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tralac’s Daily News Selection
The selection: Tuesday, 6 September 2016
G20 Leaders’ Communiqué: inclusive and interconnected development
We launch the G20 Initiative on Supporting Industrialization in Africa and LDCs to strengthen their inclusive growth and development potential through voluntary policy options including:
We will continue our work on addressing cross-border financial flows derived from illicit activities, including deliberate trade misinvoicing, which hampers the mobilization of domestic resources for development, and welcome the communication and coordination with the World Customs Organization for a study report in this regard following the Hangzhou Summit.
We acknowledge the important role of inclusive business in development, and welcome the establishment of the G20 Global Platform on Inclusive Business and its future actions. We welcome the G20 Inclusive Business Report for the 2016 Summit. [Full set of G20 China reports]
Industrialization in Africa and Least Developed Countries: boosting growth, creating jobs, promoting inclusiveness and sustainability (UNIDO)
The report was prepared [by UNIDO] at the request of the G20 Development Working Group. The report recommends (pdf) that the G20 group of leading economies promotes inclusive and sustainable structural transformation and industrialization in Africa and LDCs through various mechanisms, such as knowledge-sharing platforms for peer-to-peer learning; the sharing best of practices, policies, measures and guiding tools; and multi-stakeholder discussions. Other recommendations include:
Extract from Chapter 3 – Main challenges to industrialization: According to the most recent calculations available, local value added represented only about 9.5% of the total value added in intra-African trade in 2011. In other words, most of the value added in intraregional trade was imported rather than created locally. This matches the lack of exports of manufacturing intermediates in the region. Extract from Chapter 6: National policy measures and global collective actions – an agenda for action: Task international organizations to work with Africa and LDCs to assess the impact of trade facilitation reforms and trade preferences, including for non-traditional exports, and propose mechanisms that will make such preferences commercially meaningful to poor countries. Examine the impact of instruments such as duty drawbacks, tariff exemptions and VAT reimbursement schemes and see how these can be more effective. Discuss successful approaches to implement trade facilitation reforms through trade agreements between African countries. Facilitate knowledge sharing and peer learning on how best to leverage regional trade agreements for deepening regional integration and division of labour.
Africa Agriculture Status Report 2016: progress towards African agricultural transfor-mation (AGRA)
The 2016 Agriculture Status Report has as its main objective to: (i) highlight major trends in African agriculture, the drivers of those trends, and the emerging challenges that Africa’s food systems are facing in the 21st century; (ii) identify policies and programs that can support the movement of Africa’s farming systems from subsistence-oriented towards more commercialized farming systems that can raise productivity, increase incomes, generate employment and contribute to economic growth; (iii) identify areas that enable better targeting of investment resources to increase agriculture productivity; (iv) identify the necessary conditions, appropriate technologies, and institutions that can propel and catalyze African agricultural transformation; (v) examine the past and the present role of public and private sector investment in agriculture, and the success factors that can be scaled up to accelerate transformation; and (vi) explore how agricultural transformation can contribute to solving the reality of rural poverty, low productivity, food insecurity, malnutrition, unemployment, and lower income among the population in countries in sub-Saharan Africa. These objectives have been addressed in the 11 chapters of the Report.
Global Education Monitoring Report: Education for people and planet (UNESCO)
There is also an urgent need for education systems to impart higher skills aligned with the demands of growing economies, where many jobs are being automated and skill sets are changing fast. On current trends, by 2020, there will be 40 million too few workers with tertiary education relative to demand. The Report shows this change is vital: achieving universal upper secondary education by 2030 in low income countries would lift 60 million out of poverty by 2050. Inequality in education, interacting with wider disparities, heightens the risk of violence and conflict. Across 22 countries in sub-Saharan Africa, regions that have very low average education had a 50% chance of experiencing conflict within 21 years. The Report calls on governments to start taking inequalities in education seriously, tracking them by collecting information directly from families. [2016 GEM Report Background Papers]
The Global African Investment Summit: Kagame, Museveni push for more intra-Africa trade, investment
The two leaders, speaking at The Global African Investment Summit, said African countries need to break barriers and begin trading more amongst themselves if the continent must meet its development aspiration and live up to the “Africa Rising” adage. Both leaders decried slow implementation of development projects and bureaucratic tendencies which discourage foreign direct investments. “Progress in any endeavour is about valuing time very highly and using it well. We know integration is profoundly in Africa’s interest. What remains is to be doing what is necessary to make it reality,” President Kagame said. “The slow pace of implementation is caused by failing to appreciate that speed is a driver of wealth creation. It is not too much to say that the habit of tolerating endless delay is one of the major causes of poverty."
Economic competition delaying EAC integration - Kenyan MPs (Daily Nation)
Members of the National Assembly committee on regional integration said some countries in the region are at a “lower production level” than others. The committee’s vice-chairman, Christopher Nakuleu, said EAC member states need to address the issue of the economic status of the countries to speed up integration. “Before the integration was introduced, countries were operating on different production levels. For instance, the GDP of Burundi is 11 times less than [that of] Kenya. This disparity poses a major challenge,” Mr Nakuleu said. They observed that past perceptions that led to the collapse of the EAC in 1977 have also contributed to lack of commitment to the integration among some member states.
