolutionsandTrainLawyers•  Reduceriskinthemarket,lowertransactioncosts,andmakeregulatoryprocessesmoretransparentandinclusive

•  Trainlawyersacrossnationalsystemstobuildcapacityandenhancepotentialforregionaltrade

•  Uselegaltools(LegalGuides,SystemsMaps,CaseStudies)toengagepublicandprivatesectorstakeholdersinlegaldesignandimplementation

NML’s Methodology

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Examples of NML’s Work •  Setofprogramsfocusedonsectorscriticaltodevelopmentandheavilyregulated•  Agriculture(standards,seeds,fertilizer)•  Services(ICT,financial,andtransport)•  Technology(IP)•  E-Commerce•  EmergingIndustries

•  SeedRegulationExample•  Testcasesto“pressuretest”newregulations•  Regionalimplementationcasestudies•  TanzaniaSAGCOTexample:AGRA/USAID

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Objectives • Understandingandinterpretingcurrentregulatoryframeworks• Commonchallenges,regulatorytradeoffs,andgapsinimplementation

• Linkingregulationwithadvocacyatnationalandregionallevels•  Identifyingprioritiesfordraftingandrevisingfertilizerregulatoryframeworks(nationalandregionallevels)

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NML Partnership with AFAP (Since 2016)

•  AGRASSTP/USAID•  StrengthenUnderstandingofKeyComponentsofaHarmonizedPolicyandRegulatoryFrameworkforEastandSouthernAfrica(Malawi,Mozambique,Ethiopia,&Tanzania)

•  ConsolidateandDisseminateComprehensiveKnowledgeofthestatusoffertilizerpoliciesandregulationsØ NationalstakeholderconsultationsØ Reviewedexistingfertilizerpolicies,standardsandregulationsØ ComparativeanalysisofcurrentpolicystatusversusamodelframeworkØ RecommendedrequirementsforastrongnationalfertilizerregulatorysystemØ Policyandregulatoryreformagendatocreateanenvironmentthatismoreconducivetoopenmarketsandregionalharmonization

Ø LegalandRegulatoryGuides

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Good Regulatory Practices

• WellFunctioningNationalPolicy,Legal,andRegulatoryFrameworktoEncourageFertilizerMarketDevelopment•  Typicallyframeworkconsistsofseveralinterconnectedinstruments:FertilizerPolicy,Law/Act,andRegulations• Countrieshaveamixofmeasures•  Evenwhenexistmaybeoutofdatewithmarketdevelopments(forexample,fewaddressuniquenatureofbio-fertilizersandblends)

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Country CurrentInstruments InstrumentsUnderDevelopment

Ethiopia FertilizerManufacturingandTradeProclamationNo.137/1998;GrowthandTransformationPlan(GTPII);AgriculturalPolicyandInvestmentFramework(2010-2020);CommercialRegistrationandBusinessLicensingProclamationNo.686/2010;MoANRDirectivetoEstablishCriteriaforCompetenceCertificate

DraftFertilizerProclamation;DraftProclamationtoEstablishtheNationalFertilizerIndustryAgency(NFIA)

Malawi Fertilizers,FarmFeeds,andRemediesAct(FFRA)1973,asamended1996;NationalFertilizerStrategy(NFS),2012;MalawiGrowthandDevelopmentStrategy(MGDS);AgriculturalSectorWideApproach(ASWAp),2010

FertilizerActandRegulations(underdevelopmentsince2003;modified2007);FertilizerPolicy

Mozambique StrategicPlanofAgriculturalSectorDevelopment(PEDSA)(2010—2020);FertilizerStrategy,2012;FertilizerRegulation,2013

FertilizerAct

Tanzania FertilizerAct,2009(amended2014);FertilizerRegulations2011(amended2017),Fertilizer(BulkProcurement)Regulations,2017;NationalAgriculturalPolicy(NAP),2013;NationalFertilizerStrategy(NFS),2013

N/A

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Good Regulatory Practices Cont’d •  IndependentFertilizerRegulatoryAuthorityestablishedthroughRegulationsunderthenecessarylegalauthority,skilledstaffandwell-equippedlaboratories• Autonomousbodytofacilitatestableandpredictableregulatoryenvironmentandfacilitatedevelopmentofandalignmentwithregionalmeasures•  Example:TFRAinTanzania

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Good Regulatory Practices Cont’d •  StreamlinedandSimplifiedRegistrationProcessforNewFertilizers

•  Reducethenumberofseasonsoftestingandfees•  Example:Tanzaniaamendedregulationsin2017(shortenedfrom3seasonsto1)

•  Removetheregistrationrequirementsfornewblends•  Shifttoexpostsystemovertimeratherthanexante(focusesonenforcementratherthanmarketentry)•  Phase-outapprovedlistapproachforfertilizersandadoptatruth-in-labelingapproach•  Example:ZambiaandSouthAfricamaintainalistofnutrientsasopposedtoalistoffertilizergrades

•  Expostmeasuresareagoodregulatorypracticebutrequiresufficientcapacitytoimplement

