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Posted by the AU: 2nd biennial review report on the implementation of the Malabo Declaration
AfCFTA: How prepared is Africa for July 1st? (CNBC Africa)
The Commissioner for Trade and Industry at the African Union, Albert Muchanga, says the union is ready for the commencement of trade under the African Continental Free Trade Agreement on the first of July this year. While speaking to CNBC Africa’s Godfrey Mutizwa, Muchanga added that the union is almost done with its work on the rules of origin. They discussed this and more on the sidelines of the 33rd African Union Summit.
BUSA president congratulates Wamkele Mene on election as AfCFTA secretary-general (IOL)
Business Unity South Africa president Sipho Pityana has congratulated Wamkele Mene on his election as the first Secretary-General of the AfCFTA: “We are confident that Mene has what it takes to ensure rapid implementation of the AfCFTA, and to maximise the opportunities it presents. This is a significant appointment for South Africa and the continent, and it is particularly notable that it takes place during the same AU session at which President Cyril Ramaphosa took over the chairmanship of the AU. Organised business knows Mene well and we are sure he will be able to ensure the seamless implementation of AfCFTA.”
Online course: Making the AFCFTA work (ECA/IDEP)
This self-paced course will be delivered from 24 February to 5 April 2020. The course will be moderated asynchronously on a weekly basis and participants are required to participate in the weekly on-line discussions. In addition, each module has interactive lessons that provide the core content around the topic for that module. The lessons are designed in a way that learners are also able to self-assess their understanding through built-in quizzes. Additional resources such as bibliographies, web links and optional readings are provided for participants who wish to deepen their knowledge of the course topic.
Third Africa Business Forum: update (UNECA)
Speaking during the opening session, ECA Executive Secretary, Vera Songwe, said; “One of the reasons we cannot silence the guns in Africa is because there are no jobs for the youth. There is no energy to power job creation. We can silence the guns if the right investments are made into our energy and ICT sectors, including strengthening our health systems in partnership with the private sector. If we cannot ensure Africa has the energy it needs then 2030 is really a distant dream. We need to do more and we need to do it faster.” She said Africa should make clean energy investments now: “Ambitious climate action can deliver a US$26 trillion boost to the global economy between now and 2030. If we enter into the new climate economy, we can create 20 million jobs for the continent. Right now we need 13 million jobs every year.”
One year on: Companies to Inspire Africa 2019 (London Stock Exchange Group)
This report is a follow-up to London Stock Exchange Group’s ‘Companies to Inspire Africa 2019’ report and seeks to highlight key activities of the nominated companies from 31 January 2019 to 31 October 2019. All market data and information was obtained from publicly available sources such as the companies’ respective websites, and has not been independently verified by PwC, Asoko Insight or London Stock Exchange Group. There are 360 companies from 32 different countries across the continent represented in this report, boasting an incredibly impressive average compound annual growth rate of 46%, up from 16% last year. On average, each firm employs over 350 people, with an average compound annual employee growth rate of 25%.
A diverse range of industry sectors feature, painting an encouraging picture of the future of the African economy. Consumer Services, Industry and Agriculture are the three biggest sectors, between them making up over 50% of the companies featured. Technology & Telecoms, and Financial Services together represent over 25% of firms, while Healthcare & Education and Renewable Energy also feature strongly. It is also very encouraging that 23% of the senior executives of the companies featured are female, a near doubling from 12% in last year’s report. Extract (pdf):
Specifically, in the past year, 41 of the featured companies grew organically; this included increasing capacity in their existing market, moving into new geographies, introducing new product lines, or diversifying. Consumer services, and technology and telecoms were the leading sectors in organic growth. This was predominantly achieved through the development of new products and by accessing new markets. The pan-Africanisation of companies operating in the private sector is a stepping-stone towards market integration and development. Organisations entering new markets, while growing, in terms of revenues and brand recognition, are likely to bring new products and services, along with employment and sector development. There are, however, significant challenges in undertaking this route: understanding and adapting to specific market conditions, whether in a new market or a new sector, and developing cross-border or cross-sector partnerships becomes crucial to mitigate the risks of accessing new markets.
More from the cup: Better returns for East African coffee farmers (ITC)
East Africa produces some of the world’s most valuable specialty coffees, yet farmers in the region pocket only a minuscule share of the profits. Farmers could grab a bigger piece of the pie by participating in higher-value activities that add value to their crop, says a new report by the International Trade Centre. More than 90% of coffee is exported as a raw or ‘green’ beans, and developing countries handle most of the transformation that adds value, according to the report launched at the African Fine Coffees Conference and Exhibition in Mombasa. ‘Looking at the international value chain that delivers the “$5 cup of coffee,” less than 1% of the price remains in the hands of the men and women who cultivated the crop,’ writes ITC Acting Executive Director Dorothy Tembo in the report. ‘Almost all value is created after the farm gate. Even allowing for the expected returns of the retailer, enough value should be generated to allow farmers a greater share of the global earnings.’ On the ‘premiumization’ of African coffee (pdf):
All East African origins sell part of their coffee as specialty, because of its intrinsic high quality. While a greater proportion of the fully washed and bolder bean coffees from Ethiopia, Kenya and Rwanda fit into this category, some Arabica coffees from Uganda, the United Republic of Tanzania and Burundi can also command huge premiums over the prevailing benchmark indicator prices. The ‘premiumization’ of much of African coffee is highlighted in the 2019 Specialty Coffee Transaction Guide, which puts the median FOB price at $3.23/pound (lb), far above the 2018 average ICO composite indicator benchmark price of $1.09/lb.38
Africa’s Urbanisation Dynamics 2020: Africapolis, mapping a new urban geography (Sahel and West Africa Club)
Africa is projected to have the fastest urban growth rate in the world: by 2050, Africa’s cities will be home to an additional 950 million people. Much of this growth is taking place in small and medium-sized towns. Africa’s urban transition offers great opportunities but it also poses significant challenges. Urban agglomerations are developing most often without the benefit of policies or investments able to meet these challenges. Urban planning and management are therefore key development issues. Understanding urbanisation, its drivers, dynamics and impacts is essential for designing targeted, inclusive and forward-looking policies at local, national and continental levels.
This report, based on the Africapolis geo-spatial database (www.africapolis.org) covering 7 600 urban agglomerations in 50 African countries, provides detailed analyses of major African urbanisation dynamics placed within historical, environmental and political contexts. Covering the entire distribution of the urban network — from small towns and secondary cities to large metropolitan regions — it develops more inclusive and targeted policy options that integrate local, national and regional scales of urban development in line with African realities.
South Africa: OSBPs, Border Management Authority Bill briefing by Minister of Home Affairs (GCIS)
“The Beit Bridge Border Post is one of six large land ports of entry which we have identified for infrastructure development. These land ports of entry have high traveller and trade volumes. It is important to develop these ports of entry to reflect our commitment to easing the movement of people and goods through the ports. The ports will be developed in partnership with the private sector through public private partnerships and with our neighbouring countries. The partnership with our neighbouring countries centres on creating One Stop Border Posts. Just this past Friday, I had a fruitful meeting at the Kopfontein border post with my counterpart from Botswana on the One Stop Border Post and other immigration issues of mutual interest. I have already held successful meetings at our various border posts with my counterparts from the Kingdom of Eswatini (Oshoek border post), Lesotho (Maseru border\post) and Mozambique (Lebombo border post). The Master Plan for the development of Beit Bridge has been finalised and we are in the process of appointing a service provider. When we implement the Border Management Authority in phases, we will prioritize Beit Bridge as one of the areas where we will start implementation. Hence, Beit Bridge shall have two programmes running more or less at the same time, that is, the One Stop Border Post and Border Management Authority.” [Related: Government planning six, one-stop border posts]
Nigeria in a New Decade: Priority for accelerated growth, job creation and poverty reduction (Nigerian Economic Summit Group)
To step up the inclusive growth narrative, our Macroeconomic Outlook for 2020 takes a deep-dive approach to fixing Nigeria’s poverty problem through accelerated economic growth and job creation as a precursor to inclusive economic growth. Part I of the report reviews the Nigerian economy in 2019 and provides an outlook for 2020, which will be influenced by several events and policies such as the VAT increase, implementation of the AfCFTA agreement, movement in global oil prices, US-China trade wars, loan-to-deposit ratio and insurance companies’ recapitalisation, etc. Part II of the report examines how Nigeria can create significant number of jobs in the medium to long term to lift millions out of poverty. The following broad recommendations are crucial in ensuring significant growth in job creation. #5: Implement regulation that supports business growth (pdf):
To deliver broad-based economic growth that addresses the priorities of job creation and poverty reduction, there needs to be a fundamental shift in the thinking of the Nigerian government’s role in the business environment. Government (at different levels) and its agencies must truly act as “enablers” in the business environment rather than creating hurdles for businesses through fierce regulations and numerous charges. The motivation and incentives for business and industry regulators such as Nigeria Customs Service, NAFDAC, SON, among others, need to be re-engineered to focus on efficient and effective service delivery to their immediate stakeholders, in a simplified and easily accessible manner. This proposition is based on the premise that quality, clear and business-friendly regulation, are key in removing business hurdles across sectors and are germane to the expansion of existing businesses as well as to the growth of new businesses across the country. [The Africa Report: Buhari and Ouattara make Eco heart of regional power struggle]
IATA’s global, African data for 2019 passenger traffic, air freight demand:
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Slower but steady growth in 2019 for passenger traffic. The International Air Transport Association announced full-year global passenger traffic results for 2019 showing that demand (revenue passenger kilometers or RPKs) rose by 4.2% compared to the full year of 2018. The 2019 result is a slowdown compared to 2018’s annual growth of 7.3% and marked the first year since the global financial crisis in 2009 with passenger demand below the long-term trend of around 5.5% annual growth. African airlines led all regions with a 5.0% demand increase, down from 6.3% growth recorded for 2018. Capacity rose 4.5%, and load factor edged up 0.3 percentage point to 71.3%. Airlines in the region benefitted from a generally supportive economic backdrop in 2019 as well as increases in air transport connectivity.
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2019 worst year for air freight demand since 2009. All markets except Africa suffered volume declines in 2019. Asia-Pacific retained the largest share of FTKs, at 34.6%. The share of freight traffic increased modestly for both North America and Europe, to 24.2% and 23.7%, respectively. Middle East carriers’ traffic share held steady at 13%. Africa and Latin America saw their shares lift marginally, to 1.8% and 2.8%. African carriers’ saw freight demand increase by 10.3% in December 2019, compared to the same month in 2018. This was reflected in the strong 2019 full-year performance, which saw Africa freight volumes expand 7.4%. Capacity in December grew by 10% and for 2019 in total, increased by 13.3%. Over the year, air cargo volumes have been supported by strong capacity growth and investment linkages with Asia.
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Posted in Addis: The 2020 AU Handbook
US revokes WTO subsidy preferences for South Africa and some other countries (Bloomberg, Fin24)
The Trump administration is changing a key exemption to America’s trade-remedy laws to make it easier to penalise about two dozen so-called developing countries including China, India and South Africa. The US on Monday narrowed its internal list of developing and least-developed countries in order to reduce the threshold for triggering a US investigation into whether nations are harming US industries with unfairly subsidised exports, according to a US Trade Representative notice. In doing so, the US eliminated its special preferences for a list of self-declared developing countries that includes: Albania; Argentina; Armenia; Brazil; Bulgaria; China; Colombia; Costa Rica; Georgia; Hong Kong; India; Indonesia; Kazakhstan; the Kyrgyz Republic; Malaysia; Moldova; Montenegro; North Macedonia; Romania; Singapore; South Africa; South Korea; Thailand; Ukraine; and Vietnam.
USTR updates list of developing and least-developed countries under US countervailing duty (CVD) law
The US Trade Representative developed the list of members eligible for the 2% de minimis standard based on the following criteria: per capita GNI; share of world trade; other factors such as OECD membership or application for membership, EU membership, and G20 membership. For purposes of US CVD law, the US Trade Representative therefore considers (pdf) countries with a share of 0.5% or more of world trade to be developed countries. Thus, Brazil, India, Indonesia, Malaysia, Thailand, and Viet Nam are ineligible for the 2% de minimis standard, notwithstanding that, based on the most recent World Bank data, each country has a per capita GNI below $12,375. Given the global economic significance of the G20, and the collective economic weight of its membership (which accounts for large shares of global economic output and trade), G20 membership indicates that a country is developed. Thus, Argentina, Brazil, India, Indonesia, and South Africa are ineligible for the 2% de minimis standard, notwithstanding that, based on the most recent World Bank data, each country has a per capita GNI below $12,375.
USTR seeks comments for 2020 Special 301 Review: The review identifies countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to US persons who rely on IP protection. [MSF India demands review of USTR Special 301 report on trade barriers]
DDG Wolff affirms WTO’s commitment to support Africa’s economic integration (WTO)
I am here, on my first visit to Addis, to be with the WTO Accessions Division which has organized a Regional Dialogue on WTO Accessions for Africa, bringing together all acceding governments from the African Continent. This year’s theme for the Regional Dialogue is “Deepening Economic Integration in Africa through WTO membership and AfCFTA Implementation”. The meetings here this week are part of the WTO’s broader efforts to build a stronger bridge between the WTO and Africa. What can Ethiopia expect from the process of WTO accession?
Looking at the results of WTO accessions completed to date – 36 of them, including China, Saudi Arabia, and the Russian Federation – we see that they have benefitted enormously from the process of economic reforms required to join the WTO. Ethiopia aspires to become one of the leading economies in Africa by 2030, through pursuing WTO accession aggressively. The WTO accession process will support regulatory and administrative changes while improving the quality of economic management institutions. Through its accession to the WTO and its domestic reform agenda, the government of Ethiopia hopes to raise the standard of living of its people and contribute to peace. And it is intent on finding ways of achieving its objectives in a more sustainable way. Support for Ethiopia’s accession and the fulfilment of the promise of the AfCFTA must be, and I am sure will be, high priorities for the WTO. [Note: This speech was delivered today at Addis Ababa University]
A snapshot of cross-border trade along the Abidjan-Lagos Corridor (UNECA)
In this context, the African Export-Import Bank and the ATPC recently embarked on a new pilot project to collect data in the ECOWAS region using the Abidjan-Lagos Corridor. The AUC and ECOWAS serve as key project partners and the Eastern Africa Grain Council has been identified as the lead project implementation partner. The project will collect ICBT data on a pilot basis along the Abidjan-Lagos corridor in the ECOWAS region for a period of four months from September 2019. The data collected will also be gender disaggregated, which will help to provide a better picture on the gendered dimensions of ICBT, which is typically female dominated. The final project outputs (pdf) will include a comprehensive report detailing the scale, characteristics and challenges of ICBT along the Abidjan-Lagos corridor, and a harmonized manual for ICBT data collection for the ECOWAS region. Following the initial pilot, the intention is to scale and apply the methodology to other corridors and regions on the continent, with the ultimate goal of eventually developing a single continental framework for ICBT data collection.
Eswatini and the IMF: 2020 Article IV Consultation report. Extracts from Annex VII: Trade, export competitiveness and growth
Over the last two decades, exports performance in Eswatini have been declining, reflecting negatively on GDP growth. Exports of goods and services have halved from about 78% of GDP in the early 2000s, a time when global trade was booming and commodity prices were high, to 40% of GDP in 2018. As a result, unlike peer middle income countries, Eswatini’strade volumes have not kept up with global trends, resulting in a loss of share in global markets. Exports of services have similarly experienced a loss of market share and a trend decline, representing 1.5% of GDP in 2018 (about 10% of GDP in the early 2000s). The contribution of exports to growth is much lower from an average 3.2% during the 1990s and 2000s to 0.35 contribution during 2010-2017.
Eswatini’s export base has also narrowed and become less diversified, increasingly dominated by exports from a few traditional sectors. Up to 2008, exports were relatively diversified and of good quality and Eswatini was among the more diversified product exporters in Sub-Saharan Africa (measured by a Theil diversification index) and the quality level (measured by the unit value of exports) was higher than the average of African countries. In recent years, export diversification has, however, declined. Exports have increasingly been dominated by few items and there has been little increase in new products. Today, about 90% of exports are concentrated in four manufactured goods from traditional sectors: soft drink concentrate, sugar, textiles, and wood manufacturing. In particular, soft-drink concentrate accounts for half of goods exports in 2018 (compared to 33% in 2000).
Export concentration, compounded with a concentration in trading partners, suggests that the country has been unable to take advantage of its various trade agreements. Despite numerous trade agreements, including SACU, SADC, COMESA, and with the European Union (EPA) and the US (AGOA), among other regional bodies, about half of total trade is conducted with South Africa. Major commodities, such as sugar, textiles, and soft-drink concentrate are destined to South Africa. This increases the trade sector’s dependence on its neighbour’s performance. Other trade agreements such as the African Growth and Opportunities Act, which gives Eswatini preferential access to US markets, are not being exploited beyond textiles. [Lesotho and the IMF: 2020 Article IV visit completed]
Nigeria on the move: A journey to inclusive growth (World Bank)
This Systematic Country Diagnostic (pdf) examines the challenges the government and people of Nigeria face in achieving the twin goals of poverty reduction and shared prosperity. It identifies key constraints and presents possible pathways for moving forward. Reflecting the multifaceted nature of the development challenges in Nigeria, the list of constraints is rather long. Based on available evidence and feedback gained through stakeholder discussions, 10 key constraints have been identified. The SCD establishes the priorities and links among these 10 constraints and proposes four possible pathways to tackle the constraints. The four pathways are: breaking oil dependency; building human capital to bridge the north-south divide; promoting private sector–led growth; rebuilding social contracts.
Constraint 8: Limited domestic, regional, and global integration. Extract (pdf): Nigeria’s regional and global integration is also limited by restrictive policies. Though intraregional trade in Sub-Saharan Africa has doubled since 2000, to reach 25% in 2017, it has not increased as much as intraregional trade in East Asia and the Pacific or in the European Union. Exports to Nigeria accounted for 0.3% to 0.5% of the Sub-Saharan African total in 2000–16, well below South Africa’s 5.7% (figure 2.21, panel a). Nigeria’s poor performance in regional trade partly derives from its more restrictive border crossings relative to South Africa (figure 2.21, panel b). Cross-sectional analyses indicate that income per capita is inversely correlated with border restrictions. Countries that are more open to trade, ideas, and (appropriately sequenced) inflows of foreign capital are more well integrated into the global economy and benefit from their interactions with other countries.
This suggests that the thick borders around Nigeria are a major deterrent to growth spillovers to Nigeria’s neighbors in the Economic Community of West African States. Implementing measures to reduce drastically the thickness of Nigerian borders would be a win-win: more open borders would boost regional exports, create larger agglomeration economies, help attract more private investment from abroad, and bolster the growth potential of the Economic Community of West African States and, beyond, all Sub-Saharan Africa. Furthermore, a review of the Nigerian Investment Promotion Commission Act of 1995 and proposed amendments to the act passed by the House of Representatives and existing international investment agreements reveal there is some room for improvement, particularly regarding the lack of clarity on the list of sectors restricted to investment and the protection of foreign investors from discriminatory treatment by the government.
Import data underscore Nigeria’s relatively low level of integration with international markets. Between 2010 and 2015, the value of imported inputs equaled only 8% of the value of exports, far below the share in other commodity exporters such as Kenya (18%) and Mexico (33%). However, productivity among importing firms is greater in Nigeria than among non-importers, suggesting that access to foreign inputs enhances labor productivity. Moreover, 70% of exporting firms are also importers, highlighting the opportunities offered by international value chains. It is important for policy makers to monitor the outward orientation of domestic firms because exporting and importing are both closely correlated with innovation.
Launched: 2nd Biennial Review Report on the implementation of the June 2014 Malabo Declaration (AU)
The African Union has launched the second Biennial Review Report on the implementation of the June 2014 Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods. Out of the 49 Member States that reported on progress in implementing the Malabo Declaration during this 2019 biennial review cycle, four countries are on-track towards achieving the Malabo commitments by 2025. While this number is significantly less than the 20 Member States that were on-track in 2017 during the inaugural biennial review cycle, it is cardinal to note that 36 countries have made significant improvement in their score from the 1st BR to the 2nd BR. The benchmark for the 2019 cycle 6.66, is much higher than that of the 2017 cycle which was 3.94. The four Member States, which obtained or surpassed the benchmark of 6.66 to be on-track toward achieving the commitments of the Malabo Declaration by 2025 are: Rwanda (7.24), Morocco (6.96), Mali (6.82) and Ghana (6.67).
Selected, new papers on fintech issues from the Bank of International Settlements:
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Policy responses to fintech: a cross-country overview. Technological innovations in financial services (fintech) are increasingly transforming the way financial services are provided. While fintech opens opportunities, it also comes with potential risks. Financial authorities have responded to fintech developments in various ways. Based on survey responses from around 30 jurisdictions, this paper provides a cross-country overview of policy responses to fintech developments. In addition, building on the work by global standard-setting bodies and other international organisations, the paper proposes a conceptual framework through which to analyse policy responses to fintech, referred to as the “fintech tree”. The fintech tree identifies three categories: fintech activities, enabling technologies and policy enablers.
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The economic forces driving fintech adoption across countries. Fintech is being adopted across markets worldwide – but not evenly. Why not? This paper reviews the evidence. In some economies, especially in the developing world, adoption is being driven by an unmet demand for financial services. Fintech promises to deliver greater financial inclusion. In other economies, adoption can be related to the high cost of traditional finance, a supportive regulatory environment, and other macroeconomic factors. Finally, demographics play an important role, as younger cohorts are more likely to trust and adopt fintech services. Where fintech helps to make the financial system more inclusive and efficient, this could benefit economic growth. Yet the market failures traditionally present in finance remain relevant, and may manifest themselves in new guises.
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Impending arrival – a sequel to the survey on central bank digital currency. Research and experimentation on central bank digital currencies continue to fuel discussion and debate. This BIS paper updates an earlier survey that asked central banks how their plans in this area are developing. The latest responses show emerging market economies reporting stronger motivations and a higher likelihood that they will issue digital currencies, with central banks representing a fifth of the world’s population reportedly likely to issue very soon.
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Acceptance Statement by President Cyril Ramaphosa on assuming the Chair of the African Union for 2020
Speech delivered at the 33rd Ordinary Session of the Assembly of Heads of State and Government of the African Union
I stand before you immensely humbled by this great honour that has been bestowed on South Africa.
On behalf of the men and women of South Africa I graciously accept your collective decision that I should Chair the AU in 2020.
In executing this weighty responsibility I will rely on your continued support, wisdom and co-operation, especially that of the new Bureau members.
I want to thank our host, Nobel Peace Laureate Prime Minister Abiy Ahmed, the government and the people of the Federal Democratic Republic of Ethiopia for the excellent hospitality extended to me and my delegation since our arrival here in Addis Ababa.
I also thank my Brother, President Abdel Fattah El-Sisi for the outstanding and commendable manner in which he presided over the work of the AU during his term.
