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tralac’s Daily News Selection
The selection: Wednesday, 8 June 2016
A reminder that today is Budget Day in East Africa: selected trade and integration highlights will feature in tomorrow’s selection.
Today is also Blue Economy Day: commentaries by Carlos Lopes, ‘Africa’s Blue Economy: an opportunity not to be missed’ (OECD), Timothy Walker, ‘Turning sunken costs into sunken treasure’ (ISS)
How to unlock transit challenges along the main trade corridors in West Africa (ECOWAS)
ECOWAS and the WBG co-hosted a technical workshop in Ghana from 7-8 June, under the Improved and Facilitated Trade in West Africa Project. The project aims to unlock transit challenges across key trade corridors in West Africa. Over 40 participants, including representatives from the ECOWAS and the West Africa Economic Monetary Union Commissions, the EU, the WBG, and stakeholders from the public and private sectors along the three main trade corridors in Benin, Burkina Faso, Côte d’Ivoire, Niger, and Ghana, attended the two-day event. The Improved and Facilitated Trade in West Africa Project is a four-year initiative, launched in November 2014.
Lack of political will impeding regional integration – ECOWAS Trade Director (GBN)
The Director of Trade at the ECOWAS Commission, Dr Gbenga Obideyi says lack of political will is impeding regional integration progress in the Economic Community of West African States. He said while African leaders do not shy away from putting pen to paper on regional integration interventions, reluctance sets in when it is time for implementation and technocrats appear to be inefficient in their work. “When a president of a country signs an agreement, he represents the highest authority of the land but when it comes to implementation then there is some reluctance,” Dr Obideyi told journalists at the opening of a technical workshop in Accra on the Improved and Facilitated Trade in West Africa Project.
NANTS president appointed to ECOWAS task force on ETLS (Leadership)
ECOWAS has appointed Ken Ukaoha, President of National Association of Nigerian Traders, as a member of a Task Force Committee of Eminent Persons on the implementation of ECOWAS Protocol on Free Movement of persons, goods and services and the ECOWAS Trade Liberalization Scheme. It is led by the former President of the Republic of Niger.
New EABC chairman, Burundi's Econie Nijimbere, promises to tackle NTBs (New Vision)
Rwanda's Christophe Bazivamo is named as the EAC's Deputy Secretary General (New Times)
IGAD consultation meeting on diaspora engagement (IGAD)
Global economic prospects: Sub-Saharan Africa growth (World Bank)
Growth in Sub-Saharan Africa is projected to slow again in 2016, to 2.5%, down from an estimated 3.0% in 2015. The forecast is 1.7% points lower than the January 2016 projections. Low commodity prices, tightening global financial conditions, and drought in parts of the region will continue to weigh on growth this year. The recovery is expected to strengthen to an average of 4.1% in 2017-18, driven by a gradual improvement in the region’s largest economies and as commodity prices stabilize. Nonetheless, risks to the outlook remain tilted to the downside, including a sharper-than-expected slowdown in major trading partners, further decline in commodity prices, delays in adjusting to the negative terms-of-trade shocks, worsening drought conditions, and political and security uncertainties. Key policy challenges include adjusting to an era of low commodity prices, addressing economic vulnerabilities, and developing new sources of growth. [Download the SSA chapter]
Featured, extract on government debt, from Box 2.6.1 - Macroeconomic effects of low commodity prices in Sub-Saharan Africa: As a result of the limited fiscal adjustment, public debt burdens have risen. The median government debt is estimated at 48½ percent of GDP in 2015, up from 36½ percent of GDP in 2014, with significant country-level variations. Public debt rose marginally in Nigeria in relation to GDP. However, a number of other oil exporters (Angola, Republic of Congo) saw a large increase in their public debt/GDP ratio, exceeding 15 percentage points in the case of Angola. The increase in debt burdens was more moderate in non-energy mineral exporting countries, with the exceptions of Niger, Sierra Leone, and Zimbabwe where the public debt/GDP ratio rose by more than 10 percentage points. Kenya, Mozambique, and Tanzania saw their debt levels increased by 5 percentage points on average. In several countries (Kenya, Niger), the increase in government debt reflected rising infrastructure spending that should support potential growth over the medium term. In others, exchange rate depreciations (Tanzania, Zimbabwe) also contributed to the rising debt levels. Overall debt ratios in 2015 were well above levels in 2011-13, with both external and domestic debt contributing to the increase in public debt. Debt sustainability assessments deteriorated in a number of countries (World Bank 2016m).