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Prior Regulatory Process for Fertilizer Registration in Tanzania

Regulationsambiguousastodefinitionof“new”

ApplicantmustbeaTanzanianresidentorassignanagentwhoisapermanent

Tanzanianresident

Applicantcompletesapplication,whichincludes:(1)fertilizersample,(2)certificateofanalysis,(3)writtendeclarationfertilizerisnotbannedor

restrictedincountryoforigin,(4)3copiesoflabeltobeused,(5)informationonsuitability,(6)anyotherinformationordocumentrequiredbyTFRA,

and(7)applicationfeeofUSD50

ApplicantsubmitssignedapplicationtoTFRAforapproval

Testingforsuitabilityofknownandnewfertilizersandfertilizersupplementsmust

undergolabtestsbyTFRA.Newfertilizersandsupplementsmustbetestedvialabandfieldby

TFRAforatleast3consecutiveseasons

TFRAdeniesapplication

TFRAapprovesapplicationandgrantsregistration

certificatewithmaximumtermof2years

TFRAaddsnewfertilizerorfertilizersupplementtolistofapprovedfertilizersforuseinTanzania

ApplicantpaysfortestingbyTFRA,whichcostsapproximatelyUSD10,000/seasonoratleastUSD30,000total

[Renewal]

Season2Test Season3Test

Dealerregistration

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Amended Regulatory Process for Fertilizer Registration in Tanzania

Regulationsambiguousastodefinitionof“new”

ApplicantmustbeaTanzanianresidentorassignanagentwhoisapermanentTanzanianresident

ApplicantsubmitssignedapplicationtoTFRAforapproval

Testingforsuitabilityofknown&newfertilizersandfertilizersupplementsmustundergolabtestsbyTFRA.Newfertilizersandsupplementsmustbetestedvialab

andfieldbyTFRAforatleast1season

TFRAdeniesapplication

TFRAapprovesapplicationandgrantsregistration

certificatewithmaximumtermof2years

TFRAaddsnewfertilizerorfertilizersupplementtolistofapprovedfertilizersforuseinTanzania

ApplicantpaysfortestingbyTFRA,whichcostsapproximatelyUSD10,000/season

Applicantcompletesapplication,whichincludes:(1)fertilizersample,(2)certificateofanalysis,(3)writtendeclaration

fertilizerisnotbannedorrestrictedincountryoforigin,(4)3copiesoflabeltobeused,(5)informationonsuitability,(6)anyotherinformationordocumentrequiredbyTFRA,and

(7)applicationfeeofUSD50

[Renewal]

Season2Test

Season3Test

Dealerregistration

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Good Regulatory Practices Cont’d •  EnhancedImplementationofExistingLegalMechanisms

•  Expandcapacityandtraining(includingfocusonlaboratories,skilledstaff,equipment,traceabilitymechanism)andenforcement(withdeterrentpenaltiesforviolations)

•  StrengthenedPublic-PrivateDialoguePlatformstoImproveRegulatoryFrameworksandTheirImplementation•  AMOFERTinMozambique;TanzaniaFertilizerSociety•  Mozambique’sAMOFERTPlatformisawell-recognizedforumonissuesrelatedtofertilizer,andparticipatedindraftinganewFertilizerActthatisunderreviewbytheMozambicangovernment

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Good Regulatory Practices Cont’d •  AwarenessBuildingofLegalandRegulatorySystems•  Addresschallengesthrough(1)improveddisseminationofinformation(LegalGuides),(2)assistanceforpreparingorinterpretinglegaldocumentslikecontracts,(3)providingtransactionallegalservicestoindividualsworkingwiththeagriculturalsector•  Providetailoredlegaltrainingforfarmers,includingrightsandobligations•  Designtrainingprogramforlawyerstoimproveoverallregulatoryenvironmentanddeliveryofagriculturallegalservicestostakeholders

•  HarmonizedFertilizerStandardsatRegionalLeveltofacilitateeasymovementofblendswithintheregion;harmonizelaboratorycapacities

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Regional Harmonization • AbujaDeclarationCallsforRegionalHarmonization•  CallsonAUMemberStatesandRegionalEconomicCommunities(RECs)totakeappropriatemeasurestoreducethecostoffertilizerprocurementatnationalandregionallevelsanddevelopcapacityforqualitycontrol•  Focusonensuringdutyandtax-freemovementacrossregions

• ContinentalFreeTradeArea(CFTA)andTripartiteFreeTradeArea(TFTA;amongEAC,SADC,andCOMESA)•  Negotiationsatanearlystageanddonotyetincludefertilizersystems

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Regional Harmonization Cont’d. • COMESADevelopingHarmonizedFrameworks•  EACHarmonizedRegulatoryInstrumentsandProceduresforFertilizerMarketUnderDevelopment•  SADCRegionalAgriculturalPolicy(RAP)•  Policynotspecifictofertilizer;noseparateframeworkforfertilizerexists•  Noseparateframeworkforfertilizerexists