South Africa first chaired the African Union (AU) following its historic re-launch in South Africa in 2002 when President Thabo Mbeki, who is here with us today, became chair of the AU.
We are indeed deeply humbled to have been afforded the opportunity once again to lead this august continental body of governance, and by the confidence that has been vested in us today.
Your Excellencies, we are mindful of our weighty mission, but also of the weight of history here in Ethiopia, a place with such deep and profound connections to Africa’s ancient past.
Up in the highlands of the north of Ethiopia in the 1st century, our ancestors tamed the harsh terrain and established agriculture, herded livestock, minted their own coinage, created their own alphabetical script, built towering monuments that stand even to this day, and forged expansive trade routes across the region.
Over the passage of and in the context of the time, our forebears understood that true progress and development could be advanced through trade and working together.
Today we stand at the cusp of the greatest step towards continental unity since the founding of the Organization of African Unity (OAU).
The African Continental Free Trade Area (AfCFTA) that we adopted last year will enable us to work together through intra-Africa trade, as it will reignite industrialisation and pave the way for Africa’s integration into the global economy as a player of considerable scale.
It is the realization of the dream of our forebears, to see the rich resources of Africa being marshalled for the collective benefit of Africans.
Indeed we are a continent that is rich.
Africa is rich in natural resources yes, but also in history, in intellectual output, in culture, in a sense of humanity and in human capital.
As Africans living in this new era, we shoulder the greatest of responsibilities, to ensure that Africa’s wealth does not become her poverty; that her blessing does not become her curse; and that our endowment does not become our downfall.
It is to us that the task has fallen to build an Africa that is prosperous and at peace with itself.
An Africa that is capable of achieving the aspirations this august body set out in Agenda 2063.
An Africa connected through a vast network of roads and railways, enabling the free movement of goods, people and services.
An Africa whose vast tracts of land support agriculture, commerce and livelihoods.
An Africa whose mighty rivers are harnessed to create power and bring electricity to villages, towns, cities, homes and businesses.
As incoming AU Chair, we have set ourselves key priorities to enhance the progress that is already underway during the African Decade of Action.
We would like to deepen our work together in deepening the unity of our continent and advancing inclusive economic growth and sustainable development.
Our collective work to ensure political and economic unity, good governance, and peace should be strengthened by supporting integration, industrialization, economic development, trade and investment.
In pursuit of this priority, we will host the 13th Extraordinary Summit on the AfCFTA to be held back-to-back with the Extraordinary Summit on Silencing of the Guns in May 2020.
Working closely with President Mahamadou Issofou of Niger in his capacity as the AU Champion on the AfCFTA, we will work for the finalization of outstanding issues around the agreement.
We must all ensure that the AfCFTA does not become a conduit for products with minimal African value addition to enter and penetrate our local markets under the guise of continental integration.
There must be a reasonable standard set for what constitutes a product that is Proudly Made in Africa.
We have to level the playing field for African businesses, so they are able to operate in a large-scale market unfettered by regulatory fragmentation.
This is an integral part of rebalancing global trade relations.
The era of economic colonialism and imperialism, under which Africa is a pit stop in the global assembly line, has passed.
The success of the AfCTFA depends on Infrastructure development.
We must all drive the implementation of the Presidential Infrastructure Champion Initiative, so that priority and high-impact projects act as catalysts for the AfCFTA.
Beyond trade integration, we have trained our sights on supporting green growth on the continent, and on ensuring that the continent takes advantage of the opportunities presented by the green transition.
This includes new industries in energy, materials engineering, the circular economy, sustainable agriculture and clean production.
The 4th Industrial Revolution presents our continent with great opportunities.
The uptake of digital technologies will lead to improved competitiveness and provides fresh opportunities for inclusive growth.
Millions of our continent’s young citizens are digital natives, and we must drive a skills revolution to enable Africa to take a quantum leap into the economy of the future.
To give full effect to our attention to this important area of work, we should look to establish an Africa Artificial Intelligence (AI) Forum, that also includes the diaspora.
In this, the year that we conclude the Decade of African Women, we must advance women’s economic and financial inclusion, we must address the scourge of gender-based violence.
We want to focus on ensuring that there is accountability to global gender commitments.
We have heard the calls of the women and girls of Africa for liberation from the shackles of patriarchy, violence and economic exclusion.
We recall the words of the Egyptian novelist and activist Nawal el Saadawi, that women are half the society.
You cannot have a revolution without women. You cannot have democracy without women.
We intend to work closely with President Akufo-Addo of Ghana to ensure the interests of women are mainstreamed, and want the years 2020 to 2030 declared as the Decade of African Women’s Financial and Economic Inclusion.
I believe that the work of the Pan African Women’s Organisation PAWO, an organisation that was founded in 1962, a year before the founding of the Organization of African Unity (OAU) to promote human rights and gender equality should be strengthened in order for it to play its rightful role.
We have to find more practical and sustainable ways of empowering the women of our continent: ways that go beyond the clichés and pronouncements made from podiums as we are wont to do.
Public and private procurements offer great opportunities as they account for 30% of the GDP of many countries on the continent.
Agenda 2063 calls for the allocation of at least 25 per cent of public procurement to be for women-owned businesses, yet women owned-businesses are given less than 1% of procurement.
We have to change this.
It is not unreasonable to advocate for preferential public procurement legislation to advantage women-owned businesses, and for the establishment of preferential trade and customs regimes for women.
The empowerment of women on our continent can be done. It must be done!
The representation of women in decision making structures in governments, parliaments and other sectors is far too low.
The women of our continent want and demand to occupy their rightful place in all decision making structures.
They deserve 50% representation.
Those amongst us who have enabled the participation of more women in decision making structures have benefited immensely from the inherent wisdom, insights and energy.
The women of our continent want to play a meaningful role in developing our continent. Let us not hold them back.
Violence against women continues to rage on our continent.
We will make the adoption of a AU Convention on Violence Against Women a priority, and for member states to ratify international protocols that outlaw gender discrimination.
We will support the good governance and democracy agenda, leveraging the excellent work of the African Peer Review Mechanism (APRM) that we have been asked to chair.
We now have 40 members states that have joined the APRM.
We will engage those Member States that have not ratified to do so, with a view to achieving universal accession by 2030.
We will make a contribution to promote peace and security in our collective effort to Silence the Guns.
Through the AU Peace and Security Council, the AU Commission and the collective membership, we will focus our efforts on conflict resolution across the African continent, especially those experiencing protracted conflicts.
We will work with President Denis Sasso N’Guesso, in his capacity as the Chairperson of the AU High Level Committee on Libya to convene an intra-Libyan Conference to promote ceasefire and dialogue.
We will continue to work the parties in South Sudan with a view to implementing the outstanding issues of the Revitalised Agreement, in order to pave the way for the formation of the Government of National Unity.
South Africa will also host the Extra-Ordinary Summit on Silencing of the Guns in May 2020 to look at the implementation of the AU Master Roadmap, and at the same time respond to emerging circumstances on the African peace and security landscape.
The Summit must come up with real actions we as Africans must take to end conflicts, and deal with acts of terrorism that are raging in many countries and regions such as the Sahel, the Horn of Africa and now spreading to other parts of Southern Africa as well.
We must also deal with the actions of other countries outside our continent that are fighting proxy wars and fuelling the ongoing conflicts.
The principle of finding African solutions for African problems must be our over-ridding theme in addressing all the conflicts on our continent as we work within the frameworks of the AU and the UN.
During our chair-ship we will champion the positioning of Africa as a strong, resilient and influential global player, and advancing AU-UN cooperation will be key.
We must ensure that Africa continues to play an even greater role on the world stage.
It is therefore an imperative of the time that as Africa we continue to assert the primacy of multilateralism in world affairs.
We must continue to advance this through bolstering the AU’s relationship with the United Nations (UN).
We must focus on the reform of the UN Security Council (UNSC), advancing the 2030 UN Agenda for Sustainable Development, meeting the Sustainable Development Goals (SDG’s), and giving effect to the 2016 UN commitments on HIV/Aids.
Our collective fortunes rely on international cooperation, and in ensuring we leave no-one behind.
That is why the African Union must continue with its support for the struggles of people everywhere that still suffer under the yoke of oppression.
Today we reaffirm our unwavering support and solidarity with the Palestinian people in their legitimate quest for an independent and sovereign State, as well as the right of the people of Western Sahara to self-determination.
We must ensure that our independence and freedom as the peoples of this continent should be universal.
As the internationally acclaimed musician Jonas Gwangwa sang: “Freedom for some is Freedom for none”.
Our international cooperation must extend to the continental effort to address the global climate crisis.
As Chair of the Committee of African Heads of State and Government on Climate Change (CAHOSCC) South Africa will prioritise all three Global Goals in the Paris Agreement, namely mitigation, adaptation and support.
Our Union stands as a testament to the power of political unity.
Let us now resume the onward march towards economic integration, development, progress, growth and shared prosperity.
Our continent is definitely on the ascent.
It is indeed a regeneration moral and eternal, as described by the South African revolutionary Pixley isaka Seme.
Let us build the Africa we Want.
Let the Guns be Silenced.
Let our swords be beaten to ploughshares, and our spears turned into pruning hooks.
It is the actions that we take from this day onwards that will determine our continent’s destiny.
If we pursue our objectives with diligence and determination, and mobilize our people to support them, I am certain that ours can be a meaningful, effective and impactful Union.
In the words of the great son of the African soil, Ngũgĩ wa Thiong’o:
“Today is tomorrow’s treasury. Tomorrow is the harvest of what we plant today.”
Fellow African leaders, we salute you.
Through your leadership you have sown the seeds for meaningful African unity.
With all the actions we take to consolidate the unity of our continent, to foster economic integration, to empower the women of Africa and to Silence the Guns, let us now look eagerly to the harvest.
Our people await the harvest of our work.
As glorious is our past, so too will be our future.
I thank you.
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AU Summit updates:
Featured tweet by Prudence Sebahizi (Head of AfCFTA Interim Secretariat): Congratulations to HE Mr Wamkele Mene, SG of the AfCFTA Secretariat. Young and vibrant African with extensive knowledge of international trade.
Action points from President Cyril Ramaphosa’s acceptance statement on assuming the Chair of the AU for 2020
As incoming AU Chair, we have set ourselves key priorities to enhance the progress that is already underway during the African Decade of Action. We would like to deepen our work together in deepening the unity of our continent and advancing inclusive economic growth and sustainable development. Our collective work to ensure political and economic unity, good governance, and peace should be strengthened by supporting integration, industrialization, economic development, trade and investment. We will host the 13th Extraordinary Summit on the AfCFTA, to be held back-to-back with the Extraordinary Summit on Silencing of the Guns in May 2020.
Working closely with President Mahamadou Issofou of Niger in his capacity as the AU Champion on the AfCFTA, we will work for the finalization of outstanding issues around the agreement. We must all ensure that the AfCFTA does not become a conduit for products with minimal African value addition to enter and penetrate our local markets under the guise of continental integration. There must be a reasonable standard set for what constitutes a product that is Proudly Made in Africa. We have to level the playing field for African businesses, so they are able to operate in a large-scale market unfettered by regulatory fragmentation. This is an integral part of rebalancing global trade relations. The era of economic colonialism and imperialism, under which Africa is a pit stop in the global assembly line, has passed.
The success of the AfCTFA depends on infrastructure development. We must all drive the implementation of the Presidential Infrastructure Champion Initiative, so that priority and high-impact projects act as catalysts for the AfCFTA. Beyond trade integration, we have trained our sights on supporting green growth on the continent, and on ensuring that the continent takes advantage of the opportunities presented by the green transition.
South Africa will host the Extra-Ordinary Summit on Silencing of the Guns to look at the implementation of the AU Master Roadmap, and at the same time respond to emerging circumstances on the African peace and security landscape.
The 4th Industrial Revolution presents our continent with great opportunities. To give full effect to our attention to this important area of work, we should look to establish an Africa Artificial Intelligence Forum, that also includes the diaspora.
We intend to work closely with President Akufo-Addo of Ghana to ensure the interests of women are mainstreamed, and want the years 2020 to 2030 declared as the Decade of African Women’s Financial and Economic Inclusion. [Related: President Ramaphosa assumes Chairship of the African Peer Review Mechanism]
pdf Conditions for success in the implementation of the AfCFTA (6.86 MB)
This particular study – AfCFTA conditions for Success – provides both an analytical framework as well as an actual analysis on local and international factors likely to either augment or hinder implementation of the AfCFTA, and therefore gives an evidence-based understanding and capacity to make specific local policy and investment decisions. The study can further guide interventions aimed at strengthening and aligning related institutional and human capital needs using integrated, cross-sector and transboundary approaches. Using the International Futures Modelling Tool, the study presents, for planners, policy makers and development specialists, a uniquely African perspective and foresight analysis to help in evidence-based prioritization and determining of national or regional AfCFTA implementation pathways – also connecting between individual and collective (regional) Member States’ implementation efforts. Success of the AfCFTA is cardinal to the success of Agenda 2063.
Tariffs: Today, Central African Republic, Chad, Comoros, and Democratic Republic of the Congo are all estimated to depend on intra-African tariffs for more than 5% of total government revenue. Figure 3 shows that at its peak in 2025, 24 countries are projected to experience net losses in revenue greater than 1% relative to the Current Path. These intra-African tariff-dependent countries are likely to face a challenging period of adjustment over the medium term. However, most countries that experience net revenue losses also quickly enjoy GDP gains that fully offset those losses.
At the continental level, by the mid-2030s, total gains surpass and begin to rapidly outpace losses, such that by 2063 African economies are projected to receive an additional $500bn in annual revenue relative to a scenario without AfCFTA. This value is roughly 140 times the amount necessary to compensate the few countries that do not fully make up tariff revenue losses. In addition, while countries heavily dependent on intra-African trade tariff revenues will see short-run disruptions to government revenue generation, they also experience much greater long-term economic gains relative to countries that have less of a short-run dependence on trade tariff revenue.
While the GDP and revenue gains suggested by this analysis are more than enough to outweigh the losses, since intra-African tariffs are already relatively low, their removal alone may not be enough to generate transformative change and significantly increase intra-African trade. [Politico: An all-Africa free-trade deal to warm the EU’s heart]
Ghana: Government spends $3m on AfCFTA
A total amount of $3m has been used by government to facilitate Ghana’s preparation towards the AfCFTA. According to President Nana Akufo-Addo, the money was used for the establishment and operationalization of the AfCFTA which he announced will take full force in March 2020. “The Government of Ghana sponsored six different meetings of the AfCFTA in December 2019, in Accra. Thus far, a total amount of $3m has been advanced by the Government of Ghana for the establishment and operationalization of the AfCFTA Secretariat”, President Akufo-Addo noted. Earlier on Sunday, President Akufo-Addo held a meeting of Member States of the Commission on Science and Technology for Sustainable Development in the South (COMSATS). With Ghana serving as Chair of COMSATS, the President told Heads of State and representatives of 27 member states that the purpose of the meeting was to ensure that member states recommit themselves to the work of COMSATS, and to reposition the Commission to support the collective drive for development, leveraging science, technology and innovation. The meeting served as a precursor to the General Meeting and the Forum on Science and Technology (14-15 April, Accra).
President Paul Kagame: Progress has been made towards reforming AU
“We have indeed come a long way since January 2017. A clear consensus has been forged around the need for an effective and self-sustaining African Union,” Kagame told leaders in a closed session on the sidelines of the 33rd Ordinary Session of the Assembly of the AU. Kagame also added that the budget process is more transparent and the burden is more evenly shared among member states. “More than $150m have been contributed to the Peace Fund over the last three years and the Board of Trustees is now in place,” he said. Kagame added that there has been progress in reforming the structure of the Commission, to make it leaner and more efficient. “The new structure has been endorsed by the Executive Council and it has been put before us for adoption,” he said, adding that the Panel of Eminent Persons for the selection of the senior leadership of the Commission is now in place. As the reformed selection process unfolds this year, we look forward to electing Africa’s best talent to lead the African Union Commission in the next term. The success of this selection process will mark a key milestone in the implementation of the institutional reform as a whole,” he noted. [Related: AU elects Kagame to drive Africa 2063 Agenda]
Don’t use AU Peace Fund to subsidise UN Security Council mandate, Buhari warns
President Muhammadu Buhari has reminded African leaders that the African Union’s Peace Fund was established to support internal peace arrangement within the continent and not to subsidise the mandate of the UN Security Council. President Buhari, who stated this at the high level meeting of African Union Peace and Security Council on the state of peace and security in Africa at the 33rd AU Summit in Addis Ababa, commended the renewed vigour by ECOWAS member countries to mobilise own resources to combat terrorism. The President, in a statement by his Senior Special Assistant on Media and Publicity, Mallam Garba Shehu, announced that Nigeria has fulfilled its financial obligations to the AU Peace Fund up to 2019. Speaking on ECOWAS matters, President Buhari declared that Nigeria was proud to continue to serve as a strong contributor to the peace roles played by the regional bloc. “In Burkina Faso, we (ECOWAS) pledged to mobilise $1bn to address the challenges of insecurity in our region and the Sahel. In Guinea Bissau, ECOWAS successfully midwifed the general elections,” Buhari said.
Seychelles signs the Africa Medicine Agency Treaty
The Department of Foreign Affairs said today that the treaty was signed by Seychelles’ Vice President Vincent Meriton on the sidelines of the 33rd ordinary session of the African Union Assembly. During the weekend the Seychelles also acceded to and became the 40th member of the African Peer Review Mechanism.
Extraordinary session of ECOWAS leaders: Burkina Faso President heads ECOWAS committee to investigate Nigeria’s border closure
The Authority of ECOWAS Heads of State and Government has constituted a committee, headed by President Roch Kabore of Burkina Faso, to study and make a full report on Nigeria’s land border closure with her neighbours. The decision to set up the committee was agreed Sunday night in Addis Ababa, Ethiopia, at an extraordinary session of ECOWAS leaders convened on the margins of the 33rd AU Summit to discuss the issue and other pressing regional matters. Nigeria’s Foreign Minister, Geoffrey Onyeama, told journalists after the three-hour closed door ECOWAS session that ‘‘The President of Burkina Faso is charged with undertaking a full study of the situation, make a report and then we take it from there.’’ Asked when the report will be presented to ECOWAS Heads of State and Government, the Nigerian minister replied: ‘‘As soon as possible, there are no timelines. But he is supposed to start very quickly, study the situation from all the affected countries and present his report.’’
Mr Onyeama also said the meeting attended by President Buhari and chaired by the ECOWAS Chairman, President Mahamadou Issoufou of Niger Republic, also discussed West Africa′s new single currency, the Eco, and the situation in Guinea Bissau after the presidential election. On the Eco currency, the foreign minister said: “Nothing has changed in respect of Nigeria’s position.”
Luanda MoU: Rwanda, Uganda ministers meet at Gatuna border (New Times)
Rwandan officials met with their Ugandan counterparts at the Gatuna border on Friday for a joint planning meeting ahead of the forthcoming summit between presidents Paul Kagame and Yoweri Museveni. The heads of state are scheduled to meet on the 21 February, as both countries seek to mend broken relations, as agreed by at the recent heads of state meeting. According to available information, the preparatory meeting on the Rwandan side was led by Minister Claver Gatete, the Minister of Infrastructure while on the Ugandan side it was led by General Katumba Wamala, the Ugandan Minister for Transport. Uganda’s ambassador to Rwanda, Oliver Wonekha and the Angolan ambassador to Rwanda, Eduardo Octávio also attended the meeting. The meeting is a follow-up on a quadripartite summit, the third of its kind, which took place earlier last week between the two presidents hosted by President Lourenço of Angola. The meeting was also attended by President Tshisekedi of the Democratic Republic of Congo.
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The shortlisted candidates for General Secretary of AfCFTA: Nigeria’s Cecilia Akintomide has served as a former VP and General Secretary of the of the AfDB; South Africa’s Wamkele Mene has served as SA’s Head of Mission to the WTO; the DRC’s Faustin Luanga has served as the economic advisor to President Joseph Kabila. An official announcement will be issued on Sunday by the AU Commissioner for Trade and Industry, Albert Muchanga, after a decision by the Heads of State of the African Union.
Mr Mansur Ahmed, the president of the Manufacturers Association of Nigeria, has been appointed the new chairperson of the Pan African Manufacturers Association.
Diarise: Africa Pharma Conference 2020 (8-10 June, Nairobi)
African Union 2020 Summit: keynote speeches from yesterday’s opening of the 36th Ordinary Session of the Executive Council
(i) Moussa Faki Mahamat (chairperson of the African Union Commission). At the opening of your meeting, I wish to share with you, in broad outlines, the activities carried out in 2019, the prospects for the current year and especially the most obvious challenges. The preparatory work for the actual launching of the AfCFTA, scheduled for 1 July 2020, is at an advanced stage, which reflects the efforts made by the different actors. For this launching, its Secretariat will emerge as at the end of March this year to take in hand, with the necessary competence, the management of the outstanding issues and on whose resolution will depend the success of its full operationalization. As you are aware, the establishment of Free Trade Area of this scale is a laborious process. The participation of all the Member States in the negotiations meetings is key to the success of the process so as to fulfil the dream long nurtured by the Founding Fathers of our Organisation.
The Free Trade Area, pole of impetus for economic coherence, challenges our creativity and further our mastery of the digital technology. It is in this perspective that the AU Commission has worked, throughout the year, on the proposed strategy for the digital transformation of Africa for the period 2020-2030 as well as the execution of the African Electronic Network project. During your deliberations, you will have to pronounce yourselves on this Draft Strategy which is an orientation document, but of great importance for the digital future of the Continent.
(ii) Vera Songwe (UN Under-Secretary-General; Executive Secretary of the UNECA). Finally, Let me now turn to the economics of silencing the guns in Africa. Today, over 77% of all arms imported into the continent are from four countries. The agenda of securing the peace and the agenda of silencing the guns must be dealt with in a comprehensive manner. To effectively silence the guns African countries will have to ensure all gun imports into the continent are consistent with international practice and the governance systems around the circulation of arms on the continent is transparent. We must respect global, UN resolutions. The economics of the arms sector does not favour the continent as more and more of our young perish at the end of the gun while we continue to spend more and more resources on security at the expense of education health care and infrastructure. In Niger for example over 15% of the budget is spent on security expenditures. This is true of most in the Sahel.
(iii) Dr Ibrahim Assane Mayaki (AUDA-NEPAD CEO). In collaboration with our development partners and the private sector, we – the African Union bodies, shall enhance our efforts in supporting the Member States and Regional Economic Communities to accelerate the implementation of Agenda 2063 – as defined in our respective mandates. Today, Agenda 2063 is the identity, badge of honour and catch-phrase for the African Union. We must stay the course and continue to make Agenda 2063 the continent’s pre-eminent guiding framework for its social, economic, cultural and political development. The flagship projects of Agenda 2063 speak to every aspect of life for our people.
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The Africa Report: Will Africa manage to speak with a single voice on the Libya crisis?
