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Underway in Addis Ababa: The 33rd AU Summit kicks off with the 39th Session of the Permanent Representatives Committee
For two days, the 39th Session of the PRC will consider the reports of the various activities of their sub-committees, reports of the AU organs and their activities. The PRC will further exchange views on the draft agenda, as well as the draft Decisions and Declarations of the 36th Ordinary Session of the Executive Council, and those of the 33rd AU Assembly, before adopting its report. Opening statement by H.E. Osama Abdel Khalek (Chairperson of the PRC and Ambassador of the Arab Republic of Egypt): After 11 months, 50 meetings and 200 work hours, allow me to take you through a quick snap shot of what we accomplished together through the Egyptian year of Chairmanship to the African Union and its Permanent Representatives Committee, by dividing it into three main domains. First: Improving the internal work methods with the Commission; Second: Pursuing the main objectives, priorities, and projects of our African Agenda; Third: Partnership Meetings and Engagement with diplomatic and international community.
To be followed by:
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36th Ordinary Session of the Executive Council (6-7 February)
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33rd Ordinary Session of the Assembly (9-10 February)
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The Africa Business Forum: Investing in People, Planet and Prosperity (11 February)
Lomé Initiative: criminalizing trafficking in fake medicines (pdf, Brazzaville Foundation)
The Lomé Initiative (signed over the weekend) seeks to strengthen and coordinate the fight against the trafficking of substandard and falsified medicines and other medical products. Our aim is to expand to the rest of the African continent. The signing of a Political Declaration (pdf), and of a Framework Agreement with a clearly defined agenda, will enable: The speedy introduction of new legislation criminalising this trafficking in a coordinated manner across signatory states; The signing and ratification of the Medicrime Convention and the Palermo Convention against transnational organised crime; The introduction of mechanisms ensuring the rigorous application of new criminal legislation at the national level, and enhancing intergovernmental coordination; Other states to join the Initiative. Speech by WHO Director General Dr Tedros Adhanom Ghebreyesus:
For the first time, African leaders are putting falsified and substandard medicines on the highest political agenda. Thank you to the leaders present here for this political commitment. Your commitment sends a clear message that African leaders will fight falsified and substandard medicines aggressively and urgently. We appreciate the emphasis in the Lomé Declaration on criminalizing the trafficking of falsified medicines. This is an important element of our fight. Two of the 12 actions in WHO’s strategy relate to tightening legal frameworks to fight the criminals who traffic in it.
Tripartite Free Trade Area Agreement: ratification update (COMESA)
Namibia has become the eighth country to ratify the Tripartite Free Trade Area Agreement, moving the region closer to having a fully operational Agreement this year. Six more countries are required for the Agreement to enter into force. Tripartite Coordinator at COMESA Secretariat, Dr Seth Gor has confirmed in Lusaka that seven more countries from the EAC-COMESA-SADC are at advanced stages of ratifying the important document which will spur intra-regional trade. “We are optimistic that the remaining six countries will ratify the Agreement and we can have it fully operational this year,” Dr Gor said. He has also revealed that the Republic of Burundi deposited its instrument of ratification in November 2019.
Afreximbank announces $500m creative industry support fund (Afreximbank)
The Creative Africa Exchange Weekend (CAX WKND), Africa’s first continental event dedicated to promoting exchange within the creative and cultural industry, kicked off in Kigali with Professor Benedict Oramah, President of the African Export-Import Bank, announcing a $500m envelope to support the production and trade of African cultural and creative products over the next two years. Prof. Oramah said the funds, which would build on what the Bank was already doing, would be accessible as lines of credit to banks, direct financing to operators and as guarantees.
He commended Egypt’s “astronomical growth in creative exports over the last decade” and the Nollywood industry’s increasing importance which had prompted the Nigerian government, in its Economic Recovery and Growth plan, to forecast export revenues of $1bn from the industry by 2020. He described the African market as the lowest hanging fruit for African creative products but noted that, until recently, “that market was fragmented and balkanized, such that a Senegalese knew more about creative products in France than in Ghana”. With the AfCFTA in force and trading starting in July, Africa would begin to break down the borders and a single market for creative products would emerge. [Related: Afreximbank signs term sheet for $190 facility to Made in Africa Inc.]
Jen Snowball: How international trade can unlock the potential of the cultural economy in developing countries (The Conversation)
Building on a recent meeting hosted by UNCTAD in Geneva, this article outlines some of the trends and challenges in growing international cultural trade. Research in both developed and developing countries shows that the vast majority of cultural or creative industry firms are micro enterprises employing fewer than 10 people. In sub-Saharan Africa, there is also a high level of informality, with an International Labour Organisation report estimating that the informal sector accounts for 66% of employment in the region. Small, informal firms face particular difficulties in the cultural economy of the developing world. This affects their ability to benefit from international trade. One of the key factors affecting the ability of these firms to thrive is their access to e-commerce, according to a UNCTAD report. A recent PWC report on the entertainment and media outlook in South Africa, Kenya, Ghana and Tanzania underscores this. It points to the rising proportion of digital revenue in the sector. Yet African small and medium sized enterprises have low adoption rates of e-commerce technologies like mobile-money. This means that they risk being excluded from the digital economy that increasingly facilitates trade. This also translates into a generally low proportions of cultural and creative industry firms who have access to international markets, as shown by some South African research.
This is an important moment for emerging markets to capitalise on the globalisation and culture nexus. New trading partners with emerging markets, as well as with traditional, developed economies, are growing. There is clear potential for cultural trade to contribute to sustainable development. But this is not an automatically positive relationship, and specific policies to manage challenges, especially for micro-enterprises, will be needed.
KfW Ipex-Bank reveals Africa export financing programme (Global Trade Review)
German development bank KfW Ipex-Bank has revealed a new CIRR export financing programme designed to support large-volume German exports to Africa. Under the Africa CIRR programme, banks can grant loans to buyers of German exports in Africa, or to banks in the buyer’s country at the commercial interest reference rate. KfW Ipex-Bank, on behalf of the Federal Ministry for Economic Affairs and Energy, has launched and will administer the Africa CIRR initiative. A spokesperson for the bank tells GTR that automotive goods and machinery – both large export sectors for Germany – are likely sectors to receive backing.
Needs-based climate finance in Southern Africa: technical workshop report (UNFCCC)
The objective of the technical workshop on needs-based climate finance was to initiate the development of the Southern African Climate Finance Mobilization and Access Strategy and provide an opportunity to take stock of the state of climate finance, determine needs and priorities and exchange knowledge and information among experts in the region. Participants agreed on regional priorities (pdf) which could include trans-boundary and multi-country projects to facilitate effectiveness and efficiency towards scalability, standardized cooperation, information sharing and learning. A regional finance facility to support national banks, improve capacity of national bank, a common risk instrument to cover project exposure to exchange rate risk, a regional insurance facility to cover disasters and exposure to short onset harmful effects of climate change, and support entities seeking accreditation with GCF. A regional financing approach for water, energy and transport. Participants agreed that the strategy shall be endorsed at SADC Ministerial level through the SADC Council of Ministers on Environment and Natural Resources. Ministries of finance should be part of engagement and endorsement process. [Note: Technical and country presentations are also available for download]
Related: Zimbabwe will host the Sixth Africa Regional Forum on Sustainable Development (24-27 February, Victoria Falls)
World Economic Forum Annual Meeting: reports, initiatives
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Accelerating the impact of industrial IoT in small and medium‑sized enterprises: a protocol for action. Small and Medium Sized Enterprises are critical to the global economy; however, they are losing ground in the Fourth Industrial Revolution. SME contribution to US GDP fell nearly five percentage points from 1990 to 2014, the latest year. This trend should alarm policymakers, particularly in emerging markets where smaller companies are the primary drivers of economic opportunity and social mobility, creating 90% of new jobs, according to the International Trade Center. Extract (pdf): The Policy Protocol forms the basis of the pilot programme being launched by the State of São Paulo. In 2020 the pilot programme will scale up in partnership with federal government initiatives, which aims to support over 2,000 small and medium-sized manufacturing companies across Brazil by 2021. However, the learnings from this work are applicable well beyond Brazil’s borders. The World Economic Forum is in discussions with industry leaders and policy‑makers around the world to adapt the learnings from Brazil to their own context and deliver on the promise of a more inclusive Fourth Industrial Revolution.
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Shaping a multiconceptual world. The 50th anniversary of the World Economic Forum coincides with a period of profound global change. These events prompted the Forum to draw on its network of diverse experts – heads of leading global think tanks and research institutions – to develop a new report (pdf) with 10 chapters that explore the emerging shape of geopolitics. The authors: Børge Brende (World Economic Forum), John R. Allen (Brookings Institution), Yoichi Funabashi (Asia Pacific Initiative), L. Enrique García R. (Council on Foreign Relations of Latin America and the Caribbean), Jane Harman (Woodrow Wilson International Center for Scholars), Fyodor Lukyanov (Council on Foreign and Defense Policy), Robin Niblett (Chatham House), Samir Saran (Observer Research Foundation), Amos Yadlin (Institute for National Security Studies), Qi Zhenhong (China Institute of International Studies).
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Global Social Mobility Index 2020: why economies benefit from fixing inequality. This report is structured as follows (pdf): The first part of the report reviews the underlying concepts employed in creating the Global Social Mobility Index and briefly outlines the methods used to calculate it. It then presents the 2020 rankings, overall trends and commentaries for selected countries. In addition, an in-focus section provides a big data-driven exploration of wages across various industries and job categories in the United States as well as a key component of social mobility, the extent of professional networks, based on research conducted in collaboration with LinkedIn, ADP and Burning Glass Technologies. The Economy Profiles contained in the second part of the report give a more detailed picture of the relative strengths and weaknesses of each country’s performance. Interactive versions of the Economy Profiles are available on the report website.
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Jobs of Tomorrow: mapping opportunity in the New Economy. Through new data sources, we can gain unprecedented insights into emerging opportunities for employment in the global economy, and granular understanding of the skill sets needed by professionals. This new data reveals (pdf) that 96 jobs across seven professional clusters are fast emerging in tandem reflecting “digital” and “human” factors driving growth in the professions of tomorrow. The jobs of the future are set to grow by 51% in the horizon up to 2020 and we project they will present 6.1 million job opportunities globally. These reflect the adoption of new technologies—giving rise to greater demand for Green Economy jobs, roles at the forefront of the Data and AI economy as well as new roles in Engineering, Cloud Computing, and Product Development. On the other hand, emerging professions also reflect the continuing importance of human interaction in the new economy, giving rise to greater demand for Care economy jobs; roles in Marketing, Sales and Content production; as well as roles at the forefront of People and Culture. The growth and absolute scale of these opportunities will be distinctively determined by the choices and investments made by governments today.
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UpLink: a new global platform to unleash entrepreneurs on the world’s toughest problems. The World Economic Forum will soon launch UpLink, an open platform to scale up bright ideas the world needs, created with Salesforce, Deloitte and LinkedIn. The platform will help forge new approaches to address the world’s most pressing challenges, as set out in the UN’s Sustainable Development Goals. Uplink will connect the next generation of change-makers and social entrepreneurs to networks of leaders who have the resources, expertise, and experience to create an impact. Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, says: “By pairing the World Economic Forum’s unrivalled ability to convene leaders from across all stakeholder groups with UpLink’s potential for massive, open participation, we have created a unique formula for catalyzing the knowledge, ideas and actions necessary to solve our world’s greatest development challenges.”
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Online tool to remove trade barriers in Africa goes live
An online platform developed by UNCTAD and the African Union to help remove non-tariff barriers to trade in Africa became operational on 13 January.
Traders and businesses moving goods across the continent can now instantly report the challenges they encounter, such as quotas, excessive import documents or unjustified packaging requirements.
The tool, tradebarriers.africa, will help African governments monitor and eliminate such barriers, which slow the movement of goods and cost importers and exporters in the region billions annually.
An UNCTAD report (pdf) shows that African countries could gain US$20 billion each year by tackling such barriers at the continental level – much more than the $3.6 billion they could pick up by eliminating tariffs.
“Non-tariff barriers are the main obstacles to trade between African countries,” said Pamela Coke-Hamilton, director of UNCTAD’s trade division.
“That’s why the success of the African Continental Free Trade Area depends in part on how well governments can track and remove them,” she said, referring to the agreement signed by African governments to create a single, continent-wide market for goods and services.
The AfCFTA, which entered into force in May 2019, is expected to boost intra-African trade, which at 16% is low compared to other regional blocs. For example, 68% of the European Union’s trade take place among EU nations. For the Asian region, the share is 60%.
The agreement requires member countries to remove tariffs on 90% of goods. But negotiators realized that non-tariff barriers must also be addressed and called for a reporting, monitoring and elimination mechanism.
The online platform built by UNCTAD and the African Union is a direct response to that demand.
Hands-on training
Complaints logged on the platform will be monitored by government officials in each nation and a special coordination unit that’s housed in the AfCFTA secretariat.
The unit will be responsible for verifying a complaint. Once verified, officials in the countries concerned will be tasked with addressing the issue within set timelines prescribed by the AfCFTA agreement.
Hands-on training
UNCTAD and the African Union trained 60 public officials and business representatives from across Africa on how to use the tool in December 2019 in Nairobi, Kenya.
They practiced logging and responding to complaints, in addition to learning more about non-tariff barriers and their effects on trade and business opportunities.
“The AfCFTA non-tariff barriers mechanism is a transparent tool that will help small businesses reach African markets,” said Ndah Ali Abu, a senior official at Nigeria’s trade ministry, who will manage complaints concerning Africa’s largest economy.
Justin Bayili, a business representative who heads the Ghana-based Borderless Alliance, agreed. “The online tool will play a key role in helping my organization effectively and efficiently tackle the challenges faced by the companies we represent,” he said.
UNCTAD and the African Union first presented tradebarriers.africa in July 2019 during the launch of the AfCFTA’s operational phase at the 12th African Union Extraordinary Summit in Niamey, Niger.
Following the official presentation, they conducted multiple simulation exercises with business and government representatives to identify any possible operational challenges.
Lost in translation
One of the challenges was linguistic. Africa is home to more than 1,000 languages. So the person who logs a complaint may speak a different language from the official in charge of dealing with the issue.
Such would be the case, for example, if an English-speaking truck driver from Ghana logged a complaint about the number of import documents required to deliver Ghanaian cocoa to importers in Togo – a complaint that would be sent to French-speaking Togolese officials.
“For the online tool to be effective, communication must be instantaneous,” said Christian Knebel, an UNCTAD economist working on the project.
The solution, he said, was to add a plug-in to the online platform that automatically translates between Arabic, English, French, Portuguese and Swahili – languages that are widely spoken across the continent. More languages are being added.
UNCTAD’s work on the AfCFTA non-tariff barriers mechanism is funded by the German government.
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Prospects for economic growth in 2020 hinge on reducing trade disputes and uncertainty, UN finds
The United Nations’ flagship publication on expected trends in the global economy, the World Economic Situation and Prospects 2020, predicts that one in five countries will see per capita incomes stagnate or decline this year.
Impacted by prolonged trade disputes, the global economy suffered its lowest growth in a decade, slipping to 2.3 per cent in 2019. The world, however, could see a slight uptick in economic activity in 2020 if risks are kept at bay, according to the United Nations World Economic Situation and Prospects (WESP) 2020, which was launched today.
The Report states that growth of 2.5 per cent in 2020 is possible, but a flareup of trade tensions, financial turmoil, or an escalation of geopolitical tensions could derail a recovery. In a downside scenario, global growth would slow to just 1.8 per cent this year. A prolonged weakness in global economic activity may cause significant setbacks for sustainable development, including the goals to eradicate poverty and create decent jobs for all. At the same time, pervasive inequalities and the deepening climate crisis are fueling growing discontent in many parts of the world.
UN Secretary-General António Guterres warned that “These risks could inflict severe and long-lasting damage on development prospects. They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount.”
In the United States, recent interest rate cuts by the US Federal Reserve may lend some support to economic activity. However, given persistent policy uncertainty, weak business confidence and waning fiscal stimulus, GDP growth in the United States is forecast to slow from 2.2 per cent in 2019 to 1.7 per cent in 2020. In the European Union, manufacturing will continue to be held back by global uncertainty, but this will be partially offset by steady growth in private consumption, allowing a modest rise in GDP growth from 1.4 per cent in 2019 to 1.6 per cent in 2020.
Despite significant headwinds, East Asia remains the world’s fastest growing region and the largest contributor to global growth, according to the Report. In China, GDP growth is projected to moderate gradually from 6.1 per cent in 2019 to 6.0 per cent in 2020 and 5.9 per cent in 2021, supported by more accommodative monetary and fiscal policies. Growth in other large emerging countries, including Brazil, India, Mexico, the Russian Federation and Turkey, is expected to gain some momentum in 2020.
Progress towards higher living standards has stalled for many
Africa has experienced a decade of near stagnation in per capita GDP and many countries around the world are still ailing from the effects of the commodity price downturn of 2014-16, which resulted in persistent output losses and setbacks in poverty reduction. In one-third of commodity-dependent developing countries (home to 870 million people), average real incomes are lower today than they were in 2014. This includes several large countries such as Angola, Argentina, Brazil, Nigeria, Saudi Arabia and South Africa.
At the same time, the number of people living in extreme poverty has risen in several sub-Saharan African countries and in parts of Latin America and Western Asia. Sustained progress towards poverty reduction will require both a significant boost to productivity growth and firm commitments to tackle high levels of inequality. UN estimates indicate that to eradicate poverty in much of Africa, annual per capita growth of over 8 per cent would be needed, compared to the just 0.5 per cent average rate over the past decade.
Headline GDP growth misses crucial aspects of sustainability and well-being
Beyond GDP growth, other measures of well-being paint an even bleaker picture in several parts of the world. The climate crisis, persistently high inequalities, and rising levels of food insecurity and undernourishment continue to affect the quality of life in many societies.
“Policymakers should move beyond a narrow focus on merely promoting GDP growth, and instead aim to enhance well-being in all parts of society. This requires prioritizing investment in sustainable development projects to promote education, renewable energy, and resilient infrastructure,” emphasized Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development.
Economic growth while limiting carbon emissions is possible by changing the energy mix
To combat climate change, the world’s growing energy needs must be met with renewable or low-carbon energy sources. This will require massive adjustments in the energy sector, which currently accounts for about three-quarters of global greenhouse gas emissions. If per capita emissions in developing countries were to rise towards those in developed economies, global carbon emissions would increase by more than 250 per cent – compared to the global goal of reaching net zero emissions by 2050.
The urgency of energy transition continues to be underestimated, resulting in short-sighted decisions such as expanding investment in oil and gas exploration and coal-fired power generation. This not only leaves many investors and Governments exposed to sudden losses, but also poses substantial setbacks to environmental targets. Any delay in decisive action towards energy transition could double the eventual costs. The transition to a cleaner energy mix will bring not only environmental and health benefits, but economic opportunities for many countries.
A more balanced policy mix is needed
Overreliance on monetary policy is not just insufficient to revive growth, it also entails significant costs, including the exacerbation of financial stability risks. A more balanced policy mix is needed, one that stimulates economic growth while moving towards greater social inclusion, gender equality, and environmentally sustainable production.
“Amid growing discontent over a lack of inclusive growth, calls for change are widespread across the globe. Much greater attention needs to be paid to the distributional and environmental implications of policy measures,” concluded Mr. Harris.
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tralac’s Daily News Selection
UK-Africa Investment Summit:
Keynote outcomes, speeches
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pdf UK government statement issued at the closure of the summit (279 KB)
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Closing speech by International Development Secretary Alok Sharma
Selected commentaries, updates:
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Greg Hands, Erastus Mwencha: The time is ripe to fully unlock the UK and Africa’s trade potential
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Sola David-Borha: Stronger UK-Africa trade and investment ties can turbocharge growth for both regions
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Tony Blair: Britain must open a new chapter in its relationship with Africa
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Peter Beaumont: Tony Blair is wrong. Africa won’t be the answer to Britain’s post-Brexit problems
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AfDB President Akinwumi Adesina announces a new $80m Bank-DFID infrastructure financing partnership
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UK-Africa Investment Summit signed deals over £6.5bn
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CDC Group to invest £2bn in African businesses over the next two years
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Uhuru secures Sh170bn investment deals at UK-Africa summit
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NIPC unveils pdf Nigeria Investment Guide (6.53 MB)
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Ian Scoones: UK-Africa trade and investment – is it good for development?
tradebarriers.africa: Online tool to remove trade barriers in Africa goes live (UNCTAD)
The tool, tradebarriers.africa, will help African governments monitor and eliminate such barriers, which slow the movement of goods and cost importers and exporters in the region billions annually. An UNCTAD report shows that African countries could gain $20bn each year by tackling such barriers at the continental level – much more than the $3.6bn they could pick up by eliminating tariffs. “Non-tariff barriers are the main obstacles to trade between African countries,” said Pamela Coke-Hamilton, director of UNCTAD’s trade division. “That’s why the success of the African Continental Free Trade Area depends in part on how well governments can track and remove them,” she said, referring to the agreement signed by African governments to create a single, continent-wide market for goods and services.
