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tralac’s Daily News Selection
The selection: Monday, 11 July 2016
ATPC’s David Luke: ‘Brexit: Africa’s trade and development implications’ (pdf, UNECA)
Brexit has thrown up uncertainties in many areas relevant to development; the most pertinent to Africa’s trade and development cooperation that I would like to identify are: (i) the impact on the UK economy (ii) the UK’s formal trade arrangements (iii) Brexit lessons for African integration (iv) the UK’s trade and development assistance.
The UK should consider a continental approach to Africa. The goal should be for a comprehensive single trade agreement with all 54 countries that incorporates limited reciprocity, immediate access to the UK market, and phased-in access to the African market. This would be similar to the EU’s EPAs, which would likely form the basis for discussions. A single continental approach would reduce the multiplicity of new arrangements the UK would have to negotiate while also being aligned with Africa’s plans for continental regional integration plan as per Africa’s Agenda 2063. Such an Agreement could learn from the best practices of other development-oriented trade agreements as well as the experience of the EPA negotiations. It should, for instance, consider aspects such as:
Brexit and development: how will developing countries be affected? (ODI)
This briefing discusses the actual and potential economic impact of Brexit on developing countries. Brexit will have major implications for developing countries, whether or not the UK actually leaves the EU. Different countries will be affected in different ways, depending on how the UK exits. There are mostly negative effects for developing countries, but some positive ones too: In the short-term, the threat of Brexit has led to currency and stock market fluctuations, which have not spared emerging markets and poorer countries. The long-term effects depend on UK trade deals, any changes to aid allocation, new global collaborations, financial markets and the way in which migration and remittances are maintained. [The authors: Max Mendez-Parra, Phyllis Papadavid, Dirk Willem te Velde] [Sue Onslow: 'What Brexit means for the Commonwealth' (The Conversation)]
Why SA is most exposed to Brexit impact – Moody’s (Fin24)
Another result of the Brexit vote, according to Moody's, could be the possible need for governments to create new trading agreements with the UK and renegotiate some of the key trade agreements with the EU. This will further raise the uncertainty faced by SA businesses. Subdued growth in the UK would also have a moderately negative impact on SA’s trade and growth. Although the UK accounted for only for 4% of SA’s total merchandise exports in 2015 (with platinum making up a large share), Britain accounts for about 20% of South Africa’s exports to the EU. "If the UK slowdown or new trade arrangements were to weigh on EU growth more than currently expected, the SA economy, which contracted in the first quarter of 2016 due to both external shocks and domestic structural bottlenecks, would be under more pressure," explained Moody's. Furthermore, in 2015, UK residents represented 17% of overseas tourists visiting SA. "With the UK and the EU focused on their negotiations, they are unlikely to prioritise trade agreements with SSA (sub-Saharan Africa) sovereigns. That said, the main impact of Brexit on all SSA sovereigns that have close trade ties with the UK and the EU will be felt via reduced export demand," said Moody's.
Reminder: tomorrow’s hearing on Brexit implications for UK’s Africa Free Trade Initiative
Improving the perspective for regional trade and investment in West Africa: scoping report (ASC Leiden)
In order for support to regional integration and cooperation in West Africa to be effective and calibrated to the specific needs of the region, there is a need to build a more comprehensive understanding of the diverse and complex regional dynamics and to gain insight into the opportunities and challenges to regional integration in West Africa. Commissioned by the Food & Business Knowledge Platform, the overall objective of the study underlying this scoping report was to contribute to a more contextualized comprehensive picture of The Netherlands’ government's ongoing cooperation with West Africa and the perspective in terms of policy options for strengthening its effectiveness and coherence by giving more emphasis to the promotion of intraregional trade and investment.