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President Abdel Fattah el Sisi will officially hand over the reins to President Ramaphosaduring the opening session of the Assembly on Sunday.
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Buhari, 10 others, begin five-day trip to Ethiopia for AU Summit, State Visit
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The African Leadership for Nutrition will hold a high-level dinner, with the participation from 7 heads of states (8 February) will consolidate gains made in securing high-level political engagement on nutrition, and to reflect on progress made to date in tackling malnutrition and stunting. The meeting is a key milestone ahead of the
Nutrition for Growth Summit (December 2020, Tokyo).
Kenya-US trade relations:
(i) President Trump announces intent to negotiate trade agreement with Kenya. At the direction of President Trump, Ambassador Lighthizer will officially notify Congress of the Trump Administration’s intention to start negotiations following the consultations with Congress that are required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 - often referred to as Trade Promotion Authority (TPA). USTR will also publish notices in the Federal Register requesting public input on the direction, focus, and content of the trade negotiations. In accordance with TPA, USTR will publish objectives for the negotiations at least 30 days before trade negotiations begin. The announcement came while the US-Kenya Trade and Investment Working Group held its third meeting in Washington this week. The Working Group, established by President Trump and President Kenyatta in August 2018, is laying the groundwork for a stronger bilateral trade relationship. Other outcomes of the third meeting of the Trade and Investment Working Group include the following: [Related: USTR fact sheet on the US-Kenya trade and investment relationship]
(ii) US, Kenya launch talks on trade deal in move welcomed by industry. Myron Brilliant (head of international affairs for the US Chamber of Commerce), said Kenya could serve as a key gateway for U.S. companies seeking to expand in Africa. U.S.-Kenyan trade amounts to $1bn now, but could grow substantially. “Just announcing the agreement is going to be a huge boon for Kenya because investors are going to start looking at which country is locking in access to the U.S. market,” said Nicole Bivens Collinson, a former senior U.S. trade negotiator and attorney with Sandler, Travis & Rosenberg.
(iii) US-Kenya trade pact won’t affect AfCFTA: Kenyatta. Speaking in Washington after meeting US President Donald Trump on Thursday, Kenya’s President Uhuru Kenyatta said the proposed new trade arrangement would in no way undermine Kenya’s commitment to the continental economic bloc. “I want to put away a few doubts because there has been a feeling that by Kenya engaging with the US to have a trade arrangement, we are running away from our commitment to the African Continental Free Trade arrangement. I want to assure you that there can be nothing further from the truth as that is definitely not the case,” said Kenyatta. Kenya was among the first countries to sign and ratify the AfCFTA. Mr Kenyatta said that Nairobi’s commitment to the agreement is steadfast, adding that Kenya needs to move fast, and set the pace for other African countries in formulating new trade and investment arrangements with the US as the African Growth and Opportunity Act comes to an end in 2025.
(iv) Trump says free trade pact with Kenya will ‘probably’ happen — a first for sub-Saharan Africa. “We have provisions in the agreement which require a country to notify us when it intends to enter into a [bilateral] free trade agreement. And we also have provisions in the agreement which says any preferences given to a third party must also be given to other parties of the African Continental Free Trade Area,” said Albert Muchanga, the African Union’s commissioner for trade and industry. “We are hopeful that the government of Kenya is going to brief us on the initiative that it is taking with the United States of America.”
Exports from Kenya to the United States tend to be some of the African country’s more refined products, such as honey, coffee, and textiles, said Kwame Owino, a Kenyan economist. Kenya’s trade with China tends more toward more toward raw commodities such as avocados and flowers. “The clincher of a Kenyan agreement with the US will be if Kenya can secure more U.S. investment in those refined goods, giving U.S. companies a regional hub for those products, and a steppingstone to creating similar agreements with other East African countries,” said Owino.
Nigeria: Make policies industry-friendly to enhance AfCFTA competitiveness – MAN tells FG (Sundiata)
The Manufacturers Association of Nigeria says the Nigerian government must ensure that its policies are industry- friendly, as this is the only guarantee for a competitive intra-African trade. Its President, Mr Mansur Ahmed, spoke at the 2020 edition of the MAN reporter of the year award on Thursday in Lagos. He also urged the government to show readiness in addressing the supply side constraints of lack of infrastructure, to enjoy the gains of the AfCFTA. “As the association remains at the forefront for setting the pace for engagement with other African manufacturers, the Nigerian government must also lead by example in ensuring that policies are industry-friendly, as this is the only guarantee for a competitive intra-African trade. Modern industry competitiveness depends to a great extent on provision of adequate and efficient infrastructure. There is also the aspect of provision of soft infrastructure – like visa, tariffs, and foreign exchange – that will help ease up the process of carrying out business transactions between countries."
Rwanda to host AfCFTA roadshow (KTPress)
The roadshow will be conducted on 11 February and will provide members of the private sector in the country the substantial benefits of attending the second Intra-African Trade Fair (1-7 September, Kigali). According to Afreximbank, Rwandan businesses can take advantage of the AfCFTA by establishing new networks of business buyers and sellers from across the African continent, enabling the country to significantly expand its intra-African trade. Professor Benedict Oramah, President of Afreximbank, said: “Rwanda’s economic transformation is undoubtedly one of Africa’s success stories. Rwandan businesses can further capitalise on this achievement by positioning themselves to take full advantage of the AfCFTA.”
Ghana: Invest in Africa prepares SMEs for the AfCFTA (GhanaWeb)
The Management of Invest in Africa is empowering small and medium scale enterprises to enable them to explore opportunities that come with the AfCFTA agreement. Mr Clarence Nartey, the country Director of IIA, there was still work to be done to educate and sensitise the private sector on both the opportunities and threats that the agreement comes with and work to develop a competitive AfCFTA strategy. He said from an IIA perspective, the good news was that some of its suppliers ware already engaged in Pan-African trade – equivalent to 15% of IIA’s active supplier pool. “However, this is not enough and the organisation is committed to increasing this to 40% in a few years,” he added. Mr Nartey said the 40% target would be done through rolling out its AfDB- sponsored flagship Business Linkage Programme.
Inside Kenya’s plan to boost trade with landlocked Ethiopia (Pulse Kenya)
Kenya is planning to build OSBPs along its border with Ethiopia as it moves to boost trade with its landlocked neighbour. The Border Management Secretariat, a bilateral agency, is of the opinion that the OSBPs will enhance security, boost revenue collection and ease movement between the two countries. “Putting two more OSBPs in Marsabit County will greatly boost trade facilitation and seal all the porous border points that encourage illicit trades,” said Mr Kennedy Nyaiyo, director of Border Management Secretariat. The director said the team was currently assessing suitability of Forole and Illeret, the two sites proposed to host OSBPs in Marsabit County. Marsabit currently has only one OSBP in Moyale Town despite the fact that the Ethiopia-Kenyan border straddles over 830km of its territory. Other areas marked for OSBPs include Siftu in Wajir, Markamari, Rhamu in Mandera, Todunyang in Turkana.
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JETRO’s 2019 survey on business conditions of Japanese-affiliated firms in Africa
Following TICAD7, which concluded in August 2019, the momentum for Japanese companies to expand into the African market was expected to increase. JETRO conducted a survey of 423 Japanese affiliated companies in Africa in September and October 2019, and more than 60% of the respondents answered that the importance of Africa in their global strategy would increase. As a reason for entering the market, 80% of companies answered “future market potential.” There was also significant interest in new trends such as the transition to a digital economy. Kenya considered promising country for fifth consecutive year. Profiled findings:
Regarding the operation forecast for 2019, the percentage of companies reporting a surplus slightly increased from the previous year (49.8%→50.3%). Looked at by country, about 70% of companies in South Africa showed strong performance. This is due to the anti-corruption measures and financial soundness expected of the new Ramaphosa administration, launched in the general election in May 2019, and business expansion due to the stabilization of the political situation. Nigeria has also shown a steady increase; over half of companies reported a surplus, surpassing the previous year (47.6%→50.0%). There was no major disorder brought by the presidential election in February 2019, and the re-election of President Buhari had only a limited effect on business. Meanwhile, only 20% of the companies in Cote d’ lvoire were profitable. This might be due to concerns about political instability associated with the presidential election scheduled for October 2020, as some companies have pointed out.
The percentage of companies that reported they will expand their business in the next 1-2 years reached the majority for the past six consecutive years, and the business expansion trend has continued. Looked at by country, 80% of companies in Cote d’Ivoire reported business expansion. Multiple respondents reported that, despite concerns about political instability ahead of the presidential election, they are aiming to expand business to neighboring countries. In Mozambique, where rapid growth is expected due to natural gas development, the figure came to just under 70%, and in Morocco, which focuses on attracting companies through free zone development, it came to about 60%. A willingness to conduct new expansion in next-generation business development was also seen in Kenya (59.5%), Egypt (58.6%) and Nigeria (54.5%).
While business momentum in Africa is growing, concerns about risks remain. In terms of management issues, “preparation/implementation of legal regulations” was the biggest risk. Approximately 80% of firms viewed this as a problem, indicating strong concerns about governance. However, its percentage dropped from 87.3% to 77.8% compared to the previous year. This was due mainly to reduced corruption following the transition to a new administration in South Africa (83.2%→66.7%) and simplification of the online tax payment system in Morocco (79.2%→64.7%).
Competitors in the market have changed compared to the previous year. European companies were ranked at the top of the list as the biggest competitors, surpassing Chinese companies, which were the top competitors in the previous year. In the competition with China, the overwhelming majority of companies cited price competition as a factor, while in the competition with European companies, the existence of substantial local networks and support from their governments - including finance and tax incentives under trade agreements -were pointed out.
At the same time, there are expectations for business expansion through collaboration with third-country companies. Approximately 70% of respondents cited “partner network utilization” as an advantage of third-country cooperation. Regarding cooperation with third-country companies, South Africa, France, India and China appear promising. As a regional base, South Africa was considered attractive because of the know-how and market networks accumulated by local companies that now have a head start in regional development. Regarding France, expectations were heard regarding the potential for cooperation in French-speaking African countries. It was suggested that India’s appeal lay not only in its excellent strategy in the African market, where there is much affinity for the country, but also in the fact that Japanese companies could launch operations in Africa utilizing their Indian bases. Regarding China, the possibility of collaboration as a supplier of goods and materials is indicated.
In terms of countries worthy of notice in the future, Kenya ranked top for the fifth consecutive year. Also for the fifth year in a row, Nigeria ranked second and South Africa ranked third. Although Kenya is the seventh largest economy in the region, the robust payment system infrastructure found in the high rate of mobile money usage (66% of the population in 2018, according to the Communications Authority of Kenya) is fueling the rise of startups. By country, Kenya ranked the top startup funder in 2018. Nigeria continues to be the continent’s most populous country and biggest economic power, while South Africa continues to receive high marks for its economic infrastructure. Ethiopia ranked fourth on the back of hopes for the growth of the manufacturing industry through the development of industrial parks and having the lowest wages in the region, as well as reforms expected by Prime Minister Abiy Ahmed Ali (inaugurated April 2018), who won the Nobel Peace Prize 2019.
The rise of services trade restrictions (OECD)
There are two reasons to worry. First, new restrictions impact sectors that enable trade in digital technologies. Barriers include impediments to online payments and the imposition of local presence requirements on cross-border operations. Second, many countries have introduced measures affecting foreign investment and the temporary movement of professionals. The cumulative effect can trap competitiveness and productivity in a tractor beam and propel the cost of doing business into hyperspace. Fortunately, a band of policy-makers have been resisting the dark side. In 2019, Brazil implemented comprehensive reforms to air transport services. The European Economic Area further liberalised cargo-handling, commercial banking and insurance services. Thailand, France and Greece recorded the highest net decreases in the 2019 STRI indicators. Australia is leading the way with a government-wide services export action plan. Trade ministers and sectoral regulators must unlearn what they have learned. Impediments to services trade remain pervasive. Regulatory policies are made with limited regard for economy-wide impacts. Countries should adopt whole-of-government services strategies and bind reforms in trade agreements. [The full text of the OECD Services Trade Restrictiveness Index: Policy Trends up to 2020]
Transforming paradigms: Global AI in financial services survey (WEF)
A new survey released by the World Economic Forum and the Cambridge Centre for Alternative Finance finds nearly two-thirds of financial services leaders expect to be mass adopters of AI in just two years compared to just 16% doing so today. The Global AI in Financial Services Survey, which was produced in collaboration with EY and Invesco, looks into many areas of AI adoption in financial services. The report’s other major findings include: 77% anticipate AI to have high or very high strategic importance within two years; Nearly half of all respondents see a major competitive threat in “Big Tech” firms leveraging AI capabilities to enter financial services; Selling AI-based solutions as a service is becoming a distinct business model, currently adopted by 45% of fintechs and 21% of incumbents, which allows firms to capitalize on larger and more diverse datasets through digital platforms. [Related: How to accelerate digital literacy in the enterprise world]
US trade ‘realignment’: The impact of GSP withdrawal on India’s top exports to the United States (ORF)
The benefits that India enjoyed for many years under the Generalized System of Preferences (GSP) programme of the United States was withdrawn, effective 5 June 2018. India was the largest beneficiary of the programme, of which it has been part since its inception in 1974. This paper evaluates the impact of the withdrawal on specific sectors of Indian exports. For comparison, the paper uses the Harmonized System Code (HS Code) Commodity Classification at the two-digit level for international trade data, as well as data from the National Industrial Classification for domestic industry. Conclusion:
The analysis presented in this paper clearly suggests that there will be sizeable negative impact on Indian exports to the US due to the GSP withdrawal. It further elucidates the impact on output, exports and employment in related sectors in domestic economy. There is a definite reason to worry about the GSP withdrawal. Given the US administration’s recent combative attitude in trade, the US is unlikely to reconsider its decision withdrawing India’s GSP benefits. As the GSP has always been a privilege and not a right, India has to try its best to convince the US to not go for a total withdrawal of this benefit. Per-capita income figures of India, along with many other human development indicators, indeed suggest that India is still in the bracket of “developing country” and it has a long way to go before achieving the status of a “developed country”. The foremost GSP aim of lifting the countries with relatively lower per capita income to a higher level is still very much applicable in the case of the Indian economy. Meanwhile, the Indian government should craft an elaborate plan to cushion the negative effect of the GSP withdrawal on domestic sectors. Such a plan has to consider the realistic possibility of an unrelenting United States. Finding new export markets for the worst-affected domestic sectors will be pivotal to that future plan. In an uncertain global trade scenario, finding new export markets is going to be an extremely difficult job. However, pushing the economy to the next level of growth has never been an easy task for any country.
European Union: Report on the implementation of article 66.2 of the TRIPS agreement (pdf, WTO)
This document is circulated in accordance with the Decision of the Council for TRIPS of 19 February 2003, according to which developed country Members shall submit annually reports on actions taken or planned in pursuance of their commitments under TRIPS Article 66.2 (incentives provided to their enterprises or institutions for the purpose of promoting and encouraging technology transfer to least developed country Members). As agreed in the Council for TRIPS, this document is a detailed report on technology transfer incentives put in place by the EU and its Members between July 2018 and August 2019.
Informal working group on MSMEs: Draft ministerial recommendation on promoting MSME inclusion in regulatory development in the area of trade (pdf, WTO)
The following communication, dated 4 February 2020, is being circulated at the request of the delegations of the Russian Federation and Uruguay. Recalling the Declaration on the Establishment of the WTO Informal Work Programme for MSMEs:
Recognizing that regulatory changes may be particularly burdensome for MSMEs and that WTO Members could minimize potential challenges by assessing the impact of new rules on MSMEs and by providing adequate opportunity for MSMEs to comment on and adapt to new regulatory requirements;
Noting the discussions by the MSME Informal Working Group of horizontal and non-discriminatory solutions in the area of regulatory practices, which are likely to yield benefits for the participation of MSMEs in international trade;
Noting that principles of MSME inclusion in regulatory development have been established in a number of Members’ domestic jurisdictions and included in a number of regional trade agreements;
Noting that WTO agreements include rules on consultations with stakeholders in the process of regulatory development but do not explicitly refer to MSMEs;
Building on the implementation of Articles 1 and 2 of the Agreement on Trade Facilitation and Article X of the General Agreement on Tariffs and Trade. We recommend that WTO Members:
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Successful conclusions to Irish trade mission to North Africa
Ocean Conference (2-6 June, Lisbon) has potential to be a ‘global game-changer’
Comoros, Kenya, Madagascar, Mauritius, Seychelles: FAO-Japan Blue Economy project update
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Botswana deposits Tripartite FTA Ratification instruments
Botswana has deposited the instruments of Ratification for the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA Agreement) bringing the number of countries that have done so to eight. The other countries that have ratified and deposited their instruments are Burundi, Kenya, Egypt, Rwanda, Uganda, South Africa, and Namibia.
The ceremony took place in Lusaka, at the COMESA Secretariat on 30th January 2020. Botswana High Commissioner to Zambia, Mr Alpheus Matlhaku handed over the ratification instrument to the Chairperson of the Tripartite Taskforce (TTF) Ms Chileshe Mpundu Kapwepwe, who is the Secretary General (SG) of COMESA.
With the ratification of the tripartite agreement by the required number of States, Ambassador Matlhaku said Botswana looks forward to tapping into the wider market of the EAC-COMESA-SADC region.
Commending Botswana, the SG said the TFTA offers a bigger market and it will enable countries to trade more duty free, a move that will increase the levels of intra-Africa trade.
“All Annexes to the Agreement have been finalized , 93.4 percent of the rules of origin have been agreed on, and the exchange of tariff offers is near complete,” she said. “More critically, negotiations between SACU and EAC have now been concluded and this will pave way for the commencement of trade between the two bloc to which Botswana belongs.”
She noted that the implementation of selected priority tripartite instruments and programmes, which do not require ratification is on-going. These include online mechanism for reporting, monitoring and elimination of non-tariff barriers, the SMS based NTBs reporting system and the transport facilitation and infrastructure programmes.
She reiterated the importance of the TFTA adding the its implementation will result into positive real income gains for partner states, an increase in net exports, an increase cross border flow of investments and creation of decent jobs the women, youth and men. She called on other countries ratify the instruments to ease movement of goods, services and people in the region. For the TFTA to enter into force, fourteen ratifications are needed.
“We now remain with six countries for the Agreement to enter into force,” Madam Kapwepwe stated.
The TFTA was launched in June 2015 with the aim of bringing together, in one common market, countries in the three regional economic blocs namely the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC).
The Tripartite FTA brings together a population of 700 million people with an estimated Gross Domestic product of well over US$1.4 trillion.
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Call for papers: Harnessing intra-COMESA trade through the interface with the African Continental Free Trade Area. Selected papers will be peer reviewed and considered for publication in the COMESA flagship publication “Key issues in Regional Integration”, Volume IX.
DG Azevêdo: “To modernize the WTO, we will need vision and determination” (WTO)
I have been saying this since the first day I took office in 2013: that the system has to deliver more and deliver quicker. Its rules must cover more aspects of cross-border economic activity. And we have been doing just this. The trade facilitation agreement concluded in 2013 is a boost to global transactions that could lift trade by over one trillion dollars. In 2015, members agreed to eliminate agricultural export subsidies, removing a major distortion in farm trade. That same year, a group of about 50 members agreed to expand the plurilateral Information Technology Agreement, cutting tariffs on $1.3 trillion worth of touch screens, new-generation microchips, GPS equipment and other infotech products that didn’t exist back in 1996. These were important changes, but they are not enough. We need to go further. Unless we do, grey areas in trade rules will keep expanding. They will become fodder for tensions. In fact, some of the unconventional policies and bilateral arrangements we see today might never have arisen had we done more to update the system. The impasse on dispute settlement is a case in point. Many members, not only the United States, were dissatisfied with different aspects of how the Appellate Body was operating. It is my hope that members will use the current crisis to produce an improved two-step appeals process. [Note: Address at the Washington International Trade Association Conference, 4 February]
Validation workshop for Sierra Leone’s national trade strategy: Repositioning trade for the AfCFTA (UNECA)
The national trade strategy of Sierra Leone is anchored around implementing the AfCFTA as a means for repositioning Sierra Leone’s trade away from an overdependence on iron and other mining products, towards more diversified goods and services. The strategy has four components: AfCFTA, trade support, industry development, and institutional capacity building. Mr David Luke, coordinator of the African Trade Policy Centre of ECA, told the workshop (4 February): “The entire economy of Sierra Leone amounts to $3.7bn. And yet, as part of ECOWAS, Sierra Leone is on the doorstep of more than a $700bn economy with 350 million people. And within Africa, it has access to an economy of 1.3 billion people worth $2.5 trillion in GDP.” Mr. Luke further stated that for Sierra Leone to take advantage of these markets, among many others, the regulatory framework needs greater predictability, better mechanisms for dialogue with the private sector should be in place and trade-related infrastructure needs to be improved.
Protectionism mars progress on Africa-wide free trade area (Global Trade Review)
According to risk consultancy firm EXX Africa, however, hostilities and restrictions on exports in some African countries continue to present issues that are holding up progress. “The highly diverse continent is not immune to global trends of nationalism and protectionism, as exhibited by recurrent anti-immigrant violence in South Africa, trade restrictions in East Africa, and economically harmful border closures in Nigeria,” it says in a report published in January. Robert Besseling, executive director of EXX Africa, says those trends are “by far the greatest threat to AfCFTA implementation”. Extract from the EXX Africa report:
Moreover, the AfCFTA will always be vulnerable to the unilateral actions of sovereign member states that go against the ethos of the agreement. This was demonstrated last year when Nigeria decided to block imports of a long list of products from neighbouring Benin, Niger, and Cameroon—including foods such as live poultry, pork, beef, refined vegetable oils and fats, and sugar, as well as many other items ranging from medications to used cars. It is worth noting that Nigeria did not formally notify its regional partners of its restrictions as required by ECOWAS trade rules at the time, and its actions therefore contravened an agreement that guarantees free movement between the 15 ECOWAS members. Similar actions under the AfCFTA are not unlikely, as border closures and delays are common during elections, unexpected changes in power, security crises, or even as a result of poor bilateral relations. In 2019, closures were also witnessed between Rwanda and Uganda, Ethiopia and Eritrea, Sudan and Chad, and Mozambique and South Africa, demonstrating the prevalence of such actions across the continent
TFTA Agreement update: Botswana deposits Tripartite FTA ratification instruments
Botswana has deposited the instruments of Ratification for the COMESA-EAC-SADC Tripartite Free Trade Area bringing the number of countries that have done so to eight. The other countries that have ratified and deposited their instruments are Burundi, Kenya, Egypt, Rwanda, Uganda, South Africa, and Namibia. The ceremony took place in Lusaka, at the COMESA Secretariat on 30 January 2020. Ms Chileshe Mpundu Kapwepwe (Comesa Secretary General): “All Annexes to the Agreement have been finalized , 93.4% of the rules of origin have been agreed on, and the exchange of tariff offers is near complete. More critically, negotiations between SACU and EAC have now been concluded and this will pave way for the commencement of trade between the two bloc to which Botswana belongs.”