Complaints logged on the platform will be monitored by government officials in each nation and a special coordination unit that’s housed in the AfCFTA secretariat. The unit will be responsible for verifying a complaint. Once verified, officials in the countries concerned will be tasked with addressing the issue within set timelines prescribed by the AfCFTA agreement. UNCTAD and the African Union trained 60 public officials and business representatives from across Africa on how to use the tool in December 2019 in Nairobi, Kenya. They practiced logging and responding to complaints, in addition to learning more about non-tariff barriers and their effects on trade and business opportunities.
Cross-border runners a far cry from Africa’s free-trade deal ideals (Bloomberg, Business Day)
Border infrastructure in South Africa and Zimbabwe was built in a time when far fewer people and less freight crossed the Limpopo River between the two nations. The SA side is mainly orderly but slow, with lines of people waiting in the sun. The Zimbabwean side is frenzied, chaotic and without any obvious order, but can often be quicker. Both sides maintain archaic police and vehicle checks, endless forms and waiting. Sometimes fights break out when someone jumps the line and tempers become frazzled in the heat and impatience with corruption. It’s a far cry from the vision of leaders who signed the African Continental Free-Trade Agreement, aiming to lower or eliminate cross-border tariffs on most goods and ease the movement of capital and people across the whole continent. Back at the Shell filling station, Farai Mapondera affirms this. “When politicians talk about African trade, they’re talking for the sake of talking,” he said, dismissing chances of governments ever agreeing to open borders. “What we do, we runners, is how most of Africa trades.” [Related: UNCTAD’s Borderline Project helps develop policies to help African women benefit from cross-border trade endorsed]
Unique customs union in Central Africa underway (UNECA)
Work on the establishment of a harmonized customs union between CEMAC and ECCAS in order to consolidate subregional free trade in Central Africa and better harness the advantages of the AfCFTA has reached an advance state. About 40 experts comprising senior customs officials, representatives of trade ministries, delegates from the eleven countries of central Africa and senior officials of the Steering Committee for the Rationalisation of Regional Economic Communities in Central Africa (COPIL) met in Douala, Cameroon, at the behest of the Subregional Office for Central Africa of the UNECA, the CEMAC Commission and the ECCAS General Secretariat (6 - 10 January) to finalize four reports on this endeavour. The studies covered unrestricted trade within a unified free trade area for Central Africa straddling ECCAS and CEMAC; the codification of customs procedures; the impact of the AfCFTA on Central Africa’s economies; progressive trade measures in the subregion. The reviewed studies from the Douala meeting will be channelled to ECCAS and CEMAC statutory bodies, under the banner of Heads of State and Government of the subregion.
Global investment flows flat in 2019, moderate increase expected in 2020 (UNCTAD)
Global FDI totaled $1.39 trillion in 2019, slightly less than a revised $1.41 trillion for 2018. But flows are still expected to rise moderately in 2020, according to the latest UNCTAD Investment Trends Monitor (pdf). The United States remained the largest recipient of FDI, attracting $251bn in inflows, followed by China with flows of $140bn and Singapore with $110bn. FDI flows to North America remained flat at $298bn. But flows to developed economies as a group decreased by 6% to an estimated $643bn - just half of the peak amount recorded in 2007. “The trend for developed economies was conditioned by FDI dynamics in the European Union,” the monitor says, “where inflows declined by 15% to an estimated $305bn.”
UNCTAD found that flows to developing economies remained unchanged in 2019 at an estimated $695bn, meaning that these countries continued to absorb more than half of global FDI. Analysis of the different developing regions showed the highest growth for Latin America and the Caribbean, at 16%. Africa continued to register a modest 3% rise while flows to developing Asia fell by 6%. Extract (pdf):
FDI flows to Africa amounted to an estimated $49bn – an increase of 3%. Persistent global economic uncertainty and the slow pace of reforms seeking to address structural productivity bottlenecks in many economies continue to hamper investment in the continent. Egypt remained the largest FDI recipient in Africa with a 5% increase in inflows to $8.5bn. The country’s efforts to implement economic reforms have resulted in strengthened investor confidence. While FDI to the country was still driven by the oil and gas sector, major investments in the non-oil economy emerged, notably in telecommunications, real estate and tourism. Despite the increase in Egypt, FDI to North Africa declined by 11% to $14bn, due to a significant (45%) slowdown in flows to Morocco ($2bn from $3.6bn in 2018).
In contrast, FDI to Southern Africa increased by 37% to $5.5bn mainly due to the slowdown in net divestment from Angola. South Africa consolidated last year’s recovery with inflows remaining almost constant at a little more than $5bn. In addition to intra-company transfers by existing investors, investment to the country was led by M&A deals in business services and petroleum refining. FDI flows to East Africa remained steady totaling $8.8bn. Flows to Ethiopia, Africa’s fastest growing economy, slowed down by a quarter to $2.5bn. China was the largest investor in Ethiopia in 2019, accounting for 60% of newly approved FDI projects. Inflows to Uganda increased by almost 50% to $2bn due to the continuation of the development of major oil fields and an international oil pipeline. Flows to West Africa increased by 17% to an estimated $11bn as investment surged in Nigeria by 71% to $3.4bn. FDI to the continent’s largest economy was buoyed by resource seeking inflows in the oil and gas sector. However, the development of a $600m steel plant in Nigeria’s Kaduna state offers some evidence of investment diversification, a long-standing policy objective. FDI to Central Africa rose by 6% to $9.3bn, with the resource-oriented profile of investment persisting.
World Economic Situation and Prospects 2020 (UNCTAD)
Economic diversification is a top priority but has yet to gain much traction in Africa. As growth continues trending with commodity price cycles, the need for a systematic diversification of the productive structure is clear. Industrialization lies at the heart of this transformation. However, other than in Egypt and South Africa, economic diversification across the continent remains low, though recent improvements are evident in a few countries, including Ethiopia, Morocco and Rwanda, as a result of proactive industrial policies. Also, global value chains tend to bypass the continent, as most African countries still export mostly raw or minimally processed goods.
There is some cause for optimism, however, as last year witnessed one of the most relevant policy developments in recent years. The agreement establishing the AfCFTA was adopted in 2018 and entered into force in 2019. The AfCFTA—on track to launch in mid-2020—will create a single market for goods and services covering 1.2 billion consumers with aggregate income of close to $2.5 trillion. The Free Trade Area is expected to promote regional trade and investment integration, which has so far remained disappointing. This will likely encourage the diversification of export markets, as trade costs have been shown to be a decisive factor in firms’ decisions (see box I.1 below). Since a significant portion of intra-African trade occurs in manufacturing, there are also expectations that the AfCFTA can promote industrialization and the creation of higher-paying productive jobs. However, these benefits are contingent on the strengthening of productive capacities. For this, a much broader and more strategic set of policies is needed for the development and support of key areas such as infant industries, FDI, innovation, science and technology, and labour markets.
Extract from Box I.1: Exporters in Africa. What role for trade costs?
Afonso and Vergara (2019) analysed the performance of exporters in Africa and the role of trade costs using a range of export indicators from the World Bank’s Exporter Dynamics Database. The results show that exporting firm entry and exit rates are higher in Africa than in other regions of the world. This high turnover means that many firms in Africa begin exporting but stop almost immediately. Box figure I.1.1 illustrates the exceptionally low survival rate of exporting firms in Africa. On average, less than 30% of firms in Cameroon, Guinea and Malawi continue exporting after their first year, in comparison with 41% in developed countries and 43% in other developing regions.
African countries also exhibit higher rates of entry and exit for export products and low rates of export product survival. Among incumbents in Botswana, for example, more than 70% of exported products, on average, had not been exported the year prior. At the same time, over 70% of products exported the year prior were not exported the following year. This contrasts with rates of only about 40% of products in developed countries. Entry and exit (turnover) rates for export destinations are also higher in Africa (see box figure I.1.2). In Guinea and Senegal, about 40% of markets were new destinations (not explored the previous year), and about 40% of export destinations used the year prior were not used again the following year.
The elevated rates of entry and exit for exporting firms, export products and export destinations underscore the volatility of export activity in Africa. This reflects a lot of experimentation, but it also suggests that African exporters have difficulties in maintaining trade relationships. While this is certainly associated with the level of development, there are many underlying factors that could be at play as well, including market inefficiencies, profit uncertainties, a lack of information about foreign markets, and limited productive capacities.
Econometric analysis confirms that trade costs are a key factor explaining differences in the behaviour of exporting firms in Africa compared to exporting firms in other regions. In addition, trade costs partly explain differences in the characteristics of exporting firms among African countries (Afonso and Vergara, 2019). In fact, trade costs play a disproportionate role in affecting the size and survival of new African exporters in comparison with exporters from other regions. For instance, a reduction of 20% in trade costs has been associated with a 14% increase in the average size of new exporters and a 0.5% increase in the one-year survival probability. In addition, differences in trade costs across African countries are a relevant factor in explaining the lower market diversification of exporters from landlocked countries. However, trade costs seem not to play a significant role in product diversification.
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Global Growth: Modest pickup to 2.5% in 2020 amid mounting debt and slowing productivity growth
Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist, the World Bank says in its January 2020 Global Economic Prospects.
Growth among advanced economies as a group is anticipated to slip to 1.4% in 2020 in part due to continued softness in manufacturing. Growth in emerging market and developing economies is expected to accelerate this year to 4.1%. This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment.
“With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth.”
U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty. Euro Area growth is projected to slip to a downwardly revised 1% in 2020 amid weak industrial activity.
Downside risks to the global outlook predominate, and their materialization could slow growth substantially. These risks include a re-escalation of trade tensions and trade policy uncertainty, a sharper-than expected downturn in major economies, and financial turmoil in emerging market and developing economies. Even if the recovery in emerging and developing economy growth takes place as expected, per capita growth would remain well below long-term averages and well below levels necessary to achieve poverty alleviation goals.
“Low global interest rates provide only a precarious protection against financial crises,” said World Bank Prospects Group Director Ayhan Kose. “The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.”
Analytical sections in this edition of Global Economic Prospects address key current topics:
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The Fourth Wave: Recent Debt Buildup in Emerging and Developing Economies: There have been four waves of debt accumulation in the last 50 years. The latest wave, which started in 2010, has seen the largest, fastest, and most broad-based increase in debt among the four. While current low levels of interest rates mitigate some of the risks associated with high debt, previous waves of broad-based debt accumulation ended with widespread financial crises. Policy options to reduce the likelihood of crises and lessen their impact should they materialize include building resilient monetary and fiscal frameworks, instituting robust supervisory and regulatory regimes, and following transparent debt management practices.
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Fading Promise: How to Rekindle Productivity Growth: Productivity growth, a primary source of income growth and driver of poverty reduction, has slowed more broadly and steeply since the global financial crisis than at any time in four decades. In emerging market and developing economies, the slowdown has reflected weakness in investment and moderating efficiency gains as well as dwindling resource reallocation between sectors. The pace of improvements in many key drivers of labor productivity—including education and institutions—has slowed or stagnated since the global financial crisis.
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Price Controls: Good Intentions, Bad Outcomes: The use of price controls is widespread in emerging market and developing economies. While sometimes used as a tool for social policy, price controls can dampen investment and growth, worsen poverty outcomes, cause countries to incur heavy fiscal burdens, and complicate the effective conduct of monetary policy. Replacing price controls with expanded and better-targeted social safety nets, reforms to encourage competition and a sound regulatory environment can be pro-poor and pro-growth.
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Low for How Much Longer? Inflation in Low-Income Countries: Inflation in low-income countries has tumbled to a median of 3% in mid-2019 from 25% in 1994. The decline has been supported by more flexible exchange rate regimes, greater central bank independence, lower government debt, and a more benign external environment. However, to maintain low and stable inflation amid mounting fiscal pressures and the risk of exchange rate shocks, policymakers need to strengthen monetary policy frameworks and central bank capacity and replace price controls with more efficient policies.
Regional Outlooks
East Asia and Pacific: Growth in the region is projected to ease to 5.7% in 2020, reflecting a further moderate slowdown in China to 5.9% this year amid continued domestic and external headwinds, including the lingering impact of trade tensions. Regional growth excluding China is projected to slightly recover to 4.9%, as domestic demand benefits from generally supportive financial conditions amid low inflation and robust capital flows in some countries (Cambodia, the Philippines, Thailand, and Vietnam), and as large public infrastructure projects come onstream (the Philippines and Thailand). Regional growth will also benefit from the reduced global trade policy uncertainty and a moderate, even if still subdued, recovery of global trade. Regional data.
Europe and Central Asia: Regional growth is expected to firm to 2.6% in 2020, assuming stabilization of key commodity prices and Euro Area growth and recovery in Turkey (to 3%) and Russia (to 1.6%). Economies in Central Europe are anticipated to slow to 3.4% as fiscal support wanes and as demographic pressures persist, while countries in Central Asia are projected to grow at a robust pace on the back of structural reform progress. Growth is projected to firm in the Western Balkans to 3.6% -- although the aftermath of devastating earthquakes could weigh on the outlook -- and decelerate in the South Caucasus to 3.1%. Regional data.
Latin America and the Caribbean: Regional growth is expected to rise to 1.8% in 2020, as growth in the largest economies strengthens and domestic demand picks up at the regional level. In Brazil, more robust investor confidence, together with a gradual easing of lending and labor market conditions, is expected to support an acceleration in growth to 2%. Growth in Mexico is seen rising to 1.2% as less policy uncertainty contributes to a pickup in investment, while Argentina is anticipated to contract by a slower 1.3%. In Colombia, progress on infrastructure projects is forecast to help support a rise in growth to 3.6%. Growth in Central America is projected to firm to 3% thanks to easing credit conditions in Costa Rica and relief from setbacks to construction projects in Panama. Growth in the Caribbean is expected to accelerate to 5.6%, predominantly due to offshore oil production developments in Guyana. Regional data.
Middle East and North Africa: Regional growth is projected to accelerate to a modest 2.4% in 2020, largely on higher investment and stronger business climates. Among oil exporters, growth is expected to pick up to 2%. Infrastructure investment and business climate reforms are seen advancing growth among the Gulf Cooperation Council economies to 2.2%. Iran’s economy is expected to stabilize after a contractionary year as the impact of US sanctions tapers and oil production and exports stabilize, while Algeria’s growth is anticipated to rise to 1.9% as policy uncertainty abates and investment picks up. Growth in oil importers is expected to rise to 4.4%. Higher investment and private consumption are expected to support a rise to 5.8% in FY2020 growth in Egypt. Regional data.
South Asia: Growth in the region is expected to rise to 5.5% in 2020, assuming a modest rebound in domestic demand and as economic activity benefits from policy accommodation in India and Sri Lanka and improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh, and Pakistan. In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to 5% in FY 2019/20, which ends March 31 and recover to 5.8% the following fiscal year. In Pakistan’s growth is expected to rise to 3% in the next fiscal year after bottoming out at 2.4% in FY2019/20, which ends June 30. In Bangladesh, growth is expected to ease to 7.2% in FY2019/2020, which ends June 30, and edge up to 7.3% the following fiscal year. Growth in Sri Lanka is forecast to rise to 3.3%. Regional data.
Sub-Saharan Africa: Regional growth is expected to pick up to 2.9% in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters. The forecast is weaker than previously expected reflecting softer demand from key trading partners, lower commodity prices, and adverse domestic developments in several countries. In South Africa, growth is expected to pick up to 0.9%, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers. Growth in Nigeria expected to edge up to 2.1% as the macroeconomic framework is not conducive to confidence. Growth in Angola is anticipated to accelerate to 1.5%, assuming that ongoing reforms provide greater macroeconomic stability, improve the business environment, and bolster private investment. In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4%. In Kenya, growth is seen edging up to 6%. Regional data.
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Today, in London: The UK-Africa Investment Summit
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Growth Gateway announced at UK-Africa Investment Summit
The service will help businesses access the UK government’s trade, investment and finance offer for Africa all in one place. It will be made up of:
Online information: a section of great.gov.uk will provide up-to-date information on the UK government’s trade, investment and finance offer, as well as African market guides, UK sector guides and a tool to help businesses understand what support they may need, and how best to access it; the content will be available in English, French and Portuguese.
A UK-based team of trade and investment professionals: to help African firms export to the UK, find investment partners, and help UK and international companies to trade with and invest in Africa; the team will work closely with Her Majesty’s Trade Commissioner for Africa, Emma Wade-Smith.
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A new initiative to enhance UK-Africa economic relations: UK-Africa Prosperity Commission (UK All-Party Parliamentary Group for Trade Out of Poverty, ODI)
As African Heads of State and business leaders convene in London on 20 January for the first ever UK-Africa Investment Summit, the APPG Trade out of Poverty, and the Overseas Development Institute, is encouraging the UK government to engage them on a proposal for a joint UK-Africa Prosperity Commission. The new Commission would chart out the opportunities and future directions for a dynamic, new comprehensive economic partnership between the UK and African countries covering the inter-linked dimensions of trade, investment, aid and technology for the next decade. It would allow the UK to shape a shared prosperity agenda collaboratively with our African partners and business communities. This two-way relationship is what Africa wants most of all, and a joint commission would distinguish the UK’s approach from that of the US, EU, Germany, Japan, France and other industrialized nations. [Download the concept note (pdf) for the UK-Africa Prosperity Commission. The authors: Dirk Willem te Velde, Tom Pengelly]
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Africa and the United Kingdom: Challenges and opportunities to expand UK investments (ODI)
Currently, UK foreign direct investment in Africa is heavily focused on the extractive sector and in South Africa. The low penetration of UK FDI beyond mining and financial services and in other countries suggests that there are opportunities as well as challenges to increase the role of British investors in boosting African economies. While to date, the evidence gathered suggests that UK firms show little appetite for investing in manufacturing, developing this sector is a key priority for African governments, and is an area where the UK firms can offer expertise in a wide range of supporting activities, including insurance and business, professional and financial services. Diversification away from the extractive sector will also be key if the British government is to realise its ambition of making the UK the top G7 investor in Africa by 2022. The concentration of UK investment in the extractive sector is also undesirable because spillovers are limited and the risks of appreciation of the exchange rate are higher. Recommendations (pdf):
African governments should better coordinate efforts to strengthen the business climate and to address barriers to trade. Poor regulatory frameworks can facilitate corruption and uncertainty which hamper investment and raise business operation costs.
In particular, African governments should eliminate regulations that discriminate against foreign firms, reduce investment requirements and distribute the requirements of compliance with regulations and taxes equally between domestic and foreign firms.
Infrastructure in energy and logistics should be improved to attract investment, including in manufacturing, and to prompt diversification of investments.
UK aid should continue to be used to facilitate coordination, help address bottlenecks and contribute to the provision of public goods that companies may require.
An adequate combination of trade policies, investment and aid will determine the creation of opportunities that benefit private sector activity in the UK but, crucially, also contribute to the economic transformation and development of Africa. [The authors: Maximiliano Mendez-Parra, Sherillyn Raga, Lily Sommer]
President Buhari: A new case for a Commonwealth based on trade (The Sun)
Yet there is also a case to be made that our two Commonwealth countries should try, with other members, to deliver more – collectively. In 2015, I became the first head of a new Commonwealth Enterprise and Investment Council tasked with boosting trade and investment within the wider organisation. Now with the United Kingdom – the Commonwealth’s largest economy – no longer obliged to ringfence its economy with tariffs, this mission will be given a jolt of vitality.
However, we must be realistic: the commonwealth will not suddenly become a multilateral-free trade zone. Today many members reside within regional free trade and customs zones of their own. Yet without any of us needing to relinquish these ties, we can work together to minimise – consistent with respective memberships – as far as possible many of the tariffs and barriers on commodities, products and services. Because member countries’ national laws are built on the principles of English jurisprudence, we might work together from this common platform to better align regulations on investment, certification and trade.
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Kanze Mararo: What Kenya can gain from UK-Africa Investment Summit
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Lord Popat: We want the UK to be the investment partner of choice for Africa
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Graham Stuart (UK minister for investment): The UK must maximise trading opportunities with African firms
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Hannah Ryder: What the UK can learn from China about running an Africa Summit
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Simon Quijano-Evans (chief economist at Gemcorp Capital): Empowering African reform and inclusion
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A profile of Nick O’Donohoe (chief executive of CDC Group): Africa looms large for UK’s development finance unit
Twitter updates: #InvestInAfrica
India-South Africa trade and investment issues: extracts from the Joint Ministerial Commission (Dirco)
On trade and investment: The Ministers, while acknowledging the growth in bilateral trade volume noted the considerable scope for growth in commercial and investment relations through facilitation of cooperation between business entities in India and South Africa. Both sides encouraged the exchange of trade missions and participation in trade fairs and exhibitions. Both sides agreed on the need to expedite the consultations to finalise the India-SACU PTA at the earliest.