South Africa: Q1 GDP report (StatsSA)
A sharp contraction in mining tipped economic growth into negative territory in the first quarter of 2016. South Africa’s economy shrank by 1,2% quarter-on-quarter (seasonally adjusted and annualised), according to the latest GDP figures (pdf) published by Stats SA. Year-on-year growth for the same quarter was -0,2%. The mining industry contributed the most to the 1,2% quarter-on-quarter fall. Lower production in the mining of ‘other’ metal ores, largely platinum group metals and iron ore, saw the industry contract by 18,1%. [Gauteng province hosts economic Indaba]
SA firms to lose out on dollar earnings from Zim (Fin24)
South African companies are set to lose out on their US dollar earnings from Zimbabwe after the southern African country’s central bank said it will authorise payment of foreign suppliers in their own currencies only. On Monday the country’s biggest grocery retailer OK Zimbabwe told a results briefing that it will no longer pay its South African suppliers in dollars but in rand. CEO Willard Zireva said while the retailer procured goods mainly in US dollars in its 2016 financial year, this “is changing now under new settlements arrangement and the main currency for procurements will be ZAR going forward”. With around 60% of Zimbabwe’s imports coming from South Africa, the move will have a significant impact on the dollar earnings of most South African companies with a huge market in Zimbabwe [OK Zimbabwe profits plunge 90% on weak demand, Zimbabwe: country profile (pdf, AfDB)
Malawi’s third Trade Policy Review: minutes of the meeting (WTO)
Focusing on specific trade sectors, Members had, at the last TPR meeting [in 2010], asked how Malawi would address the questions of chronic electricity shortages, and strike a balance between subsidizing fertilizers and investing in the long-term development of the agriculture sector. These concerns appeared to be still valid today. Furthermore, severe weather conditions were now posing a serious threat to food security, despite the improvements made in this regard in previous years. All these were issues that merited Members’ attention. Indeed, some of them had been raised again in Members’ advance questions this time. In addition, Members had asked about the progress that Malawi was making in negotiating RTAs and ratifying the Trade Facilitation Agreement; as well as its plans to improve adherence to WTO notification requirements.
DRC: Product and market concentration and the vulnerability to exogenous shocks (World Bank)
This paper uses UNCTAD trade data to analyze the DRC's export patterns for the period 1960-2014. The data confirm that the country's exports remain highly concentrated. The product concentration on minerals is high and reaches exceptional levels. The geographic concentration is also high, while there is a shift in destinations. Hence, EU27, traditionally the main market destination for the Democratic Republic of Congo, lost its importance to China for most of the past decade. This trend continued to increase in the past few years from 2010 to 2013. The clear prevalence of commodity products within the Democratic Republic of Congo's exports and the higher exposure to the Chinese economic cycle are sources of vulnerability. [The authors: Chadi Bou Habib; Ephraim Kebede]
World Trade Symposium: Roberto Azevêdo’s keynote address (WTO)
Trade and globalisation in the 21st century: the path to greater inclusion: “I wonder what Ricardo would make of the situation today? This is a fraught time for global trade. In many countries, trade is under siege, raising the spectre of protectionism. Alongside the anti-trade rhetoric, there is the notion that we have reached “peak trade” or that globalisation has ground to a halt. In the current economic climate, I think we should be seeking to use trade as a tool to drive growth, development and job creation, and this means addressing a couple of misconceptions. [WTO chief says post-Brexit trade talks must start from scratch (The Guardian), PIE's Brexit scenarios for June 24]
USTR Michael Froman: ‘Windmills and world trade’ (LiveMint)
Forty-four countries under the WTO are working towards an Environmental Goods Agreement (EGA) that would eliminate tariffs on environmentally friendly goods such as solar and wind technologies, water filtration systems and air-pollution control equipment. This effort is among the top issues the US and China will discuss next week during our annual Strategic and Economic Dialogue in Beijing. Further progress in the EGA negotiations hinges on constructive Chinese engagement.
Mood on international trade sombre ahead of UNCTAD 14 (Voice of America)
UNCTAD Secretary-General Mukhisa Kituyi said the gloss is rubbing off the growing optimism of recent years that Africa was rising, while Asia retained its position as an economic powerhouse and other regions were benefiting from a general uptick in the global economy. He said these regions now are largely beset by stagnation as economies slow down. He said low employment and rising debt are leading to the most rapid expansion of economic migrants from sub-Saharan Africa in 70 years. “In the developed world, we are seeing a number of things...
World about to enter new trade era, report concludes (Public Finance International)
The world is about to undergo a “transition to a new order” in global trade with the Asian and African regions accruing increasing power while Europe declines, a joint-report by the Dubai Multi Commodities Centre, Future Agenda and the Centre for Economics and Business Research has said. The report collected opinions from hundreds of industry leaders, academics and experts from around the world, many of whom shared the view that the world is at the end of an era in global trade as western markets are overshadowed by the opportunities from emerging economies. “New interests, new trading routes, new products and services are all emerging,” the report said. “The next decade will see the post-war routes gradually being eclipsed by the power of the Indian Ocean region.”
African public financial governance: regional institutional support project to support ATAF, CABRI (pdf, AfDB)
The Project will contribute to knowledge building through peer learnings, networking, skills and knowledge transfer, and partnership among the tax and budget officials in the member countries. The establishment of the PFM Knowledge Hub will play a critical role and serve as an effective platform to share knowledge and centre for PFM knowledge and analysis. [ODI roundtable calls for global finance ministry network]
Chinese imports: what’s behind the slowdown? (IMF)
Real imports in China have decelerated significantly over the last two years to below 4% (yoy) from double-digit growth in previous years. Weaker investment, partly due to progress in rebalancing from investment to consumption, has been the main factor accounting for about 40–50% of slowdown during this period. Weaker exports also account for about 40% of slowdown, of which about a quarter is due to stronger RMB. Onshoring - substitution of imported intermediate inputs with domestic production - has not been an additional drag over this period but it continues to slow import growth at a similar pace as previous periods. [Related IMF paper: China and Asia in global trade slowdown, Charted: China's excess capacity in the steel industry is devastating global markets]
EU Parliament: Stop ‘aid’ funding billions to agribusiness in Africa (The Ecologist)
The European Parliament has called on the Commission and member states like the UK to stop funding the ‘New Alliance’ plan to force export-oriented agribusiness onto Africa. Instead they want support for small-scale family farms and agroecology.
DFID's use of contractors: written evidence to IDC enquiry is posted
Egypt's tourist numbers down 54% in April (Al-Ahram)
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