COMESA Simplified Trade Regime update: Malawi, Zimbabwe review common list products
The governments of Malawi and Zimbabwe have reviewed and added products to their Common List which will be traded between the two countries using the COMESA Simplified Trade Regime (STR). Each country is now expected to have the List gazetted by 28 February 2020. This was agreed during a bilateral meeting between the two countries held in Mponela, Malawi in November 2019. COMESA Secretariat, through the Cross-Border Trade Initiative, was part of the meeting.
pdf The First Continental Report on the Implementation of Agenda 2063 (5.79 MB) (AUDA Nepad)
The January 2013 African Union Summit adopted Agenda 2063 – “The Africa We Want” – as Africa’s blueprint and master plan for sustainable development and economic growth of the continent. This report is a consolidation and evidence-based assessment of country and regional-level progress reports on Agenda 2063, complemented with interventions and results achieved at the regional and continental level. This is the first continental-level report that has been compiled from reports received from 31 African Union Member States, covering 56% of the continent, and six Regional Economic Communities. The report presents an analysis of the aggregate status of progress made against the targets stipulated in the First Ten- Year Implementation Plan, taking into consideration that the continental plan has so-far been implemented over six years.
At the regional level, East Africa recorded the highest performance in five out of the seven aspirations in Agenda 2063 First Ten Year Implementation Plan with an aggregate score of 40% against the 2019 targets. The aggregate performance of West Africa stood at 34%, while the aggregate performance of North Africa stood at 27%. Southern and Central Africa both recorded an aggregate score of 25% against the 2019 targets.
Profiled recommendation: There will be need for more sensitisation on Agenda 2063 and its added value to country and regional development efforts. Further efforts should be made towards deepening domestication and mainstreaming of the continental development agenda into planning, budgeting and implementation at national, regional and continental levels. It will be important to anchor Agenda 2063 within existing country and regional institutional mechanisms with designated focal points for improved domestication, coordination, implementation and reporting on Agenda 2063. Institutionalising evidence-based reporting on Agenda 2063 among all AU Member States, RECs and AU continental-level bodies is thus required to review progress on a biennial basis. On this note, it is recommended that AUC, AUDA-NEPAD and other relevant bodies strengthen the capacities of Member States and RECs in data collection, data analysis and reporting on Agenda 2063.
Note: A dashboard showcasing the findings of the above report is available online on the AUDA-NEPAD website. The dashboard showcases the quantitative data on the progress made by AU member states in the implementation of Agenda 2063 and the Sustainable Development Goals 2030.
PIDA PAP2 training workshop: update (AU)
In his opening remarks, the Head of Information Society division at the AUC, Mr Moctar Yedaly, emphasized the need for unceasing commitment to see the PIDA PAP2 through the validation of Specialised Technical Committee in October, 2020 and its adoption by the Heads of State in January, 2021. “We have new projects to select taking into consideration what has been achieved and what we have yet to do,” he highlighted. The task force intends to build upon the experiences and lessons learned from PIDA PAP1 projects to lay the groundwork for PIDA PAP2. The Task force members will train experts from Member States and RECs during regional workshops.
Moving into the second phase of PIDA, member states and RECs must first identify priority projects so that ultimately the projects reflect the needs of the main stakeholders. Member states will propose their projects to RECs, who are required to fill out specific forms requesting key information to screen projects with the guidance of the task force before submitting it for review. Once the project identification is complete, the task force will analyze, score and screen the proposed projects according to the eligibility and project selection criteria. While the eligibility criteria focuses on regional integration, the project selection criteria concentrates on inclusiveness and sustainability with regard to gender sensitivity, rural connectivity and environmental friendliness. The project selection criteria also weighs the economic and financial impact of projects in terms of job creation, economic impact, bankability, smart/innovative approaches, and corridor planning. Fifty total projects will be picked by the end of the process, ten projects per region and at least one project by sector. The screening tool, based on inputs by the taskforce, will generate a weighted overall score to measure a project’s ability to respond to the Integrated Corridor Approach for the selection.
Transnet must punch above its weight to grow Africa, says new CEO Portia Derby (Fin24)
Newly appointed Transnet group CEO Portia Derby told delegates at the Investing in African Mining Indaba on Wednesday that the state-owned rail freight company’s mission to establish itself on the African continent would yield benefits for the economy of South Africa and other African nations. Derby said the establishment of Transnet International Holdings – a subsidiary of Transnet Group – in 2018 was a critical part of investing in the revival of the South African economy and the further industrialisation of countries on the rest of the continent. Transnet International Holdings’ key projects include a rail revitalisation programme in Ghana and the North South Rail Corridor, which connects rail networks among Southern African states. Derby said Transnet needed to take the lead in establishing South Africa as a key investor on the African continent, mentioning that the South African economy reaps little benefit from the $104bn in Chinese exports the continent receives. “If you look at the exports to the continent from China, they are substantial, but in terms of logistics, South Africa gets little of that. There is absolutely no reason why we can’t be the queens of trans-shipment,” said Derby.
Morocco’s trade deficit widens by 1.5% in 2019 (Reuters)
Morocco’s trade deficit expanded by 1.5% to 209 billion dirhams ($21.6 bln) in 2019 compared with a year earlier, the foreign exchange regulator said on Wednesday. Total imports rose 2% to 491 billion dirhams, outstripping exports of 282 billion dirhams, which were 2.4% higher, the regulator said in its monthly report. Energy imports, including gas and oil, dropped 7.2% to 76.4 billion dirhams, or 15.6% of total imports. The automotive sector continued to top Morocco’s exports at 27.3% of all sales standing at 77.1 billion dirhams, up 6.6%. Agri-food exports grew 4.1% to 60 billion dirhams, while phosphates and by products dropped 5.9% to 50 billion dirhams due mainly to lower fertilizer sales. Remittances from Moroccans living abroad, which are important to Morocco’s hard currency flow, were stable at 64.8 billion dirhams. Foreign direct investment dropped 46.8% to 18.1 billion dirhams.
Witney Schneidman: Can an investment summit save Trump’s Africa policy? (Brookings)
Unfortunately, apart from convening business meetings in Kenya and Tunisia, the Trump administration has yet to transform this good idea into an effective policy instrument. Bureaucratic turf-fighting over where Prosper Africa should be housed—State, Commerce, USAID, the new DFC, or none of the above—has hampered the rollout. The initiative’s leadership remains unresolved: The interim leader does not even appear on the website. Nor does a board, staff, or any point of contact. It is not yet clear how the 16 U.S. government agencies that make up Prosper Africa can work as a unified entity to help US companies compete in Africa.
Many American companies rely on some form of partnership with the US government as key to mitigating risk and doing business in Africa. This comes in many forms: advocacy from Washington or an embassy, resources from the DFC, or export financing from the newly re-authorized U.S. Export-Import Bank, to name a few. A fully functioning Prosper Africa and a fully funded DFC are essential to deepening US-Africa commercial ties. A US-Africa investment conference would be vital as well. While commercial supports are essential to spurring more US investment in Africa, so is a coordinated diplomatic, commercial, and security strategy. An integrated and forward-looking policy toward the continent will not emerge until the most senior leaders in the administration determine that Africa is a priority region for the United States.
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Makhtar Diop: SSATP’s new phase is ready to deliver (World Bank)
For over 30 years, SSATP has been helping African countries build the underlying and enabling “invisible infrastructure” of transport policy reforms and capacity building. The vitality and relevance of this mission are clear. Much progress has been made, but I believe that SSATP’s current priority areas - road safety, regional integration and urban mobility - remain extremely relevant to solving the continent’s transport challenges. I am glad that SSATP member countries agreed last November during the annual general meeting in Victoria Falls to renew the focus on these areas in the upcoming Fourth Development Plan. This will be an important foundation for making the African Continental Free Trade Area a reality through regional connectivity and economic integration.
The new phase of SSATP will build sustainable urban mobility and accessibility with a focus on low-carbon modes to manage Africa’s increasingly congested urban areas; and mainstream road safety activities that use the “Safe System” approach, which focuses on upstream safety by design in road and transport systems. Two extremely relevant new areas - resilient road asset management and the aviation sector - have now been incorporated into SSATP’s mandate, as they are pivotal for Africa to address the challenges of climate change and multimodal continental integration in context of the increased transport demands from burgeoning populations across Africa.
Kenya – US trade policy: selected updates
(i) Uhuru, Trump meet to discuss Kenya-US trade, economic deal (The Standard)
President Uhuru Kenyatta is scheduled to hold talks with President Donald Trump in Washington this week as the two countries negotiate on a free-trade agreement, America’s first such deal with a sub-Saharan country. According to the president’s spokesperson Kanze Dena, Kenya is working closely with the US government in crafting a trading arrangement that guarantees continued market access for Kenya’s products in the US market after the African Growth and Opportunity Act comes to an end in 2025. "While in Washington DC, President Kenyatta is expected to hold bilateral meetings with senior US government officials and those from the private sector. During meetings with American business membership groups, President Kenyatta will be expected to pitch for Kenya as an ideal business, investment and tourism destination,” she said in a statement.
The President will also engage with the US congress, Chairmen of Finance, Defense and Foreign Relations Committees. Uhuru’s visit will also see a technical working group to promote trade and economic relations between Kenya and US meet for the third time after it was formed two years ago. It is expected that at the end of the technical working group meeting, a joint statement will be issued announcing the start of negotiations geared towards a new Kenya-US free trade agreement.
(ii) Kenya push for US trade talks to stir up EAC again (Business Daily)
The move is set to draw a sharp reaction from other EAC members given that Kenya surrendered its customs space to the bloc in 2005 when it signed its customs union protocol. The rulebook compels member States to negotiate all trade pacts jointly. “The EAC can only approve a free trade deal with Kenya if the resulting tariff regime is not in conflict with EA Customs Union Protocol,” Mr Kenneth Bagamuhunda, the EAC director-general for customs and trade told the Business Daily on Friday. “In fact, from 2001, the rule has been that any trade agreement with a third party must be negotiated as a bloc. This was a Summit (EAC Presidents’) decision.”
(iii) Review EAC pacts to aid members’ priorities (editorial comment, Business Daily)
Even before the dust settles in the EAC about Kenya’s lone quest for an economic pact with the European Union, Nairobi is at it again, seeking to test the bloc’s integration project with direct trade negotiations with the US. The Cabinet, chaired by President Uhuru Kenyatta, approved the free trade talks with the US last week despite the fact that the EAC Heads of State Summit advocates for joint negotiations. It, therefore, could mean that Kenya has either learnt that the pace at which its neighbours want to move forward is painstakingly slow or it is keen on striking its own deals as it waits for the neighbours to join forces with it. Being a developing nation, Kenya must sign reciprocal pacts to trade with the EU and the US. However, Tanzania, Uganda, Rwanda, Burundi and South Sudan are classified as least developed nations that can access developed markets like the EU and the US without having to sign reciprocal trade deals. To avoid incessant conflicts, the EAC must review its treaties to ensure that members are free to pursue national interests that are critical to their economies as long as the resulting pacts do not undermine regional integration.
(iv) Financial Times: US and Kenya to start talks on 'model' trade deal for Africa
US ambassador’s ambition: Lift South Africa into top 20 of US trade partners (Daily Maverick)
When she met President Cyril Ramaphosa at the credential ceremony, Marks explained two new major US initiatives – she asked him, after he had become chair of the African Union next month, to invite all of Africa’s leaders to a US-Africa investment summit in Washington which Ramaphosa and Trump would co-host, probably in May; and she told him the Trump administration had decided to lift South Africa into the top 20 of US trade partners. Marks told Daily Maverick that the investment summit could “make a significant difference to Africa and the economies of Africa”. She said Trump and Ramaphosa had met several times, “and they’ve just hit it off”. Ramaphosa’s office confirmed at least four meetings at global summits.
Marks said Ramaphosa was unable to respond to the investment summit proposal at the ceremony on Tuesday but had received her very positively and the two governments would follow up the proposal. Ramaphosa’s office, though, suggested the US should rather go through the African Union Commission. Marks acknowledged that lifting SA into the top 20 of US trading partners – from its current position of 39th – would be an enormous undertaking, requiring at least tripling the volume of two-way trade which was already “decent”. Her team and the South African team were already working on the framework for doing so, she said. [The author: Peter Fabricius]
South Africa: State authorises poultry tariffs to protect local industry (City Press)
Government has authorised the long-awaited import tariffs to be imposed on all poultry product imports in a move to stabilise the local industry and plug the R6.5 billion annual loss the country is experiencing due to these imports. The introduction of the tariffs is one of the main requirements of the poultry sector master plan announced by government late last year to protect the local industry from being flooded with cheap imports from foreign countries, particularly from Brazil and the US. Various poultry industry stakeholders confirmed to City Press this week that Economic Development Minister Ebrahim Patel authorised the tariffs late last year and they were with Treasury for “finalisation and publication in the Government Gazette”.
Kenya’s draft AfCFTA strategy: update (UNECA)
The two day-meeting was jointly organized in Nairobi by the UNECA and the Kenya State Department for Trade. It was attended by 60 experts, including government officials, trade economists, university lecturers, development partners and youth and women’s representatives. Gladys Kinyuah, the Deputy Director for International Trade at the Kenya Ministry of Industry, Trade and Cooperatives said the government is already taking the steps towards implementing the agreement and was taking into consideration the concerns and recommendations of all concerned stakeholders. Kinyuah also explained that if Kenya is to maximise its benefits from the agreement, greater attention must be geared towards improving the competitiveness of service sectors such as transport, ICT, tourism, finance and business services. She finished her remarks by expressing the Ministry’s appreciation to ECA for helping the country to develop the AfCFTA implementation strategy.
Kenya: Cargo scanning tracking boots KRA's collection by 18% (The Star)
Investment in cargo scanning and tracking has helped curb diversion, mis-declaration and illicit trade boosting revenues by 18.8 per cent, according to Kenya Revenue Authority. This follows the successful implementation of the Integrated Scanner Command Centre and the Regional Electronic Cargo Tracking System, all with a central command center at Times Tower, Nairobi. Latest official Treasury data shows half-year tax collection (July-December) closed at Sh857.8 billion, a 18.8% growth compared to Sh722.3 billion in December 2018. The two systems, which have been lauded by the World Customs Organisation, have reduced cargo verification at ports of entry from 60% to below 10%, increasing clearance processes and cargo dwell time along the Northern Corridor. “In terms of tax evasion, cargo scanning systems have addressed that, and we have seen especially ethanol which was being smuggled in large quantities being arrested at the scanners,” Commissioner for Customs and Border Control Kevin Safari said yesterday. He spoke during a tour of the centre by the WCO Secretary-General Kunio Mikuriya , who is in the country on a two-day visit. [WCO urges Kenya to leverage tech to spur regional trade hub]
Kenya: Like others before him, Kebs boss just won’t sit pretty (The Standard)
Barely a year after taking over at the Kenya Bureau of Standards (Kebs) Bernard Njiraini is facing a mountain of challenges restoring public confidence in the institution mandated to ensure safety of products. Mr Njiraini, a former military officer, was picked last August to head the crucial department. And like many of his predecessors, he is facing familiar hurdles including what he terms “fight back by cartels”. The MD is currently under investigations by the Ethics and Anti-Corruption Commission and Directorate of Criminal Investigations. EACC is pursuing allegations of graft while DCI is probing claims that the new chief had threatened one of his juniors. The doors at the Kebs headquarters in Nairobi’s South C have opened several times over the last decade for new MDs. But they have also enhanced their early exits, leaving a trail of fractured corporate careers. The job of a Kebs MD appears too hot for many. For years, Kebs has struggled to retain a chief executive, with every one that occupied this office in recent years hounded out before their term ends. Over the last 10 years, none of the MDs has held the job for a complete term. The holders of this office work on a three-year renewable contract.
Kenya: Mombasa auction registers first sale of premium teas (The East African)
The decline of international market for the cut-tear-curl (CTC) black tea has pushed Kenyan exporters to premium tea as the next best bet for the industry. The first tea auction of 2020 at the Mombasa Tea Auction registered the first premium orthodox tea export by Empire Kenya EPZ Ltd to Sri Lanka. But managing director Thushara De Silva has called on the government of Kenya to “initiate trade agreements with our source markets since they charge 15% tax for packaged tea, which is discouraging export of packaged tea.”
Tanzania: Major infrastructure projects increase December 2019's import bill by 9% (pdf, BoT)
Exports improved further, recording annual growth of 11.9% to $9,534.4m in year ending November 2019. This performance was on account of an increase in the value of nontraditional goods exports and service receipts. The value of exports of non-traditional goods grew by 31.0% to $4,160.0m in the year to November 2019, largely driven by gold and manufactured goods. Export of gold, which accounted for 51.4% of non-traditional goods exports, increased by 41.9 to $2,139.9m on account of both volume and price in the world market. The increase in volume exported is partly associated with government actions to effectively manage mining activities in the country. Likewise, manufactured goods exports improved by 28.4%, to $996.0m, in the year to November 2019, largely owing to good performance in exports of iron and steel products, glass and glassware, manufactured tobacco, sisal yarn and twine, and fertilizers.
The on-going mega infrastructure projects in the country remained the main driver of imports. The import bill for goods and services recorded annual growth of 9.0% to $11,004.5m in the year ending November 2019, owing to an increase in the value of goods import. All major categories of goods import recorded growth with much of the increase registered in capital and intermediate goods. The value of oil imports, which accounted for 23.1% of goods imported, rose by 30.2% to $2,078.6m, owing to increase in volume much associated with the on-going infrastructural projects in the country (Table 5.2).
The UK and the WTO: two updates
The United Kingdom has notified WTO members of its status in the organization given its withdrawal from the European Union on 1 February. In a document sent on 1 February, the United Kingdom explains the WTO-related implications of Brexit (pdf) for itself and other WTO members.
UK’s statement at the WTO on the Joint Initiative on Services Domestic Regulation
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AU Summit timeline
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36th Ordinary Session of the Executive Council (6-7 February). The Executive Council will consider the draft agenda and the draft decisions and declarations of the Assembly with appropriate recommendations for consideration by the Heads of State scheduled to take place from 9-10 February 2020. The Executive Council will further consider the reports and updates of the sub-committees of the Executive Council and Ad-hoc Ministerial Committees on, inter alia: Progress made by the AfCFTA; Statute of the African Peer Review Mechanism; Update on the Digital Transformation Strategy for Africa (2020-2030); Draft Social Agenda 2063.
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37th Session of the AUDA-NEPAD Heads of State and Government Orientation Committee (8 February). The HSGOC session will receive opening statements from: President Macky Sall (Senegal, chairperson of the NEPAD Heads of State and Government Orientation Committee), Moussa Faki Mahamat (Chairperson of AUC), President Abdel Fattah El-Sisi (Egypt, Chairperson of the African Union).
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33rd Ordinary Session of the Assembly (9-10 February). Download the draft agenda here (pdf)
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AUDA-NEPAD at 33rd Ordinary Session of the African Union Summit. Featured event (8 February): Launch of Conditions for Success in the Implementation of the AfCFTA
South Africa and the AU in 2020: extract from President Cyril Ramaphosa’s weekly newsletter
At the end of the week, I will travel to Addis Ababa in Ethiopia for the African Union summit at which South Africa will assume chairship of our continental organisation for the next year. We plan to use this great responsibility, among other things, to promote the economic empowerment of the women of Africa. There has never been a better time to do so. With the African Continental Free Trade Area coming into operation this year, we have an opportunity to ensure that women and women-owned businesses are able to meaningfully benefit from what will be the world’s largest common market for goods and services. Just as there can be no real gender equality without economic emancipation for women, so too there can be no sustainable economic growth for any country unless women are full and equal participants.
The continental African passport promised to roll out in 2020 can only improve mobility in Africa (Quartz)
It’s still up in the air whether the African Union can keep its promise to deliver a continental passport by the end of the year. The travel document would allow visa-free travel between the Union’s 55 member countries. The potential economic impact is huge. Recently-released data show that intra-African travel continues to lag the world. The continent’s 1.2 billion people made far fewer intra-continental trips—in total, and per person—than Europeans, Asians and Americans.
Will expansion help Tazara get back on track? (The East African)
The board of directors of the Tanzania-Zambia Railway wants the two countries to expand the business to Malawi, Rwanda and Burundi. “We took note of the negative trend in some of the key performance indicators recorded in the first half of the year ending December 31, 2019, and we urge the management to ensure that actions are taken to reverse the trend and put the performance back on track,” says a communiqué issued this past week in Dar es Salaam following Tazara’s board of directors meeting. Tazara’s latest performance report shows that the company performed below capacity in the first half of the 2019/2020 financial year, transporting just over 56%, or 88,529 tonnes, of its target cargo volume of 157,734 tonnes, between July and December. This is a 9.7% drop compared with the same period in 2018 when 98,024 tonnes of cargo moved between the two countries. Tazara’s priorities are listed to tap more private investment and to link the railway to landlocked neighbouring countries. However, none of these have been implemented.
Northern Corridor deal set for review (The East African)
The 10-year-old Northern Corridor trade agreement will be updated by March to address emerging trade opportunities, meet current needs and boost regional trade. This was the main resolution of the 48th executive meeting of the Northern Corridor Transit and Transport Co-ordination Authority member states — meeting in Mombasa, Kenya recently. The member states are Kenya, Uganda, South Sudan, Democratic Republic of Congo, Rwanda and Burundi. “The revised draft of Agreement and protocols has been received and is awaiting a validation workshop in March this year before its submission to the Council of Ministers,” said executive secretary Omae Nyarandi.
The revised trade agreement will include the use of Kenya’s Standard Gauge Railway, which was not there in 2007 when the agreements were being drawn up; joint funding of infrastructure such as roads, one-stop-border posts, motion weighbridges; and speed up implementation of the Customs Union Protocol by adopting a single window system for regional custom data transfer to end cross-border delays. Trade Mark East Africa has committed budgetary support of $393,000 for the recruitment of system developers to enhance the current online tools — which are a transport observatory system and the regional information system — and are expected to be officially launched in the next two months.