On agriculture: The Ministers noted the progress made in Agriculture sector at the recent FoC meeting, where both the countries agreed to identify two agricultural products for mutual market access and tasked their officials to quickly facilitate market access to these products. EAM expressed hope that the barriers to trade in agro-processed sectors (seafood and bovine meat) would be removed soon and tasked their officials to address and resolve the issues related to phytosanitary regulations and others on priority. The Work plan that has been under discussion between South African Agricultural Research Council (ARC) and Indian Council of Agricultural Research (ICAR) has been finalized and is ready for signature.
Global Economic Prospects: Slow growth, policy challenges (World Bank)
Global growth is projected at 2.5% in 2020, just above the post-crisis low registered last year. While growth could be stronger if reduced trade tensions mitigate uncertainty, the balance of risks is to the downside. A steep productivity growth slowdown has been underway in emerging and developing economies since the global financial crisis, despite the largest, fastest, and most broad-based accumulation of debt since the 1970s. These circumstances add urgency to the need to rebuild macroeconomic policy space and undertake reforms to rekindle productivity.
pdf Sub-Saharan Africa (159 KB) : Regional growth is expected to pick up to 2.9% in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters. The forecast is weaker than previously expected reflecting softer demand from key trading partners, lower commodity prices, and adverse domestic developments in several countries. In South Africa, growth is expected to pick up to 0.9%, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers. Growth in Nigeria is expected to edge up to 2.1% as the macroeconomic framework is not conducive to confidence. Growth in Angola is anticipated to accelerate to 1.5%, assuming that ongoing reforms provide greater macroeconomic stability, improve the business environment, and bolster private investment. In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4%. In Kenya, growth is seen edging up to 6%.
World Economic Outlook Update: Tentative Stabilization, Sluggish Recovery? (IMF)
Trade policy uncertainty, geopolitical tensions, and idiosyncratic stress in key emerging market economies continued to weigh on global economic activity – especially manufacturing and trade – in the second half of 2019. Intensifying social unrest in several countries posed new challenges, as did weather-related disasters – from hurricanes in the Caribbean, to drought and bushfires in Australia, floods in eastern Africa, and drought in southern Africa.
Despite these headwinds, some indications emerged toward year-end that global growth may be bottoming out. Moreover, monetary policy easing continued into the second half of 2019 in several economies. Adding to the substantial support the easing provided earlier in 2019, its lagged effects should help global activity recover in early 2020. As discussed below, the 2019 global growth estimate and 2020 projection would have been 0.5 percentage point lower in each year without monetary stimulus.
In sub-Saharan Africa, growth is expected to strengthen to 3.5 percent in 2020-21 (from 3.3 percent in 2019). The projection is 0.1 percentage point lower than in the October WEO for 2020 and 0.2 percentage point weaker for 2021. This reflects downward revisions for South Africa (where structural constraints and deteriorating public finances are holding back business confidence and private investment) and for Ethiopia (where public sector consolidation, needed to contain debt vulnerabilities, is expected to weigh on growth).
High Level Retreat on the Operationalization of the Peace Fund: The Retreat (11-12 January) was expected to provide clarity and consensus on the following key issues (pdf)
How to ensure the revitalised AU Peace Fund is effectively and accountably managed in line with international best practice in fund management
How to ensure the Peace Fund delivers concrete results and impact
The roles and responsibilities of the AU Policy Organs (including a flow chart illustrating the roles and responsibilities of the PSC and other stakeholders)
The roles and responsibilities of the Peace Fund governance bodies detailing the key interface/relationship between the Peace and Security Council, Board of Trustees the Executive Management Committee and other Policy Organs
The decision-making process for financing activities under the AU Peace Fund and what procedures will guide access to the Fund?
How the budgeting process for the AU Peace Fund will work
How to ensure that the Fund is not rapidly depleted. Beyond Member State contributions, what resource mobilisation strategy should be put in place?
The initial pilot activities that should be prioritised for financing in 2020, along with the management systems that will need to be in place to ensure that any funds allocated are effectively utilised.
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AfCFTA Ratification update: Great news out of Accra at the 2nd meeting of AfCFTA Council of Ministers is that Algeria has ratified the AfCFTA, bringing the number of countries that have ratified to 29. [Source: @jattamensah]
Visualizing 2020: Trends to watch (Council on Foreign Relations)
Trend 3: Africa’s urban housing crunch is already a serious problem, and without significant investments and policy interventions, it’s projected to get far worse in the decade ahead. As the continent’s booming youth population flocks to cities in search of work, many will struggle to find a place to call their own. A major housing shortfall in African cities could threaten urban health and safety and provoke serious social frustration and political unrest. To head off a crisis, civic leaders should move quickly to introduce zoning, construction, and related reforms that set the stage for smart, sustainable additions to the urban housing stock. [The contributor, Michelle D. Gavin, is a senior fellow for Africa Studies; Mark Lutter: The three trends shaping the future of Africa’s cities]
25th anniversary of the creation of the WTO – 1 January 1995 (Council on Foreign Relations)
So the WTO starts its twenty-sixth year with its future in flux as Washington blocks its enforcement operations and threatens to cut what it contributes to its budget. [Related: 11 December 2019 was the 18th anniversary of China’s accession to the WTO. It also marks the start of an era in which the WTO no longer has a functioning appellate body to adjudicate trade disputes among member countries. Why is the WTO imploding, and can it be resuscitated before it’s too late?]
AfCFTA implementation: Let’s meet 1 July 2020 deadline, President advises Africa trade ministers (Ghanaian Times)
Ghana’s president, Nana Addo Dankwa Akufo-Addo, has urged African trade ministers and experts working on the AfCFTA implementation, to conclude all outstanding issues on time for trading to start on 1 July next year as planned. He said meeting all the deadlines set by the AU Heads of State and Government at their extra-ordinary summit in July this year, would allow the new African market commence smoothly and bring about the much anticipated socio-economic impact on the continent. “Similarly, for the effective implementation of the AfCFTA, African trade ministers must ensure that the institutional structures, that are established to support the AfCFTA, are based on practical approaches that work in Africa. Existing, as well as new AU programmes and projects aimed at supporting trade, investment and economic development in Africa, at national, regional and continental levels, must all be properly coordinated to support the implementation of the AfCFTA, and, thereby, fast track regional integration, economic growth and development,” he said.
President Akufo-Addo was speaking at the 10th meeting of African Ministers of Trade and 2nd Meeting of the AfCFTA Council of Ministers in Accra on Saturday. It was for stakeholders to continue discussions towards AfCFTA implementation. Various governments, he said had the responsibility to assist this process by fashioning and implementing a comprehensive set of policies that will empower the private sector to achieve its goal. “Appropriate fiscal, monetary, financial, energy, exchange rate, tariff and non-tariff policies must be co-ordinated to enable African enterprises to be competitive, and, where possible, achieve comparative advantage.” [The Gambia hosts technical workshop on National AfCFTA Implementation Strategy]
“I want African nations to have more say in international standards body”: Kenya’s Eddy Njoroge (The Standard)
On 1 January 2020, Kenya’s Eddy Njoroge will take over the presidency of the International Organisation of Standardisation. He will be the first African to lead the global standards body, the entity that sets the bar for products and services across different industries. While he could have opted for an office in Geneva where ISO is headquartered, he has opted to have the ISO president’s office in Nairobi. And even before he sets foot in the office, he is clear what success will look like at the end of his tenure – bringing Africa and other developing countries to the table where standards are made. He expects to reverse a scenario where these countries have been what he terms just ‘standard takers’ but also become ‘standard makers’.
Past ISO presidents have all been from the developed countries, except in three instances where there was one from Brazil and two from India. “We have not had anybody from what you can truly call developing countries. That is why I want to be the voice of the developing countries and get them more involved. We have over 300 technical committees within ISO, which are the developers of standards but we have very few developing countries in these committees. We must sit at the table to safeguard our interests. What mostly happens is that standards are developed and while we, as developing countries have not participated, have to take them when they are adopted as global standards. I would want more countries to participate.”
Nigeria and the AfCFTA: SON approves 128 new standards in readiness for AfCFTA (Leadership)
The Standards Organization of Nigeria has taken proactive measures to ensure there is no blowback, in Nigeria’s participation in the AfCFTA, by approving a new set of 128 Nigeria Industrial Standards. Director General of the Standard Organisation of Nigeria, Osita Aboloma, said the SON Council has approved the Industrial Standards for publication, dissemination and use by Stakeholders in Nigeria to drive economic advancement by Manufacturers, Processors, Assemblers and Importers of products and services. He enumerated areas covered by the approved standards as including civil/building technology, chemical technology, electrical and electronics, food/codex, petroleum products as well as liquefied petroleum cylinders among others.
Ghana and the AfCFTA: GEPA to begin implementation of National Export Strategy in 2020 (BusinessGhana)
The Ghana Export Promotion Authority will begin the implementation of the ten-year National Export Development Strategy next year, once the document is approved. The document, which has been completed by GEPA, is awaiting approval of the Minister of Trade and Industry and Cabinet. Addressing stakeholders at the 79th Exporters Forum on Thursday, Dr Afua Asabea Asare, the Chief Executive Officer of GEPA, said the key target of the Strategy is to achieve a Non-Traditional Export Revenue of at least $10bn by the end of the strategy’s implementation period in 2028. Dr Asare said GEPA had been able to embark on some strategic interventions geared towards ensuring that the Authority was aligned towards expanding the country’s export revenue base, especially with the coming into effect of the AfFTA. Dr Asabea said GEPA would lead the task of breaking down what AfCFTA means to the ordinary man on the streets, adding that the Authority would embark on a nationwide roadshow to bring the relevance of AfCFTA home. “Otherwise, sadly we will only be a host to AfCFTA and not a successful participant. I implore all partners here present, to rise up to the task when we call on you to come along with us on this nationwide roadshow in the coming months.”
Ghana: Industry captains positive about business conditions in 2020 (Ghana News Agency)
Industry captains interviewed for the Third Oxford Business Group Chief Executive Officers report expect local business conditions to be positive in the coming year. They were also upbeat about the AfCFTA, which would be headquartered in Ghana, and the benefits it could bring to the region. About 100 CEOs’ from across Ghana’s industries were asked a wide-range of questions on a face-to-face basis aimed at gauging the business sentiment. Seventy-one per cent of respondents described their expectations of local business conditions as positive or very positive for the coming year; while 68% viewed the level of transparency for conducting business in the country relative to the West African region as high or very high.
South Africa: Trade conditions will decline in next six months (IOL)
Trade conditions in South Africa will decline over the next six months as expectations weakened last month due to power cuts, according to the SA Chamber of Commerce and Industry (Sacci). Sacci’s seasonally adjusted Trade Expectations Index slid from 49 points in October to 46 points in November. The seasonally adjusted Trade Activity Index, a measure of recent trade conditions, improved slightly by 1 point to 43 points in November.
Job creation for youth in Africa: Assessing the employment intensity of industries without smokestacks (Brookings)
To further assess the employment potential of these industries, the Africa Growth Initiative has initiated a new multi-year research project to estimate the job creation potential of industries without smokestacks in Africa. The first framework conducts a comparative assessment of the employment elasticities for IWOSS and other sectors in the economy. Framework 2 (forthcoming) presents a methodology to identify constraints to growth in industries without smokestacks. Framework 3 (forthcoming) presents a methodological framework to identify the employment creation potential of industries without smokestacks and the skills required for individuals to be absorbed in these sectors. In this paper (pdf), we examine the potential of tourism, transport and telecom (T-T), agro-industry, and horticulture sectors to create jobs. [The authors: Brahima Sangafowa Coulibaly, Dhruv Gandhi, Ahmadou Aly Mbaye]
Is African agriculture waking up? (EIF/IFPRI)
Moreover, the Africa Agriculture Trade Monitor (AATM) 2019 report evaluates what comes from an initial pattern of specialization, and what comes from a reallocation of exports to specific products or specific destinations over the period. Geographical reallocation has benefitted 27 countries, and notably four LDCs. Niger has increased its export shares to China, Malaysia and Thailand; Angola to Chile, China and Peru; Somalia to Gulf countries like Oman and Saudi Arabia, and China; and Liberia to Malaysia and the Netherlands. Sixteen countries, on the other hand, have seen their export performance undermined by negative reallocation. The effect is still limited, but has had noticeable impact on Eritrea with a reduction in export share to Europe and the United States in favor of Egypt; Benin and Burkina Faso with reallocation from China and Thailand to India and Vietnam; and East African countries such as Rwanda and Burundi that strengthened trade with regional partners with limited import demand.
Namibia: 2019 Q3 Trade Statistics Bulletin (pdf, Namibia Statistics Agency)
Recent figures show that the overall value of exports and imports amounted N$19,360m and N$26,153m respectively, hence the total trade (export plus imports) amounted to N$45,513m, reflecting a decline from a revised figure of N$55,025m recorded in the corresponding period a year ago and from N$51,100m registered in the previous quarter. Namibia’s persistent trade deficit is displayed in Chart 1 over a period of ten quarters, starting from q2-2017 to q3-2019.
The largest deficits over the period shown in Chart 1 was recorded in q1-2018 (N$9,289m), q3-2017 (N$8,317m), q3-2019 (N$6,792m) and q2-2017 (N$6,438m). Whereas the smallest deficits of N$1,140m, N$2,612m, and N$3,716m were observed in q2-2018, q4-2018 and q2-2019 respectively. On the other hand, it is not surprising that no surplus was recorded throughout this period. The persistent deficit is mostly driven by the country’s high demand for high-valued manufactured commodities and industrial machinery from the rest of the world as opposed to exporting low value primary commodities such as raw minerals and unprocessed fish. [Download the associated presentation, pdf)
Lesotho: World Bank Poverty Assessment (World Bank)
Lesotho’s poverty rate is lower today than it was 15 years ago. However, with a poverty rate of 49.7% in 2017, poverty remains widespread. Economic vulnerability is high, with more than 75% of the population either poor or vulnerable to poverty. This suggests that most of the population lack economic opportunities and are deprived on multiple fronts. Urban areas experienced greater poverty reduction due to improvements in education and increases in incomes from well-paying jobs, largely in the services sector. In rural areas, poverty stagnated due to slow growth in agricultural incomes, a fall in remittances and vulnerability of the rural population to weather shocks. Despite the growing urban-rural poverty divide, inequality fell as a result of expansion of social protection and an increase in wage incomes among the poor. In spite of this, Lesotho remains one of the 20% most unequal countries in the world.
Angola: First diamonds from Angola’s new pipe to arrive mid-2020 (Reuters)
Angola’s major new Luaxe diamond deposit may start trial mining in mid-2020 and could produce 1 million carats of diamonds worth $90m in 2020, Russian diamond producer Alrosa said. Angola’s state-controlled diamond miner Catoca and Alrosa found Luaxe’s Luele pipe in 2013. Catoca has spent $200m studying and developing it further and has said the pipe may turn out to be the largest discovery in the industry in 60 years. “It will be one of the largest deposits in the world,” Vladimir Marchenko, Alrosa’s deputy chief executive in charge of its Africa business, told Reuters. In November, Alrosa’s specialists finished reviewing a sample of Luaxe’s ore containing 45,000 carats of diamonds. This data will be used to complete the reserves audit, he said.
World Tourism Barometer: November 2019
International tourist arrivals (overnight visitors) grew 4% in January-September 2019 compared to the same period last year, with mixed performance among world regions. The Middle East (+9%) led growth followed by Asia and the Pacific and Africa (both +5%). Europe (+3%) and the Americas (+2%) enjoyed a more moderate increase. [Modern Diplomacy: The growing power of tourism]
Please note: This is the final Daily News selection for 2019. tralac’s Daily News bulletin will resume in January 2020
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All Africans travelling to Nigeria can get visa on arrival from 2019 (Premium Times)
Other Africans travelling to Nigeria will from January 2020 be able to get their visas at the point of entry. This was stated by President Muhammadu Buhari Wednesday at the Aswan Forum for Sustainable Peace and Development in Africa, holding in Egypt. President Buhari equally emphasized that massive investment in transportation infrastructure was necessary for African economic resurgence as this would facilitate the African Free Trade Area Agreement recently signed on by the continental leaders.
“Africa should embark on the provision of transport connectivity by enhancing the development of roads, rail, and air links which will ease the free movement of persons, goods and services within the continent. In this regard, we in Nigeria have already commenced an aggressive drive to upgrade our rail transport system and road networks across the country. We should furthermore promote free trade within and amongst Africa and Africans especially now that we have launched the African Free Trade Area Agreement,” he said.
After challenging year, improvement expected for 2020 (IATA)
The International Air Transport Association forecasts that the global airline industry will produce a net profit of $29.3bn in 2020, improved over a net profit of $25.9bn expected in 2019 (revised downward from a $28bn forecast in June). If achieved, 2020 will mark the industry’s 11th consecutive year in the black. Africa regional outlook: African carriers continue to suffer structural problems of high costs - in large part owing to government taxes and fees - and low load factors. Economic growth in the region has been relatively good and is expected to rise in 2020, but markets are extremely fragmented and inefficiently served in the absence, so far, of a Single African Air Transport Market. As a result, they are projected to show a loss of $200m, similar to 2019. [Nigeria: Operators canvass long-term funding for airlines’ survival]
Ghana: Economic diversification through productivity enhancement (World Bank)
After nearly a decade of strong growth fueled by the boom in commodity prices, Ghana’s economy remains undiversified and vulnerable to external shocks. This report strives to analyze the main challenges for economic diversification from a productivity angle. In looking at a set of high-growth economies of the past, the Growth Report 2008 identified common characteristics of successfully applied growth models - the “ingredients of growth” - to inform policy formulation around the world. However, since independence in 1957, Ghana’s long-term growth dynamics have been mixed and can be divided into three distinct periods. Drivers of the economic expansion of Ghana changed significantly over the years; currently, the service and natural resources sectors provide the main sources of growth. As a consequence of the change in input factors for growth, the contribution of total factor productivity to growth is on a declining path. The structural shift of the Ghanaian economy into services and natural resource sectors comes with two key economic management challenges (pdf). First, Ghana’s shift to services sectors only marginally contributes to labor productivity growth. Second, concentration of economic activity in natural resources increase economic volatility and complicate macro-management.
Markups, market imperfections, and trade openness: evidence from Ghana (World Bank)
This paper investigates the impact of Ghana’s WTO accession on firm-level product and labor market imperfections. The paper exploits a rich dataset of firm-level information to estimate both markups and the degree of monopsony power enjoyed by manufacturing firms. The results indicate that price-cost margins declined while the degree of monopsony power increased in the wake of WTO accession. These diverging dynamics suggest that firms compress real wages to offset loss of market power in the product market due to increased international competition. This gives rise to an increase in the market imperfection gap, which gradually erodes the pro-competitive gains from trade. The paper contributes to the literature by identifying channels through which allocative inefficiencies and misallocation can persist even after trade liberalization.
Promoting SME competitiveness in Botswana: a bottom-up approach to economic diversification (ITC)
Strengthening the competitiveness of Botswana’s small and medium-sized enterprises (SMEs) will help attain the goals of sustainable economic development envisaged in Vision 2036, the country’s development blueprint. According to a new report assessing the competitiveness of Botswana SMEs (pdf), targeted policies would enable Botswana’s businesses to take advantage of opportunities on the horizon, including the African Continental Free Trade Area, and support the diversification of the economy. The report finds that SMEs in Botswana have strengths that could help them go global, and suggests that policies be crafted to address remaining bottlenecks to seize interesting opportunities. For example, companies in the services sector are found to be particularly strong on skills and innovation. Interventions to improve information and communications technology infrastructure could unlock their potential and deliver dividends for services exports.
With a quarter of the population below the age of 25 and one of the highest rates of youth entrepreneurship in the world, Botswana has the potential to benefit from a significant demographic dividend. Yet, Promoting SME competitiveness in Botswana suggests that youth-led companies trail other enterprises when it comes to management practices. Setting up management training for youth-led enterprises would help address these issues. The report builds on data gathered from over 600 Botswana firms using the ITC SME Competitiveness Survey. Based on the collected data, it provides empirical evidence on opportunities to craft strategic competitiveness policies and programmes to boost exports by Botswana SMEs. Survey results indicate that low rates of certification to international standards may hamper efforts to attract international buyers. Support to obtain certification may be particularly helpful in the agricultural sector, where experience has shown it can unlock exports of new products to new markets.