Marcelo Giugale: Can services drive Africa’s development? (Huffington Post)
All this has, of course, a not-so-rosy side. Exporting services sometimes means exporting your best and most dynamic people—those who you need to build your country. Yes, they send remittances back home. But the “brain-drain” is large and painful. By some calculations, one quarter of doctors trained in Africa eventually migrate to developed countries. Something similar probably happens to nurses, architects, and academics. But blocking their way out with legislation and bureaucracy is a self-defeating proposition - it just pushes migrants underground and leaves them unprotected abroad. So, with all its pros and cons, is trade in services the future engine of Africa’s development? Probably not the engine, but one of them, and one that can power up others—agriculture, industry, and natural-resource extraction will do better if cross-border services do better.
Rick Rowden: ‘Tanzania, Nigeria and the EU: free trade discord' (This is Africa)
The main reason cited by Tanzanian and Nigerian officials for rejecting the EPAs – that they would block industrialisation – are consistent with these historical lessons. Not only do officials worry that the EPA’s proposed tariff reductions would pose a drain on vital revenues needed for annual budgets, but both countries are concerned that dropping tariffs would destroy local industries – a view supported by research by think tanks such as the Wilson Centre. Tanzania also points to a rule in the proposed EPA that would outlaw its use of export taxes on raw materials. This would deny them a standard industrial policy that was used by all of the rich countries to keep raw materials at home and available for use by domestic manufacturers. For example, Tanzania banned exports of mineral sands from gold mining on August 1. This is permitted under WTO rules, but would not be allowed under the EPA.
Namibia: A revised outlook is not a downgrade – Schlettwein (New Era)
Said Schlettwein: “One of the major factors in this ratings opinion was the elevated level of public deficit to GDP observed in the 2015/16 financial year. This was chiefly the result of actual government revenue coming in below its target. I agree with Fitch when they identify ‘a secular decline in SACU revenues’ as one of the key challenges to Namibia’s public finances. SACU revenues have long constituted a large part of government revenue – around 30% in recent years. Many are estimating that the South African economy is bordering on a recession and it is an unavoidable reality that a weaker South Africa means weaker government revenue in Namibia.” He added that government revenue growth has been constrained by persistently low global commodity prices (particularly in the diamond and uranium industries) and spillovers from the slowing Angolan economy, which curtails consumer demand in Namibia. “In this more challenging environment, one simply cannot expect to see the strong revenue growth of the 2012-2014 period repeated in the coming few years,” Schlettwein cautioned. [Presidency responds to negative Fitch rating]
Namibia's exports need to grow 67% for country to become a net exporter (New Era)
Frans Uusiku from Simonis Storm Securities noted that it is clear that the cost of Namibian imposts is more sensitive to exchange rate fluctuation than the export revenue: 0.84 for imports and 0.79 for exports. He says this is partly because the country imports mostly soft commodities (e.g. food), while its exports are mainly dominated by hard commodities (e.g. industrial inputs). Namibia’s export profile is highly characterised by hard commodities, which are traded in US Dollars. “This makes the weaker ZAR more favourable for Namibia’s export sector and also for rebalancing the current account. Therefore, if we consider the 2015 import and export levels (N$ 97.2bn and N$58.2bn, respectively) as a benchmark, the ideal exchange rate that would warrant a positive trade balance should be at least 1.7 times the prevailing exchange rate (R14.07/USD). This would bring it to R23.91/USD,” he explained.
How Rwanda can achieve flower exports target (New Era)
The Rwamagana District based flower park project plans to export flowers by the end of the year. Emmanuel Hategeka, the permanent secretary at the Ministry of Trade and Industry, said the country is counting on this particular project to double exports to global markets including the European Union and other destinations worldwide. This, according Hategeka, will help keep the export sector competitive despite a fall in global commodity prices which has affected specifically Rwanda’s mining industry. The idea is to be able to increase flower production to at least 44,000 tonnes per annum that can generate export receipts of up to $140million by 2020
South Africa: GDP, 2nd Quarter 2016 (pdf, Stats SA)
Exports and imports of goods and services: In the second quarter net exports of R5bn were reported. Exports of goods and services increased by 18,1%. Exports of precious metals and transport equipment were largely responsible for the increase. Imports of goods and services decreased by 5,1%. Imports of machinery and electrical equipment were largely responsible for the decrease.
South Africa: Politicians should do rand crash course (Business Day)
The Rand is one of the most highly traded currencies in the world’s $4-trillion-a-day foreign exchange market. John Cairns, a currency strategist at Rand Merchant Bank, estimates that average daily onshore and offshore trade in the Rand is in the region of $50bn. Contrast that to the position of SA’s gross gold and foreign exchange reserves at the end of March 2016: in comparison they were a relatively paltry $47bn. In other words, the country’s entire pot of reserves is less than the daily trade in its currency.
A selection of G20 articles, reviews:
Olusegun Obasanjo: Africa and the G20’s moment of truth (Project Syndicate)
Robert Kappel: The G20 summit - 'a disappointment for Africa' (DW)
Developing states need greater access to global markets, Jacob Zuma tells G20 (Business Day)
President Xi Jinping: remarks at closing ceremony
Narendra Modi takes black money fight to G20 (Livemint)
Bill Gates: We are confident about the role of China in driving global development
G20 wraps with world leaders agreeing to use trade to boost global economy (CBC News)
Lagarde urges action to deliver on G20’s Hangzhou commitments (IMF)
Calling for G20 support, Ban stresses importance of financing tools for 2030 Goals (UN)
Simon Evenett, Johannes Fritz: Investment and protectionism: a pre-G20 summit briefing (Vox)
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