South Africa: Trade statistics for December 2019 (SARS)
The South African Revenue Service released trade statistics for December 2019 on Friday which recorded a trade surplus of R14.85bn. The year-to-date (1 January to 31 December 2019) trade surplus of R24.70bn is an improvement from the R15.23bn surplus for the comparable period in 2018. Exports increased by 4.1% year-on-year whilst imports for the same period showed an increase of 3.3%. The R14.85bn trade surplus is attributable to exports of R103.31bn and imports of R88.47bn. Exports decreased from November 2019 to December 2019 by R13.02bn (11.2%) while imports decreased by R22.22bn (20.1%). Top 5 countries for exports: China (11.0%), United States (7.5%), Germany (7.1%), United Kingdom (6.9%), India (5.2%). Top 5 countries for imports: China (16.9%), Germany (7.4%), United States (6.3%), Nigeria (5.9%), Saudi Arabia (5.9%)
Journal of African Trade: selected recent articles from Volume 6, Issue 1-2, December 2019
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Trade and industrialisation in Africa: SMEs, manufacturing and cluster dynamics. There is evidence of dynamism in Africa, both within individual SMEs and in clusters of SMEs. In understanding the challenges faced by this sector, and in examining the prospects for their participation in external trade, we review the experience of 25 African clusters using four dimensions: the nature of unintended externalities (e.g., external economies), market orientation and upgrading and growth trajectories, cluster dynamism and joint action for upgrading, external institutional support and upgrading. In terms of policy challenges for SMEs and export trade we discuss four major areas: (i) participation in governed global value chains feeding into high-income markets, (ii) export sales to non-regional low-income markets, (iii) export sales to regional markets and (iv) informal sector cross-border trade to regional economies. We conclude that for Africa, trade and industrialisation are integrally linked and attempts to facilitate regional trade policies cannot ignore the need for developing appropriate industrial policy and adopting an approach of developmental regionalism. This is especially evident with respect to SME development. [The authors: Raphael Kaplinsky, Mike Morris]
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The impact of regional integration on Africa’s manufacturing exports. This paper analyses the impact of Regional Trade Agreements on intra-regional manufactured exports in Africa. Using data from 1990 to 2015 for 45 African countries, a structural gravity model was estimated using the Poisson pseudo maximum likelihood estimator that controlled for heteroscedasticity and allowed for bilateral zero trade values between trading partners. The study also accounted for multilateral resistance effects, endogeneity of RTAs, and the phased-in impacts of RTAs. On average, a regional trade agreement led to a 72% increase in manufacturing exports between members within 12 years of the ratification of the trade agreement. [The author: Rodgers Mukwaya]
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The effects of trade facilitation on trade performance in Africa. In this paper, we assess the effects of trade facilitation measures and their combined effect (using principal component analysis) on trade performance in a sample of 52 African countries within a structural gravity model framework for the period 2006–2015. The results suggest that trade facilitation improves trade performance in Africa; the better the level of trade facilitation, the larger the extent of trade flows. From a policy perspective, reducing trade costs across borders remains key to improve trade performance in Africa. [The authors: Daniel Sakyi, Sylvanus Kwaku Afesorgbor]
WTO structured discussions on investment facilitation for development: informal ministerial meeting on investment facilitation for development. The following communication dated 31 January 2020 is being circulated at the request of the delegation of Chile:
Ministers (23 January, Davos) re-affirmed their commitment to work towards a concrete outcome on investment facilitation by MC12 and to keep the momentum in the forthcoming crucial months, including by conducting further outreach activities. They also confirmed the decision to move into negotiating mode as of March 2020 in order to achieve such concrete outcome.
Ministers welcomed the Philippines as the newest participant in the Initiative, following the announcement made at the meeting in Davos. There are now 99 participating WTO Members, representing well over half of the WTO’s membership – as well as 64% of world GDP, 78% of global trade and 68% of global foreign direct investment (inward stock).
Ministers conveyed their strong support and commitment in favour of the joint initiative and confirmed that a framework on investment facilitation is seen as an important element to update and strengthen the multilateral rules-based system and make it more responsive to present-day needs and global challenges – notably the financing of the 2030 Sustainable Development Goals, which will require a significant mobilization of investments.
Finally, Ministers welcomed the strong support and engagement by the private sector in favour of the initiative – as highlighted in a separate high-level meeting with business leaders, civil society and academics held at the World Economic Forum’s Annual Meeting 2020 in Davos.5 Ministers expressed their readiness to further strengthen the dialogue with business and investors, including micro, small and medium-sized enterprises.
Statement by the Inclusive Framework on BEPS (OECD)
The international community reaffirmed its commitment to reach a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy, and will continue working toward an agreement by the end of 2020, according to the Statement by the Inclusive Framework on BEPS released by the OECD on Friday. The Inclusive Framework on BEPS, which groups 137 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules, decided during its 29-30 January meeting to move ahead with a two-pillar negotiation to address the tax challenges of digitalisation.
Participants agreed to pursue the negotiation of new rules on where tax should be paid (“nexus” rules) and on what portion of profits they should be taxed (“profit allocation” rules), on the basis of a “Unified Approach” on Pillar One, to ensure that MNEs conducting sustained and significant business in places where they may not have a physical presence can be taxed in such jurisdictions. The Unified Approach agreed by the Inclusive Framework draws heavily on the Unified Approach released by the OECD Secretariat in October 2019. Endorsement of the Unified Approach is a significant step, as until now Inclusive Framework members have been considering three competing proposals to address the tax challenges of digitalisation. A Programme of Work agreed in May 2019 has been replaced with a revised Programme of Work under Pillar One, which outlines the remaining technical work and political challenges to deliver a consensus-based solution by the end of 2020, as mandated by the G20. Inclusive Framework members will next meet in July in Berlin, at which time political agreement will be sought on the detailed architecture of this proposal.
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Selected WTO updates:
Ethiopia has resumed its WTO membership negotiations almost eight years after the last formal meeting of its Working Party. Mamo Mihretu, senior advisor to the Prime Minister of Ethiopia, and chief trade negotiator, shares his impressions:
Zimbabwe’s Trade Policy Review will take place on the 25, 27 March
The Standards and Trade Development Facility launched its 2020-2024 strategy, Safe and inclusive trade horizons for developing countries
Borrow with sorrow? The changing risk profile of Sub-Saharan Africa's debt (World Bank)
This paper documents recent trends in public debt and its composition over the past decade in Sub-Saharan Africa. It argues that although the level of indebtedness of the region as a whole is still lower than the one before debt forgiveness, the risk profile of public debt has increased sharply. The share of concessional public debt has been declining while that owed to private creditors and non-Paris Club bilateral creditors has been rising. The resulting reconfiguration of public debt has led to a significant increase in the region’s debt service. The combined higher risk debt profile and rising debt service might lower the threshold for debt distress in the region.
This paper is organized as follows (pdf): Section 2 documents recent trends in general government gross debt stocks in Sub-Saharan Africa over the past two decades. It distinguishes the evolution of debt across different country groups in the region classified by income levels and the degree of resource abundance. Section 3 zooms in on the external borrowing of the government. It documents the increase in public external debt since 2013 and the rapid increase in public external debt service. Moreover, it presents an overview on sovereign bond issuances in the region over the past two decades. Section 4 indirectly analyzes whether the increase in public debt is associated to greater growth, investment and efficiency of investment, or related to either greater consumption or investment. Section 5 discusses the policy options of countries in the region to manage risks and contain vulnerabilities in public debt. It argues that the policy toolkit of African policy makers needs to be enhanced by implementing strategies to manage the risks of the public sector balance sheet and put emphasis on policies to boost investment efficiency. Section 6 concludes.
Extract (pdf): Between 2013 and 2015, there was a rapid rise in sovereign bond issuance with more Sub-Saharan African countries accessing international capital markets. These included Côte d’Ivoire, Senegal, Angola, Nigeria, Tanzania, Namibia, Rwanda, Kenya, Ethiopia and Zambia, generating commercial debt exceeding $17.5bn. A total of 13 LICs and LMICs in the region accessed the bond markets during 2013 and 2015. In 2013, the largest sovereign bond issuance shares were made by Gabon ($1.5bn), Nigeria ($1bn), and Ghana ($0.75bn). In 2014, the largest issuances were made by Kenya ($2.75bn), with Ethiopia, Ghana, and Zambia accruing $1bn each. The bulk of these bonds are due between 2021 and 2025 and they are expected to trigger an average repayment of about $4bn annually over that interval. [The authors: César Calderón, Albert G. Zeufack; Related: Kenya is set to hold discussions with the IMF from March about a cautionary facility]
Kenya's bilateral trade relations: selected updates
The Cabinet yesterday approved talks with the US on the establishment of a free trade arrangement between the two countries. A cabinet meeting, held at State House, Nairobi, said the negotiations will give Kenyan goods a smooth access to the US consumer market, especially as the African Growth and Opportunity Act (Agoa) comes to an end.
President Uhuru Kenyatta is set to fly to Washington next week where, according to a Bloomberg report, the two countries will announce negotiations on a trade pact that will form a model for other African countries. Foreign Affairs Principal Secretary Macharia Kamau told Bloomberg that the two nations expect real progress on an agreement by the third quarter of this year, depending on how the negotiations go. This comes even as the AU is pushing to have a continent-wide trade pact with the US instead of individual bilateral deals once the Africa Growth Opportunities Act lapses in 2025. The negotiations between Kenya and the US come at a time when trade between the two countries has remained flat, with Kenya exporting Sh47.2 billion worth of goods to the US in 2017 and Sh47.3 billion in 2018.
Kenya’s private sector is proposing to sell flowers directly to Qatar as part of efforts to boost trade relations with the Middle East country. The push for the flower exports to the Middle East was one of the proposals that officials put on the table during the Kenya-Qatar trade and investment forum, which opened in Nairobi Thursday. The forum, organised by Qatar Development Bank led by its executive director for export development and promotion Hamad Salem Mejegheer, seeks to increase bilateral trade between the two counties currently estimated at Sh4.1 billion.
Kenya has called on Qatari investors to establish a presence in the country's manufacturing sector. Pius Rotich, general manager of Kenya Investment Authority told a trade forum in Nairobi that Kenya is prioritizing the industrial sector because of its huge transformative effect on the economy. "Kenya has put in place a number of policy and tax incentives that will make it attractive for Qatari investors to set up manufacturing plants to produce goods for local and export markets," Rotich said during the Qatar Development Bank-Kenya Matchmaking event. The day-long conference provided a platform for 20 Qatari companies to meet their Kenyan counterparts. Rotich said that Kenya is an ideal base for industrial production because of the number of trade agreements it has signed with the rest of the world that allow locally produced goods to access foreign markets at preferential rates.
Pakistani traders, facing a slow economy back home, have hinted at setting a base in Kenya saying the country is “the gateway to emerging African markets”. Speaking at the Pakistan-Africa Trade Development Conference, which began in Nairobi Thursday, the delegates said investment in Kenya would grant them easy access to markets in East African Community as well as the continental free trade area. The conference, which is Pakistan’s first of its kind in Africa, attracted more than 300 delegates drawn from the public and private sector from 22 African countries as well as another 150 delegates from Pakistan. President Uhuru Kenyatta said Kenya will be seeking to revive trade relations with countries in Central Asia such as Pakistan, noting that the trade agreements will offer positive benefits to both regions. “Kenya and Africa is seeking to transform itself to a global powerhouse and to achieve that we need to revive trade relations with the China-Pakistan economic corridor. This conference is just the beginning of that journey where we hope to learn from each other.” [Razak Dawood: Pakistan to double bilateral trade with African countries]
Regulatory and procedural constraints hinder Ugandan ICT exports: new UEPB, ITC report
A new report explores the characteristics of Ugandan technology firms finds that the sector promotes intraregional trade and the inclusion of women and youth in the economy. But regulatory and procedural hurdles make it difficult for many exporters to reach foreign markets. The report, Firms’ characteristics and obstacles to ICT services trade: Indicative evidence from a company survey in the Ugandan ICT sector (pdf), was released during the fifth edition of Annual Export Week organized by Uganda Export Promotion Board. The report argues that Ugandan technology companies would benefit from a regional discussion targeting harmonization and ways to ease the regulatory burden on African services trade. Facilitating such a dialogue, ideally during AfCFTA negotiations, is one of nine headline suggestions of the report. The report found that more than half of the 57 companies surveyed already export, and many others aim to follow suit in the next two years. These enterprises mostly target countries in the Eastern African Community region and the rest of Africa. A majority of the exporting companies face trade obstacles such as tough regulations and administrative procedures. Some preliminary recommendations, which could lead to further analysis and technical assistance interventions, have been identified (pdf, extract):
Facilitating a regional dialogue that could ease the requirements imposed on local presence and open opportunities to cross border trade, when possible, is key. The AfCFTA negotiations would represent a unique platform to discuss about harmonization and the reduction of regulatory burden on services trade in the continent. ICT services are part of the five priority sectors adopted by the AU assembly in July 2018. This particular situation demands for an increasing body of research that can enable African leaders to engage into a more data-driven dialogue.
Harmonization of taxation systems and reciprocal recognition of licenses and certifications could also help to ease the burden faced by companies. Governmental sources, consulted during the preparation of the current report, mentioned that Uganda is in the process of harmonizing internal taxes with other partner states under the aegis of the EAC Common Market Protocol as an EAC Draft Policy has already been prepared. EAC members’ efforts to speed up the adoption process will therefore be beneficial for the ICT sector. Focus should be also devoted on the ratification of the EAC Double Taxation Agreement. Ugandan authorities can leverage on the experience of the double taxation agreements that have been already successfully concluded with India, South Africa, Denmark, Mauritius, Netherlands, Norway and the UK. [Related: Museveni tips exporters to up dialogue with govt]
Thwarting smugglers leave Nigerians counting costs of stony rice (Bloomberg)
In Adeola Adejare’s market store in Lagos, two teenage boys separate stones from Nigerian rice, preparing it for sale after the government closed land borders and stemmed the flow of cheap, smuggled grains. “Most people cannot afford to buy” even the least costly local variety, said Adejare, a trader in Daleko, the largest rice market in the country’s financial hub. Sales have plummeted by 90%, with the 47-year-old now considering herself lucky to sell two 50-kilogram bags a day.
Despite widespread discontent over rising prices, many Nigerian farmers are happy with Buhari’s tough stance. Estimates of Nigeria’s grain supply and demand vary wildly - though they point to Buhari’s measures boosting domestic cultivation. Data from the U.S. Department of Agriculture shows the country’s milled rice production increased by 24% since 2015 to reach 4.9 million tons this year, leaving a near 2-million ton deficit. The ban has improved the confidence of planters and expected output for this year is 13 million tons, said Muhammad Sahabi Augie, chairman of the Rice Farmers Association of Nigeria in the northwestern state of Kebbi. Millers are now refurbishing old abandoned facilities and are looking to expand production to about 10 million tons this year -- provided the borders remain sealed, said Peter Dama, the president of the Rice Millers Association of Nigeria, which estimates production to have more than doubled to 6.7 million tons this year. [Related: Demurrage swells, goods spoil as border closure continues]
Leveraging export diversification in fragile countries: The emerging value chains of Mali, Chad, Niger, Guinea (World Bank)
Despite multiple past efforts, fragile Sub-Saharan African economies such as those of Mali, Chad, Niger, and Guinea still rank among the least diversified worldwide, with natural resources constituting a high share of their gross domestic product or exports. Large-scale production of gold for Mali, oil for Chad, uranium for Niger, and bauxite for Guinea offers substantial opportunities, but also has major shortcomings. This report explores the following questions: What are Mali’s, Chad’s, Niger’s, and Guinea’s main constraints to export diversification as perceived by key exporting firms? How it could be beneficial for these countries to target certain emerging export products? Are their current interventions to promote global value chain adequate? What lessons can be extracted from specific cases? How can trade and logistic policies favor (or hamper) export diversification–led growth? The book lays the groundwork for effective step-by-step multidimensional policies to propel export diversification in fragile economies that are hindered not only by poor governance and weak institutions, but also by their landlocked position (except Guinea), small domestic markets, and business-unfriendly environments.
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Ethiopia resumes WTO accession negotiations after eight-year pause
Members expressed unanimous support for the resumption of Ethiopia’s WTO membership negotiations at the 4th meeting of the Working Party on the country’s accession, held on 30 January 2020. It was the first meeting of the working party in almost eight years. The Ethiopian delegation said it was ready to work jointly with members to advance and, hopefully, conclude, the accession process by the end of 2021.
The chair of the Working Party, Ambassador Morten Jespersen of Denmark, stressed that the resumption of Ethiopia’s accession process coincides with the internationally recognized peace and integration efforts by Prime Minister Abiy Ahmed, who was awarded the 2019 Nobel Peace Prize.
“As the Prime Minister said in his Nobel speech, while the world is shifting rapidly, it is time for Ethiopia to reap peace dividends with good faith to blossom into prosperity, security and opportunity. I have no doubt that today’s Working Party meeting will contribute to reaching this goal, by becoming a critical turning point in the history of Ethiopia’s accession” to the WTO, Ambassador Jespersen said.
“This meeting convened almost after eight years, has been critical at least on two accounts: first, sending a clear message that the accession of Ethiopia is back; and second, Ethiopia’s engagement is decisively different from the past – it is pro-active and offensive, as the WTO accession is integral to Ethiopia’s ambitious economic reform agenda,” he added.
The chair noted that Ethiopia plays a major role in the Horn of Africa region, which has the highest concentration of WTO accession activities. “Therefore, the resumption of the accession of Ethiopia is expected to give positive impetus to other African accessions, as well as regional integration efforts in the African continent, such as the African Continental Free Trade Area.”
Mr Mamo Mihretu, senior advisor to the Ethiopian Prime Minister and chief trade negotiator, led a high-level government delegation, including Ambassador Misganu Arga Moach, State Minister of Trade and Industry, Dr Eyob Tekalign Tolina, State Minister of Finance, Ambassador Zenebe Kebede Korcho, Permanent Representative of Ethiopia in Geneva, as well as other senior government officials and experts from a range of ministries and government agencies.
Mr Mamo underscored the government’s commitment to the accession process and called on members to accelerate negotiations in consideration of Ethiopia’s status as a least developed country (LDC).
“Membership of the WTO is only the logical next step in Ethiopia’s broader efforts to inject rule of law and predictability in its relations with all states around the world,” he said. “Let me emphasize that Ethiopia is now ready for a deal; I am here to seek your full support and commitment to facilitate this process and bring Ethiopia into the WTO within the shortest possible period, ideally not later than the end of 2021.”
The full statement of Mr Mamo is available here.
WTO members welcomed the resumption of the accession process and supported Ethiopia’s domestic reform efforts through this process. In addition, members pledged to provide technical assistance to Ethiopia to expedite its accession.
Bilateral market access negotiations
The Ethiopian delegation reported on its bilateral market access meetings in Geneva with six WTO members. Ethiopia provided a revised goods offer which envisages all tariff lines to be bound on the day of accession. Also, an initial services offer was submitted offering market access commitments in 10 services sectors. The chair urged members to work constructively in view of Ethiopia’s wish to speed up negotiations.
Foreign trade regime and WTO rules
Members reviewed the foreign trade regime of Ethiopia on the basis of an updated version of the Factual Summary of the Points Raised, which was issued in December 2019 ahead of the Working Party meeting.
Members provided comments and questions on a range of issues pertaining to the country’s trade and trade-related developments. The discussion helped to identify the list of issues which require further attention.
Legislative developments
The Ethiopian delegation updated members on legislative developments and reaffirmed its commitment to bring its trade regime into conformity with WTO rules. They assured WTO members that a fair and predictable legal system that encourages trade and investment is among the priorities of the government and the parliament in the ongoing legislative reform.
To that effect a special Advisory Council composed mostly of independent professionals from the private sector, academia and civil society has been established to provide for an innovative and participatory reform process that ensures its legislation is in full conformity with WTO requirements.
Next steps
On the bilateral front, Ethiopia was invited to intensify bilateral market access negotiations with interested members; on the multilateral front, members were invited to submit comments and questions in writing by 28 February in order for the WTO Secretariat to prepare an “Elements of a draft Working Party Report”.
Concerning legislation, the chair asked the delegation of Ethiopia to revise its Legislative Action Plan and to continue submitting copies of WTO-related legislation, in order that members to have an up-to-date picture of the ongoing legislative reforms in Ethiopia.
Given Ethiopia’s strong drive to advance the accession process, the chair said members could aim at holding the 5th meeting of the Working Party after the northern summer break.
Background
Previous Working Party meeting: 27 March 2012 (3rd meeting)
Working Party Chairperson: Mr. Morten Jespersen (Denmark)
Working Party established: 10 February 2003
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African Economic Outlook 2020: Developing Africa’s workforce for the future (AfDB)
Decomposing Africa’s GDP growth shows that the shift from consumption toward investment and net exports observed in previous years has continued and strengthened. In 2019, for the first time in a decade, investment expenditure explains more of GDP growth than consumption expenditure (54 versus 31%). And growth in net exports has contributed more to aggregate growth than in previous years, rising from % in 2018 to 6% in 2019. Similarly, the production and value-added approach shows that improvements in services are the primary driver, explaining more than 50% of growth in the region.
Profiled policy recommendation from Chapter 1: Africa’s growth – performance, outlook, and inclusiveness. Improve productivity by alleviating constraints in the business environment. The results from the growth accounting show that growth in the region has been driven mainly by factor accumulation, while the contribution of total factor productivity has been limited and in some cases declining. The large and persistent gaps in output per worker between Africa and other world regions can be explained by inefficiencies in the allocation of factors by firms. Improving productivity to revive growth will require cultivating a dynamic and competitive private sector by alleviating the most binding constraints to business operations. Recent analysis by the African Development Bank shows that Africa loses close to 3 million jobs due to the low entry, early exit, and stagnation of existing firms. Particularly worrisome is the “missing middle” of medium size firms. In most economies, small and large firms predominate. The main constraints limiting firm survival and growth in Africa tend to be symptoms of poor governance - poor contract enforcement, delayed court hearings, unreliable property rights, and poor infrastructure - and an inadequately educated labor force. Alleviating these constraints can help to boost productivity and revive growth.
Trade integration, export patterns, and growth in Sub-Saharan Africa (World Bank)
This paper examines systematically the growth effects of trade integration in Sub-Saharan Africa. It complements and improves upon the empirical literature in two aspects: first, it jointly estimates the impact of different dimensions of trade integration, namely, trade volumes, export/trade patterns by product (primary and manufacturing goods), and by destination (inter- and intra-regional). Second, it estimates the impact of trade integration on economic growth and its sources, that is, capital accumulation and total factor productivity growth. The analysis finds causal evidence that trade integration fosters growth. Additionally, manufacturing trade boosts growth and trade in primary goods hampers growth. Doubling the manufacturing trade share in Sub-Saharan Africa’s gross domestic product would increase growth by 1.9 percentage points per year, while increases in primary trade reduce growth by 1 percentage point. This impact is mainly transmitted through lower capital accumulation. Finally, inter- and intra-regional trade have a positive impact on growth in Sub-Saharan Africa. Doubling inter-regional trade will increase growth by 1.9 percentage points, and the same increase for intra-regional trade enhances growth by 0.6 percentage points. The effects of inter-regional trade are transmitted primarily through capital accumulation, while those of intra-regional trade are channeled through enhanced total factor productivity growth. Extracts (pdf):
Intra-regional trade in Africa grew by 8 percentage points of GDP since 1990 (see Figure 2). However, the actual volume of trade across borders might be underestimated as it does not account for informal (or unrecorded) trade in the region. The share (and size) of intra-regional trade in Sub-Saharan Africa is significantly lower compared with other regions — especially with East Asia (See Figure 3). In 2017, intra-regional trade in Africa represented only 17% of total exports, an amount that is considerably lower than that of Asia (59%) or Europe (69%). Additionally, one of the main drivers of the gap in Africa’s intra-regional trade vis-à-vis Asia and Europe is the large share of intraregional trade of manufactured goods in the latter regions.