Tanzania mainland poverty assessment: executive summary (World Bank)
This report summarizes a comprehensive analysis of poverty and inequality in Tanzania and identifies some priority actions if poverty is to be reduced. The first part is based on the results of the Household Budget Surveys for 2007, 2012, and 2018; several rounds of National Panel Surveys; and Demographic Health Survey data. The second part examines the pattern of structural transformation, firm profiles, job creation, and financial inclusion using the rebased GDP figures released in February 2019, plus data from the Statistical Business Register, Census of Industrial Production, national accounts, NPS, Integrated Labor Force Surveys, and other sources. Extract (pdf):
Two-thirds of Tanzanian firms are in manufacturing and trade. About 35% are in manufacturing and 34% in wholesale and retail trade. Manufacturing firms primarily produce food and beverages (39%); textiles, wearing apparel, and leather (30%); and furniture (14%). Only 1% are in high value-added and knowledge-intensive industries. The rest operate essentially in services, especially nonmarket services. Less than 1% are in agriculture; most people working in that sector run their own farms without creating a business.
Despite the predominance of micro firms in the economy, they account for just 24% of employment; large firms account for 28%. About half of Tanzanian jobs (49%) are in medium and large firms, which account for about 4% of all businesses (Figure ES.28). Thus, even though fewer than 0.5% of all firms employ more than 100 workers, they account for about 28% of all employment—their average number of workers is over 370, compared to no more than 2 in micro firms and 9 in small ones. New firms in business for less than five years account for less than 25% of jobs, compared to 36% in firms that have lasted more than twenty years. Though only 50% of firms are formal, they account for over 80% of jobs. In general, firms tend to employ twice as many men as women; the gender discrepancy is slightly higher in small and young firms. The average number of men is two times higher than that of women in these firms, while it is 1.6 times higher in larger and older firms. [Doing Business 2020: Economy profile of Tanzania]
Ethiopia and the IMF: Staff-level agreement on a $2.9bn financing package (IMF)
The Ethiopian government and the IMF staff team reached preliminary agreement, subject to approval by the Fund’s Executive Board, on policies that could constitute the basis for Ethiopia’s new program supported by the ECF and EFF arrangements. The overall objective of the program would be to support implementation of the authorities’ Homegrown Economic Reform Program. The Fund-supported program would consist of five main pillars: Durably address the foreign exchange shortage and transition to a more flexible exchange rate regime; Strengthen oversight and management of state-owned enterprises to contain debt vulnerabilities; Strengthen domestic revenue mobilization and expenditure efficiency to create space for adequate poverty-reducing and essential infrastructure spending; Reform the financial sector to support private investment and modernize the monetary policy framework; Strengthen the supervisory framework and financial safety nets.
Services exported together with goods (OECD Working Party of the Trade Committee)
In brief:
WTO members meeting as the General Council agreed on 10 December to extend two existing moratoriums related to customs duties on electronic transmissions and the initiation of “non-violation” complaints under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). They also approved the WTO’s budget for 2020.
Jumia: What went wrong at ‘Africa’s First Unicorn’? Vanity metrics, an obsession to list instead of fixing problems, and a problematic workplace culture turned Jumia from unicorn to carthorse.
Chubb takes stake in ATI to boost African trade. Global insurer Chubb has made a $10m equity investment in the African Trade Insurance Agency, becoming the first global property and casualty insurer to invest in the multilateral political risk and credit insurance agency.
Visa, MFS Africa team to take mobile wallets cross-border. The partnership will also include an integration of MFS Africa into Visa Direct, the card network’s real-time push payments, to provide mobile money users a fast, convenient and secure way to send and receive money and remittances directly from/into their mobile money wallets via eligible card credentials.
The Central Bank of Egypt has signed off on a new $600m export credit risk company in a bid to bolster Egypt’s intra-Africa trade links. The new company, which will be based out of Cairo, will seek to help Egyptian companies win contracts for major projects with African governments, which the African Export-Import Bank claims are worth $60bn annually.
India’s total investment in Mozambique amounts to $8bn, representing 25% of the Indian capital invested on the African continent. The figure was revealed in Maputo on Tuesday by the High Commissioner of India in Mozambique during a business conference for companies in the Information and Communication Technologies sector.
The African Union Commission, in collaboration with the African Refiners and Distributors Association, hosted a two-day workshop (10-11 December) to validate “The Benefits of Adopting AFRI Fuel Specifications Roadmap” which aims to ensure superior fuel quality and significant emissions reduction for achieving clean air in Africa. The purpose of the workshop was to meet with the stakeholders and discuss a draft of the study on the socio-economic benefits of harmonized specifications to develop a final report to be presented to the AU for its adoption.
India’s Ministry of External Affairs will hold the 6th edition of the Indian Ocean Dialogue in New Delhi on the 13 December. During the summit, member states will hold high-level discussions on the Indian Ocean Rim Association role within the Indo-Pacific.
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Gender-sensitive policy recommendations to support women cross-border traders in Malawi, Tanzania, Zambia (UNCTAD)
Recommendations on Enabling Business Environment and Formalization include (pdf):
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Given the large share of informal employment in sub-Saharan Africa, policy interventions should avoid severe restrictions and instead target creating enabling business environment for informal traders.
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Registration requirements could be relaxed for informal cross-border traders, for example, through initiatives such as the National Cross-border Trade Strategy of Rwanda, which proposes removing the requirement for informal cross-border traders to be formally registered as a business, and setting up facilities at the border where informal traders can register and obtain an identification number (to be used for tracking purposes, not for collecting taxes).
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The benefits of formalization should be integrated into any training or awareness-raising initiative to make it attractive for informal cross-border traders, many of whom are women.
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National agricultural and manufacturing development strategies should mainstream cross-border trade considerations so that new linkages between domestic production and informal (including small-scale) cross-border trade could be established.
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Procurement practices should take into account women’s role as informal cross-border traders and feature more inclusive processes that encourage supplier diversity by sourcing from women-owned businesses. For example, in Zambia, the government has a plan to put in place a gender equality seal for both the public and private sector, aimed at offering opportunities for women-led firms in public procurement processes launched by government and in the private sector.
Recommendations on policy coordination include (pdf):
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There is need to strengthen mutual recognition of standards and conformity assessment bodies, and harmonize the characteristics of STRs to help streamline rules and procedures associated with different overlapping trade arrangements to which each country is party (e.g. EAC, SADC, COMESA).
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One-stop border posts could be tailored further to meet the needs of cross-border traders, for example, by constructing basic shared facilities, and establishing one-stop window and fast-track clearance systems for small-scale traders.
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National policies could be introduced to oversee all initiatives carried out on cross-border trade, and promote coordination among initiatives and entities dealing with cross-border trade.
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Relevant gender stakeholders should be added to the list of members of the National Trade Facilitation Committee (NTFC), and trade and gender should be included among topics to be discussed at NTFC meetings.
African Permanent Representatives focus on climate change and AfCFTA in retreat with ECA
The second annual retreat of the African Permanent Representatives and the ECA ended in Mahe, Seychelles, late Tuesday following two days of intense dialogue on key development priorities that can lead to accelerated development in Africa. Debate on climate change took centre stage as Ambassadors and ECA experts discussed how the continent, in particular small island developing States , can leverage new technologies and research to mitigate the impact and vulnerabilities they face due to their remoteness, frontline exposure and levels of development. Africa has six SIDS namely Cabo Verde, the Comoros, Guinea-Bissau, Mauritius, Sao Tome and Principe, and Seychelles, all highly dependent on the coastal and marine sectors.
Whilst their economies are faced with exacerbating climate threats, significant potential also exists to develop through the Blue Economy. The retreat, which brought together representatives from 44 member States, discussed a number of important topics including appropriate response to climate issues, the next phase on the implementation of the AfCFTA, how to stem illicit financial flows and the accelerated actions needed if Africa is to deliver the sustainable development goals by 2030.
ECA to launch online investment information tool in more African countries (Xinhua)
The ECA on Wednesday announced that it is currently working with more African countries in developing the joint online information project, dubbed “iGuide”, an easy-to-use tool providing potential investors with useful information concerning investment opportunities, costs, and applicable laws and procedures. With a view of supporting investment flows and by jointly working with UNCTAD, the Commission has already launched the iGuide projects in seven countries, including Ethiopia, Nigeria, and Zambia.
The Regional Integration and Trade Director at ECA, Stephen Karingi, said progress has been registered in the area of investment in many African countries though the regional distribution show that FDI is concentrated in a handful countries, including Egypt and South Africa. He underlined the need to change the existing situation by doubling up efforts to attract greater and more qualitative investments flows on the African continent. The director was speaking at the opening of the first meeting of the Committee on private sector, regional integration, trade, infrastructure, industry and technology on the premises of ECA in Ethiopia’s capital Addis Ababa, whereby private sector and digital economy are emphasized to boost regional integration of Africa.
UNCTAD’s Handbook of Statistics 2019: Nowcast shows international trade and global economy cooling down
After a continued surge last year, global trade and economic output have stagnated this year, according to UNCTAD’s nowcast published today in the 2019 Handbook of Statistics. Merchandise trade is predicted to drop by 2.4% to US$19 trillion, after significant growth rates in 2018 (9.7%) and 2017 (10.7%). Trade in services is predicted to only increase by 2.7% to $6 trillion, a considerable deceleration from 7.7% in 2018 and 7.9% in 2017. Real global economic output (gross domestic product) is now expected to grow by 2.3% this year, 0.7 percentage points less than last year. “We see consistency across a range of indicators – the global economy is slowing,” said Steve MacFeely, UNCTAD’s chief statistician.
Last year, world merchandise trade increased by 2.3% in volume terms. The 9.7% increase in values could to a large extent be attributed to changes in prices. For example, fuel prices recorded substantial growth, year-on-year, during all the months of 2018, a trend that was reversed at the beginning of 2019, as UNCTAD’s free market commodity price index shows. Maritime transport lost momentum in 2018. World seaborne trade volumes rose by only 2.7%, compared with 4.7% in 2017, and port container traffic grew by 4.7%, two percentage points less than the year before. Extract (pdf): Different exposure to the upswing in trade. In 2018, transition economies enjoyed a boost in merchandise exports (22.7%), increasing at almost two and a half times the rate of their imports (9.4%). Africa also experienced high exports growth (14.7%), combined with a slightly slower growth of imports (11.6%). In the other economic groups exports and imports increased in line with the world average, varying between 8 and 11%, with imports growing slightly faster than exports.
Gaps, limitations and the way forward: UNCTAD assessment of progress in the implementation of the Vienna Programme of Action for LDCs for 2014-2024
Landlocked developing countries (LLDCs) face a number of unique challenges in their quest for development, partly due to their geographical position, and the structure of their economies. Their lack of direct access to the sea makes them dependent on transit countries to effectively link to global markets. As a result, on average, LLDCs have less trade and incur up to 50% more trade costs, according to a study by the World Bank. Furthermore, 26 of the 32 LLDCs are dependent on primary commodities for more than 60% of their exports, rendering them highly vulnerable to external price shocks, and limiting the impact of trade and growth on employment and poverty reduction.
The dual challenges facing LLDCs (remoteness from the sea and commodity dependence) have an adverse impact on their overall development prospects. 17 of the world’s 32 LLDCs also belong to the category of Least Developed Countries. The present report provides UNCTAD’s assessment (pdf) of the progress achieved by LLDCs at the mid-point of the implementation period of the VPoA in areas within its mandates. It identifies the key challenges ahead, together with policy recommendations for the way forward. A particular focus is placed on Priorities 3 (International Trade and Trade Facilitation) and 5 (Structural Transformation). [Companion UNCTAD analysis: eTrade Readiness Assessments of Land-Locked Developing Countries]
Ghana: Exploring the revenue management and producer pricing mechanism within the cocoa sector (Imani Africa)
Cocoa has played a pivotal role in the economic development of Ghana. It provides employment across the cocoa value chain, serves as an export earner, provides interim liquidity support for the management of the foreign exchange, contributes to growth of the economy and ultimately helps reduce poverty. In spite of these benefits, the sector is bedevilled with challenges such as low yield gap, disease and pest infestation, producer incentivization vis-à-vis government deficit and dissatisfaction from cocoa farmers. Against this background, this report aims to explore the revenue management and producer pricing mechanism within Ghana’s cocoa sector.
Using a mixed methods approach for the core part of the report, a number of tools including, variance analysis, econometric analysis, survey analysis and interviews have been leveraged for analysing the data throughout the study, in answering the core research questions. There are four key objectives of the study (pdf): to understand the current cocoa pricing mechanism; to examine the nexus between cocoa prices and cocoa production in Ghana; to explore the perspectives of stakeholders in the cocoa sector; and to examine the revenue and expenditure management of COCOBOD.
Economic Openness: Ghana case study (Legatum Institute)
The report reveals that Ghana’s overall rank in the Global Index of Economic Openness is 91st. Its strongest performance is in Governance (55th), and weakest in Market Access and Infrastructure (115th).
Ghana’s Market Access and Infrastructure (115th) is improving, but at a slower rate than its peers. While Transport and Import Tariff Barriers have both deteriorated over the past decade, there have been improvements in Communications, Resources, and Border Administration.
Ghana’s Investment Environment (106th) has deteriorated over the last 10 years, although it has seen improvements in Property Rights and the Financing Ecosystem.
Ghana has improved its Enterprise Conditions (69th) since 2009 but not changed its global rank. Its Environment for Business Creation is relatively strong, ranking 53rd in the world, and both Burden of Regulation and Labour Market Flexibility have improved.
Governance (55th) is Ghana’s highest-ranking pillar, putting it among the leaders in Africa and reflecting the strong democratic traditions built up under the 1992 constitution. However, it has seen a decline in Government Integrity and Government Effectiveness over the last decade.
Leading through consensus: South Africa chairs the AU (pdf, ISS)
Nearly 18 years after former president Thabo Mbeki chaired the AU, South Africa is officially taking over at the helm of the pan-African institution in February 2020. South Africa will not only assume the chair of the AU, but it will also assume this position for the African Peer Review Mechanism as well as the Committee of African Heads of State and Government on Climate Change. During its chairship of the AU, South Africa will have a mandate to speak on behalf of the continent. As it will also remain a non-permanent member of the United Nations Security Council, as well as a member of the G20 and the BRICS groupings, South Africa will also be the voice of Africa in those fora. This will give South Africa a formidable platform to take continental priorities forward and align them with its own priorities. This includes boosting its economy and those across the continent through the AfCFTA. South Africa can achieve a lot during its presidency but it has to muster the necessary diplomatic capacity and clout to do so. [The authors: Liesl Louw-Vaudran, Mohamed M Diatta]
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Key AfCFTA meetings begin on Monday in Accra, culminating in the African Trade Ministerial meeting this weekend (Ghana News Agency)
Ghana, under the auspices of its Ministry of Trade and Industry, will today start hosting series of meeting for African Trade Ministers and Senior Trade Officials to advance the cause of the AfCFTA. Meeting of the AfCFTA Negotiating Forum, will begin the seven-day meetings to be held at the Accra International Conference Centre. The three-day meeting, will be followed by the meeting of the Committee of Senior Trade Officials (12-13 December). The African Ministers of Trade Meeting and the AfCFTA Council of Ministers Meeting will then follow from the 14-15 December.
17th African Continental Free Trade Area Negotiating Forum will seek to finalise outstanding work on Phase 1 negotiations which deal with the trade in goods and services protocols as well as dispute settlement mechanisms. Technical Working Groups on investment, competition policy and intellectual property rights will also be established. The report of the Negotiating Forum will form the agenda for the meeting of the Senior Trade Officials. At the Council of Ministers Meeting, attention will be paid to the consideration of the report of the meeting of the Senior Trade Officials as well as consideration of work plans and budgets of the interim AfCFTA Secretariat and the permanent Secretariat.
AfCFTA Business Index: methodology validation workshop opens in Addis (UNECA)
Starting on Tuesday, in Addis Ababa: 3rd Ordinary Session of the STC on Education, Science and Technology
The third STC-EST will elect a new Ministerial Bureau for the next two-year tenure, and specifically: Update the Ministers on the status of ongoing programmes and share best practices among Member States to enhance intra-Africa collaboration in Education; Science, Technology and Innovation; Take stock of the implementation of the Continental Education Strategy for Africa (CESA 16-25) as well as Science, Technology, and Innovation Strategy for Africa (STISA-2024) from Member States, the AUC and the partners; Advocate for increased investments in education, science, technology and innovation in Africa; Promote quality assurance and harmonisation of higher education; Contribute to the Draft Digital Transformation Strategy for Africa Education; Contribute to the Chairperson’s Youth empowerment Initiative: 1millionBy2021; Agree on decision/recommendations, for consideration by the AU 2020 Summit. Profiled submissions on Contextualising Science, Technology and Innovation Strategy for Africa – 2024:
Human Development Report 2019: As Africa gains development ground, new inequalities emerge (UNDP)
African countries have made significant strides in advancing human development, gaining ground on primary education and health. But a new generation of inequalities is opening up that, left unchecked, threatens to undermine further progress and make it harder for those already behind to catch up. So finds the UNDP in its 2019 Human Development Report, titled Beyond income, beyond averages, beyond today: inequalities in human development in the 21st century. This Human Development Report, which pioneers a more precise way to measure countries’ socioeconomic progress, says that just as the gap in basic living standards is narrowing, with an unprecedented number of people escaping poverty, hunger and disease, the necessities to thrive have evolved. New inequalities are becoming more pronounced, particularly around tertiary education, and the seismic effects of technology and the climate crisis. “This is the new face of inequality,” says UNDP Administrator, Achim Steiner. “And, as this Human Development Report sets out, inequality is not beyond solutions.”
For the first time this year, an African country – Seychelles – has moved into the very high human development group. Others are rising in the ranks as well. Four countries – Botswana, Gabon, Mauritius and South Africa – are now in the high human development group, and 12 countries – Angola, Cabo Verde, Cameroon, Congo, Equatorial Guinea, Eswatini, Ghana, Kenya, Namibia, Sao Tome and Principe, Zambia, and Zimbabwe – are in the medium human development group. Botswana also enjoys the region’s highest increase in HDI rank between 2013 and 2018, rising 11 places in the rankings.
The spending challenge for reaching the SDGs in Sub-Saharan Africa: lessons learned from Benin, Rwanda (IMF)
This paper documents the additional spending that is required for sub Saharan Africa to achieve meaningful progress in SDGs by 2030. Benin and Rwanda are presented in detail through case studies. The main lessons are: average additional spending across SSA is significant, at 19% of GDP in 2030; countries must prioritize their development objectives according to their capacity to deliver satisfactory outcomes; financing strategies should articulate multiple sources given the scale of additional spending; and strong national ownership of SDGs is key and should be reflected in long-term development plans and medium-term policy commitments. Extract:
ECOWAS single currency not feasible in 2020: Nigeria’s finance minister (Punch)
The 2020 proposed date for the commencement of a single-currency regime for West Africa may not be realised as many countries within the region have yet to meet the criteria for the monetary union. The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who confirmed the development in Abuja, said only Togo had met all the convergence criteria. She spoke on Friday at the opening session of a meeting of ECOWAS committee of ministers of finances and governors of central banks on the currency programme. Zainab said: “We need to address in an optimal way the challenges ahead of us. This meeting is important because we are at a crossroads. The recommendations we make will have significant implications on the monetary policies we undertake.”
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ECOWAS Presidents to meet on single currency regime on 21 December
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Teslim Shitta-Bey: Why the ECOWAS “ECO” will not work, for now
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President Brou restates ECOWAS Commission’s commitment to the single currency project
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ECOWAS, WAEMU move to strengthen regional trade networks
Nigeria: CRFFN, agents blame customs for border closure (ThisDay)
The Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) and customs agents in the country have attributed the decision of the federal government to shut Nigeria’s land borders to incompetence by the Nigeria Customs Service in carrying out its statutory duties at the borders. They stated this at a one-day interactive session tagged, “Federal Government Land Border Closure: Freight Forwarders Perspective,” organised by the CRFFN Governing Council Committee on Monitoring, Enforcement and Compliance held in Lagos. The Registrar/Chief Executive of the Council, Samuel Nwakohu, alleged that the cause of the problem leading to closure of the borders was a system failure especially on the part of Customs. The CRFFN, however, appealed to the federal government to open land borders to legitimate goods. Nwakohu, in a chat with newsmen on the sidelines of the meeting said the call was not intended to encourage criminality, saying that compliant goods should be allowed into the country to be traded across the borders.
