News
tralac’s Daily News Selection
The selection: Thursday, 8 September 2016
Featured trade infographics:
@StanChart - China’s commodity demand drove trade with Africa. Expect diversification further supporting economic recovery.
@UNUWIDER - Countries where extractives are over 30% of exports. Like it or not dependency is increasing.
The EAC Heads of State summit takes place today in Dar es Salaam. Selected previews:
EAC-Europe deal stalemate calls into question regional integration (The EastAfrican): The EAC’s solidarity came into question on Monday during the Council of Ministers meeting, when member states were accused for prioritising national interests ahead of regional integration. This was in connection to the Economic Partnership Agreement with the European Union that the economic bloc was expected to sign, which some countries have now opposed. On the one hand, Rwanda and Kenya were criticised for breaching a proposal made earlier in May, requesting EAC partner states to sign the EPA on the same date in order to project the region as a functional Customs Union. On the other hand, Tanzania and Burundi were slammed for declining to sign the deal after they had been informed that delays in its signing will potentially hamper the bloc’s exports to the EU. Tanzania and Burundi were also criticised for being indifferent to Kenya’s, after it had been pointed out that the country would suffer more than others EAC states if the EPA is not signed urgently.
Tanzania backs out of EAC deal with EU over Brexit (IPPMedia): Minister for Foreign Affairs, East Africa, Regional and International Cooperation, Dr Augustine Mahiga told journalists yesterday in Dar es Salaam that Tanzania wanted its industrial economy policy be included in the agreement and the exit of Britain from EU be discussed before signing the agreement. He explained that another issue was whether signing EPA would not affect other trade agreements within the EAC especially the EAC Single Customs Territory. “We want to ensure that treaties within the EAC treaties were safeguarded unless we decide otherwise such as making changes but this should be through official meetings within the block,’’ he further explained.
Secrecy clouds proposed EAC trade pact with Europe (Business Daily): As the haggling continues, the region’s citizens remain helpless bystanders. A lack of mass participation has relegated public discourse to a two-side showdown between Tanzania — led by former President Benjamin Mkapa — and Kenya (read flower industry). Mr Mkapa, board chairperson of South Centre, a regional economic think-tank, maintains that, among other things, EAC stands to lose Sh25.1 billion per year in tax revenues if it signs EPA to cushion Kenya from EU taxes totalling Sh10 billion a year. According to Kenya’s EAC ministry, the EAC states will gradually open up 82.6 per cent of its total trade European Union firms in 25 years under EPA. The previous drafts had proposed a 15-year period for trade liberalisation.
Launching, 15 September - Lions on the move II: Six years ago, McKinsey Global Institute launched a groundbreaking report on Africa: Lions on the move - the progress and potential of African economies. On 15 September, we’re releasing brand-new research to refresh our perspective on Africa.
Credit on the cusp: strengthening credit markets for upward mobility in Africa (pdf, FSD)
According to the report, a new class of consumers referred to as the “Cusp Group” is emerging in sub-Saharan Africa. This group accounts for 23% of sub-Saharan Africa’s population, covering a segment of active earners that straddle the formal and informal worlds and get by on $2-$5 per day. For this group, healthy credit markets could expand opportunity and enable upward mobility, helping to build a true middle class. However, for this to happen, credit needs to expand in healthy ways. Commenting on the research, Juliet Munro, the Director, Inclusive Programmes at FSD Africa says: "While ‘Africa Rising’ told an optimistic story, our research is showing a more nuanced reality. What we are seeing is not an emerging middle class but rather an expanding group who are living on the “cusp” between poverty and the middle class. They have emerged from absolute poverty, but they still lack the kinds of assets, job security, purchasing power and stability we associate with middle class livelihoods. In Africa’s political and economic discourse, this ‘cusp’ group has been overlooked, drowned out by the ‘Africa Rising’ narrative."