The evolution of the patterns of intra- vs. inter-regional exports and imports in Sub-Saharan Africa over the last decade is presented in Figure 4. Shifts in the extent of Sub-Saharan Africa’s trade openness in the region are mainly driven by fluctuations in exports and imports outside the region. In turn, interregional trade is vastly influenced by fluctuations in international commodity prices —where exports still heavily rely on extractive industries (say, mineral ores, metals, and energy commodities). Intra-regional exports and imports represent a small and fairly stable share of total exports and imports over time. The low levels of intra-regional trade suggest significant barriers to trade across borders as well as the lack of depth in regional value chains.
Overall, intra-regional trade in Sub-Saharan Africa has been driven by an expansion of “intra-REC” rather than “inter-REC” trade. The lower tariffs implemented after the creation of the REC increased significantly trade flows within sub-regions in the continent — although the effects were uneven across RECs (see Figure 6). For instance, tariff reductions were not accompanied by substantial increases in subregional trade flows in CEMAC. This suggests that the inability to boost trade within the community could be attributed to important non-tariff barriers and relatively undiversified exports. On the other hand, the limited trade between countries from different RECs may, for instance, result from high tariffs imposed by countries from different RECs. [The authors: César Calderón, Catalina Cantú, Albert G. Zeufack]
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2019 Article IV Consultation. South Africa’s undeniable economic potential remains largely untapped and the recent economic performance points to rising risks. Impediments to growth have to be removed, vulnerabilities addressed, and policy buffers rebuilt. The economy faces three immediate challenges: (i) persistently weak economic growth attributable to stagnant private investment, exports, and productivity, worsening already high unemployment; (ii) deteriorating fiscal and debt positions, and weak quality of spending; and (iii) major difficulties in the operations of SOEs, which inflate the cost of doing business and financial support from the fiscus. [ pdf Staff report (4.28 MB) ]
Against this background, a more decisive approach to reform implementation is urgently needed. Beyond the initial steps undertaken, expediting structural reform implementation is the only way to sustainably boost private investment and inclusion. Improving the cost effectiveness of network industries will be crucial. In particular, determined and coordinated action will be needed to deliver an electricity sector that can provide reliable services at predictable and reasonable prices without government support. To this end, the financial and technical capacity of the private sector in renewables must be actively pursued. Dominant market players in sectors lacking contestation should be subject to healthy competition. Regulatory requirements that unduly inflate production costs should be streamlined. Labor market rigidities should be tackled to help align wages more closely with productivity and facilitate employment, including in SMEs. [IMF: Six charts explain South Africa’s inequality]
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Selected issues report: Growth in South Africa – issues and reform options. Export performance was lackluster compared to other EMs. South Africa’s exports have remained broadly stagnant as a share of world goods exports, in clear contrast to the increasing trend in exports of the median EM and the fastest growing EMs in the sample. The composition of exports shows that the importance of minerals and manufacturing sectors has remained broadly unchanged. The lack of export dynamism is also confirmed by the export complexity index of the Growth Lab at Harvard University, which presents South Africa with one of the least complex export structures among EMs. [ pdf Selected Issues paper (1.66 MB) ]
The behavior of foreign direct investment points to low returns to investment. The five-year moving average of FDI has been consistently below the median level of other EMs. Moreover, the decline in FDI that followed 2009 was slightly above 50% compared to 20% in the median EM despite already low levels. At the same time, South African corporates increasingly started to seek investment opportunities abroad. These developments suggest that a low rate of return to private investment has been a long-standing problem, worsening after 2009.
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National Treasury’s response to the IMF’s Article IV Report. National Treasury is mindful of the fiscal risks that SOEs, particularly electricity utility Eskom, present to the fiscal framework. Furthermore, there is commitment to resolve the challenges facing South African Airways (SAA). The airline has been placed under voluntary business rescue to improve its financial position. Externally, the performance of the global economy has an impact on South Africa, as an open, small economy. Government has progressed in implementing many of the reforms to revive the economy, however, more urgency is required in the speed of implementation. Finally, National Treasury remains committed to implementing prudent fiscal policy to achieve a low primary balance, excluding Eskom provisions, by 2022/23 in order to ensure a stabilisation of debt by 2025/26.
Mozambique Economic Update: Mind the rural investment gap (World Bank)
Having put much of the past economic volatility behind, the challenge for Mozambique remains to be slow growth. According to the Mozambique Economic Update, growth is expected to have fallen to 2.3% in 2019, from 3.3% in 2018, as lower coal production and the impact of the cyclones, particularly on agriculture, affected overall output. With economic output growing at a slower pace than the population (2.8%), this translates into a decline in the standards of living in a context where poverty has been further aggravated by the cyclones. The report also warns that Mozambique is entering a period of widening current account deficits as it heads towards the early stages of the Liquefied Natural Gas (LNG) investment cycle. It enters this cycle with an improved external reserve position. But lackluster non-extractive export performance, lower growth in key trading partners and commodity price movements continue to be important sources of external risk. The MEU presents a positive growth outlook provided a post-cyclone recovery in agriculture, easing in credit conditions and progress in LNG developments are materialized. But the report highlights the need for a renewed focus on structural reforms for more sustainable and inclusive growth, including progress in strengthening the business environment, increasing the supply of skilled labor to the economy, reducing corruption and improving connectivity. Building resilience to climate shocks is also increasingly critical given Mozambique’s heightened exposure to such events. Extract (pdf):
The special focus section of this edition of the Mozambique Economic Update places a spotlight on public investment in basic infrastructure, a topic of significant importance if Mozambique is to raise equality in opportunity and pursue more inclusive growth. First, it asks whether disparities in access to basic infrastructure are growing or declining. The analysis finds that overall, disparities have been growing between rural and urban areas, especially in the rural parts of Mozambique’s central and northern provinces. Beneath the regional trends is mixed performance at the sectoral level, with mild improvements in access to water, electricity and health facilities. However, access to transport deteriorated significantly, along with a moderate deterioration in access to primary schools, on average. The deterioration in access to transport is particularly notable, indicating a significant deterioration in rural connectivity and contributing heavily to the overall decline in the measure of access to basic infrastructure. With this context in mind, the report asks if the large increases in public expenditure during Mozambique’s 2009 to 2015 investment boom years boosted funding to the underserved areas: did the public investment program seek to address the growing disparities?
Toward successful development policies: Insights from research in development economics (World Bank)
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Bob Rijkers, Erhan Artuc: Trade, poverty, and inequality. Despite the compelling associations between international integration and growth, empirical evidence on the causal relationship is more limited. This is because separating the impact of trade from other developments that overlap with episodes of increasing globalization, such as technological progress, is challenging. To accurately quantify the gains from trade it is also necessary to account for the structure of global value chains, input‐output linkages, knowledge spillovers, pro‐competitive effects, and other mechanisms that may amplify them. In addition, trade may create dynamic gains which can be sizable.
Although globalization has been a force for development for the last three decades, protectionism is now on the rise. One reason is the frustration of those whom trade may have left permanently behind. International trade is not a zero‐sum game, as it increases the size of the pie. However, it also changes how the pie is divided, creating winners and losers. The losses often are highly visibly concentrated among specific people in specific areas. The gains, by contrast, are often widely spread and therefore less salient. This undermines political support for global integration. In the past 10 years, the increased availability of microdata and computing power have spawned a burgeoning literature measuring these distributional impacts of trade, yielding several novel insights (pdf):
The negative distributional impacts of international trade are large, localized, and long‐lived
Trade liberalization can favor the poor because low‐income households often consume traded goods more than services and non‐traded goods
Lower prices due to trade liberalization are often not fully passed on to consumers. [Note: An extract Briefing Note 13 in the short volume]
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Roberto Fattal, Hiau Looi Kee, Sergio Schmukler: To design good policies, macro outcomes need to be understood “from the ground up”
Traditionally, macroeconomic outcomes such as growth, economic fluctuations, and reactions to policies and shocks have been studied using aggregate data at the country level. A flurry of new research over the past decade has centered on using micro data at the product, firm, and sector level to shed new light on aggregate outcomes. The bottom‐up approach yields insights on how trade affects workers, firms, and localities differently. For example, low‐cost imports from China increase unemployment, lower labor force participation, and reduce wages in some local labor markets in the United States, contributing to one‐quarter of the contemporaneous aggregate decline in U.S. manufacturing employment, even though the aggregate welfare gains from trade with China are positive. The firm‐level approach also reveals that there are significant downward biases in aggregate measures of domestic value added embodied in exports. This is because aggregate statistics are mainly constructed based on data from large firms, which tend to use more imported material inputs and therefore produce less domestic value added. The new firm‐level approach aggregates firms’ domestic value added from the ground up based on customs transaction data for all firms, not just large ones. Based on this firm‐level evidence, new research shows that the domestic value added of China’s exports is higher than previously thought, and rising over time due to trade and FDI liberalization.
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African Economic Outlook 2020: Africa’s economy forecast to grow despite external shocks
Africa’s economic growth remained stable in 2019 at 3.4 percent and is on course to pick up to 3.9 percent in 2020 and 4.1 percent in 2021, the African Development Bank’s 2020 African Economic Outlook (AEO) revealed Thursday.
The slower than expected growth is partly due to the moderate expansion of the continent’s “big five” – Algeria, Egypt, Morocco, Nigeria, and South Africa – whose joint growth was an average rate of 3.1 percent, compared with the average of 4.0 percent for the rest of the continent.
The Bank’s flagship publication, published annually since 2003, provides headline numbers on Africa’s economic performance and outlook. The 2020 edition, launched at the Bank’s Abidjan headquarters, was attended by former Liberian president Ellen Johnson Sirleaf, African ministers, diplomats, researchers, and representatives of various international bodies.
Johnson Sirleaf commended the Bank for upholding the confidence of the people of the continent “... because we trust you. As simple as that. Because we trust you to share our vision. We trust you to understand our limitations.”
Referring to Africa’s fastest-growing economies, she said, “There are stars among us... and we want to applaud them. We want to see more, particularly for countries like mine, which have been left behind, so that more can be done to give them the support that they need.”
In 2019, for the first time in a decade, investment expenditure, rather than consumption, accounted for over 50% of GDP growth. This shift can help sustain and potentially accelerate future growth in Africa, increase the continent’s current and future productive base, while improving productivity of the workforce.
Overall, the forecast described the continent’s growth fundamentals as improved, driven by a gradual shift toward investments and net exports, and away from private consumption.
East Africa maintained its lead as the continent’s fastest-growing region, with average growth estimated at 5.0 percent in 2019; North Africa was the second fastest, at 4.1 percent, while West Africa’s growth rose to 3.7 percent in 2019, up from 3.4 percent the year before.
Central Africa grew at 3.2 percent in 2019, up from 2.7 percent in 2018, while Southern Africa’s growth slowed considerably over the same period, from 1.2 percent to 0.7 percent, dragged down by the devastating cyclones Idai and Kenneth.
Urgent call to address Africa’s education, skills mismatch
The 2020 AEO, themed Developing Africa’s workforce for the future, calls for swift action to address human capital development in African countries, where the quantity and quality of human capital is much lower than in other regions of the world.
The report also noted the urgent need for capacity building and offers several policy recommendations, which include that states invest more in education and infrastructure to reap the highest returns in long-term GDP growth. Developing a demand-driven productive workforce to meet industry needs, is another essential requirement.
“Africa needs to build skills in information and communication technology and in science, technology, engineering, and mathematics. The Fourth Industrial Revolution will place increasing demands on educational systems that are producing graduates versed in these skills,” the report noted.
To keep the current level of unemployment constant, Africa needs to create 12 million jobs every year, according to the report. With rapid technological change expected to disrupt labour markets further, it is urgent that countries address fundamental bottlenecks to creating human capital, the report said.
“Youth unemployment must be given top priority. With 12 million graduates entering the labour market each year and only 3 million of them getting jobs, the mountain of youth unemployment is rising annually,” said Akinwumi Adesina, African Development Bank President, who unveiled the report.
“Let’s look at the real lives beyond the statistics. Let’s hear their voices, let’s feel their aspirations.”
Although many countries experienced strong growth indicators, relatively few posted significant declines in extreme poverty and inequality, which remain higher than in other regions of the world.
Essentially, inclusive growth – registering faster average consumption for the poor and lower inequality between different population segments – occurred in only 18 of 48 African countries with data.
“As we enter a new decade, the African Development Bank looks to our people. Africa is blessed with resources but its future lies in its people... education is the great equaliser. Only by developing our workforce will we make a dent in poverty, close the income gap between rich and poor, and adopt new technologies to create jobs in knowledge-intensive sectors,” said Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department at the Bank.
The African Economic Outlook provides compelling up-to-date evidence and analytics to inform and support African decision makers. The publication has built a strong profile as a tool for economic intelligence, policy dialogue and operational effectiveness.
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IMF Executive Board concludes 2019 Article IV Consultation with South Africa
On January 24, 2020, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with South Africa.
Given structural impediments to growth, South Africa’s economic performance remains subdued, and risks are materializing. Weak private investment and productivity growth have dampened economic activity to levels insufficient to raise per-capita income and foster greater social inclusion. While the sophisticated services sector has been growing, most other sectors have been stagnant or contracting. South Africa thus remains an extremely unequal society, with high and rising unemployment (29 percent), particularly among the youth. Inflation is estimated to have moderated in 2019 to below the midpoint of the inflation target range, aided by one-off factors. The current account deficit is relatively wide and largely financed by non-FDI inflows. Banks are sound, albeit with pockets of vulnerabilities.
Fiscal deficits have been persistently large due to continued high expenditure despite weakening revenue performance and state-owned enterprise (SOE) bailouts. The government deficit is projected to reach 6½ percent of GDP in FY19/20, resulting in significant debt accumulation—projected to exceed 60 percent of GDP in FY19/20—and leaving South Africa with no fiscal space. Weaknesses in public enterprises are resulting in poor service delivery and weighing on the fiscus through bailouts or administrative interventions. An earlier monetary policy tightening was unwound in mid-2019 following inflation moderation, and the policy rate has remained unchanged since.
Policymakers have taken initial steps to advance reforms and streamline regulations with the purpose of reigniting growth and fostering greater social inclusion. The Medium-Term Budget Policy Statement (MTBPS) released in October proposed savings from a rationalization of spending in goods and services to partially offset large bailouts to the electricity company Eskom, but projects increasing government debt that does not stabilize.
On current policies, staff projects a lackluster growth recovery from an estimated 0.4 percent in 2019 to 0.8 percent in 2020 and 1.5 percent in the outer years. Inflation is projected to rebound in 2020 (from an estimated 4.2 percent in 2019) before easing to slightly below 5 percent in the medium term. The current account deficit is expected to widen to around 4 percent of GDP over the medium term. The outlook is subject to risks derived from further delays in adjustment and reform or changes in investors’ appetite for emerging markets.
Executive Board Assessment
Directors commended South Africa’s monetary framework, anchored on a credible inflation targeting regime, flexible exchange rate system, and highly developed financial system. Notwithstanding these buffers, Directors noted that South Africa is in a difficult situation, given subdued growth, rising debt, and high poverty and unemployment rates. In that context, they encouraged the authorities to implement strong fiscal consolidation and SOE reforms to ensure debt sustainability, accompanied by decisive structural reform measures to boost private-sector led, inclusive growth.
With public debt on the rise, Directors encouraged the authorities to focus on maintaining medium term debt sustainability, through a growth friendly and expenditure based fiscal consolidation. Noting that the upcoming budget discussion provides an opportunity for the authorities to undertake necessary reforms, Directors suggested reductions in the public wage bill and fiscal contingencies from SOEs, coupled with improved tax administration and compliance. Directors also highlighted the importance of protecting priority pro poor social spending and making education and health spending more efficient given high poverty and unemployment rates. They also supported introducing a debt anchor to the fiscal framework and institutionalizing periodic spending reviews.
Directors were concerned with the risks emanating from SOEs, especially from the electricity company Eskom, and emphasized that budget support to SOEs needs to be conditioned on well- defined governance and operational and financial performance targets. They noted that tackling Eskom’s challenges would not only reduce fiscal deficits and debt but would also boost business confidence, encourage private investment, including in green energy, improve macroeconomic policy credibility, and convey a genuine ambition by the authorities to address state capture legacies.
Directors also encouraged the steadfast implementation of structural reforms to fully harness South Africa’s economic potential and foster greater social inclusion. Beyond the initial steps undertaken, Directors called for particular focus on product and labor market reforms, including greater competition and private participation in network industries, and efforts to improve the business climate and human capital, and to promote an environment conducive to job creation, particularly for the youth. Directors also encouraged the authorities to accelerate reforms to strengthen governance and fight corruption, including enhancing the AML/CFT framework.
Directors commended South African Reserve Bank’s (SARB) credibility and strong performance. Amid rising fiscal risks and volatile global conditions, Directors stressed the importance of continuing to durably anchor inflation expectations at the targeted level by closely monitoring upside and downside risks in the context of the flexible exchange rate regime. They noted that monetary policy has limited potency to boost growth at this juncture given structural impediments to growth and called for close coordination between monetary and fiscal policies. In the context of ongoing SARB reform discussions, Directors indicated that the SARB’s independence and inflation mandate should be preserved.
Directors welcomed the resilience of the financial sector and called for continued vigilance, given the recent pick up in unsecured lending. They also encouraged the SARB to use the forthcoming FSAP as an opportunity to further strengthen its supervisory and regulatory framework. Directors welcomed the entry of new players and technological innovations to promote financial inclusion.
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Launching tomorrow in Abidjan: The AfDB’s flagship African Economic Outlook 2020. The theme: Developing Africa’s workforce for the future.
A preview of UNCTAD’s Illicit Trade Forum (3-4 February, Geneva)
The USTR will hold a hearing on Thursday into South Africa’s intellectual property protection and enforcement regime: selected submissions
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The SA government’s lengthy submission will be presented by DTI DDG Xavier Carrim, Dr Evelyn Masotja: The submission will: Explain why the petition is misdirected in that the proposed law that is being objected to has not yet come into effect, is not part of South African law and accordingly no clear and present damage is being suffered by any US firm as a result of legislative changes; Recall the existing legal position in relation to protection of intellectual property, applicable in South Africa, including some challenges experienced with the existing framework that led to proposed changes to the law being developed; Set out briefly key points in the proposed legislation currently being reviewed by the Presidency in South Africa, including the objections to aspects of the proposed changes raised by the IIPA and why these do not constitute valid grounds for the removal of SA from the GSP benefits.
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Knowledge Economy International: “USTR is not qualified to act as a global licensing agent, protecting the MPAA and RIAA interests in every national dispute over performer rights, and the notion that countries have sovereignty and should make their own laws, accountable to their own citizens, should have some weight too, in matters like this. The provisions in the South Africa law regarding fair use, which is modeled after the U.S. statute, should be welcomed by the USTR, and not sanctioned. The IIPA asserts that the South Africa exceptions are more liberal than permitted by the Bern Convention or the TRIPS but do not suggest the USTR litigate these issues under the WTO dispute settlement system, preferring instead a situation where the USTR itself decides.”
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Sean Flynn (InfoJustice): “There are no ground on which USTR could conclude that the Copyright Amendment Bill, if enacted into law, violates the international three-step test. One particularly odd complaint is that South Africa has adopted a mix of specific exceptions and a general fair use clause. Every country that has a fair use or fair dealing general exception also has a list of specific exceptions. The various exceptions that the South Africa Bill adopts are framed in terms that commonly appear elsewhere. For example, the Bill’s exception for educational uses of excerpts for teaching can be found in roughly 70% of developing countries in Latin America and Africa.”
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Download the full set of submissions on the South African angle to the hearings here.
South Africa: Trade surplus for 2019 foreseen (Standard Bank)
December trade balance this Friday: we expect a further surplus of R9.0bn, from R6.1bn in November. The cumulative year-to-date trade balance is R13.5bn; therefore, the December trade balance will likely take the cumulative trade surplus to around R22.5bn in 2019, compared to the 2018 surplus of R13.8bn. The only months in trade deficit were January, April and July 2019. Exports in November fell by 4.8% m/m, to R116.9bn, from R122.8bn in October. Exports of mineral products, vehicles and transport equipment, machinery and electronics, vegetable products and base metals all fell significantly. However, imports fell by a larger 7.7% m/m in November, to R110.8bn, from R120.1bn in October. Imports of original equipment components and chemical products led that decline.
FACTI: New UN finance panel to push Global Goals forward
On Tuesday, Tijjani Muhammad-Bande and Mona Juul, the President of the UN Economic and Social Council, ECOSOC, introduced a joint initiative to establish a high-level panel on financial accountability, transparency and integrity, called FACTI. “It is critical that Member States get behind the panel’s work, both substantively and financially”, he urged, noting that in light of the Decade of Action, it would help promote faster progress towards achieving the 2030 Agenda on Sustainable Development. He said the flow of illicit cash and goods on the international black market, impacts every nation’s ability to mobilize domestic resources. Moreover, it is a cross-border problem that requires “inclusive multilateral action”. Ms. Juul set out a timeline, saying the panel would be launched in early March and its members to meet “face-to-face at least four times, in different regions of the world”. “It is a tight schedule, but we are aware of the urgency to address these issues”, she stated. The panel will produce an interim report in July 2020, and its final report with recommendations in January 2021.
African logistics: Time for revolution (African CEO Forum)
The modernization of African logistics is one of the most important areas of development on the continent today. Despite the progress achieved over the past 15 years, particularly in the field of ports, which handle 90% of the continent’s trade, the sector remains insufficiently competitive and modern to support industrialization and African economic integration: China’s investment in logistics is 23 times greater than that of Africa, and only 10 African countries are in the two first quartiles of the Logistics Performance Index 2018. To coincide with the Continental Free Trade Zone entering into its operational phase, the Africa CEO Forum, in partnership with OKAN, has published an exclusive report which makes pragmatic recommendations to accelerate a real revolution in the African logistics sector. The report draws on case studies of several African success stories and examines the many challenges that are holding back the sector to formulate these recommendations for the benefit of investors and entrepreneurs. Six recommendations:
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Speed up port modernization, create essential ports of call on the continent
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Think as a “bloc”, develop intra-African logistics around multimodal corridors
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Strengthen states’ capacities as strategists, financiers, and guarantors of security
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Structure projects better
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Rethink the logistics of African cities
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Put the African middle class at the heart of logistics modernization
Kenya: Inspection agencies accused of flouting Uhuru’s cargo directive (Business Daily Africa)
Some of the inspection agencies that were removed from the port following President Uhuru Kenyatta’s directive last year have illegally resumed operations. This is according to importers who say the agencies are not only flouting the president’s directive, but they are causing delays in release of cargo. The importers say the Port of Mombasa and Inland Container Depot in Nairobi are now experiencing more delays in removing cargo from the facilities after issuance of release order. According to the latest Northern Corridor weekly performance report, the average time between entry of release order and removal of container increased from an average of 35.33 hours in the week ended January 14 to 41.89 hours in last week’s performance. Highlights from the latest Northern Corridor weekly performance report:
Most cargo handling indicators recorded positive performance with the average time difference between ship entering port area and exiting recording most improved time surpassing set target of 72 hours from 108 hours in the week ended January 14 to an average of 51.89 hours last week.
