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tralac’s Daily News Selection
The selection: Wednesday, 5 October 2016
Mukhisa Kituyi: ‘African trade integration most exciting whenever it creates more jobs’ (UNCTAD)
Africa is widely noted for its low levels of intra-regional trade, but in fact the levels are much higher when North Africa is removed from the analysis, Dr Kituyi said. In East Africa, intra-regional trade is closer to 26%, the same level as in Latin America. Meanwhile, preparations continue for the CFTA, bringing together more than one billion people in 54 African countries with a combined gross domestic product of more than $3.4 trillion. Dr Kituyi said the CFTA was unlikely to happen in 2017 as originally planned, but the target had helped to move the project forward. "I had the privilege to visit 16 African presidents to talk to them about the CFTA and I am satisfied that a large number of the political leadership believes in the future and the need for African integration."
Financial Times 2016 Africa Summit: keynote address by Dr Akinwumi Adesina (AfDB)
Africa is still the second fastest growing destination in terms of foreign direct investments, second only to the Asia-Pacific region. Foreign direct investments inflows to Africa are projected to reach $55-60 billion in 2016. The value of announced FDI investments in Greenfield projects totaled $29bn in the first quarter of 2016 - 25% higher than the same period in 2015. The FDI inflows are also becoming more diversified. Of the $71.3bn of Greenfield announcements in 2015, the focus has mainly been in infrastructure such as electricity and transport ($37bn), manufacturing, food and beverages and automotives ($19bn). Africa must develop a “high industrial readiness index” by accelerating investments in other critical infrastructure such as roads, ports and rail, aviation and ICT, which will position it as a competitive destination of choice.
Jim Yong Kim: Automation could disrupt the pattern of traditional economic path in developing countries (LiveMint)
“In large parts of Africa, it is likely that technology could fundamentally disrupt this pattern. Research based on World Bank data has predicted that the proportion of jobs threatened in India by automation is 69%, in China it is 77% and in Ethiopia, the percentage of jobs threatened by automation is 85%,” he said. “Now, if this is true, and if these countries are going to lose these many jobs, we then have to understand what paths to economic growth will be available for these countries and then adapt our approach to infrastructure accordingly,” Kim said.
Featured trade policy commentaries:
Joshua Setipa: ‘Why AGOA remains critical to Lesotho’s development’ (AfDB): Lesotho is one of the countries that has benefitted and continues to benefit immensely from the AGOA programme, and in particular its textile and apparel industry. For Lesotho, the AGOA Forum came not too long after the country had gone through an eligibility review process for 2016, which determined its continued eligibility. But what would a withdrawal of AGOA benefits mean in practical terms for Lesotho? [The author is Lesotho’s Minister of Trade and Industry]
Faizel Ismail: ‘Why there’s an urgent need to revive the Doha round of trade talks’ (The Conversation): The only way to ensure that the world creates a legitimate and secure world trading system is to rebuild the WTO based on fair trade, balanced rules, inclusivity and transparency. The next opportunity to do this will be when trade ministers meet again at the 11th WTO Ministerial Conference at the end of 2017. They should gun to revitalise the Doha round. But how should we understand this failure? And how can the situation be resolved?
Dirk Willem te Velde: ‘Five win-win ways to ensure the UK’s new trade policy works for developing countries’ (ODI): Alongside its negotiation with the EU, the UK also has the opportunity to announce a series of win-win trade options in the mutual interest of the UK and the (poorest) developing countries, and this doesn’t have to wait until Brexit negotiations have concluded. Here are five win-wins that I presented at an ODI event at the Conservative Party Conference:
DRC flags an intention to join the EAC (Daily News)
President Magufuli revealed at the press briefing that President Kabila had asked him to allow his country to join the EAC, currently made up of six member states. “I have informed his Excellency President Kabila to follow procedures for his country to be admitted, it can start to participate as an observer. It is a known fact that DRC has been trading with many members of the EAC,” Dr Magufuli, who also doubles as Chairman of EAC, said. Once DRC submits formal application to join the EAC, President Magufuli pledged to submit the request to his fellow leaders of the EAC for deliberations.
Rwanda: Cabinet reshuffle sees new Ministry of Trade, Industry and EAC affairs (New Times)
The EAC affairs docket has also been scrapped as an independent ministry, and merged with the Ministry of Trade and Industry to form the Ministry of Trade, Industry and EAC affairs, with François Kanimba retained as the minister. Emmanuel Hategeka who had been Permanent Secretary @RwandaTrade for 7 years was appointed National Coordinator of Northern Corridor. Amb. Valentine Rugwabiza, former Minister for East African Community affairs, moves to New York as Rwanda’s Permanent Representative to the UN.
Zimbabwe: CZI, cross-border traders in exports deal (NewsDay)
The Zimbabwe Cross-Border Traders’ Association and the Confederation of Zimbabwe Industries are finalising a business linkage agreement which will put more focus on locally-produced goods with a potential to increase exports. The manufacturers will use the cross-border traders to market their goods outside the country. ZCBTA secretary-general Augustine Tawanda told NewsDay last week the deal would allow cross-border traders to reduce their dependency on imported goods. Tawanda said the small-scale traders would become “runners” for industry, marketing or exporting goods produced by local manufacturers.