South Africa: Task team established to urgently address congestion issues at the Port of Cape Town (GCIS)
We are concerned by the significant issues at the Port of Cape Town particularly with regards to congestion at the container terminal. These issues are impacting on the costs and efficiencies of the logistics and export industries, and are impeding economic growth and job creation in the Western Cape. To address these issues, on Thursday, 5 December the Department of Economic Development and Tourism convened a meeting at the Cape Town International Convention Centre with key stakeholders representing the entire Port logistics chain, from exporters and importers, to trucking companies, the respective divisions of Transnet, Navis, SARS and shipping lines, as well as representatives from the City of Cape Town. At the meeting the Department of Economic Development and Tourism presented on the root causes of congestion, including institutional matters, port capacity, and the traffic flow of trucks carrying containers into and out of the Port. Selected representatives from the port logistics chain, including Transnet National Ports Authority, Transnet Port Terminals, Navis, and two shipping lines were invited to present their analysis and recommendations on the congestion issues, and further discussion was held with all stakeholders to achieve broad consensus.
The urgency of addressing the congestion issues at the Port of Cape Town was agreed by all, and a task team was nominated, comprising of ten senior representatives from the entire port logistics chain. To demonstrate this urgency, I have requested the task team to meet within two weeks and to implement the first remedial actions within three months. The task team have 10 priority issues to deal with, ranging from a shortage of cranes to traffic flows and effective communications throughout the logistics chain. Synchronisation of working hours in the logistics chain will also be addressed. [Note: Statement issued by Provincial Minister of Finance and Economic Opportunities, David Maynier]
The Abidjan Declaration: Advancing social justice – shaping the future of work in Africa (ILO Africa)
In the period leading up to the 15th African Regional Meeting, we request the Office to provide constituents with enhanced support to achieve the above mentioned priorities by developing an implementation plan that will be presented to the 338th Session (March 2020) of the Governing Body. The implementation plan will contain the following: specific and concrete actions for creating an enabling environment for sustainable business; measures to enhance productivity growth; comprehensive policy guidance and technical support for skills development; comprehensive measures for removing policy and regulatory barriers to formalization, in line with Recommendation No. 204, and enhancement of competitiveness and sustainability of formal sector enterprises; comprehensive measures for progressive extension of social protection coverage; measures to address gender inequality and discrimination; comprehensive measures for a just transition; capacity building of social partners; and decent work and reduction of inequalities.
Strengthening synergies between the ILO and institutions in Africa, namely the African Union Commission, regional economic communities, and the three labour administration training centres (African Regional Labour Administration Centre, Centre régional africain d’administration du travail, and Arab Centre for Labour Administration) as these play a supportive role in the implementation of the African Decent Work Agenda priority areas. [Conference documentation can be accessed here]
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Next week, in Addis: Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology. Extracts from featured submissions:
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pdf Issues Paper (709 KB) : Private sector development and the digital economy in support of regional integration in Africa. The large-scale uptake of digital technologies in Africa is still under way. As a relatively new phenomenon, there are fewer tried and tested routes to learn from in navigating industrialization in the digital era. This makes the recommending of policy responses to industrialization through digitization inherently difficult. Governments can respond by improving their policymaking processes so that they are more reactive to a fast-changing environment – in other words, policymaking needs to be both adaptive and properly coordinated.
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African Continental Free Trade Area: pdf an update on the establishment of the agreement and the status of negotiations on phase II (551 KB) . The Specialized Technical Committee recommendations were adopted during the AU Summit in February 2019, which gave a concrete mandate to the African Union Commission, in cooperation with African Union member States, ECA and all relevant stakeholders, to develop a comprehensive African Union Digital Trade and Digital Economy Development Strategy, to be presented for adoption during the summit scheduled for January 2020.
In 2020, it is planned that the sub-programme will scale up its pilot project on informal cross-border trade and apply the methodology to other corridors and regions on the continent, with the ultimate goal of developing a single continental framework for informal cross-border trade data collection in the context of implementation and monitoring of the Agreement Establishing the African Continental Free Trade Area.
In 2020, sub-programme 2 proposes to explore the possibility of a research project on the structural and policy underpinnings required to facilitate the emergence of an African Customs Union to support the implementation of the Agreement Establishing the African Continental Free Trade Area.
A new work programme that is focused on assessing the human rights and inclusivity implications of the trade and climate change nexus will be launched in the context of the partnership of ECA with OHCHR and the Friedrich-Ebert-Stiftung. In the context of the AfCFTA, this work stream will further focus on strategies for green industrialization and technological leapfrogging to ensure a low carbon and sustainable growth trajectory for member States. The findings are expected to provide cutting-edge and innovative contributions to the climate change policy debate and the United Nations Climate Change Conference – 26th Conference of the Parties in 2020.
The digital trade and digital economy work stream will engage more deeply in the themes of e-commerce in free trade agreements and support the implementation of the African Union Digital Trade and Digital Economy Strategy. The work stream will also support preparations across the continent for multilateral and plurilateral e-commerce negotiations through a study on the practical issues of e-commerce entrepreneurship to identify African interests and possible negotiating positions.
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pdf Assessment of progress on regional integration in Africa (611 KB) : focusing on the regional economic communities and lessons on the implementation of the agreement establishing the AfCFTA. Following the introduction, the structure of the report is as follows: section II focuses on trade integration; section III on productive integration; section IV on macroeconomic integration; section V on infrastructure integration; section VI on migration and the free movement of people; section VII on governance, peace and security; and, to close, section VIII offers a conclusion and recommendations.
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Profiled side events (9-10 December): Governing the interface between the AfCFTA and RECs’ Free Trade Areas: issues, opportunities and challenges; Review and validation of the methodological approach to produce the AfCFTA Country Business Index; Africa’s Services Trade Liberalization and Integration under the AfCFTA; Towards a common investment area in the AfCFTA: levelling the playing field for intra-African investment
Nigeria’s national AfCFTA forum: selected updates
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Nigeria is determined to fully implement the terms of the AfCFTA and uphold its commitments on trade and regional integration, the country’s Industry, Trade and Investment Minister, Mr Adeniyi Adebayo, said Monday. In remarks to a two-day national AfCTA forum, Mr Adebayo said Nigeria, however, will not allow smuggling and other predatory trade practices to continue unchecked in the country as this undermines the nation’s development efforts and destroyed local industries, leading to job losses. “We also will not allow rogue traders to manipulate the rules of origin and disguise goods from outside the continent as made in Africa so as to qualify for duty free passage,” he said, adding for a successful implementation of the AfCFTA, his government had constituted the National Action Committee to coordinate a wide range of actions at the domestic, regional and continental levels. “Whilst we have rightfully been wary of the risks posed by the AfCFTA to Nigeria, we ought now to look at it with significant optimism,” the Minister said, adding the Nigerian Export Promotion Council had mapped out goods and services where the country has strong potential to export to Africa.
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National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Mr Hajiya Saratu Iya Aliyu, said successful implementation of the AfCFTA was of crucial importance to Nigeria. “This is because it has the potential to generate a range of benefits for Nigeria by its ability to support trade expansion, create employment, improve national prosperity and tackle poverty,” he said, adding for this to become a reality issues of trade policy, trade facilitation, productive capacity of the private sector, the need for trade-related infrastructure, finance, trade information and market integration must be tackled. Mr Mansur Ahmed, President of the Manufacturers Association of Nigeria, said Nigerian manufacturers can compete well on the continent if the right policies and regulations were put in place to make manufacturing more cost effective.
Concluding today, in Yaounde: Fostering African Private Sector in the Big Data Era – the 2019 Annual Africa Regional Review of WSIS Implementation. Extracts from featured submissions:
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pdf Fostering African private sector in the Big Data Era: draft report (1.66 MB) . The following are some recommendations identified from the findings of this report for possible considerations by businesses and policy- and decision-makers:
African mainstream businesses need to develop agile and adaptable business model for embracing big data to work in different African markets.
Government and other stakeholders need to support upcoming yuth start-ups to further investment in innovative products to scale-up and move beyond start-up and becoming a leading market player. Start-ups also need to network and use their data and customer relationships to develop new products and services to create new revenue opportunities.
African governments need to capture the booming tech hubs to create or change regulations to support growth of entrepreneurialism;
African governments need to ensure and make the necessary reform in the education system to generate the necessary people with key technical skills for the big data ecosystem
African governments need to adapt to the emerging technologies and the digital disruption environment to improve policy making and deploy recourse more efficiently
Countries need to elaborate the interface between big data and the new phenomenon of ‘open data’ to promote innovation and to make the potential of big data much more powerful and useful.
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Dr Dereje Yohannes: Challenges and potential solutions for Big Data implementation in Africa (pdf)
Take advantage of the high penetration rates of mobile phones to collect usage-associated data and sensor data for innovative BD projects. (Data Capture issue)
Increase the number of data scientists trained. Make partnerships with nonprofit organizations. (Work force issue)
Institute policies and regulatory frameworks to ensure the privacy and security of sensitive data. (Privacy and security issue)
Implement strategic partnerships with private and public institutions with expertise in BD tools and techniques. (Adoption issue)
Encourage institutions and private sectors to produce and share accurate, unbiased Big data. (Partnership issue)
John W.H. Denton: Don’t let tariffs break the Internet (Project Syndicate)
Most people have never heard of the WTO’s moratorium on customs duties on electronic transmissions. And yet it may be one of the most important trade deals in recent history, given the outsize effect it has had on the growth of the Internet. The moratorium – which has been renewed by WTO member states every two years since 1998 – has enabled the digital economy to flourish by prohibiting governments from applying tariffs to international data flows. It has thus shielded the Internet from distortions induced by levies at national borders. As such, the online sphere has been a virtual utopia, the likes of which trade economists can only dream when it comes to real-world commerce.
But this paradise will soon be lost unless cool heads prevail. A handful of countries – most notably India, South Africa, and Sri Lanka – have signaled their intention to let the moratorium lapse at the end of this year. That would leave governments free to begin experimenting with unilateral tariffs on everything from software, e-books, and cloud services to the data underlying popular streaming services. Proponents of ending the moratorium argue that the digitalization of previously physical goods – books to e-books, CDs to Spotify, DVDs to Netflix – has resulted in a loss of tariff revenues. Viewed through this narrow lens, the notion of applying duties to digital transactions may seem appealing to politicians seeking to protect domestic revenue bases, and who are increasingly feeling public pressure to tax the global tech giants. But applying tariffs to data flows would be a chimerical answer to a very real challenge. Not only would such a move add to a damaging pattern of escalating tariffs; it would also wreak potential havoc in the online economy. Move over Kim Kardashian: tariffs really could “break the Internet.” [Note: The author is Secretary General of the International Chamber of Commerce]
Blockchain and DLT in trade: a reality check (pdf, WTO)
Building on the WTO publication Can Blockchain Revolutionize International Trade?authored by Emmanuelle Ganne and TFG’s white paper Blockchain and Trade Finance, this study provides an overview of the main projects underway in trade, with a focus on trade finance, shipping, and the digitalization of trade documents, and assesses their stages of maturity. Based on a survey of more than 200 actors in the field, it analyses the key challenges that companies involved in blockchain projects are facing and discusses actions that may need to be taken to allow the technology to truly transform international trade. After years of hype around blockchain, the time has come for a reality check. Extract from the conclusion (pdf):
The survey we conducted and the analysis of its results have provided new insights into the perceptions held by the various players in the space and the differences amongst them. Examining the opportunities in combination with the challenges has allowed us to remove the rose-coloured glasses and view the industry in its unfiltered current state. With the views of a wide-ranging group of stakeholders in mind we will be better placed to steer the DLT-fueled global trading vessel in the right direction, meeting and surpassing each milestone along the way. If we all join forces to successfully address the various challenges that are currently slowing down the spread of blockchain and limiting its impact on trade, from technical aspects, to standardization, legal and privacy issues and governance, the future promises to be bright for all parties involved in the international trade space, from farmer, to shipper, to financier, to port operator, and even to the trendy hipsters waiting for a slice of avocado toast. [The authors: Deepesh Patel (TFG), Emmanuelle Ganne (WTO)]
Informal sector taxation: ATAF EOI for an individual consultant (AfDB)
The will be expected to perform the following services: Provide inputs for the project concept note; Collect and compile data on informal sector; Participate in the country visits for the identified pilot countries; Compile draft country field visit reports; Provide inputs for a work plan for the consultative technical workshop to be held in February 2020; Provide data and information as inputs for research papers and policy briefs; Gather inputs for the informal sector guidebook; Develop and maintain a list of key project stakeholders; Develop tools for data collection.
AUDA-NEPAD Land Governance Programme country assessments validation workshop: communiqué
The validation workshop (2-4 December, Accra) was aimed at galvanising technical partnerships to support building consensus on key priorities (datasets) for the design and development of digital land data and information repository, with visualization and analytical functionality; exchange information on country experiences on the assessments; review country specific needs and requirements for the establishment of their national help desk; and Agree on country-specific activities for help desk set up. Discussions were informed by five sub-themes: socio-economic data, administrative data, geo-spatial data, legal & institutional framework for land governance, legal & institutional framework for administrative and geo-spatial data management.
Today’s Quick Links: Nigeria-South Africa Integrated Road Transport Infrastructure Initiative: update UK signs MOU with Nigeria’s Standards Agency Ogun-Guangdong Free Trade Zone: China seeks strategic partnership with Nigeria Nigeria: Exporters seek government’s support for small businesses BloombergQuint: Moody’s warns Nigeria its reliance on hot money is damaging its economy WTO Committee on Technical Barriers to Trade: Moderators’ report of the thematic session on conformity assessment procedures – national quality infrastructure Côte d’Ivoire: UNCTAD investment policy review workshop Angola: IMF executive board completes Second Review, approves $247m disbursement Namibia, Tanzania seek ways to exploit trade Yariv Cohen: Africa is building bridges with global innovation hubs African Union policy brief on Africa’s Future: Youth and the data defining their lives AUDA-NEPAD report: Breaking Barriers – Women and Youth in agri-business |
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Doing Business 2020: Selected African economy profiles
Angola, Benin, Botswana, Burkina Faso, Burundi, Cabo Verde, CAR, Cameroon, Comoros, Congo, Chad, Cote d’Ivoire, Ethiopia, Eritrea, Eswatini, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritius, Mauritania, Mozambique, Namibia
African finance ministers redefining usage of financial resources of the African Union
The Committee of Experts Retreat in Cairo, ahead of the Ministerial Meeting of Finance Ministers (F15), deliberated on a range of priority financial issues of the African Union for two days. During the retreat it was highlighted that the participation of F15 in the AU budgetary and financial processes has improved efficiency in resource utilization by eliminating waste and duplications from the budget. It also assisted AU institutions to focus on results. F15 examined the AU budget and prepared recommendations, among other accomplishments.
F15 achievements vis-à-vis implementation of Golden Rules are reassuring according to presentation made during the retreat in that it decreased dependence on external funding such that 66% of the resources are contributed by AU Member States; linked budgets to Medium Term Plans; carried out forecast for revenue and expenditure; budget guidelines strictly encourages preparation and submission of budgets that reflect priorities of the Union; 98% of financial transactions are now paperless among others.
Outlining progress with implementation of Kigali Decision on Financing the Union (the 0.2% import levy), it was reported that 17 countries (31%) reported to be collecting the levy: Kenya, Gambia, Congo Brazzaville, Gabon, Rwanda, Cameroun, Chad, Sierra Leone, Djibouti, Cote d’Ivoire, Guinea, Benin, Sudan, Ghana, Nigeria, Mali and Togo; collectively, these countries are assessed $79,925,060 to regular budget (29%) and $57,829,254 (63%) was collected as of 10 October 2019.
Nigeria Economic Update: Unlocking the productive potential of Nigeria’s people and resource endowments (World Bank)
The focus section of this report analyzes the evolution of productivity in Nigeria and identifies policies and institutions that can leverage productivity growth to accelerate Nigeria’s economic expansion and create new job opportunities. The analysis highlights four key priorities…:
Extract (pdf): Box 1.1. Harnessing the benefits of the AfCFTA
Nigeria can gain from the AfCFTA. It is among the most closed countries in Africa (Figure B1.1.1) and its exports are the least diversified (Figures B1.1.2-3). Because its exports are highly concentrated in oil, they fluctuate with oil prices. Nigeria trades little with other African countries and has few nonoil exports beyond relatively basic agricultural goods. Accelerating diversification and becoming more integrated into the regional and global economy could help Nigeria achieve its potential as an African economic powerhouse.
Nigeria has yet to take a leading role in ECOWAS, or beyond the region in the African Union. The good news is that Nigeria’s signing of the AfCFTA in July 2019 and proactive stakeholder consultation efforts beforehand could signal that it is now more willing to become a driver of continental growth and integration. Today, Nigeria has an opportunity to capitalize on the potential gains of doing so.
Nigeria could leverage integration into the regional market to achieve economies of scale and lower costs for manufacturers and exporters. That would make it possible for its competitive services firms to expand into other countries. Working through AfCFTA, Nigeria could leverage regional market integration to achieve economies of scale, lower costs, build regional value chains, and take a larger role worldwide—e.g., regional value chains can provide a stepping stone into global value chains.
There will be losers and winners. The International Monetary Fund estimates that trade reforms foreseen in the AfCFTA would lead to welfare gains of 1–1.2%, with most gains driven by the reduction of NTBs, e.g., reducing the widespread use of import bans and addressing inefficiencies at borders (Abrego et al. 2019). Nigeria’s short-term revenue losses from AfCFTA’s tariff liberalization would be small and distributed over 10 years (Arenas and Vnukova 2019); the result would be only a 0.2 annual percentage change in tariff revenues (0.1% of tax revenues). In the long run, trade and welfare gains are estimated to increase substantially in response to such other aspects of trade agreements as trade facilitation, elimination of NTBs, and liberalization of services (Vanzetti et al. 2018).
Nigeria’s proactive stance in AfCFTA negotiations would ensure that its private sector can take advantage of new opportunities. At the same time, the federal government needs to address concerns that greater integration could hurt Nigerian manufacturers. To support those who might lose from increased openness, the government has options, among them a new Africa Union facility to support countries that experience revenue declines from the AfCFTA. The African Export-Import Bank has also agreed to provide a credit line of up to $1.5 bn to help members meet shortfalls.
Nigeria’s AfCFTA Forum: tweeted highlights from the presentation by Edward Kallon, UN Resident Coordinator
The AfCFTA would be a game changer when it comes to stimulating intra-African trade. Precisely, Nigeria’s exports to Africa would increase significantly between 10% and 15% in 2040 compared to baseline without the AfCFTA in place. The more ambitious the trade liberalization, the greater the expansion of Nigerian exports to its African partners in agric, food and industrial sectors, offering invaluable opportunities to industrialize through trade. Nigeria’s exports will also increase significantly towards nations outside West Africa, with most impressive expansions to countries such as Botswana, Cameroon, Egypt, Ethiopia, Kenya, Malawi, Morocco, Mozambique, Namibia, Rwanda, Tanzania, Uganda and Zimbabwe.
Tanzania Economic Update: Realizing the potential of agriculture for inclusive growth and poverty reduction (World Bank)
Tanzania was again one of the top growth performers in the region. Official GDP figures show that growth remained steady in the first half of the year, driven by higher public investment and by a recovery in exports. Inflation has been low and stable, and the balance of payments is quite sound despite a widening current account deficit. Exports are recovering from last year’s contraction. The Government’s Tanzania Development Vision 2025 and the Five-Year Development Plan (FYDP II) set out ambitious goals for reducing poverty and sustainably industrializing so that the country can achieve middle-income status by 2025. The government recognizes agriculture as central to realizing its objectives of socioeconomic development, which are well-articulated in the Second Agriculture Sector Development Program (ASDP II). Extract (pdf):
Because Africa’s regional markets are fast becoming the main targets for both African and non-African food exporters, belief in the quality and integrity of Tanzania’s food safety certification for exports will be critical to commercial success. The recent successes of both Rwanda and Uganda in growing market share in regional inland markets for high-nutrition baby foods illustrates what can be done.
Approaches to ensuring food safety systems have been identified: Build up leadership and address duplication of institutional mandates; Prioritize public spending; Shift to a risk-based food safety system; Over the long term, move from compliance with compulsory regulation to facilitation and creation of incentives for compliance with voluntary regulation; Harmonize rules and processes within the East African Community.
More efficient phytosanitary inspection and certification procedures in an exporting country like Tanzania can reduce the burden on export businesses and possibly encourage more trade. Initiating the phytosanitary certification process electronically and enhancing on-site inspection and issuance of certificates would allow products to be packed and sealed in the same place as they are inspected. This would reduce transport and logistics costs and allow for immediate export after inspection.