Ship waiting time also improved from 13 hours previous week to 12.10 hours in the last weeks’ performance records while containerised cargo dwell time — which is an average time between landing and exit of container from the port— recorded average of 51.71 hours last week from 65.65 hours in the previous week.
At Document Processing Centre, time between passing of customs entry registration and issuance of release order recorded two hours from previous 2.63 hours.
Number of truckers using Namanga borders increased twofold as recorded in the Athi River weighbridge traffic, which registered an average of 11,418.71 trucks weighed daily last week compared to 6,537 trucks in the previous week which ended on 14 January. Mariakani weighbridge only recorded an average of 4,522.71 trucks compared to previous total of 4,250 trucks. At Malaba border, an average time between issuance of release order and issuance of certificate of export at border crossing reduced from 120.21 hours in the week ended January 14 to 71.46 hours last week.
Nigeria “on track to commence rice exportation by 2022” (Guardian)
The Minister of Agriculture and Rural Development, Sabo Nanono, during a working visit to Nestle Nigeria PLC’s Office in Lagos, yesterday, noted that the country’s land border closure has resulted in increased outputs by many rice milling plants, which were hitherto operating below capacity. Nanono disclosed that there has been expansion in the local rice value chain as well as the creation of many jobs due to increase in rice production. “As at today, we have 11 rice milling plants with the capacity to produce from 180 tonnes to 350 tonnes of rice per day. In a few months, another mill with a capacity to produce 400 tonnes of rice per day is going to be opened, with another upcoming 34 smaller mills; then, we have clusters in different areas,” he said.
Kenya: Sugar imports up 61% as production dwindles (Business Daily Africa)
Data from the Sugar Directorate indicate the volume of sugar imported in 2019 increased to 458,631 tonnes compared with 284,169 the previous year. The decline was attributed to poor performance of cane. “Overall, sugar imports in January-December 2019 totalled 458,631 tonnes against 284,169 tonnes in the same period last year, attributed to a significant increase in table sugar imports in this year to bridge the rising domestic demand against the declining local production,” says the report by the Directorate. But even with enhanced cheap imports, consumer prices have remained high in retail shops.
Zambia: Country Forest Note (World Bank)
This country forest note aims to foster dialogue between the World Bank, the government of the Republic of Zambia, and key development partners on future engagements in the forestry sector in Zambia by offering a comprehensive analysis of Zambia’s forest sector while shedding light on potential long-term engagements. In response to the government of the Republic of Zambia’s policy and development ambitions to improve the forest sector’s contribution to the national economy, a number of interventions are highlighted in this CFN that could lead to transformative impacts. Data and information available for the forest sector in Zambia is fragmented and inconsistent. This is, in part, due to the lack of consistent monitoring in the context of widespread informality within the forest sector.
Africa Fertilizer Financing Mechanism governing council calls for more investments in Africa’s fertilizer value chain (AfDB)
“The Africa Fertilizer Financing Mechanism has now effectively started implementing its activities as its first agreements were signed in 2019 to foster the fertilizer market in Nigeria and Tanzania. New projects are being prepared for implementation in other countries,” said Marie Claire Kalihangabo, the AFFM’s coordinator. Participants said the organisation could significantly transform the fertilizer value chain in Africa and strongly recommended mainstreaming its projects into the lending program of the African Development Bank and other stakeholders, like Afreximbank, for increased impact. Josefa Leonel Correia Sacko, the African Union Commissioner for Rural Economy and Agriculture who also serves as Chairperson of the AFFM Governing Council, called on the AFFM to work closely with key stakeholders to implement the resource mobilization objectives. Sacko also provided an update on the second Fertilizer Summit, scheduled to take place in 2021.
Namibia: Feasibility study on crop and livestock value chain analyses (AfDB)
The Government of Namibia has received a grant under the Middle Income Country Technical Assistance Fund towards the cost of the preparation of Namibia’s Feed-Africa Agriculture Transformation Agenda Projects, and intends to apply part of the agreed amount of this grant for payments under the contract for consultancy services for the feasibility study on crop and livestock value chain analyses.
International trade in services, 2019 Quarter 3 (pdf, UNCTAD)
World services exports recorded a 2.7% increase in the third quarter of 2019 (measured in current US dollars, year-on-year). Services other than transport grew at a combined rate of 4/1%, travel increased by 1.4%, while transport stagnated. Overall, trade in services recovered from the sluggishness observed in the first quarter of 2019.
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South Africa’s six strategic objectives during its Chairship of the African Union: keynote address by President Ramaphosa (The Presidency)
At the same time, we are presented with unprecedented opportunities for development, most notably the implementation of the AfCFTA agreement. This is a momentous event in the decades-long effort to integrate the economies of the African continent. As the Chair, South Africa is determined to take the project of continental unity, integration and development further, guided by our foreign policy priorities and the Continent’s aspirations as espoused in Agenda 2063. Our domestic priorities - including economic transformation, job creation and the consolidation of the social wage through reliable and quality basic services – depend on a politically stable and economically growing Africa.
Together with our fellow African countries, we must implement the AfCFTA agreement with purpose and determination. We must undertake the detailed work, extensive consultation and complex negotiations required to give life to this agreement. In this regard, South Africa will work with President Issoufou of Niger, who is the AU Champion on Continental Economic Integration. This work is directed towards the social and economic development of the Continent, and the realisation of a prosperous Africa based on inclusive growth and sustainable development.
South Africa will need to be pro-active and assertive in seeking common approaches on issues like tariff lines, rules of origin, custom controls, trade in services and new generation issues like competition and intellectual property. We will also need to address issues like the ease of doing business in different African countries.
We know that the AfCFTA will only become a reality if the infrastructure between African countries is developed. Infrastructure is at the core of Africa’s social, economic and political challenges. It is crucial for sustainable development and inclusive growth, and for diversification through industrialisation and value addition. As the Champion of the Presidential Infrastructure Champion Initiative under NEPAD, South Africa has a critical role to play – and must act on the opportunity presented – in profiling infrastructure development in support of the AfCFTA.
In this role, South Africa can also develop linkages between the SADC Regional Infrastructure Development Master Plan and the Presidential Infrastructure Champion Initiative. On this basis, it is proposed that South Africa hosts a High Level Forum on Infrastructure during its term as AU chair.
Up before Dawn: Experimental evidence from a cross-border trader training at the DRC-Rwanda border (World Bank)
Small-scale cross-border trade provides opportunities for economic gains in many developing countries. Yet cross-border traders - many of whom are women - face harassment and corruption, which can undermine these potential gains. This paper presents evidence from a randomized controlled trial of a training intervention that provided access to information on procedures, tariffs, and rights to small-scale traders to facilitate border crossings, lower corruption, and reduce gender-based violence along the DRC–Rwanda border. The training reduces bribe payment by 5 percentage points in the full sample and by 27.5 percentage points on average among compliers. The training also reduces the incidence of gender-based violence by 5.4 percentage points (30.5 percentage points among compliers). The paper (pdf) assesses competing explanations for the impacts using a game-theoretic model based on Hirschman’s Exit, Voice, and Loyalty framework. The effects are achieved through early border crossings at unofficial hours (exit) instead of traders’ use of voice mechanisms or reduced rent-seeking from border officials. These results highlight the need to improve governance and establish clear cross-border trade regulations, particularly on the DRC side of the border.
Gender mainstreaming in AfCFTA national implementation strategies: an inclusive and sustainable pathway towards gender equality in Africa (UNECA)
Although there are a number of provisions in the AfCFTA Agreement that can expand the capacity of women to participate in economic and trade opportunities, the benefits of AfCFTA for women are not automatic. Furthermore, consideration will need to be given to the potential differential impact of AfCFTA provisions and the implementation of the Agreement in a manner that opens up new opportunities for women, in particular vulnerable women; enhances their economic participation as a whole; and helps them to integrate more fully into high paid sectors of the economy. [The author: Nadira Bayat]
Rwanda Economic Update: Accelerating digital transformation (World Bank)
This edition’s forecast of Rwanda’s economic growth for 2019 is revised upward from the 7.8% projected in the REU14 to 8.5%. The stronger growth is driven mostly by the unexpected magnitude of the fiscal expansion. Medium-term growth also looks strong with annual growth projected to be about 8%. Although the current public investment push will continue in the medium-term, this issue’s high growth scenario assumes that the role of the private sector in investment will grow; public investments alone may not sustain growth at 8% over the medium-term.
The risks to Rwanda’s economic outlook, both domestic and external, have risen. The main risk is the growing reliance on public-sectored investments. Fiscal expansion to achieve the government’s targets for expanding access to infrastructure raises the debt, widens external imbalances, and may crowd out access of the private sector to finance, thus undermining long-term growth. If the reliance on the public sector persists, Rwanda may have difficulties in financing its growth model. Rwanda’s commitment to concessional borrowing and monetary stability reduces the risks to macroeconomic stability, but overall fiscal risks has gone up because of the reliance on the public sector for achieving NST1growth targets. Despite continuing efforts, the ineffectiveness of the private sector remains a major risk to Rwanda’s growth outlook - growth projections for the medium to long term depend on the ability of the private sector to take the lead.
Extract (pdf): External imbalances are widening, reflecting on the one hand wider fiscal deficits and heavy demand for imports and on the other weaker than expected exports. The impressive growth in goods exports in 2017 proved to be a one-off phenomenon; in US dollar terms, since 2018 the growth rate of exports has slowed, and the trend continued into 2019. International prices for the commodities Rwanda exports were low, and export volumes of coffee, tea, and minerals stagnated or declined. Imports grew by 19% in US dollar terms in H1, driven by capital and intermediate goods. In the 12 months ending in June 2019, the current account deficit widened to 8.9% of GDP. The surge in import demand has put pressures on foreign exchange reserves.
Republic of Congo: 2019 Article IV Consultation (IMF)
The external current account is expected to record a substantial surplus for a second year in a row. After registering large deficits that exceeded 50% of GDP over the 2015–16 period, the current account balance reached a surplus of about 7¼% of GDP in 2018. This surplus is expected to continue in 2019 and reach about 8% of GDP. The main factors driving the improvement are the recovery in oil exports and new mining exports coming on stream.
Congo is considered in debt distress due to the accumulated external and domestic arrears. External payment arrears have increased in recent years as financial difficulties have prevented Congo from servicing its debt; by September 2019, Congo had accumulated $181m in official bilateral external arrears, in addition to the stock of unrestructured pre-HIPC arrears. Moreover, Congo has also accumulated substantial external commercial arrears with oil traders, as well as domestic arrears. The total public debt level at the end-September 2019 was estimated at 87.8% of GDP, with external public debt at 62.3% of GDP, of which about 20% of GDP was in arrears. Debt is assessed to be unsustainable, absent restructuring.
Selected Issues report theme: non-oil revenue mobilization - key challenges and reforms. Non-oil revenues in the Republic of Congo have followed a generally positive trend since 1995, though there has been a substantial decline in recent years. From 1995 to 2014, non-oil revenues doubled (Figure 1), reaching 30% of non-oil GDP. However, this positive trend was reversed in 2014 due to the decline in oil prices that triggered a deep economic crisis. Non-oil revenues in Congo are relatively high compared to other oil producing countries in sub-Saharan Africa (Figure 2). However, these calculations need to be interpreted with caution given the fact that non-oil GDP could be underestimated. The authorities should step up revenue mobilization as a key component of their medium-term fiscal strategy. This will require a well-sequenced structure of reforms that includes three key elements:
Ethiopia: IMF Executive Board concludes 2019 Article IV Consultation (IMF)
Executive Directors agreed with the thrust of the staff appraisal. They noted that Ethiopia’s growth model, driven by public investment, had supported rapid growth and remarkably improved living standards over the past decade. At the same time, it has led to a build-up of debt and external vulnerabilities. Directors highlighted the urgency of fundamental reforms to correct macroeconomic imbalances, ease structural bottlenecks, and lay the foundation for sustainable, inclusive growth led by the private sector. To this end, Directors welcomed the ambitious Homegrown Economic Reform Plan, which is appropriately built around macroeconomic, structural, and sectoral reforms. They considered that the plan, together with the authorities’ strong ownership and commitment, deserves Fund support, which would help catalyze private investment and donor financing. Noting high implementation risks amid external vulnerabilities and political uncertainty, Directors underscored that steadfast determination, strong communication, and social protection would be key to obtain a broad-based public buy in. They also urged the authorities to seek additional debt reprofiling from external creditors to improve debt dynamics. Directors supported a comprehensive approach to addressing the exchange rate overvaluation and foreign exchange shortages.
Regional Ministerial Forum on Harmonizing Labour Migration Policies in the East and Horn of Africa: selected updates
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Presentation by Peter K. Tum (Principal Secretary, State Department for Labour, Kenya)
Kenyans are present in most regions of the world, including Asia, the Middle East, Latin America and the Caribbean, and Oceania. Lately, there is an increasing number of Kenyan professionals migrating to Canada and Australia. There are 29,448 Kenyan migrant workers who have been cleared to work in Saudi Arabia as homecare managers between March 2019 and January 2020. Kenyan migrant workers contribute significantly to the socio-economic development of the country in terms of skills, expertise and transfer of knowledge upon return. For instance, monthly remittances inflows in 2019 averaged KShs. 23 Billion Shillings (about US$ 228.14 million).
Kenya lacks reliable, accurate and timely labour market information on its migrant workers. To address this, an information system will be developed that will be useful in projecting labour demand in identified countries, developing skills development programmes to meet foreign labour market demand, dissemination of information on Kenyan migrant workers and estimating and projecting remittances. The Government has embraced an electronic platform (MUSANED1) for facilitating the contracting of domestic workers to Saudi Arabia. The system has increased transparency, reduced recruitment costs by eliminating intermediaries and enhanced provision of information.
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Opening remarks by Simon K. Chelugui (Cabinet Secretary for Labour and Social Protection, Kenya)
A significant number of migrant workers from East and Horn of Africa look toward the EU and the Gulf Cooperation Council member states for job opportunities. This is mainly influenced by the geographical proximity of these regions and hopes of better economic prospects for the migrants. Bilateral Labour Agreements between the member states in the region as countries of origin and the European Union and Gulf Cooperation Councils Member States as countries of destination are the primary instruments through which such labour mobility arrangements are effected. Recent studies have however shown that there exist substantive gaps between existing Bilateral Labour Agreements in the region and international standards. This is especially with respect to the adequacy of social protection available to migrant workers.
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Closing remarks by Simon K. Chelugui (Cabinet Secretary for Labour and Social Protection, Kenya)
Let me share some thoughts on the discussions from this Forum which I believe requires to be emphasized. I agree with the observations by representatives from most countries in the region [Kenya, Burundi, Djibouti, Eritrea, Ethiopia, Rwanda, Somalia, South Sudan, Sudan, Uganda, and Tanzania] that strengthening the capacities of institutions involved in labour migration management has not been accorded the necessary priority. This is despite the challenges facing the region in labour migration management. Going forward, I urge my fellow ministers from all Member States to prioritize capacity building of institutions dealing with labour migration management in our respective countries. We have a responsibility to do our utmost to sensitize our respective governments and all relevant stakeholders to ensure that adequate resources are budgeted for activities on labour migration. This forum can offer opportunities for inter-country learning on best practices towards achieving this. Allow me to also emphasize the proposal to establish a Technical Advisory Committee chaired by the Principal Secretary or Director General for Labour, or an official of equivalent status, from the host country. This Committee, with additional membership from Development Partners, will take the lead in driving the implementation of key agreements from the Forum.
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Related:
Somalia, Ethiopia and Eritrea propose formation of Horn of Africa cooperation
Advancing multi-stakeholder engagement to sustain solutions: Learning from the application of the CRRF in East Africa to inform a common agenda post GRF
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Diarise:
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Burundi’s National Trade Facilitation Committee meeting (28-31 January, Bujumbura)
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Indian Ocean Rim Association experts’ meeting on intra-regional trade and investment (30-31 January, Mauritius)
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UNCTAD’s Trade and Development Board (5-7 February, Geneva)
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EAC Coffee Business Forum (11-14 February, Mombasa)
Tripartite Capacity Building Programme: Phase II appraisal report (AfDB)
The proposed Bank operation will provide technical assistance and capacity building to the 3 RECs and their RMCs to operationalize the TFTA Agreement, which was signed in Sharm El Shekh, Egypt in 2015. Key outputs from the Bank’s intervention will be the development of guidelines, procedures, regulations and manuals required to operationalize the Agreement in areas such as rules of origin and dispute settlement. The Project will also support the establishment of online databases for non-tariff measures in Tripartite RMCs, building on the pilots under phase I. This will improve transparency in trade, speed up the resolution of NTBs, deter arbitrary application of regulatory measures that hinder trade, and improve awareness of traders about legitimate regulatory requirements, which provides a foundation for them to improve their capacity for compliance.
The project will enhance awareness of traders and the business community on the market access opportunities now availed by the Agreement, with a view to effectively harnessing such opportunities. To this end, the project will provide training to members of business bodies on TFTA Agreement. The Project will also leverage existing platforms, notably the Bank-funded 50 Million Women Speak Platform, to disseminate such information to a wider audience, in particular women. The project will also support the implementation of Tripartite Simplified Trade Regime. This will especially benefit women traders and the youth, who constitute over 70% of small-scale cross-border traders.
The expected project impact is an expansion in share of intra-Tripartite trade from 18% in 2018 to 24% of total trade by 2025, resulting from reduction in trade costs, NTBs and improved awareness of stakeholders. The design of the Project took into account lessons from TCBP Phase I and similar capacity building projects (see Paragraph 2.7). The Project will also complement ongoing initiatives supported by other development partners as indicated in Appendix 3.
The project will be funded through an ADF-14 Regional Public Goods grant of UA850, 000 and in-kind counterpart contribution, estimated at UA150,000 from COMESA Secretariat. Implementation will take a period of 24 months, from grant effectiveness.
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Component I: Improving the capacity to implement the TFTA Agreement. This component will support capacity building of the three RECs and businesses in the tripartite countries on areas critical to operationalize the TFTA Agreement. It will focus on the development of guidelines, regulations and manuals for all the 10 Annexes to the TFTA Agreement, training on TFTA Rules of Origin, Stakeholder sensitization on the TFTA Agreement (including preparation and dissemination of user friendly versions of the guidelines and dissemination through the 50 Million WS platform), support negotiations on the Tripartite built-in agenda focusing on Trade in Services and Competition Policy.
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Component 2: Improving transparency in trade to tackle non-tariff barriers in the TFTA. This component will support the roll out of NTMs databases to remaining Tripartite countries (in addition to the 9 covered in phase I), establish a Tripartite Simplified Trade Regime, and disseminate information on TFTA to increase awareness of traders, and especially women, on the TFTA trade rules and opportunities.
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See Appendix 4: pdf Tripartite countries and status of TFTA Agreement ratifications (421 KB)
African Medicine Agency update: The Republic of Chad is the 11th AU member state to sign the Treaty for the establishment of the African Medicine Agency. The AMA treaty was adopted by Heads of States and Government during their 32nd Ordinary Session of the Assembly on 11 February 2019 in Addis Ababa. The African Medicine Agency will enter into force once ratified by 15 AU member states.
pdf Mauritius Government Programme 2020-2024 (3.22 MB) : Towards an inclusive, high income and green Mauritius (GoM)
Another core objective of the new industrial and trade policies will be to strengthen the resilience of key sectors of the economy. A new reform package will be implemented for the cane industry, while encouraging the shift to modern organic and niche production in agriculture. A plan for optimising the use of agricultural land will be developed. With regard to tourism, Government will work with all stakeholders to re-engineer the whole industry, target new markets, enhance efforts to further diversify the product and client base and consolidate traditional markets. The tourism branding will be reviewed.
As regards the financial services industry, Government will build on the progress achieved in developing the fintech eco-system in Mauritius and further accelerate the country’s growth and consolidate the image of Mauritius as a thriving international financial centre of repute. The Bank of Mauritius is currently working on the creation of a central bank digital currency and is further developing a modern technology-driven payment system.
In order to usher in a paradigm shift in the development of the manufacturing sector, Government is devising a strategic plan. It will focus on the promotion of innovation-led and technology-intensive production on building export competitiveness and on import-substituting activities.
As part of its new trade policies, Government will use economic diplomacy more intensively. It will leverage agreements already negotiated with trading partners, namely, the USA, Europe, UK, key African nations, China and India. [Note: Delivered by the President of Mauritius, 24 January; Integrated governmental clearance centre to facilitate trade in Mauritius]
Trade wars among EAC members cast doubts on summit (The East African)
Trade wars among East African Community members have put in doubt the 21st Ordinary EAC Heads of State Summit slated for February. A cloud of uncertainty now hangs on the summit that was supposed to be held in November last year but was called off at the last minute in unclear circumstances. “A date has so far not yet been set for the Heads of State Summit. However, we expect that it will either be held in late February or March,” said Simon Peter Owaka, head of communications at the EAC Secretariat. He added that the summit is responsible for setting its own date and agenda, which are shared at least one week in advance with various stakeholders. Kenya’s EAC and Regional Development Cabinet Secretary Adan Mohamed and EAC Secretary General Liberat Mfumukeko are tight-lipped on the issue, a clear indication of a region that on the surface is propagating integration but beneath is pulling apart. Recently, Kenya and Uganda spurred over dairy products exports that have seen the confiscation and barring entry of dairy consignments from Uganda into Kenya. “Failure to meet sends a worrying message,” said Richard Kamajugo, senior director of Trade Environment at TradeMark East Africa.
Tussle heats up over Regional Court of Justice. Kenya, Uganda and Tanzania are locked in a tussle over who should host the East African Court of Justice , straining relations among the three founder members of the regional bloc. The court, currently based in Arusha, Tanzania, hears cases on violations of the rule of law, a key principle in the EAC Treaty. In a classic case of horse trading, Kenya is reported to have offered to pull out of the running to host EACJ headquarters on condition that it is allowed to house agencies created under the EAC Monetary Union Protocol.
Trade wars cost Uganda $454m worth of exports (Daily Monitor)
Trade wars and border blockades within the East African region cost Uganda $454.7m (Shs1.6 trillion) worth of export revenue for the year ended December 2019, according to data sourced from Bank of Uganda, Uganda Revenue Authority and Uganda Coffee Development Authority. The data indicates that Uganda lost much more revenue from Kenya and Rwanda compared to other EAC member states. For instance, according to the data, Uganda’s export receipts from Rwanda declined to $173m (Shs640b) in 2019 from $250m (Shs925b) in 2018. Uganda at last lost $75.6m (Shs280b) of revenue specifically due to a decline in exports from companies such as Hima Cement, Roofings and Movit, among others. Exports revenue to Kenya, according to the data, declined to $535m (Shs1.9 trillion) in the period from $825m (Shs3 trillion) in 2018. This means that at least export revenue worth $290m (Shs1 trillion) was lost mainly due to cautious purchase of Uganda’s maize, sugar, beef and poultry products.