South Africa’s ‘Trade Africa’ initiative to launch on Friday (dti)
The Minister of Trade and Industry, Dr Rob Davies will, Friday, launch Trade Africa (formerly known as the Africa Export Council), a unit established within the Department of Trade and Industry to promote South Africa’s trade relations with the African continent. The initiative will be launched together with the Guidelines for Good Business Practice by South African Companies operating in the rest of Africa, at a roundtable discussion on intra-African trade. The purpose of the initiative is to leverage the state’s capacity to unlock the bottlenecks experienced by South African businesses when operating in the rest of Africa, through deliberate, targeted and well-defined financial and non-financial interventions as described in the Industrial Policy Action Plan (IPAP) and other government policies.
SA engages Zimbabwe on latest trade restrictive measures (dti)
The Department of Trade & Industry notes with concern the range of trade restrictive measures that the government of Zimbabwe has introduced. These measures include import bans, surcharges, increases in import duties, requirements for import permits and other forms of restrictions that have negative implications on intra-regional trade. At the recent meeting of the Southern Africa Development Community Committee of Trade Ministers South Africa and Zimbabwe were requested to report to SADC on the implications of these measures for the coherence of the SADC Trade Protocol.
Import restrictions temporary, says Zimbabwe VP (The Herald)
Speaking during the Buy Zimbabwe annual summit in Mutare last Thursday, VP Mnangagwa said while the legislation was meant to protect local companies from unfair competition, enhancing competitiveness remained a long-term solution. He also underscored the need to develop a robust import substation strategy meant to replace imported products with local goods while urging consumers, including the Government, to embrace local commodities. “We need to appreciate that restrictions are not permanent and that in the long term, pressure from trading partners will always force us to open our markets again,” said VP Mnangagwa. “Industry must appreciate the important role that competition plays in the global economy. We risk closing ourselves out of the global market and fail to develop in line with global trends.” [Zimbabwe: 'Retail businesses in imports syndicates']
SA advises Zimbabwe to adopt the rand (IOL)
However, ordinary Zimbabweans increasingly resorted to the stronger dollar because of the fall in the value of the rand. Official sources said that policy had now been demonstrated to have failed. And Zimbabwe could not print its own money again as this would have no credibility now with ordinary Zimbabweans. They said switching to the rand would boost Zimbabwe’s exports as the US dollar made its exports too expensive on international markets. This could revive Zimbabwe’s flagging manufacturing sector. The sources said that if Zimbabwe switched to the rand, Pretoria would encourage its state-owned enterprises already in the country, such as the Development Bank of Southern Africa, the Industrial Development Corporation, and the Public Investment Corporation, to inject more money into the Zimbabwean economy. This would be easier for them to do in rands than in US dollars.
SACU Ministerial Retreat: ‘Lesotho should retain SACU revenues’ (Lesotho Times)
Trade and Industry Minister Joshua Setipa said while the revenue sharing formula was expected to be reviewed in the near future, the government wanted to ensure Lesotho’s share would not be reduced after the negotiations were completed. “Our position as the government is that whatever happens during the review of the revenue-sharing arrangement, we should not be left worse off in the end,” he said. “We hold this view because our share of the revenue has declined significantly in recent years due to the weak economic performance of the region.” Lesotho’s share of SACU revenue has been steadily declining over the preceding years due to a slowdown in the performance of the global economy. The 2016/2017 SACU revenue share is estimated to account for 32 of Lesotho’s budget – down from 42% in 2014/15.
Lesotho: CBL urges economic resilience (Lesotho Times)
The Central Bank of Lesotho chief [Governor Dr Retšelisitsoe] also said Lesotho needed to identify underlying opportunities that were being presented by the global economic slowdown. She said the current shift in the Chinese economy from industry to services was an opportunity that Lesotho could seize by building its production base so that manufacturing companies in China can consider relocating to Lesotho. Dr Matlanyane also called for value addition in the wool and mohair industry in order improve the country’s foreign currency earnings.