Can the new European Commission deliver on its promises to Africa? (Chatham House)
If the EU is serious about its rhetoric on equal partnership, it must therefore move beyond convoluted hybrid proposals. Delivering on the Juncker administration’s proposal to increase funding for external action by 30% for 2021–27 would mark an important first step, particularly as this involves streamlining that would see the European Development Fund – the financial instrument for EU-ACP relations – incorporated into the main EU budget. The new commission should therefore continue to exert pressure on the European Council and European Parliament to adopt this proposal, as negotiations on this financial framework have been repeatedly subject to delay and may not be resolved before the end of the year.
Beyond this, proactive support for the AfCFTA and for structural transformation more broadly must be prioritized ahead of vague promises for a continent-to-continent free trade agreement, as held out by Juncker in his final State of the Union address in 2018. The significance of internal EU reforms for Africa should also not be discounted. The EU’s Common Agricultural Policy, for instance, has placed the African sector at a particular disadvantage and has made it harder to compete even in domestic markets, let alone in the distant EU export markets. EU efforts to stimulate inflows of private investments into the African agricultural sector, abolish import tariffs and offer technical support for African producers to satisfy EU health and safety regulations will be of little use if they are undermined by heavy subsidies across Europe. [The authors: Damir Kurtagic, Fergus Kell]
Africa Cloud Initiative: update (GIC)
The German Development Ministry (BMZ) has announced seven flagship digital projects in Africa. The announcement coincides with a special cabinet retreat focusing on Germany’s digital future, held at Meseberg Palace. The BMZ is investing nearly 270 million Euro in over 200 digital projects in Africa.
Germany’s Development Minister Gerd Müller: “There are more people online than offline in the world. Nowhere is digital technology spreading faster than in Africa. Over the last five years, the number of internet users there has increased threefold. We must wake up to the digital development happening in Africa. If we don’t, we will miss the chance to create enough opportunities for education, training and jobs. Today we are launching the Africa Cloud Initiative. This new platform offers e-learning opportunities to young people in remote and rural areas of Africa. The content of these courses, aimed at vocational trainers, young farmers and digital entrepreneurs, will be developed locally and can be downloaded onto a computer or smartphone. Local partners and a coach then offer learners support. The courses will begin in January 2020 at our Green Innovation Centres for the agriculture sector in Africa.”
Unsustainable management of West Africa’s urban population growth raises business risks (Fitch Solutions)
Rapidly rising populations, high unemployment and competition for diminishing resources in a period of lagging infrastructure development and uneven economic growth will exacerbate operational risks for firms operating in the West Africa region over the medium term. Urban population growth will increase pressure on utilities, transport networks and natural resources and this in turn will drive up energy, water and transport reliability risks. While rising urbanisation will raise the need for structural reform implementation and boost opportunities for infrastructure developers, failure to plan and build sustainable infrastructure will weigh on growth by deterring investment and impeding economic diversification and employment creation. Extract:
Congestion risks at major container ports will ramp up in tandem with trade growth, thereby increasing supply chain delays across a broad spectrum of sectors. Growth in economic activity over the medium term will also place greater pressure on regional ports that are already buckling under the strain of rising trade volumes amid ageing infrastructure and slow execution of port expansion projects. Nigeria’s supply chains are overly reliant on the country’s poor-quality road network and congested ports, which heighten costs for businesses due to the high likelihood of disruption caused by congestion, traffic accidents, security issues and energy and fuel shortages. Although competition to establish regional leadership for port capacity is ramping up (mainly from expansive projects taking place in Ghana, Cameroon, Côte d’Ivoire and Nigeria), we believe that the scale of these expansions will not be sufficient to meet demand in the medium-to-long term. Increased urbanisation will lead to higher demand for imported goods (including manufactured consumer products, food and fuels), while exports will continue to rise in tandem with agriculture and mining sector output that account for the bulk of exports. [Note: The report can be accessed after registration]
Annual report of the Council for Trade in Services to the General Council (2019): table of contents (pdf)
Notifications made to the council pursuant to GATS Articles iii:3, v:7 and vii:4
An inclusive approach to transparency and notification requirements in the WTO
Operationalization of the LDC services waiver
Work programme on electronic commerce
Update of the Secretariat background note on mode 4
Cybersecurity measures of China
Cybersecurity measures of Viet Nam
Recent developments in trade in services statistics
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Underway, in Dar es Salaam: Regional workshop on informal cross-border trade for empowerment of women, economic development and regional integration in Eastern and Southern Africa
Starting tomorrow, in Lagos: Nigeria's National AfCFTA Forum. The forum is co-organized with the UNECA, the EU, the Manufacturers Association of Nigeria, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, and in collaboration with the African Union Commission.
Starting on Friday, in Addis Ababa: International Conference on China and Africa - jointly promoting sustainable development. Topics for discussion include (pdf):
African Continental Free Trade Area: The promotion of industrial development and free trade, notably through the construction of Free Trade Zones, in line with AU Agenda 2063 flagship AfCFTA programme, which was officially launched by the AU in July 2019 and is set to be operational from July 2020, is of great relevance to Africa-China Cooperation. This session will focus discussions on Africa-China development cooperation in areas of trade promotion, including the AfCFTA.
Construction of the Road-Belt Initiative: The Belt and Road Initiative which is expected to connect China to 152 countries including a number of African countries is expect to enable greater infrastructure development and investments. Yet, the specifics of this initiative and its impact on African economies needs to be better understood by all actors involved and aligned and adapted to the development goals of the continent. This session will focus on sharing views from African and Chinese counterparts on the importance of this initiative and its relevance in the scope of the sustainable development.
The effects of Nigeria’s closed borders on informal trade with Benin (Brookings)
The informal sector throughout West Africa, and particularly in Benin, represents approximately 50% of GDP (70% in Benin, in fact) and 90% of employment. Unsurprisingly, informal cross-border trade (ICBT) is pervasive and has a long history given the region’s artificial and often porous borders, a long history of regional trade, weak border enforcement, corruption, and, perhaps most importantly, lack of coordination of economic policies among neighboring countries. Notably, ICBT takes several forms, not all of which are illegal: For example, trade in traditional agricultural products and livestock in bordering countries may involve little or no intent to deceive the authorities, as peasants and herders ignore artificial and un-policed borders.
The economic relationship between the two countries, both members of ECOWAS, is already asymmetric, with Nigeria exerting much more influence on Benin than vice versa. Given Nigeria’s larger population, economy, and natural resource wealth, Benin has adopted a strategy centered on being “entrepôt state,” i.e., serving as a trading hub, importing goods and re-exporting them legally but most often illegally to Nigeria, thus profiting from distortions in Nigeria’s economy. Benin’s dependence on Nigeria is not apparent from official trade statistics, as Benin’s reported trade with Nigeria accounted for only about 6% of Benin’s exports and 2% of Benin’s imports in 2015-17. These official statistics are very misleading, however, as they do not reflect the vast informal trade along the border.
Nigeria’s heavy dependence on oil and many dysfunctional economic policies have created an environment for ICBT between it and its neighbors, mainly Benin and Togo, to flourish. The wide gap between the official and black-market rates of the naira; Nigeria’s subsidized fuel prices; import barriers (Table 1); poor trade facilitation (Table 2); and Benin’s poor business climate have incentivized local traders to turn to the informal cross-border trade. [The authors: Stephen Golub, Ahmadou Aly Mbaye, Christina Golubski; Related analysis by Oxford Policy Management: Benin’s informal trading with Nigeria]
No date yet to reopen Nigeria’s borders, Buhari insists
Nigeria's border closure in national interest: Sanusi, Fayemi
Ethiopia is well positioned to become the textile and apparel manufacturing hub of Africa (ITC)
The International Trade Centre recently organized, under the Partnership for Investment and Growth in Africa project, a dialogue on Ethiopia’s potential to become the next textile and apparel supply base for the world. The discussion was organized in collaboration with the Ethiopian Investment Commission and the China Chamber of Commerce for Import and Export of Textile and Apparel. The event (19 November) gathered more than 100 international buyers, potential Chinese investors, representatives of Chinese and foreign-owned companies in Ethiopia and representatives of Ethiopian institutions.
Mr Sileshi Lemma, Director General of the Ethiopian Textile Industry Development Institute: “Chinese investment has contributed to the growth of the sector through knowledge and technology transfer, closing local companies’ capital gap and opening up new markets, and the government is looking forward to working with more Chinese investors and international buyers to further develop the sector.” Underlining the magnitude of Chinese investment in Ethiopia, which makes up 60% of overall FDI in the country during the last two decades, Ambassador Tan Jian advised: “The Ethiopian Government should focus on addressing the concerns of existing investors, because they will talk to other potential investors about the business environment and will influence their investment projects.”
Kenya: Technology is our best bet to end illicit trade (Business Daily)
The Kenya Revenue Authority is up in arms against illicit trade and contraband, fighting this menace through the roll-out of the Excisable Goods Management System (EGMS) on bottled water, juices, energy drinks and soda. EGMS went live on 13 November and stakeholders have been adequately prepared and educated through numerous sensitization and engagement fora. Issues raised at every engagement level have also been comprehensively and exhaustively addressed to ensure that all parties set off for the voyage in the same coach. The EGMS system was first rolled out in 2013 on tobacco, wines, spirits and beers through affixation of excise stamps on the products. The implementation of the EGMS system on these products has been beneficial, reflecting a positive impact on revenue collection. This implementation saw a significant improvement in collection in the sector within the financial year in which EGMS was implemented. Thanks to EGMS, excise revenues in this sector have risen from Sh700 million back then to more than Sh5.7 billion per month (excluding excise from airtime and financial services) currently. EGMS is a system for protection of excise tax revenue which comprises a secure excise stamp production and accounting with track and trace functionalities. It further supports the identification and interdiction of illicit products along the supply chain. [The author, Elizabeth Meyo, is the Commissioner for Domestic Taxes Department at the Kenya Revenue Authority]
South Africa: SARS' attempt to shield SA from cheap Chinese imports dealt a blow (IOL)
In a judgment delivered last week at the North Gauteng High Court, Judge Neil Tuchten ordered the South African Revenue Service to release 11 containers belonging to Bedfordview-based Dragon Freight. SARS had withheld the consignment after it arrived at the Durban harbour from China in September. Dragon Freight said in papers deposed at the court that SARS refused to release the containers even though they were cleared. The company said SARS had maintained that it was withholding the clothes because they were too cheap compared to similar types of clothing found locally. Dragon Freight feared that SARS would also confiscate 22 more containers that were still headed for the country. The group imports for shops operating in Chinese shopping centres around Johannesburg.
Judge Tuchten ruled in favour of Dragon Freight largely on grounds that SARS did not dispute the urgency of the importer's court application. SARS maintained before Judge Tuchten that the clothes were incorrectly invoiced, and expressed worry they would be sold too cheaply. Speaking to The Star ahead of Judge Tuchten's ruling, Dragon Freight's attorney Richard Meaden said it appeared SARS held the consignment as part of its drive targeting low-cost imported clothes. It would not come as a surprise if the state adopted stringent “anti-dumping” laws following this case, Meaden said.
South Africa: Impact of land expropriation without compensation on international law and treaties to which South Africa is a signatory (PMG)
The Department of Trade and Industry had been requested to brief the committee on South Africa’s international obligations in respect of the expropriation of land and the obligation to pay compensation when land was expropriated. The DTI had also been requested to explain what had been done to align South Africa’s international obligations with the developmental obligations contained in the Constitution. Extract from summary of presentation by Ambassador Xavier Carim (DDG: International Trade and Economic Development Division):
Terminations of BITs formally commenced in 2013 but BITs contain what is referred to as a “survival clause”. Following formal termination, the already existing investment protected under those BITs continued for a period of time varying from 10 to 15 or 20 years. 14 BITs had been formally notified for termination, and the survival clause was in effect for 12 BITs. A New Investment Act was adopted in 2015 and a new Model BIT was developed in SADC. With respect to the matter of expropriation and compensation, the following was relevant: If land of a foreign investor is expropriated and that investor is a citizen of a country that has a BIT with South Africa (including where the survival clause is in effect), the affected investor would be in a position to invoke a legal challenge under the BIT against the Government if the investor were not satisfied by the amount of the compensation.
Three arbitrators under terms of International Settlement of Investment Disputes would make a determination on the matter. While the outcome could not be predicted, arbitrators might take into account national legislation but their primary reference would be the terms of the BIT itself. On the question of compensation, past cases indicated that the standard has tended to be the “market value” of the investment immediately before the expropriation took place. The Government might face a challenge if the new legislation could be construed to impact negatively on the land value of a foreign investor. Some of the jurisprudence on investment treaties referenced a standard of “legitimate expectation” in respect to returns from investment.
Ambassador Carim drew the Committee’s attention to the relevant eligibility requirement set out in the United States General System of Preferences. While that system did not constitute an international obligation for South Africa, it did set a standard to benefit from preferential access provided under the GSP to the US market. The relevant criterion reads:
Stakeholders worry as Nigeria loses IMO council seat again (Guardian)
For the fourth time, Nigeria has failed to clinch the coveted Category ‘C’ seat on the International Maritime Organization Council. This development, which apparently dampened the morale of stakeholders in the industry, would again deny Nigeria the pivotal role of contributing in taking key decisions in the global maritime space. Category C comprises countries, which have special interest in maritime transportation or navigation, and whose election to the IMO council will ensure the representation of all major geographic areas of the world. At an election held during the 31st Session of the IMO, Nigeria lost to Kenya by one vote in the Category C elections. Kenya got 111 votes to come 20th, while Nigeria got 110 votes to make 21st. Saudi Arabia got 106, Poland 101, and Liberia 100. However, Egypt, Morocco, South Africa, and Kenya retained their seats in the 20-member Category C of the IMO.
Effective division of labour between the AUC, RECS, Member States, RMs: TOR for the recruitment of a consultant (pdf, AU)
In order to attain the above objective, the specific purpose of the study includes the following: Prepare a clear and an effective division of labour between the AU, RECs, Member States, Regional mechanisms based on the guiding principle of subsidiarity and based on their respective competencies; AU at continental level, RECs at regional level and Member States at national level. These three levels should work in synergy to address the same issue in a very coordinated manner with clear alignments and timeframes. The work should also take into consideration the following aspects: Policy planning and formulation; Policy adoption; Implementation; Monitoring & evaluation; Partnerships; and Joint resource mobilisation. [Note: The closing date for submission of proposals is 11 December 2019]
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Starting tomorrow, in Pretoria: 15th Replenishment of the African Development Fund
Representatives of donor governments will meet from 4-5 December in Centurion to conclude the 15th Replenishment of the African Development Fund with a financing package for Africa’s low-income countries for the period 2020-2022. Representatives of beneficiary member countries will also participate in the deliberations, focusing on the needs and priorities of ADF countries and measures and resources to address them.
Underway, in Doula: ECCAS countries to prepare lists for continental trade in services under AfCFTA
East African Business and Investment Summit: Business representatives discuss regional integration (ECA)
The AfCFTA was a hot topic of discussion. Acting Director of the Office for Eastern Africa of the ECA, Mr Andrew Mold gave a keynote presentation in the dedicated AfCFTA session “Positioning EAC private sector to take advantage of the AfCFTA.” He explained that, despite the region enjoying an impressive growth performance over the last decade, because of the fragmented nature of regional markets, growth was fragile. “Collectively, the regional market is large and expanding rapidly. If measured in purchasing power terms, it is more than 2 and half times larger than is commonly thought. And it is one of the fastest growing sub-regions in the world. Yet the regional private sector is not sufficiently taking advantage of the opportunities, and an excessively large share of the burgeoning domestic demand is being met through imports. That needs to change under the AfCFTA.”
Prudence Sebahizi, head of the AU’s AfCFTA unit, shed some further light on some of the gains from the AfCFTA, and reported preliminary results from a study being carried out by the World Bank, noting that average real income gains across the continent would amount to 7% or nearly $450bn. At the high end, Kenya and Tanzania would both enjoy real income gains of above 10%.
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Bitange Ndemo: Africa can’t develop trade without free movement
EU/Africa Business Summit: Africa relations are ‘not equal’, leaders warn EU
As the field of competitors for investing in Africa becomes more crowded, the EU will have to quickly improve its offer. The challenge for Ursula von der Leyen’s new European Commission will be to turn the so-called ‘partnership of equals’ promised by her predecessor into something concrete. That was the message at the EU/Africa Business Summit in Marrakech, Morocco on 28-29 November where politicians and business leaders urged the new Commission to be more ambitious and make the ‘equal partnership’ pledge made by Jean-Claude Juncker a reality. After lengthy delays caused by the European Parliament rejecting three of her nominees, von der Leyen’s new college of Commissioners only took office last week.
She will make her first foreign trip to Ethiopia on Friday (6 December), where she will meet Prime Minister and Nobel Prize winner Abiy Ahmed in a symbolic move meant to show Europe’s increased focus on the continent. The main building blocks will be finalising the successor to the Cotonou Agreement, the twenty-year-old treaty between the EU and the 78-member African, Caribbean and Pacific Community, which expires next March, the myriad financial instruments which can facilitate more EU investment in Africa, and the slower process of revamping EU-Africa trade relations. The EU is unlikely to offer significant new sources of financial investment. The next seven-year EU budget, known as the multi-annual financial framework, proposed by the Commission is set to increase spending for Sub-Saharan Africa by 23%, from €26.1bn to €32bn, but that would still see the EU spend more on migration control.
Gerd Müller commentary on Germany’s presidency of the EU Council, from 1 July 2020
Nowhere are the opportunities and challenges of our era more evident than in Africa. With a huge potential of young people, commodities and renewable energies, our neighbouring continent will play a large role in determining our future. By 2050, Africa’s gross domestic product may actually exceed those of the EU and the USA combined. Apart from the shifting global balance of power, this is one reason why competition over Africa and in Africa is becoming ever more intensive. Europe needs a new deal with Africa to build the future, and to follow on from the Cotonou Agreement. In this context, I welcome the fact that Ursula von der Leyen, the new commission president, has announced as a top priority the drafting of a new and comprehensive Africa strategy.
During our Council presidency, we want to contribute to the relaunch of the EU’s Africa policy. Germany’s international development policy offers good starting points. By launching the Marshall Plan with Africa, I have initiated a paradigm shift in cooperation with Africa. Taking our lead from the African Union’s Agenda 2063, we are focusing our support on reform-minded governments with an eye to improving governance in areas such as the rule of law, transparency and fighting corruption. By promoting such causes, we are creating the environment for the private sector to invest sustainably, generate more employment and build something like an African “Mittelstand”, similar to the small and medium-sized enterprises that mark the German economy. At the same time, we are leveraging private investments by means of our newly established development investment fund, which will make up to € 1bn available to European and African enterprises.
The Compact with Africa, an initiative started under the German G20 presidency, takes the same approach. The Africa summit in Berlin in November showed what can grow out of this new quality of cooperation with Africa. Several investment agreements were signed with the involvement of international organisations and companies. That kind of experience will inspire our proposals for a new and comprehensive European Africa policy.
pdf Fifth PIDA Week: communiqué (915 KB) (AU)
Extract: Call upon AU member states, development partners and members of the Continental Business Network to provide adequate resources for the PIDA project preparation facilities: the PIDA Service Delivery Mechanism and the NEPAD Infrastructure Project Preparation Facility, among others.
Encourage partner organisations, as well as bilateral development partners to provide the necessary technical and financial support to the implementation of the second phase of PIDA Priority Action Plan projects by 2030.
Urge the AUDA-NEPAD in consultation with the AUC, and the member states to coordinate continental stakeholders toward the operationalization of the Africa Infrastructure Guarantee Mechanism as a strategic instrument to scale up risk mitigation and mobilize greater investment for PIDA projects.
Welcome the launch of the PIDA Job Creation Toolkit, encourage all project owners, financiers and other stakeholders to make use of the Toolkit and further recommend its continued promotion, development and application in the PIDA PAP 2 process.
Encourage the use of cross-sectoral approaches to promote and demonstrate the economic viability of projects on the continent;
Appreciate the recognition of the tourism sector as one of the five priority services sectors under the AfCFTA and urge the Member States, AUC, AUDA- NEPAD, AfDB and UNECA, to fast track the establishment of African Tourism Organisation in line with the recommendations of Agenda 2063.
Encourage partner organisations, as well as bilateral development partners to promote and provide the necessary technical and financial support for the development and implementation of the Continental Transmission Network Master Plan, INGA 3 Hydropower and High-Speed Rail projects within the framework of the AU Agenda 2063. In the context of the High- Speed Rail Project, and in order to crowd-in private sector financing of rolling stock; encourage Member States to ratify the Luxembourg Rail Protocol.