Dr Patrick Njoroge: ‘Joint action needed to stop illicit cash flows’ (Business Daily)
Weak banking regulatory and supervisory frameworks have largely hindered the effective implementation of initiatives aimed at reducing illicit financial flows from Africa. This is reflected at the national level, given that most African countries are yet to fully adopt and implement the 2012 Financial Action Taskforce recommendations, the international standards on combating money laundering and the financing of terrorism. I would therefore urge the continent’s legislatures to consider implementing changes to our national laws that would enhance our national registries, particularly as relates to the obtaining and sharing of beneficial ownership information. In the past year, the Central Bank of Kenya has adopted several initiatives to foster transparency in the Kenyan financial system. [The author is Central Bank of Kenya governor]
Invest in Africa Forum: China creates company with $500m initial capital for infrastructure in Africa (Ghana Business News)
The Chinese government announced at the Second Invest in Africa Forum a $500m initial capitalization, with the creation of the China Overseas Infrastructure Development and Investment Corporation Limited (COIDIC). According to a press release the COIDIC is a for-profit company that invests in and manages projects from concept to feasibility studies, financial close and commercial operations. “Its founding shareholders include: China Development Bank’s China-Africa Development Fund (CADFund); China Gezhouba Group Overseas Investments Co. Ltd; China Telecom Global Limited; Changjiang Survey, Planning, Design and Research Co., Ltd (CISPDR); China ENFI Engineering Corporation; and HCIG Energy Investment Co., Ltd. In 2017 COIDIC expects to add more shareholders,” it said.
Mihir Sharma: ‘Japan’s aid needs more imagination’ (Bloomberg)
Shinzo Abe’s recent promise of $30bn in financing to African countries over the next three years shouldn’t have come as a great surprise. Quietly, over decades, Japan has become the leading financier of growth-supporting infrastructure across large swathes of the developing world. Perhaps too quietly. In fact, few people outside the country appreciate the scope of Japan’s overseas development assistance. In several South and Southeast Asian countries, the country is the largest provider of foreign assistance and low-cost loans, larger than the U.S. or the World Bank. Japanese development aid to India, for example, totaled $1.4bn in 2013 - almost double Germany’s effort. (American aid to India that year was only $100m.) Japan occupies a similarly dominant position in concessional lending to Indonesia, Vietnam and Myanmar.
Triangular co-operation: findings from a 2015 survey (pdf, OECD)
Detailed information was obtained on over 400 triangular co-operation programmes, projects and activities from 60 respondents. Based on the 60 responses received, the most active countries in triangular co-operation were Japan, Chile, Brazil, Norway, Spain, Guatemala, Germany, South Africa, Mexico, and Colombia (with 20 to 160 activities each). The majority of triangular co-operation projects can be found in Latin America and the Caribbean (LAC), followed by Africa, Asia-Pacific, the Middle East and North Africa region and Eastern Europe. Triangular co-operation between countries in the same region is still the most common arrangement, with 55% of all reported projects being implemented in Latin America and the Caribbean, 14% of projects in Africa and 13% in Asia-Pacific. In addition, 18% of the triangular co-operation projects reported involved more than one region. [Download the report, in French]
SADC’s ICT sector: outcome statement from Mauritius (pdf)
The ICT SCOM noted that completion of the SADC Regional and National Integrated Broadband Infrastructure Study and the resulting proposed baskets of ICT infrastructure projects responding to the infrastructure gaps identified in the SADC Region, which Member States can now pursue. The SADC Secretariat will convene the SADC Ministers’ Meeting and the SADC ICT Investment Conference in October 2016 in Swaziland, where the latter would further promote ICT infrastructure projects for both the RIDMP and the recently revised RISDP to potential investors and partners.
India-Namibia joint trade committee: statement by India’s Commerce Ministry
On the issue of bilateral trade, it was shared that during 2015, India was the seventh largest country from whom Namibia sourced its imports. The Indian side conveyed to the Namibian side that leather, Gems and Jewellery, food processing products and engineering goods like electrical and mechanical appliances are sectors that India can cooperate with Namibia to meet Namibia’s requirements. Metals and mineral from Namibia was sought for the Indian requirement. The Namibian side encouraged joint ventures in mining and mineral exploration with Epangelo Mining and Exploration company, trade of precious and semi-precious gems and stones was discussed. Namibia expressed interest in development of skills through training in the fields of gems and jewellery to encourage local value addition and employment opportunity in Namibia. Namibia also expressed willingness to utilise $100m of Line of Credit for them.