‘Modi in Africa’ – selected Tanzania and South Africa postings:
How Modi can help Africa achieve a blue economy (Daily O)
It is noteworthy that the accent on Africa’s maritime capacities aligns well with "Sagarmala", the prime minister’s mega-modernisation project, which involves coastal area development, port infrastructure building, connectivity and sea-based industrial capacities. As India strives to be a defence and logistical partner for Africa’s eastern states, Modi’s domestic prioritisation of maritime development signals a positive intent, which African governments are likely to read favourably. Meanwhile, Africa’s own efforts to improve its maritime economy and develop a harmonising vision for the subcontinent have been significant. In 2013, the AU announced an Integrated Maritime Strategy 2050 and "plan of action", outlining a blueprint to address the continent’s maritime challenges for sustainable development and competitiveness. The strategy, meant to systematically address Africa’s maritime vulnerabilities, marked a declaratory shift away from a period of self-imposed sea blindness. More significantly, it sought to integrate individual maritime strategies of Africa’s other security communities and develop a unique vision of comprehensive maritime development.
PM’s Africa trip: Concessional loans, hosting AfDB meet on agenda (The Hindu)
Discussions will also focus on India hosting for the first time the AfDB’s annual meeting during May 22-26, 2017, they said. Besides, India — having become a member of the African Development Fund in 1982 and of AfDB in 1983 — will be looking to host the AfDB annual meet in 2017 to ensure that, among other things, there are opportunities between Exim Bank of India and AfDB to co-finance large projects. India is keen to host the AfDB’s (52nd) annual meet in Ahmedabad (Gujarat) especially because the Vibrant Gujarat investor summits had attracted several African businesspersons and companies for doing business with Indian firms.
Tanzania: Indian PM ends tour on high economic note (Daily News)
During yesterday talks, India agreed to fund commercial production of peas in Tanzania. But, India too offers immense market for Tanzanian cashew nut, with over 90 per cent of the produce exported in raw form to India for processing. However, under the country's new industrialisation drive, which envisages among other things to add value to agricultural produce, Tanzania stands to benefit greatly from Indian expertise in agro-processing. "We have invited our Indian friends to come and assist us in sustainable exploitation of our resources, we want a win-win situation," President Magufuli said in Dar es Salaam yesterday.
The entourage of over 50 businesspeople that Premier Modi came with denotes the seriousness of the Indians to invest in Africa, especially in Tanzania. Already, India is the third, after Britain and China, largest source of foreign direct investments to Tanzania. According to records from the Tanzania Investment Centre, the centre has registered 426 Indian projects worth $2.4bn (about 5 trillion/-), with 54,176 new jobs on offer. Following the visit, more investments are expected from the Asian nation in the industrial sector, especially in sugar and medicine manufacturing that has attracted the interest of the visiting businesspeople. [India signs five agreements with Tanzania (The Hindu), Tanzania-India Business Forum inaugurated (Daily News)]
South Africa: SA investors looking to India (IOL)
South African defence, food retail, airlines, private security, and pharmaceutical companies are gearing up to take advantage of India’s lifting of its caps on foreign investment in these industries. President Jacob Zuma welcomed India’s change of policy in a joint statement on Friday with Indian Prime Minister Narendra Modi after they met in Pretoria. Zuma also invited Indian private sector investment into South Africa. The two leaders also discussed intensified collaboration in the sectors of defence, energy, agro-processing, human resource development, infrastructure, mining, renewable energy, science, technology, and innovation.
Related India-SA: Joint statement on bilateral issues, WTO, BRICS, IBSA, G20 (GCIS), Modi’s vision for India-SA partnership: an interview with the Prime Minister (IOL), President Jacob Zuma: South Africa-India Business Forum (GCIS)
Consultancy: Impact assessment of the East African harmonized standards on the business community (EABC)
Objective: to undertake an impact assessment of the EAC harmonized standards on 7 of the most 20 most traded product in the EAC region products on the overall business environment. The products are: alcoholic beverages, steel products, surface active agents, edible fats and oils, paper and paper board, tea and coffee
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