JP Morgan South Africa Opportunities Conference: remarks by deputy finance minister, Dr David Masondo
We are proud that a number of South African companies have outgrown our domestic market and have become global champions in their respective sectors. We need to continue this trend of growing South African companies to the point that they are able to compete in international markets. These companies should continue investment in the local economy and create jobs in our country. As you might expect, we will insist that these companies remain South African tax residents to protect our country’s interests.
Exports remain low as a share of GDP; and are still dominated by minerals. We need to increase our export performance. Again, it is for this reason, that the pdf Economic Strategy (1.23 MB) also pays attention to boasting the global competitiveness of our manufacturing sector. This must includes value-addition to our minerals. This is notwithstanding the rise of economic nationalism in the global north associated with trade wars and Brexit. The Economic Strategy has also crystalized many aspects of the NDP. The plan lays the basis upon which we hold each other accountable in our quest to achieve higher and more inclusive economic growth. There are a number of economic growth interventions that the Strategy suggests. These interventions include: [Stats SA: GDP contracts by 0,6% in the third quarter; Daily Maverick: SA’s Q3 GDP contracts 0.6%, heralding a possible recession]
UNCTAD’s Business-to-Consumer (B2C) E-commerce Index: Europe continues to dominate
For the second consecutive year, the Netherlands leads UNCTAD’s Business-to-Consumer (B2C) E-commerce Index, followed by Switzerland. The only non-European countries on the top 10 list are Singapore (third) and Australia (10th). The index scores 152 nations on their readiness for online shopping, worth an estimated $3.9 trillion globally in 2017, up 22% from the previous year. Countries are scored on the access to secure internet servers, the reliability of postal services and infrastructure, and the portion of their population that uses the internet and has an account with a financial institution or mobile-money-service provider. The 10 developing countries with the highest scores are all from Asia and classified as high-income or upper middle-income economies. At the other end of the spectrum, least developed countries occupy 18 of the 20 bottom positions. Extracts (pdf):
Table 3: Top 10 developing and transition economies in the UNCTAD B2C E-commerce Index 2019 for Sub Saharan Africa. Mauritius, South Africa, Nigeria, Kenya, Namibia, Tanzania, Ghana, Senegal, Botswana, Uganda
Table 4 shows the average values by geographic region. There are wide regional differences. In the case of Internet access, only a quarter of the population in Africa uses the Internet compared to three quarters in Western Asia. The relative strengths and weaknesses generally differ. East, South and Southeast Asia needs to boost Internet penetration, which currently stands at just over half of the population and is below world average. In Latin America and the Caribbean, the main opportunities for improvement is in postal reliability. To facilitate more inclusive e-commerce, African countries would benefit from catching up in all policy areas. Compared with the 2018 index, regional values have improved somewhat in Latin America and the Caribbean, Western Asia and in developed economies, while they dropped slightly for Africa and the transition economies.
Today’s Quick Links: World Atlas: Top export partners of Mauritius IGAD Heads of State and Government: communiqué AU Commission and SADC Secretariat reiterate commitment to enhanced cooperation in promoting regional and continental integration 2019 African Economic Conference: A clarion call for bolder action to tackle Africa’s youth jobs crisis UNIDO: Bringing the YES Declaration to Africa UNIDO: International Guidelines for Industrial Parks UAE investments into Africa to flourish says Standard Chartered exec |
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The African Economic Conference 2019 began today in Sharm el-Sheikh. The theme: Jobs, entrepreneurship and capacity development for African youths. Concept note (pdf):
Specifically, the conference will give African stakeholders, youth representatives and political leaders the opportunity to: provide their insights and thoughts on the debate on youth jobs, skills and entrepreneurship capacities; assess the impact of past and current reforms and initiatives to address youth jobs challenges in Africa; and discuss the feasibility of proposed innovative policy options to reap the benefits of Africa’s youth bulge and address the challenge of youth skills mismatch in the labor market. [Twitter updates: #AEC2019]
The Sustainable Development, Sustainable Debt: Finding the Right Balance conference is underway in Dakar. The opening address was delivered by the IMF’s managing director, Kristalina Georgieva. A backgrounder by the IMF’s Abebe Aemro Selassie: Africa’s Infrastructure Gap and Debt
The midterm review on the implementation of the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014–2024 takes place later this week in New York. Downloads include National Reports and three regional preparatory reviews. UNCTAD compiled this backgrounder.
German companies in Kenya less optimistic about their business (AHK Eastern Africa)
German companies are still confident about their business in Kenya but optimism has decreased in the last six months, as indicated in the Autumn 2019 World Business Outlook Survey, released by the Delegation of German Industry and Commerce for Eastern Africa (AHK Eastern Africa) in cooperation with the German Business Association in Kenya. According to the survey results, the business expectations of companies in the next twelve months now stands at 62% expecting higher/better. This is down from 71% in the Spring 2019 survey results. In addition, interest in expansion of existing employee base has fallen to 38%, down from 45%, while 48% remained constant in their desire to maintain their current employee numbers. However, the German business community in Kenya still sees many opportunities for bilateral trade relations and economic growth, including employment opportunities. 57% of responding companies, up from 42%, indicated their current situation is likely to remain constant. In addition, 33%, up from 19%, still maintain constant positive business expectation for the next 12 months. The highest increase is 33% expecting better/higher economic growth for their organization, up from 29%, while 52%, up from 42%, expect their economic growth to remain constant.
South Africa’s merchandise trade statistics: October surplus
The South African Revenue Service, on Friday, released trade statistics for October 2019 recording a trade surplus of R3.09bn. The trade surplus is attributable to exports of R123.35bn and imports of R120.26bnn. Exports increased from September 2019 to October 2019 by R13.09bn (11.9%) while imports increased by R14.53bn (13.7%). The year-to-date (1 Jan - 31 Oct) trade surplus of R5.32bn is an improvement from the R3.70bn deficit for the comparable period in 2018. Exports increased by 2.8% year-on-year whilst imports for the same period showed a decrease of 4.3%. The top 5 countries for exports during October: China (10.1%), Germany (9.1%), US (6.8%), Mozambique (5.0%), UK (4.7%). Top 5 countries for imports: China (18.6%), Germany (10.1%), US (7.0%), India (4.8%), Nigeria (3.9%). [Related: SA’s tourism trade balance edges lower]
South Africa: Home Affairs briefing on e-Visa pilot, Border Management Authority
The National Council of Province is scheduled to consider the BMA Bill on Tuesday. This will bring to finality deliberations on the Bill and once adopted, will be referred back to the National Assembly which will then consider it for submission to the President before it becomes law. In the meantime, the BMA project management team has been busy finalising the technical work required to establish the BMA. I have directed the BMA project management office to focus their initial efforts in strengthening the borderline between Limpopo and Zimbabwe, Mpumalanga and Mozambique and KwaZulu-Natal with Mozambique.
On the e-Visa pilot: The department is testing the new system with Kenya. As part of the pilot, a team of DHA immigration and IT officials visited Kenya. This team is scheduled to return to Kenya next week, on 09 December 2019. The first Kenyan tourist who applied for a visitors’ visa on the new e-Visa system arrived yesterday afternoon and more are expected this week as part of the pilot. We are continuously monitoring this pilot process to ensure that user experience is not compromised. In early 2020, we’ll include China, India and Nigeria to the pilot which will run until March 2020.
39th Meeting of the EAC Council of Ministers approves crucial cotton, textile and apparels strategy (EAC)
The 39th Meeting of the EAC Council of Ministers has approved the final draft Cotton, Textiles and Apparels (CTA) Strategy and its implementation roadmap. The strategy makes a critical analysis of the CTA sector along the following key levels of the value chain: cotton seed (production); seed cotton (ginning); cotton lint (spinning); yarn (weaving/knitting/printing/dyeing/finishing), and fabrics (garments/apparels/fabrication/manufacturing) level. The Council further approved the Final Draft Leather and Leather Products Sector Strategy and its Implementation Roadmap.
The Council directed the Sectoral Council on Agriculture and Food Security to develop a strategy to boost the production of cotton in the region. In their deliberations, the Ministers observed that the seed cotton sector was constrained by low and declining production, low productivity, low quality and fluctuating farm gate prices. Textile mills were further constrained by outdated technology; low spinning capacity, availability of cotton lint, high cost of energy and low skill levels.
The Council also approved the draft EAC Export Promotion Strategy 2020 – 2025 for implementation. The EPS 2020-2025 contains the following strategic interventions: Stimulate exports through acquired market intelligence for enterprises and improved visibility on international markets; Improve market access and conditions for EAC export; Strengthen export competitiveness through interventions like improved access to finance and technology for enterprises, in particular SMEs, and; Strengthen the trade support institutions and partnerships.
The Council referred the request for admission to the EAC from the Democratic Republic of Congo to the 21st Summit of the EAC Heads of State for consideration.
COMESA-EU sign €8.8m agreement to support private sector competitiveness
The EU and COMESA have signed an €8.8m contribution agreement to increase private sector participation in sustainable regional and global value chains through improved investment/business climate and enhanced competitiveness in the COMESA region. This was one of the activities conducted during the opening of the 40th Meeting of the Council of Ministers that took place in Lusaka. The funds will be used to implement the Regional Enterprise Competitiveness and Access to Markets Programme (RECAMP), focusing on agro-processing, horticulture and leather products. RECAMP will also support pre-selected value chains based on the potential to generate value addition, jobs creation and attraction of investments to the region.
Rwanda, DRC begin joint border services (New Times)
The Rwanda-DR Congo border of La Corniche, popularly known as Grande Barrière, on Saturday started operating as a OSBP, according to the Directorate General of Immigration and Emigration. Grande Barrière is one of the busiest border crossings on the continent. Construction of the OSBP linking Rubavu in Western Province to the border city of Goma in eastern DR Congo was launched in late 2014, with the project’s construction, worth $9m (about Rwf6 billion), financed by the Howard G. Buffet Foundation.
2020 Africa-France Summit: African technical consultation meeting in Lusaka (AU)
African experts have convened in Lusaka to deliberate on regional priorities in preparation for the 2020 Africa-France Summit, billed for 4-6 June 2020 in Bordeaux, France on the theme of “Better Cities, Better Lives” co-hosted by the AUC, the ECA and UN-Habitat. With Africa having the world’s highest rate of urban growth (3.58%) and its urban population doubling between 1995 and 2015 and projected to almost double again by 2035, the Summit presents an opportunity for African countries to further reinvigorate commitments to advance sustainable urbanization through innovative solutions, and strengthen international cooperation in this regard. Mr Apollinaire Nkeshimana (Ministry of Minister of Local Government of Public Works, Infrastructure and Urban Planning of Burundi) and the representative of the Chair of the Sub-committee on Human Settlement and Urban Development of the AU-STC8, emphasized that the Africa-France 2020 Summit aims to develop new long-term partnerships within the framework of Africa-France cooperation.
Perspectives on the Work Programme and Moratorium on Electronic Commerce (WTO)
Since 1998, WTO members have periodically taken decisions at Ministerial Conferences to continue their practice of not imposing customs duties on electronic transmissions. Recognizing the potential implications on certainty and predictability for business and consumers from the moratorium lapsing prior to the next Ministerial Conference, we propose an extension of the moratorium until the 12th Ministerial Conference and to continue the work under the Work Programme on Electronic Commerce during this period. We note that the moratorium is without prejudice to Members’ right to impose internal taxes, fees or other charges in a manner consistent with WTO Agreements. We propose that the General Council adopts a decision to this effect at its meeting in December 2019 and we will submit a draft decision in the near future.
Draft General Council Decision (pdf). The General Council decides as follows: Members agree to continue the work under the Work Programme on Electronic Commerce, based on the existing mandate as set out in WT/L/274. Members agree to maintain the current practice of not imposing customs duties on electronic transmissions until the 12th Ministerial Conference. The General Council shall report to the 12th session of the Ministerial Conference. [Note: Both documents circulated by: Australia, Canada, Chile, Colombia, Costa Rica, Georgia, Guatemala, Hong Kong, China, Iceland, Israel, Korea, Mexico, New Zealand, Norway, Panama, Paraguay, Singapore, Switzerland, Thailand, Uruguay]
Global Sugar Alliance committed to stamping out export subsidies (Queensland Country Life)
Members of the Global Sugar Alliance have reaffirmed their commitment to use all avenues available to stamp out export subsidies and remove trade-distorting domestic price supports. Meeting in London last week to celebrate 20 years since the alliance of countries was formed, government ministers and industry representative organisations discussed the sugar price supports and export subsidies being paid by the Indian government, and India’s alleged violation of its commitments to the world community made in the WTO. Canegrowers chairman Paul Schembri said Australia, Brazil and Guatemala remain 100% committed to the action they have launched with the WTO. “We do know that a dispute panel has now been formed,” Mr Schembri said. “These things do take time but we’re confident we will get a result in 2020. This is going to be a defining year for us.”
Mr Schembri said this was not just an action against India: “This is also sending a signal from Australia and other countries that aren’t subsidised, that if we think any country is breaking WTO rules, we will ferociously protect our patch to ensure that producers get a fair go and access to a fair world price.” The action in the WTO comes after the Indian government approved an export subsidy equal to a staggering A$216/tonne in August. The unprecedented subsidy is designed to enable India to export more than 6 million tonnes of sugar over the next year, a move which will flood global markets.
India: Tax on cheap imports from free trade partners under consideration (Mint)
Commerce and Industry Minister Piyush Goyal on Saturday said India was looking at introducing a “border adjustment tax” on low cost imports from free trade partner countries, which will bring level playing field between such imports and locally produced goods. The proposed tax is perfectly compliant with the WTO’s rules on multilateral trade, Goyal said in his address to industry leaders at the Economic Times Awards for Corporate Excellence, 2019, on Saturday in Mumbai. The proposal for a “border adjustment tax” came up from a domestic steel maker at a recent meeting on ‘Make In India’, the minister said. Goyal emphasised that India’s trade policy rests on national interest as well as on the interests of its people and the industry, which will guide all government engagement with the rest of the world. “The interest of our people and industry are paramount. That is the terms of India’s engagement with the rest of the world. No more will India stand with weak knees or play on the backfoot,” the minister said, adding that India walked out of the Regional Comprehensive Economic Partnership deal earlier this month when the country’s concerns were not adequately addressed.
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Global Ireland: Ireland’s new Strategy for Africa, to 2025 (DFA)
To increase the value of two-way trade between Ireland and Africa to at least €5n by 2025 and to promote investment, we will:
Build on the strategic Local Market Team approach to grow exports and investment, include a trade focus to the increased number of Ministerial visits to Africa, and further develop business networks with viable propositions to boost trade and investment.
Increase support for innovation by funding Irish-African private sector collaboration, including through expansion of the Africa Agri-Food Development programme, the piloting of a new Ireland Africa Tech Development Fund, and exploring investment in areas such as female entrepreneurship and climate innovation.
Complement the triennial high-level Africa Ireland Economic Forum with an annual programme of focussed seminars and engagements with private sector and non-governmental actors; Expand and enhance Ireland’s network of Double Taxation Agreements in Africa, consistent with international standards and serving mutual interests. As a global actor, we will (pdf):
Andrew Mold: A sceptics guide to the AfCFTA - and why the sceptics are wrong (OECD)
Objections to the AfCFTA follow familiar lines. There are a series of misconceptions which underpin these objections: “African countries all trade the same things”, “AfCFTA is a ‘neo-liberal’ project serving the interests of big corporations”, “How can the AfCFTA succeed while regional trade is actually declining?”, “It won’t be implemented”
Cameroon readies strategy for partaking in Africa's common market (UNECA)
Antonio Pedro, Director of ECA’s Subregional Office for Central Africa, argued that “the establishment of a conducive business environment to improving the productive capacity of the private sector is a concern to both state and non-state actors”. “This is one of those cases where collaboration between the public and private sector has to be at its best; coherence between the trade, industrial development and foreign policies has to be enhanced; and a closer attention needs to be paid to interventions at the macro and micro levels.” Pedro put the objective of the exercise into perspective, saying “Cameroon's accession to this new market must contribute to the creation of trade rather than a diversion of trade.
Namibia: Quarter Two Trade Statistics Bulletin 2019 (pdf, Namibia Statistics Agency)
The overall value of exports and imports for q2-2019 were estimated at N$23,468 million and N$27,247 million respectively, hence, total trade (export plus imports) amounted to N$50,715 million from N$49,250 million recorded in the previous quarter and N$48,869 million registered in the corresponding period of 2018. Chart 1 shows Namibia persistent trade deficit over a period of ten quarters, from q1-2017 to q2-2019. The trade balance, measured as the difference between exports and imports for q2-2019 amounted to a deficit of N$3,779 million from a revised N$5,475 million deficit in q1-2019 and N$1,138 million registered in q2-2018.
During the period under review, Namibia mostly exported to five countries namely; China, South Africa, Belgium, Botswana and Spain (Chart 4). These countries are the same reported in the previous quarter except that Botswana slipped one place down to the fourth position while Belgium moved up one place to occupy the third position. Together, these countries made up the largest share of the value of all goods exported to the rest of the world, with 58.2% of the value of all goods exported destined to these markets. Subsequently, overall exports to these markets grew by 10.7% to register N$13,657 million after recording N$12,335 million in the corresponding quarter a year ago.
China lodged on top of the list as the largest export destination, accounting for 20.1% of all goods exported and South Africa in the second place accounting for 16.6%. Belgium and Botswana accounted for 7.8% each while Spain’s contribution to domestic exports stood at 5.9%. Further analysis of Chart 4 shows that exports to China experienced the largest growth of 48.9% (N$1,548 million) to N$4,713 million up from N$3,165 million witnessed in the corresponding quarter of 2018. Spain followed with 36.2% growth, up from N$1,023 million recorded in q2-2018 to N$1,393 million in the current quarter.
Botswana: International merchandise trade statistics, August 2019 (Statistics Botswana)
Botswana’s total exports amounted to P3, 700.4 million, resulting in an increase of 39.2% compared to the revised July 2019 value of P2, 658.9 million. Imports for the current month were valued at P5, 071.2 million, showing a decline of 14.0% from the revised July 2019 value of P5, 896.0 million. The UAE was the largest destination for Botswana exports, having received 25.3% of total exports during August 2019. India and Belgium followed with 19.7% and 12.6% respectively. South Africa received 12.4% of total exports. Asia as a regional block received 63.7% of Botswana’s total exports during the month under review. The EU got 16.7% while SACU received exports accounting for 15.4%.
Botswana mostly exported diamonds, accounting for 87.3% of total exports during the month under review. Machinery and transport equipment contributed 4.2% while meat and meat products and salt and soda ash contributed 1.7% and 1.2% percent respectively. SACU as a region contributed 78.1% to total imports during August 2019. Most of the imports from SACU came from South Africa followed by Namibia, accounting for 67.4% and 10.5% respectively, of total imports value for the month. Imports from Asia and the EU regions made contributions of 10.5% and 4.0%, respectively. Canada and USA respectively contributed 3.7% and 1.5% of imports into Botswana.
Nigeria: Digital Economy Diagnostic (World Bank)
Nigeria is capturing only a fraction of its digital economic potential and will need to make strategic investments to develop a dynamic, transformative digital economy, according to a new World Bank assessment. The report provides an assessment of the state of the country’s digital economy around the five pillars of the Digital Economy for Africa initiative (pdf); digital infrastructure, digital platforms, digital financial services, digital entrepreneurship and digital skills—key foundational elements of a digital economy. Extract (pdf):
Despite its entrepreneurial potential, Nigeria remains a minor player in the global digital economy in terms of exports of digital goods and services. The Information and Communication Technology (ICT) 56 sector expanded in the last decade: its contribution to GDP doubled in 2010–2017 (Figure 20) and accounted for 12.2% of the GDP in 2018. In 2018, the sector contributed 9.65% to GDP growth. However, in 2017, only 5% of Nigeria’s exports were in the ICT sector (Figure 21).
Nigeria is Africa’s largest market for digital products and services, but its growth is constrained. Despite its protracted economic recession, Nigeria remains Africa’s largest ICT market with 82% of the continent’s telecoms subscribers and 29% of Internet usage. However, overall digital literacy rates remain low, especially among women, and low-income and rural populations. Micro-entrepreneurs and local SMEs are also missing out on digital dividends. [How tough is it to be a tech entrepreneur in Nigeria? Results from a new survey; UNCTAD: Young digital entrepreneurs leading Africa into a new era]
Updates, commentaries on Nigeria's closure of its land borders:
(i) Obasanjo backs border closure, FG restates terms for reopening. Briefing State House correspondents after the weekly Federal Executive Council meeting, the Minister of Information and Culture, Alhaji Lai Mohammed, asked the country’s neighbours, particularly Benin Republic, to respect the ECOWAS protocol on transit, ensure that right duties are paid on containers and uphold the sacrosanct of the rule of origin. He said the freedom of movement of goods from one country to another would be guaranteed only when all the various MoUs that were signed by the parties, were respected and also provided those goods were manufactured in the exporting states. He stated that despite diplomatic effort to resolve the differences with Benin and Niger over the border closure, the three Comptrollers of Customs of Nigeria, Benin and Niger, who met on Tuesday, failed to reach a compromise on the disputes.