Regional regulatory framework needed to address gaps and weaknesses in electricity sector (COMESA, RAERESA)
The COMESA Regional Association of Energy Regulators for Eastern and Southern Africa (RAERESA) is developing a framework which will act as the regulatory oversight for the electricity sector in the region. The association believes the framework will help control the area and enhance the efficiency of regional power trading on the continent. As a way of moving this process, COMESA/RAERESA has conducted a regional consultative workshop (22–23 January, Dar es Salaam) for the study to develop a framework for regulatory oversights for the regional electricity market in Eastern and Southern Africa and the Indian ocean region under the EU funded Enhancement of Sustainable Regional Energy Markets (ESREM) Project.
Attracting private participation and financing in the power sector in Sub-Saharan Africa: findings from a survey of investors and financiers (World Bank)
Private financing and private participation in service delivery will be required if Sub-Saharan Africa is to achieve affordable, reliable, sustainable, and modern energy for all by 2030. To find out how to elicit private interest in power sector investments in the region, we surveyed 51 private investors and financiers. The results indicate that investors perceive three segments of the market - power generation, off-grid electrification, and mini-grids - as ready for private solutions.
EU, 16 WTO members agree to work together on an interim appeal arbitration arrangement
“We, the Ministers of Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, Uruguay, remain committed to work with the whole WTO membership to find a lasting improvement to the situation relating to the WTO Appellate Body. We believe that a functioning dispute settlement system of the WTO is of the utmost importance for a rules-based trading system, and that an independent and impartial appeal stage must continue to be one of its essential features.
“Meanwhile, we will work towards putting in place contingency measures (pdf) that would allow for appeals of WTO panel reports in disputes among ourselves, in the form of a multi-party interim appeal arrangement based on Article 25 of the WTO Dispute Settlement Understanding, and which would be in place only and until a reformed WTO Appellate Body becomes fully operational. This arrangement will be open to any WTO Member willing to join it. We have instructed our officials to expeditiously finalise work on such an arrangement. We have also taken proper note of the recent engagement of President Trump on WTO reform. “ [India, Brazil agree to resolve sugar subsidies issue bilaterally]
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10th meeting of African Ministers of Trade (14 December 2019, Accra): pdf Declaration on WTO issues (75 KB)
The following communication (dated 21 January 2020) is being circulated to delegations at the request of the Delegation of Botswana. Selected extracts:
Pledge support to African countries in the process of WTO accession and urge Members to desist from making unreasonable requests on African acceding countries to extend any commitments made as a result of their membership to the AfCFTA or that are inconsistent with their levels of development;
Reaffirm that any debate on the reform of the WTO must include the views and interests of the African Group, and address the long-standing issues of interest to developing countries as entailed in the Doha Development Agenda as well as preserve WTO principles and pertinent instruments that promote development and inclusion.
Stress that the overriding objective of Africa’s trade policy is a Free Trade Area capable of building an African common market for goods and services, and we must ensure that the outcomes of the negotiations in the WTO do not undermine these objectives;
Direct the African Group at the WTO in Geneva to continue to ensure the necessary synergies with the relevant organs of the African Union, with a view to ensure WTO Agreements support African integration, in particular the Agreement Establishing the African Continental Free Trade Area with the WTO Agreements, in the different sectors and stages. Call upon the African Group to the WTO to implement effectively the outcomes of their Retreat held in Geneva on 23 November 2019.
Take note of the progress report given by the Commission regarding the internal AU process in the endorsement of the African candidate for the position of the Director-General of the WTO and express the legitimate aspiration that the next WTO Director General be from Africa and;
Welcome the renewal of application by the AUC, to the Chair of the General Council of the WTO and the Director-General of the WTO, requesting the granting of Permanent Observer Status to the African Union in all WTO bodies and Call upon all WTO members to support the African Union’s efforts to secure Observer Status in the WTO.
41st Cairns Group Ministerial (23 January 2020): outcomes
Nigeria’s border closure: a road block or a speed bump on the road to a successful AfCFTA? (World Bank)
Let’s zoom in on the rice issue. In 2018, Benin, a country of 11 million people, was the sixth largest importer of rice in the world and the largest rice importer from Thailand. More recently, Benin’s rice imports have been steadily rising while Nigeria’s have been falling at a similar pace, suggesting large re-exports of rice from Benin to Nigeria (Figure 1). Why might that be the case? Because import tariffs in the two countries are widely different. In 2013, Nigeria’s tariff on rice imports was set at 70%. In 2014, Benin reduced its tariff on rice imports from 35% to 7%. This makes the practice of re-exporting extremely attractive to both formal and informal operators. They can import rice to Benin at a low cost and smuggle it into Nigeria to sell at a much higher profit margin. One of the most straightforward ways to combat this behavior would be to agree on a common external tariff, which could help make re-exporting less profitable. But this incident between Nigeria and Benin highlights some of the other non-tariff trade barriers that could still provide incentives for re-exporting. Below, we focus on three of the major technical challenges that need serious consideration as governments negotiate the terms of their participation in the AfCFTA.
Tension between national industrial policies and AfCFTA ambitions: The AfCFTA will only succeed if member countries make the regional strategy part of their national policy and proactively address the tensions that arise between the two. Countries should find the sweet spot that reinforces national economic goals and ensures maximum gains from increased integration, looking beyond a static assessment of their priorities. In addition, countries need to make the case to their people as to why integration is useful in the long term – this is particularly important in the larger countries, which may have greater influence on regional decisions.
Lack of capacity to monitor and safeguard against illicit practices, including smuggling, dumping, and violation of the rules of origin: Given the African Union’s ambitious industrialization agenda, we expect to see even more of these types of disputes on rules, particularly the rules of origin, once trade under AfCFTA becomes more widespread. With this on the horizon, countries need to think through how to address origin fraud, setting clear and simple rules that are monitored and enforced at the national and regional levels.
Trade dispute settlement mechanisms: One of the key challenges to the AfCFTA we identify in our forthcoming book, is the need for an effective dispute resolution mechanism with the authority and institutional capacity to mediate and enforce decisions within and across countries in Africa and with parties outside the continent. This body should be complementary to the traditional diplomatic/political approach to resolve disputes. [The authors: Woubet Kassa, Albert Zeufack; tradebarriers.africa: Despite closed borders, Nigerian manufacturers begin online registration for AfCFTA]
Uganda’s National Export Week: Exports grow despite regional trade wars (Daily Monitor)
Despite border disputes and export blockades imposed on some of Uganda’s goods, exports grew in 2019, according to data from Uganda Export Promotions Board. Data indicates that exports grew to Shs13.8 trillion, at least by Shs400b, as of November 2019 compared to Shs13.4 trillion in the same period in 2018. Speaking during the 4th annual exporters conference in Kampala, Mr Elly Kamugisha Twineyo the UEPB executive director, said contrary to public belief, the closure of some borders such as Rwanda and blockade on some goods from Uganda by EAC member states, export volumes grew in 2019 as Ugandan manufacturers opened new trading frontiers such as DR Congo.
Kenya sends back 19 milk trucks, Uganda plans retaliation (The East African)
At least 19 trucks carrying powdered and UHT milk have been returned to Uganda or diverted by Kenyan authorities, according to an internal memo by the Uganda Revenue Authority. The milk truck loads worth more than Ush1.1 billion, URA details show, were directed to return on varying dates or let in and the goods later seized by Kenya. This, together with the sealing off of the Pearl Dairies depot in Kisumu, western Kenya, is expected to spark a trade war with far-reaching implications. Uganda has already demanded that Kenya stops hostilities on its exports or face reciprocal measures. According to the memo seen by Daily Monitor, Uganda is already targeting a number of goods, key among them juices, assorted household items and roofing materials. URA sources that requested anonymity said that although Ugandan goods, specifically milk, are cleared by the Kenya Revenue Authority, Kenya Bureau of Standards and Kenya Plant Health Inspectorate Service, they are later seized by Kenya’s inland police once in the country. “Police are removing milk from the market and stopping new supplies. No one is providing an explanation,” the source said.
On Wednesday, Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said that whereas he was not aware of the milk diversions, there was a breakdown in communication between Ugandan and Kenyan authorities. “We see a breakdown in the communication to the relevant technical authorities and this could be the reason why all this is happening,” he said while expressing his disappointment over how Kenya has treated Uganda yet it is one of the country’s major trade partners.
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Related: According to Uganda’s Trade Minister Amelia Kyambadde, through the Foreign Affairs Ministry, they have written to the Kenyan government to give an update and response within 14 days. “Kenya exports more goods to Uganda than we export to Kenya. The trade balance is still in favour of Kenya. We don’t want to retaliate by banning Kenyan products on to the Ugandan market because of the East African Community spirit but we have written to them through the ministry of Foreign Affairs expecting a response/explanation within 14 days,” said Kyambadde in Kampala. Kyambadde said as the Minister of Trade, she tried to contact her counterpart in Kenya, but because of the reshuffles that went on in Kenya recently, she couldn’t get in touch with the new Kenya Cabinet Minister for Trade.
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Related: But that’s not the whole story. Investments in agriculture, especially large-scale operations and in value-chain agro-processing, have led to an increase in output in Uganda and brought into sharp focus comparative advantages. The installation of milk coolers in south- western Uganda and the building of milk processing plants increased demand for milk and encouraged more investment in the dairy sector. The surplus has flooded the Kenyan market not because satisfied Ugandans are pushing away gourds of milk with their feet but because of higher purchasing power across the border. In the case of the eggs, it reflects capital hunting for higher returns by bringing machinery closer to the source of key raw materials (maize), relatively cheaper land in central Uganda, near the urban areas, and cheap labour. It is classic capitalism.
Lawyers’ body sue EAC Council of Ministers for ‘breaching’ Treaty (New Times)
The umbrella association of national law societies in the EAC on Thursday filed a case at the six-member bloc’s court in Arusha, against the bloc’s Council of Ministers for persistently violating the EAC Treaty. Comprising Ministers/Cabinet Secretaries from the partner states whose dockets are responsible for regional co-operation, the Council is the central decision-making and governing organ of the six-nation bloc. The East Africa Law Society filed the case at the East African Court of Justice in Arusha, Tanzania. According to the EALS, holding meetings without the involvement of Attorneys General of the partner states “has led to delays in realisation of objectives of the Treaty and brought conflicts and confusion in the integration processes.” Reached for comment, Olivier Nduhungirehe, Rwanda’s Minister of State in charge of the East African Community, and current chairperson of the Council said he could not comment on a matter that has gone to court.
Another way in which the Council has violated the Treaty, it is noted, is creating an institution - the Ad Hoc EAC Service Commission – to undertake the work of human resource and administration at the EAC Secretariat without having the institution properly established by the Heads of State through the Summit. “Consequently, we are seeking orders that all decisions that the Council of Ministers has made in violation of the Treaty, especially those relating to its 39th Meeting held in November 2019, be nullified. The importance of this case is to bring to the attention of the entire citizenry of EAC the importance of respecting laws of the Community in order to realise the benefits of regional integration.”
Nigeria: FG directs FMITI to establish Agro-allied industries in 36 states (Sun News)
The Federal Ministry of Industry, Trade and Investment has been directed by President Muhammad Buhari to establish agro-allied industry in each state of the federation. The Minister of State for Industry, Trade and Investment, Mariam Katagum, confirmed the development when a delegation from the Amana Farmers and Grains Suppliers Association of Nigeria led by its chairman, Haruna Pambeguwa, visited her office. Katagum said the decision to establish agro-allied industry in each senatorial district in the country is part of government’s efforts to achieve food security and stimulate economic activities to eradicate hunger in the country. The minister said the Federal Government would give necessary support towards the development of the cotton, textile and garment sectors of the economy. [Bloomberg Tax: Widening the tax net in Nigeria. Is an increase in VAT rate the way to go?]
Central African Republic Economic Update: strengthening domestic revenue mobilization to sustain growth in a fragile state (World Bank)
The report notes that the improved security situation is leading to brighter economic prospects, with the real GDP growth rate estimated at 4.8% for 2019. The authors indicate that although the country’s growth rate has outpaced that of countries in the Central African Economic and Monetary Community and Sub-Saharan Africa, it continues to lag behind peer countries such as Burkina Faso, Malawi, Mali, Niger, and Uganda. The report also reveals (pdf) that while CAR is still at high risk for debt distress, its efforts to streamline public expenditure and clear domestic arrears are driving down the public debt level to below CEMAC and Sub-Saharan Africa averages and bringing it closer to the debt levels of its peers. The report presents a number of options to address the growing needs of Central Africans: [Data collection in fragile states: innovations from Africa and beyond]
Today’s Quick Links: Payce Madden: Patent policies and their effects on African innovation UK eyes lion’s share of SACU, SADC trade African Road Safety Observatory: update UNECA’s policy dialogue on land policy reform, social-economic transformation in Southern Africa Rwanda, Zimbabwe to strengthen trade ties Uganda: Coffee export earnings drop Uganda: Will government’s new 5-year growth plan deliver middle income? Kenya: Cost of imports to rise as trade agency introduces new levy Regional integration in South Asia: implications for green growth, female labor force participation, and the gender wage gap |
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Rwanda to scrap visa fees for over 90 countries (New Times)
Rwanda is considering scrapping visa fees for citizens of the Commonwealth, as well as the African Union and La Francophonie member countries, President Paul Kagame has announced. President Paul Kagame made the announcement yesterday at the International School for Government at King’s College in London, while speaking about Rwanda’s transformation journey. The conversation was moderated by Alexander Downer, the Executive Chair of the institution. The President emphasised Rwanda’s commitment to trade with the rest of the world. “We are soon considering exempting citizens of the Commonwealth, as well as the African Union and the Francophonie, from paying visa fees when entering Rwanda,” he said. The move is expected to ease access to Rwanda for a significant section of the international community. Commonwealth has 53 members while Francophonie has 54 member states across the world. To date, only 17 African countries were exempt from paying visa fees.
The Eco and the CFA franc: four weddings and a funeral (The Africa Report)
Economist Kako Nubukpo believes that “when someone pretends to die, we have to pretend to bury them” and envisions four possible scenarios of how the Eco’s replacement of the CFA franc could play out. They are:
- The Eco as simple avatar of the CFA franc
- An Eco based on real convergence: GDP per inhabitant
- The Eco-naira
- The Eco, a common, but not single, currency.
South Africa: SARS targets illicit traders (SANews)
SARS Commissioner Edward Kieswetter has committed the revenue collector to work closely with other government agencies to stamp out illicit trading plaguing various sectors. “The losses in tax revenue and the negative impact on our domestic economy affects industries, erodes employment opportunities and generally denies the most vulnerable in society the social and economic wellbeing they deserve,” said Kieswetter on Thursday. SARS, he said, has found that importers and exporters in these sectors are using various ways to avoid paying the import/export duties. Under-declaration of customs value in this sector has increased from R5.2bn in 2014 to R8.52bn in 2018, with the under-declared customs value in 2017 and 2018 representing 34% and 35% of the declared customs value respectively.
The revenue collector said some of the cases of non-compliance that customs has come across recently in this area include declaring complete garments at values as low as 0.02 US cents; excess cargo; fictitious importers’ addresses and misclassification of goods. In one instance, more than 80% of a container was not declared. SARS forms part of an inter-agency working group with the Department of Trade and Industry, and National Treasury, focusing on the clothing, textile, leather and footwear industry.
South Africa: Cement imports accelerate (Moneyweb)
Cement imports into the South African market are accelerating. This is as local producers scurry to finalise applications to the International Trade Administration Commission for the imposition of tariff protection, and to the Department of Trade and Industry for the designation of cement. The designation of cement will make it mandatory for local cement to be used in all government contracts. David Metelerkamp, a senior economist at construction market intelligence firm Industry Insight, says cement imports during the first 11 months of last year increased 7.6% year on year to 971 623 tons after having escalated 84% year on year in 2018. The volume of imports has remained at a very elevated level and is even higher than the surge seen in 2018, he says, while the currency has remained relatively unchanged.
Metelerkamp says imports of cement clinker increased by 137% in the first 11 months of last year to 210 485 tons. The origin of these imports has changed from mainly Vietnam in 2017 to the United Arab Emirates and Saudi Arabia in 2018 and 2019. He adds that cement producers in Pakistan reported a 22% year on year increase in export volumes during the second half of 2019 to 4.38 million tons compared with an increase of just 3.5% in domestic consumption.
Metelerkamp says there was a notable increase towards the end of last year in the number of proposals for the construction of new cement plants in Pakistan. “After being hit by tariffs imposed by South Africa on Pakistan cement imports, Pakistan exported 40 000 tons to South Africa in October 2019 [first time since May 2019] and a total of just over 80 000 tons in 2019 compared to a total of 201 680 tons in 2018. A total of 34 million tons was exported from Vietnam during 2019, representing an increase of 6.3% year on year. Vietnam is currently the largest threat to local cement producers,” says Metelerkamp. It is responsible for over 70% of total imports into South Africa, with a total of 687 284 tons imported into the country up to November 2019, he adds.
Rwanda: Government prioritises six agricultural products to reduce trade deficit (New Times)
The Ministry of Trade and Industry has said that they are prioritising agro-processing for six products; sugar, aquaculture, edible oils, rice, fertilizer and maize so as to recapture the domestic market and lower the imports. Sam Kamugisha, the Director-General for Industry at the Ministry of Trade and Industry, said that the efforts are part of a Made-in-Rwanda policy instituted in 2017 to drive the recapturing of the domestic market. Priority in processing sugar, fertilizer, edible oil, dried fish, maize and rice could save the country $112m (approx.Rwf104 billion) annually, the ministry says. In an interview, Kamugisha said that there are efforts to add value to other different agricultural products. She cited Community Processing Centres including the current six for leather, dairy, Irish potato, wood, ceramics and honey.
George Wachira: Munya has what it takes to turn around fortunes of Kenya’s agriculture (Business Daily)
Peter Munya’s appointment as the Cabinet Secretary for Agriculture was both timely and appropriate. Timely, because agriculture had of late lost momentum and also direction. Appropriate, because Mr Munya’s experience in previous dockets equips him with the right understanding of critical pinch-points in agriculture. Having been a governor of an intensely agricultural Meru county, the CS understands what motivates and disappoints farmers. His previous docket of Industrialisation has hopefully given him the understanding of why new agro-industries are essential for increased produce value. The experience he gained in external trade empowers him to respond to threats posed to local production by irregular food imports. Hopefully he also now understands why we need to urgently correct imperfections in crop (coffee, tea) export marketing to increase net farmer’s earnings. His recent involvement in developing new crop export markets (e.g. avocados) will be a strong advantage.
In short, the CS does not need much induction and should therefore hit the ground running. In respect of critical food security produce - maize, sugar, rice, milk - Mr Munya should seriously consider publishing recommended minimum producer prices based on real cost of production and farmer’s return on investment. No matter the IMF opinion, food security cannot be left to the mercy of free market forces which permit uncontrolled competition from imports. Let us question the value of regional trade pacts if the net value of these protocols to Kenya is negative. In respect of farm inputs, fertiliser importation is understood to be an area where quality over-specification by our standards authorities is making fertilisers unduly expensive for Kenya’s food security. It will be even wiser if we can support local fertiliser manufacturing. Fertiliser subsidies may be politically popular but these are neither effective, nor sustainable.
WTO DDG Wolff: It is time to update the WTO rulebook for agriculture (WTO)
The world needs a smoothly operating agricultural machine, and the parts of that machine, national agricultural policies need to complement each other, not run at cross purposes. Trade rules provide the necessary guarantee that food will be available at affordable prices when needed thereby ensuring livelihood security, particularly for rural households. Trade rules also help to ensure that food is safe by allowing countries to impose appropriate sanitary and phytosanitary measures without unnecessarily restricting trade. In short, trade rules allow all countries to take care of their food security by working cooperatively with each other.
The WTO Agreement on Agriculture rests on the unstated recognition by all WTO Members that the agricultural policies of others matter. This is true whether the Member involved is a net importer or a net exporter, whether it is developed or developing. Also unstated is the conclusion reached that no bilateral or regional agreement can be sufficient to address many of the most pressing issues of agricultural trade, particularly domestic support. Only a multilateral approach is possible. Multilateral trade agreements will be needed to meet these challenges. Solutions will be needed in at least six areas: [Dr Mukhisa Kituyi, Secretary-General of UNCTAD: Trade wars are huge threats to food security; US Agriculture Secretary says no need for more farm aid after China trade deal]
India, China have taken ‘tremendous advantage’ of their developing country status: Trump (Mint)
Ahead of his proposed visit to India in February, the US President Donald Trump on Wednesday said India and China have taken “tremendous advantage” because of their developing country status and that he would hold discussions with WTO chief for reforming the global trade body. “We have dispute running with the WTO for quite a while because our country has not been treated fairly. China is viewed as a developing nation; India is viewed as a developing nation; we are not viewed as a developing nation. As far we are concerned, we are a developing nation too. But they get tremendous advantages by the fact that they are considered developing and we are not. They shouldn’t be, but if they are, we are,” Trump said addressing media at the World Economic Forum in Davos.
With WTO chief Roberto Azevedo by his side, Trump said he will soon hold discussions with Azevedo to bring in dramatic changes in the trade body. “We are talking about a whole new structure about the deal. The WTO has been very unfair to the US for many many years. Without it, China wouldn’t be China. China would not be where they are right now. That is the vehicle that they used. Roberto and I have a tremendous relationship and we are going to do something. I think it would be very dramatic. He will be coming with a lot of his representatives to Washington sometime next week or the week after and we will start working on it,” Trump said.
Speaking from the same forum, Azevedo said if the WTO is to deliver and perform its role in today’s global economy, it has to be updated. “It has to be changed, it has to be reformed. This is an agenda that is squarely before members. I don’t think anybody in Geneva misses the point. I think they understand that they system has not been functioning properly in many areas. That’s something that we are trying to address. This is something we are serious about,” he added. [Bertelsmann Stiftung: The WTO at 25]
Dubai launches World Logistics Passport to boost south-south trade (Govt of Dubai)
Dubai is bringing together Government leaders and heads of major corporations from Asia, Latin America and Africa for the Davos launch of the World Logistics Passport, a major initiative to boost South-South trade. The World Logistics Passport links Customs World, DP World, and Emirates Group to enhance connectivity through Dubai and, through expertise sharing and process development, directly between partner countries. A pilot project operational since July 2019 has already increased trade by participants by 10%. The World Logistics Passport has been designed to overcome the non-tariff trade barriers, such as logistics inefficiency, that currently limit the growth of trade between developing markets. Designed as a points loyalty scheme, the initiative has been set up to incentivise companies and traders to use Dubai’s world-leading logistics facilities in return for cost and time savings and enhanced customs clearances.