Inaugural Zambezi Basin Stakeholders’ Forum (27-28 September, Windhoek: brochure (pdf), update
ECOWAS Court orders Dasuki’s release, imposes N15 million fine on Nigerian government (Premium Times)
The Court of the Economic Community of West African States, ECOWAS, on Tuesday declared the arrest and detention of former National Security Adviser, Sambo Dasuki, as unlawful and arbitrary. The court also held that the further arrest of Mr. Dasuki by government on November 4, after he was granted bail by a court of law, amounts to a mockery of democracy and the rule of law.
Ethiopia: 2016 Article IV Consultation (IMF)
Box 2 - Export dynamics and diversification: Over the past 15 years Ethiopia’s merchandise export revenue grew at 13.3% on average. This strong performance stems from volume expansion (15.1% annually), as prices decreased by 2.3% annually. However, export growth - both price and volume - remains highly volatile, due to concentration on agricultural commodities exposed to price and weather shocks. To reduce export volatility and increase revenue, policies aim at diversification across products and destination countries. Also, diversification has development spillovers, as less innovative firms follow in the wake of pioneer entrants. As a result, one third of 2015 export revenue comes from markets where Ethiopia was not present 15 years ago. FDI has flowed to horticulture and light manufacturing, and non-traditional exports account for more than 10% of total exports. For example, flower exports expanded from $440,000 and 5 destinations in 2004 to $225 million and 59 destinations now.
Sudan: 2016 Article IV Consultation (IMF)
Box 1 - Tax revenue mobilization: Sudan’s tax revenues are among the lowest in low- and lower-middle income countries. Tax revenues represented only 6.3% of GDP compared to 12% of GDP on average in fragile LLMICs in 1995–2015. With little improvement over the period, this gap has been increasing. Tax collections have yet to adjust to the loss of oil revenues following the secession of South Sudan. Oil revenues, which averaged 8% of GDP in 1995–2011, financed the bulk of government expenditure and made it unnecessary to raise tax collections. After the secession, oil revenues (including transit fees and transfers from South Sudan) dropped to 2.2% of GDP in 2012–15, and are expected to drop further to less than 1% of GDP in 2016 on account of low global oil prices. At the same time, despite efforts to strengthen tax administration, tax revenues increased only marginally in percent of GDP in 2015 due to low imports and an overvalued official exchange rate. This limited the available fiscal space and constrained pro-growth investment and poverty-reducing social spending. Sudan’s tax revenue is lower than expected at its income level.
Egypt to join TIR (IRU)
Egypt has endorsed the TIR system to boost its regional and international trade flows. Following a series of meetings held by IRU in Cairo, Egypt’s Technical Committee for Trade and Transport Facilitation has unanimously pledged to begin preparation for accession to TIR.
Egypt, South Africa sign MoU on investment cooperation (ECN)
South Africa and Egypt have committed to boost investment and trade between the two countries. The commitment was made in Egypt during the signing of a MoU on investment cooperation between Investment South Africa and its counterpart, General Authority of Investment and Free Zones. The MOU is designed to conduct an effective and efficient programme geared towards the promotion and facilitation of cooperation of investment activity within high valued added sectors. The MoU was signed by Ambassador Sadick Jaffer on behalf of Investment SA and Chief Executive officer of GAFI, Mr Mohamed Khodeir.
Making power affordable for Africa and viable for its utilities (World Bank)
Examination of the financial viability of power sectors in 39 countries in Sub-Saharan Africa shows that only two countries have a financially viable power sector, and only 19 cover operating expenditures. Quasi-fiscal deficits average 1.5% of gross domestic product. If operational inefficiencies can be eliminated, power sectors in 13 countries become financially viable. In the remaining two-thirds of the countries, tariffs will likely have to be increased even after attaining benchmark operational efficiency.
The cost of air pollution in Africa (pdf, OECD)
First, air pollution is of significant and increasing concern for the continent. Building on the methodology of the OECD Environment Directorate for OECD countries, China and India, the paper provides new, critical evidence on the cost of premature deaths in Africa attributable to air pollution. Between 1990 to 2013, total annual deaths from ambient particulate matter pollution (APMP, mostly caused by road transport, power generation or industry) rose by 36% to around 250 000, while deaths from household air pollution (HAP, caused by polluting forms of domestic energy use) rose by 18%, from a higher base, to well over 450 000. For Africa as a whole, Roy estimates that the economic cost of premature deaths caused by each of these sources of pollution surpasses those associated with unsafe sanitation or underweight children. Second, the human and economic costs of air pollution might explode without bold policy changes in Africa’s urbanisation policies. This makes it all the harder to reach regional and global sustainable development goals. [The analyst: Rana Roy] [The cost of air pollution: strengthening the economic case for action (World Bank)]
Competition and innovation in land transport (pdf, OECD)
The main trend in transportation markets at present is their increasing digitalisation, which is changing the way transport services are offered. The sourcing of data is evolving quickly, largely via the proliferation of handheld devices, such as smartphones, and automobile-based devices (e.g. portable navigation devices, in-vehicle navigation devices and connected vehicles). Around 80% of vehicles in Europe and North America are expected to be two-way connected by 2018.4 Mobile sensor-generated data has already given rise to the development of new business models. In 2015, approximately three billion apps relied on location-based data. Competition agencies are likely to face a number of challenges brought about by these developments.
WTO panel to discuss India’s paper on trade facilitation agreement in services on Oct 6
The consequences of the global trade slump
UNCTAD: Estimating the impact of trade specialization and trade policy on poverty in developing countries
Said Adejumobi: Africa development challenges are heavily under-researched
East Asia and Pacific Economic Update (pdf)
Who are the poor in the developing world?
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