•  ECOWASRegulationRelatingtoFertilizerQualityControlintheECOWASRegion

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Regional Harmonization Example: ECOWAS Fertilizer Regulations (1) •  StreamlinedProductRegistration(ECOWAS–ProductRegistrationNotRequired;TruthinLabeling)•  InstitutionalCooperation•  FreeMovementofFertilizer(includingblends;waytomeetmarketneeds;ECOWAS)•  StandardQualityDefinitionsandLabelingRequirements(ECOWAS)

•  IFDCcontributedtoworkonsamplingandtesting•  HarmonizedInspectionandAnalysis(ECOWAS)•  CommonLicensesforFertilizerProducersandTraders(ECOWAS)•  SharedLaboratoryResources(ECOWAS)

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Regional Harmonization Example: ECOWAS Fertilizer Regulations (2) •  Requiresdomestication(differencesbetweencivillawandcommonlawcountries)•  IFDCWAFPprojectisassistingindividualECOWAScountrieswithdomesticationprocess•  Developqualitycontrolsincountrydistributionsystem(identifyandevaluatelabandhumanresources)

•  EstablishagencytoenforceECOWASregulatoryframework,includingqualitycontrolandnationalcommitteestosupporttheseefforts

•  Draftmodalitiesforissuanceofimportanddistributionlicenses;fixregistrationfeesforimportersanddistributors

•  Setuppenaltiesforinfringementofregionalandnationalregulations

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Principles for Harmonizing Fertilizer Regulatory Frameworks •  ImplementationatNationalLevelisCritical• ApproachesMayVaryAmongMembersofRegionalBloc• ConsiderSequencingofRegulatoryInterventions• Promote“LowHangingFruit”Reforms•  EstablishCommonMethodologyandIndicatorstoMeasureProgress•  TailorCapacityBuildingtoNeedsofIndividualMemberCountries•  ListentoPrivateSectorandCivilSocietyVoices

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Regional Harmonization Interventions: Short-Term •  EstablishmentofNationalEntitiesResponsibleforFertilizerRegulation

•  Helpfacilitatestableandpredictableregulatoryenvironmentatthecountrylevelandsignificantlycontributetoamoreefficientregionalfertilizermarket

•  ClarityonProductandBusinessRegistrationandLicensingRules•  Inconsistentapplicationofregistrationandlicensingrulesimpedesharmonizationefforts

•  TariffandCustomsDuties•  Countriescouldagreetoexemptfertilizerfromcustomsdutiesandothertaxes,andharmonizeVATforfertilizer,includingforfertilizer-relatedservices

•  ListofApprovedFertilizers•  Regionalizelistofapprovedfertilizerstofacilitatetrade,withthelong-termaimoftransitioningtoanexpostapproachliketruth-in-labeling

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Regional Harmonization Short-Term Interventions Cont’d. •  PackagingandLabeling

•  Establishuniformrulesforpackagingandlabeling,suchasaminimumsetofinformationtobeclearlylabeledonfertilizercontainers

•  HarmonizedRegionalQualityControl(IncludingInspection)

•  Establisharegionalqualitycontrolsystemthatextendsallalongthefertilizervaluechain

•  FertilizerStandards•  Adoptuniformstandardsforfertilizer,includingblends,basedoninternationalstandards

•  RaisingAwarenessofFertilizerLawsandRegulations•  Atnationalandregionallevels,includingbymakingsureproposedchangesaresharedandvettedwithpublicandallrulesarepublished

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Regional Harmonization Interventions: Long-Term •  ShifttoaTruth-in-LabelingApproach•  ECOWASsystemisanexampleofexpostregulationandaTruth-in-Labelingapproach

•  FreeMovementofFertilizerCross-Border,IncludingTransport•  Removeorreducebordertaxes,roadblocks,andescortsystems;introduceone-stopborderprocesses;andimprovetradecorridors

•  RegionalInspection,Analysis,Sampling,andTolerance•  Inspection,analysis,andtestingprocedurescouldfollowinternationalstandardsandregionalrulesforinspectioncouldbeestablished

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Regional Harmonization Long-Term Interventions Cont’d. • OversightandAdministration• Establishregionalinstitutionalmechanismwithclearmandate

• RighttoAppealandConfidentiality• Harmonizegroundsforappealandensureclearrighttoconfidentialityforsensitivebusinessinformationtoavoidunfaircompetition

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Thank You! ThispresentationwasfundedbyagrantfromtheAllianceforAfricanPartnership,anewinnovativeinitiativeatMichiganStateUniversitythatseekstodevelopacollaborativeandcross-disciplinaryplatformforaddressingtoday’sglobalchallenges.

PEMEFAteam

•  MariaWanzala-Mlobela(AFAP,[email protected])•  NicoleMason(MSU,[email protected])•  JoshuaAriga(IFDC,[email protected])•  CharlesJumbe(ReNAPRI,[email protected])•  KatrinKuhlmann(NML,[email protected])•  ShannonKeating(NML,[email protected])•  KillianBanda(AFAP,[email protected])

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legal frameworks: existing statuses, lessons, and the way ......2/22/18 4 partnership for enabling...

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