Lesotho: Free Basotho Movement wants Lesotho to merge with SA (The Citizen)
The Free Movement of Basotho wants Lesotho to be incorporated into South Africa, its leader Letsema Morolong said on Wednesday. “Our lawyers have wrote [a letter] to SADC calling for Lesotho to have a referendum where Basotho will vote whether they want to be part of South Africa,” he told supporters in Rustenburg. He said the majority of Basotho regarded themselves as South Africa citizens. Secretary of the Free Basotho Movement Mokhobo Mokhobo said they also wanted Basotho to have dual citizenship. [Lesotho Special Permit: Ministerial briefing]
South Africa: State-business relationships in the formulation, implementation of industrial policy (Mail and Guardian)
Text of the Alice Amsden Memorial Lecture, delivered by Minister Malusi Gigaba: The consequence of the above dynamics is that many large companies, which can be the corner-stone of our industrial policy, are completely out of kilter with the national interest. This is aggravated by a trust impasse between stakeholders. This, I think, reflects the growing political fragmentation as the gaps in the 1994 political settlement become apparent and points to the need for a revisiting of critical elements of the political settlement to create a greater alignment between large business and of the state. However, while necessary, this will be an extremely complex process, and our industrialisation project cannot wait.[Industrial Parks Revitalization Programme: dti’s parliamentary presentation (pdf)]
Kenya Economic Report 2016 (pdf, KIPPRA)
Trade and Foreign Policy: The domestic retail and wholesale trade sector has been evolving with greater concentration of firms as well as developments in electronic commerce, making Kenya a regional business hub. However, there is need to strengthen and rationalize the regulatory framework, taking into account the roles of the national and county governments in order to increase the sector’s contribution to GDP and wage employment. To expand trade, there is need to improve the commercial environment by addressing domestic constraints to international business development, and through projects that could facilitate regional sharing of production, as well as diversification into new export lines.
#AGRF2016 in Nairobi: Uhuru Kenyatta’s opening speech (GoK)
In fact, I am certain that together we can and will make bigger pledges and bolder commitments. And it is in the spirit of that conviction that, today I commit the Kenya Government to invest KSh2 billion, equivalent to US Dollar 200 million over the next five years. This support is intended to enable 150,000 young farmers and agriculture entrepreneurs gain access to markets, finance and insurance, improving access to modern machinery and other agriculture technology, and increasing value addition and agro-processing in our country. This commitment is just one way, our way, of actualizing the spirit of the Malabo declaration.
USAID funding to spark ‘new era’ in agricultural data collection (FAO)
USAID and FAO have signed a $15m agreement aimed at boosting the capacity of developing countries to track key agricultural data -information that is essential to good policymaking and that will help track progress toward achieving the SDGs. The USAID donation will cover the first phase of an FAO-led project that will run from 2016 to 2021 starting with pilot efforts in four developing countries, two in Sub-Saharan Africa, one in Latin America and one in Asia. A dialogue is under way with eligible countries. The goal: To design and implement a new and cost-effective approach to agricultural data collection in developing world contexts, known as agricultural integrated surveys. [IFAD’s Kanayo Nwanze awarded the First Africa Food Prize]
A food-secure 2030: a global vision and call to action (Feed the Future)
In this paper, the US Government agencies charged with strengthening global food security call on the international community - particularly country leaders and donors - to build upon unprecedented recent progress and continue the fight against global food insecurity and malnutrition. The vision for a food-secure 2030 cannot be achieved without steadfast country leadership, political will and commitment to results, evidence-based action and accountability. Indeed, progress thus far has been underpinned by this leadership. When developing countries own, lead and guide these cross-sectoral, whole-of-government efforts, it ensures sustained success. Strong country leadership includes:
A new tool for monitoring global value chains (World Bank Blog)
The World Bank Group’s World Integrated Trade System (WITS) offers a new tool for analyzing countries’ participation in three key global value chains: apparel and footwear, electronics, and automotive goods. This new data tool will help researchers by enabling the tracking of GVCs at the sector and product level, revealing their linkages at different stages of the production process and across countries and regions. It differs from the widely-used approach of tracking GVCs using value-added data derived from global input-output tables in that it provides more disaggregated information for goods, is easier to implement for small countries, and is more accessible mathematically.
Today’s Quick Links:
The Global African Investment Summit postscript: What can advance intra-Africa trade?
SADC air traffic controllers meeting starts in Luanda
Nigeria’s four major airports must be concessioned – Aviation Minister
Angola’s SE4All Action Agenda and Investment Prospectus: report on Luanda meeting
Nearly 60 stock exchanges sign up to UNCTAD sustainability initiative
South Africa’s tourism minister appoints expert team to improve tourism planning
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