“All we are saying is ‘please let us respect the protocol on transit’. ECOWAS set up a protocol on transit of goods, which is very simple. If a container meant for Nigeria is dropped in Cotonou, the authorities in Benin Republic should escort the container to Customs in Seme border, and that way proper duty will be levied and will be paid. But what has been happening over the years is that our neigbours will transload the container, put about five containers on one truck and drive it to the border as if it is only one container that they are going to pay duties on. Worse still, less than even 50% of what is meant for Nigeria will come through the approved border."
(ii) Shut borders: Uproar in ECOWAS Parliament. The verbal exchange followed presentation of Nigeria's country report by its delegation at the ECOWAS Parliament, led by Deputy Speaker of the House of Representatives, Ahmed Idris Wase at the 2019 Second Ordinary Session of the parliament in Abuja. Wase told the parliament that prior to the Nigeria's land border security drills, the Nigerian Government had in 2016 banned importation of rice through land borders. He said that despite this measure, imported rice continued to flood the Nigerian market at rock bottom prices, thereby rendering locally produced rice unattractive to buyers. Specifically, he said "most of the smuggled goods are not part of the legal items captured under the ECOWAS Trade Liberalization Scheme, ETLS, but rather imported by third countries, such as rice produced in Thailand and Vietnam, exported to Benin and finds its way to Nigeria through smuggling."
The Nigerian delegation had hardly finished its presentation when lawmakers from different ECOWAS countries voiced their dismay at the border closure, arguing that it goes against the spirit of the ECOWAS Protocol on free movement of persons and goods. Ghanaian lawmakers, led by Kwasi Ameyaw Cheremeh, said the closure of the borders since September this year was a major issue affecting Ghana's trade with its neighbours in the region, noting that several trucks from Ghana sending goods to Nigeria had been stranded at the Seme-Krake side of the border for over two months now. Speaker of the ECOWAS Parliament, Moustapha Cisse Lo, condemned the closure of the border between Nigeria and Benin and between Niger and Nigeria, and urged immediate re-opening.
(iii) Central Bank Governor Godwin Emefiele on Tuesday said he would advise the Nigerian government to maintain the border closure in the interests of boosting economic output, which has been recovering relatively slowly in the non-oil sector. Emefiele said the impact of the closures on prices was “reactionary and temporary” and that the medium-term benefits of the government’s decision outweighed the short-term costs, after inflation soared to a 17-month high last month.
(iv) Olu Fasan: It’s wrong to force feed Nigerians with local foods. The lesson is thus clear. Nigeria may close its land borders today and succeed in curbing smuggling, as the current border closures seem to have done, but if it opens the borders tomorrow without addressing the underlying institutional and policy problems, smuggling would resume. But how long would Nigeria close its land borders without doing irreversible damage to its vast informal sector, which at 65% is, according to the Financial Times, the largest in sub-Saharan Africa? What about legitimate businesses, including the export sector, that are affected by the border closures? And what about the social and human costs in terms of the impacts on ordinary Nigeria?
(v) Joachim Jarreau: A border patrol force is unlikely to solve Nigeria’s smuggling problem. However, the scale and persistence of smuggling across the border has more fundamental causes. Nigeria has a restrictive trade policy, imposing high duties, or even import bans, on many products. This creates price differences between Nigeria and its neighbours: imports from third countries are cheaper in neighbouring markets than they are in Nigeria. In turn, these price differences create an incentive for smuggling goods across the border. The border patrol will not address this fundamental cause. Moreover, the experience from the past three decades also suggests it is unlikely to succeed.
(vi) Two twitter threads by @LeenaHoffmann
Over the past 4 years I have been involved in three projects investigating Nigeria’s informal economy, its trade relations with its neighbours/cross-border cooperation and regional integration in West Africa. In light of ongoing debates on Nigeria’s land border closure I feel compelled to draw on these research activities to share “two fundamental reasons and another” why I’m puzzled by the land border closure and think it is wrongheaded.
The other fundamental reason why Nigeria's border closure decision is wrongheaded is related to port competitiveness. There is fierce competition between West Africa's seven main maritime gateways to serve the regional market and to specifically handle Nigerian trade.
(vii) Léopold Ghins, Philipp Heinrigs: Nigeria’s border closure - why it will not pay off. African decision makers should endorse long-term policies that take potential adverse effects on consumers into consideration and seek to improve the overall business climate. This implies considering the realities of an increasingly interconnected world and relying on well-identified comparative advantages to allow countries to “leap directly into the global economy”. It is hard to believe that keeping borders closed in Africa’s largest economy is a step in that direction.
China small manufacturers’ rising exports to Africa help offset plunging sales to US amid trade war (SCMP)
Growing optimism is spreading among some small Chinese manufacturers in sectors ranging from car parts to textiles, as a spike in exports to countries involved in the Belt and Road Initiative is starting to offset a portion of lost demand from the United States due to the trade war. Exporters say they have seen a sharp uptick in demand from nations involved in Beijing’s trademark foreign policy initiative, which aims to link Asia, Europe and Africa with a network of ports, motorways and railways.
“Take the textile industry as an example, many export-oriented factories in Zhejiang that I know have doubled or even tripled their orders to the African market this year,” said Steve Xie, a textile exporter from the Chinese manufacturing hub, whose own business has seen a 40% increase in orders. “Every textile factory in Haining and Yiwu city is talking because there have been a particularly large number of African buyers placing orders this year. The increase in orders from Nigeria and Ethiopia is huge.”
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Diarise:
(i) The COMESA Council of Ministers meets tomorrow in Lusaka
(ii) ACP Heads of State and Government Summit (6-10 December, Nairobi). The theme: A transformed ACP committed to multilateralism. Prior to the Summit, the Council of Ministers will discuss important aspects for the future of the Group. Among the items tabled for debate are the appointment of the new Secretary General for the period 2020 to 2025 and the revision of the ACP Group’s constitutive act, the Georgetown Agreement. The candidacy for the post of the Secretary General is done on a rotating basis among the six ACP regions. The new secretary general will be selected from the Southern African region which was charged with the implementation of a vetting process to shortlist suitable candidates for the post. The three candidates submitted for consideration by the Bureau of the Council as a result of this process are Ambassador Georges Rebelo Pinto Chikoti (Angola); Ambassador Dr Brave Rona Ndisale (Malawi) and Ambassador Tadeous T. Chifamba (Zimbabwe).
30 years of the Trade Policy Review Mechanism: speech by WTO's Roberto Azevêdo
The TPR has become one of the main channels members use to promote accountability, predictability and transparency in the multilateral trading system. To be clear, TPRs are not about evaluating members' compliance with specific rules or commitments of the organisation, or about imposing new obligations on them. These can result only from negotiations between members. What the TPR does is shed light on trade practices and policies. This helps clarify trade concerns, defuse potential frictions, and promote good practices. If you look at the figures, they tell quite the story. The past 30 years have seen: more than 500 TPR reports; about 390 meetings of the Trade Policy Review Body; 157 WTO members have been reviewed thus far, most of them multiple times. All members, at all different levels of development, participate.
We need to ensure that the mechanism can respond to changes in the global economy. Today, trade is far more multi-faceted than it was a generation ago. Global value chains bring together flows of goods, services, investments and people. Nearly two-thirds of traded goods are made with components from at least two different countries. Advances in technology, such as e-commerce or artificial intelligence, are revolutionizing the way we trade. These changes pose new questions both for the broader trading system and for how the TPR mechanism should evolve. I hope this conference can spark conversationson this front, helping members define paths forward that would enable the TPRM to be as effective for the next thirty years as it has for the past. This debate is very important, especially in the current circumstances.
Jayant Menon: The proliferation of free trade disagreements (East Asia Forum)
Free trade agreements (FTAs) are being replaced by the proliferation of free trade disagreements (FTDs). Unlike FTAs, FTDs are not easy to measure or define - they cover a wide range of actions and inactions. They may be difficult to quantify, but they are real. FTDs arise when free or freer trade leads to outcomes that are perceived as being unfair by at least one party. When the benefits (or costs) of freeing up trade are viewed by participants as being disproportionately distributed, tensions can lead to FTDs. FTDs also arise when there are significant shifts in the distribution of global economic power. As the economic size of rivals catch up to the prevailing hegemon, the risk of conflict also rises sharply.
With Japan in the past and China more recently, the response appears to be triggered when their share of the GDP of the United States surpasses the 60% mark. And when new major economic powers emerge, they generally do so by increasing their commercial relations with existing ones, resulting in greater interdependence. Although greater interdependence theoretically reduces the risk of conflict - as the costs are higher with more at stake - this is rarely observed in practice. This results in a sense of inevitability toward such conflicts and all that can be done is to contain them and manage their consequences. So far, there has been a rather poor job of both. Why should policymakers be concerned about the proliferation of FTDs? [The author is the lead economist (trade and regional cooperation) in the Office of the Chief Economist at the ADB]
Informal Working Group on MSMEs: Draft ministerial recommendation on promoting MSMES inclusion in rulemaking in the area of trade (pdf, WTO)
The following communication, dated 26 November 2019, is being circulated at the request of the delegations of the Russian Federation and Uruguay: We recommend that WTO Members enhance MSMEs inclusion in domestic rulemaking in the area of trade by paying special attention to the needs of MSMEs. For this purpose, WTO Members within their respective jurisdictions establish regulatory procedures in consistency with their implementation capacities that would include:
Consultation with MSMEs in the process of developing new regulations related to issues covered by the WTO agreements;
Publication of drafts of such regulations before their adoption, or of consultation documents that provide sufficient details about a possible new regulatory measure related to issues covered by the WTO agreements, preferably at an early stage of their development;
Provision of a reasonable period of time for all the interested parties to comment on such drafts; and
Assessment of impact of such drafts on MSMEs.
Kimberley Process: Consensus eludes new definition for ‘blood diamonds’ (Tribune India)
An attempt for a new, expanded definition of conflict diamonds eluded consensus during a meeting of the Kimberley Process countries in New Delhi. India is the current chair of the Kimberley Process, a multi-nation effort to prevent the sale of rough diamonds in Africa to sustain conflicts against governments. The new definition quarterbacked by the US was to include violence by a broader set of actors, including state security forces in the definition. Many countries at the meeting held here felt that the current definition’s limited focus on rebel groups does not sufficiently protect the legitimacy of the rough diamond supply chain. But other countries did not agree with the proposal, suspecting it to be an attempt to tie down governments.
Related KP plenary updates: Final communiqué; World Diamond Council statement; Civil Society Coalition statement;Russia assumes KP Chairmanship, deputised by Botswana
A golden web: How India became one of the world's largest gold smuggling hubs (IMPACT)
In its latest report, IMPACT uncovers how India imports approximately 1,000 tons of gold per year—a quarter more than official figures indicate. Some enters as legal imports thanks to falsified paperwork. The report identifies three primary factors (pdf) which allow a problem of this magnitude:
Tax breaks: To boost India’s refinery sector, the government introduced tax breaks in 2013 for gold doré –also known as unrefined gold. This has led to traders covering up questionable provenance claims by falsifying documentation of gold doré to take advantage of lower taxes. Gold doré imports shot from 23 tons in 2012 to over 229 tons in 2015 as a result of these tax breaks.
Falsified origin documents: Gold doré imports have spiked, with the majority coming from producing countries that lack strong internal controls or are linked to supply chains with weak evidence of due diligence. Analysis of trade data reveals more declared gold imports to India than some countries are capable of producing, such as in the Dominican Republic and Tanzania, as well as instances of paperwork fraud like in Ghana. In the case of the Dominican Republic, as much as 100.63 tons of gold doré imported to India between 2014 and 2017 cannot be accounted for in the country’s gold production.
Complicit allies: Refined gold is being smuggled into India primarily from the United Arab Emirates, while key traders and refiners in Africa’s Great Lakes region with links to India have been identified as being part of the illicit gold trade.
The “Borderline” project: Dar es Salaam regional workshop (4-5 December)
The "Borderline" project equips women with information on cross-border trade procedures, helping them reduce business costs and expand opportunities. The first workshop took place at the Nakonde/Tunduma border between Zambia and Tanzania on 11 November, followed by additional training sessions in Kyela, Tanzania; Karonga, Malawi; and Chipata, Zambia. As Malawi, Tanzania and Zambia belong to different regional economic communities, women traders often feel lost and unable to identify specific trade rules regulating their transactions. Experiences from the border training sessions will be reviewed at a regional workshop in the Tanzanian capital, Dar es Salaam, on 4 and 5 December, the final activity under the “Borderline” project. UNCTAD will share with policymakers from the three target countries the findings of the project and present a set of policy recommendations aimed at making cross-border trade a more profitable activity, especially for women, and a tool for overall economic growth and regional integration.
Botswana: IMF staff completes 2019 Article IV Mission
After a relatively good performance in 2018, the economy is facing headwinds in 2019 related to weaknesses in the diamond market, a severe drought, and slower growth in neighboring countries. Growth is expected to slow to about 3½ percent in 2019, while inflation will remain low. The current account is projected to move to negative territory, contributing to a decline in reserves. The fiscal deficit is expected to reach 5¾ percent of GDP due to lower-than-expected revenue, higher-than-expected increase in public wages and other recurrent spending. Despite these challenges, the banking sector remains well capitalized and liquidity has improved. Under staff’s baseline scenario, growth is expected to recover to 4.2% in 2020, as the diamond market normalizes and copper production comes into stream, and hover around 4% thereafter - a level too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labor market. Inflation will accelerate amid accommodative monetary policy but remain in the bottom half of the Bank of Botswana target band. Fiscal consolidation will gradually reduce the deficit and would contribute to a gradual rebuilding of buffers over the medium term. The outlook is subject to significant downside risks, including a global rise in protectionism, a faster-than-anticipated slowdown in China and in the euro area, and continued slow growth in South Africa.
WCO updates from Zambia, Ethiopia:
Zambia: A national single window workshop was held in Lusaka (4-8 November). It emphasized the paramount role of all agencies in achieving a sound Single Window operating environment, while underscoring crucial activities that should be conducted to ensure the success of the initiative, such as a legal gap analysis, a business process analysis and reengineering, data harmonization and an attentive service design. The workshop succeeded a WCO field mission on implementation of the WTO Trade Facilitation Agreement in Zambia which highlighted a recommendation to reinforce efforts to prepare other border agencies for digitalization and the adoption of Zambia Electronic Single Window, coupled with an outreach programme to raise awareness and build inclusive consultations and communication amongst all border agencies.
Ethiopia: Under the sponsorship of the EU-WCO HS Programme for Africa, a national workshop on the HS 2017 amendments for the Ethiopian Customs Commission was held in Addis Ababa (11-15 November). The overarching goal of the workshop was to assist the ECC, which has just completed the migration to the HS 2017 version, to understand the scope of the amendments and align its classification work on the new version of the national tariff.
Mauritius Standards Bureau to develop National Standardisation Strategy (GoM)
The Minister of Industrial Development, SMEs and Cooperatives, Mr Soomilduth Bholah, launched the event, organised by ISO in collaboration with the Mauritius Standards Bureau. Delegates from various countries (Denmark, Spain, Belgium, Ethiopia, Eswatini, Gambia, Serbia, Bosnia and Herzegovina, Nigeria, Senegal, Germany, Switzerland, Iceland, Mauritius) are participating in the workshop. The Minister announced that his Ministry is in the process of reviewing the National Export Strategy with the main objective of establishing the building blocks and engines of growth of the future. The strategy outlines the roadmap for the development of key sectors having high export potential.
Mauritius Jin Fei zone to further consolidate ties between Mauritius and China (GoM)
The Mauritius Jin Fei Economic Trade and Cooperation Zone is yet another step in further consolidating the friendship between Mauritius and China and is one of the economic zones being established in Africa to strengthen China-Africa economic and trade cooperation, said the Minister of Tourism, Mr Georges Pierre Lesjongard, on Friday 22 November 2019. The Minister was speaking at the Ground-Breaking ceremony of the Jinfei-Maritim Five-Star Business Apartment Hotel project, held in Riche Terre, Terre Rouge. The apartment hotel, to the tune of some Rs 2,6 billion, will be operational in 2022. The structure will comprise two towers of 16 floors each, with a mix of rooms and apartments. The hotel will also consist of two restaurants, five conference halls, and a helipad. The collaboration of Jinfei as a partner is further expected to attract some 75,000 Chinese visitors by 2020. [New impetus to Sino-Mauritian collaboration to further consolidate the SME sector]
Today's Quick Links:
Egypt: Africans doing business
Harmonised Consumer Price Indices, September 2019: SADC, COMESA
Mauritius: SADC Regional Agricultural Policy sensitisation workshop
US cuts funds for WTO Appellate Body drastically
Wang Huiyao: Why China should lead the mission to save the ailing WTO and revive multilateralism
Istanbul Competition Forum: Keeping markets fair in digital era requires stronger cooperation
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EAC Trade and Investment Report 2018: Accelerating market-driven integration
This report is structured in three parts, covering four chapters. Part One includes the background chapter which highlights the introduction to the EAC, analyses the macroeconomic trends and outlines key initiatives that have the potential to affect trade and investment in the Region. Part Two deals with the trade and investment outlook in the Region. Chapter 2 reviews trade among the partner states as well as with the rest of the world. The chapter also reviews the impact of different trade promotion policies on customs revenue in the partner states and concludes with an analysis of the challenges to trade development in the region. Chapter 3 analyses foreign direct investment inflows as well as intra-regional investment flows. The chapter concludes with an analysis of the challenges of attracting investment to the region. Part Three is the wrap-up section while Chapter 4 draws conclusions.
Chapter 1: Background. As in other free trade agreements, the negotiations on Rules of Origin for the AfCFTA are likely to be dominated by strong industry lobbying. During the negotiations so far, West and Central Africa have preferred general Rules of Origin, which would probably resemble those in the East Asia and the Pacific region. On the other side, Egypt, Kenya, and South Africa have pushed for product-specific Rules of Origin, and South Africa has lobbied for adoption of the SADC Rules of Origin on a sector- or product-specific basis. If South Africa’s position prevails, the result would be costly Rules of Origin that would likely deny preferences to the low-income partners (such as Ethiopia, Mozambique, Tanzania, and Zambia). When the more developed partner has a comparative advantage in the upstream capital-intensive sector, such as weaving in textiles and apparel or engine building in the automobile sector, Rules of Origin create a captive market in the low-income partner, which has no choice but to source (at a higher cost) from the more developed partner. Potential benefits from the AfCFTA include elimination of tariff and non-tariff barriers in goods and services, customs improvements leading to reduction in cost of trading across borders.
Chapter 2: EAC merchandise trade. EAC merchandise trade grew by 11.7% to $52.4bn in 2018 from $46.9bn in 2017. The growth in merchandise trade resulted from the increase in the import bill for the region while export volumes fell during the year. Total EAC exports decreased by 4.7% to $14.0bn in 2018 from $14.7bn in 2017. The decline in exports was attributed to low international prices of mainly agricultural commodities on account of higher production as a result of improved weather conditions coupled with a drop in the export of primary minerals as a result of a fall in international demand especially due to decline in economic growth in China and the Far East. Earnings from coffee, tea and minerals fell by more than 24% during the year.
Outside the African continent, the EU was EAC’s major trading partner with exports to the EU increasing by 6.5% to $2.5bn in 2018, from $2.3bn in 2017, and constituted about 17.5% of total EAC exports. Exports to the USA and the rest of the world fell by 20.6% and 12.7%, respectively during the year.
Overall, the region continued to register a trade deficit with the rest of the world in 2018 partly due to an increase in imports into the region. The deficit for the EAC increased by 39.4% to $24.3bn in 2018 from $17.4bn registered in 2017. The increase in the deficit was attributed to increase in imports mainly due to a spike in global crude oil prices that peaked at $73 per barrel and increased the import bill for petroleum products. Other imports included machinery, motors, textile, wheat and rice. The EAC imports fossil fuels, textile, leather, crude palm oil, motors and machinery which account for a large proportion of import bill. On the other hand, the Region mainly exports agricultural commodities which in most cases, are unprocessed and fetch very little on the global market.
Chapter 3: Investment trends in the EAC. Foreign direct investment into East Africa decreased by 15.9%, to $5.7bn in 2018, from $6.8bn in 2017. Inflows to Tanzania increased by 2.3% to $3.1bn. Inflows to Burundi and Rwanda decreased by 76.8% and 11.5% to $15.1m, from $65.1m in 2017 and to $1015.3m in 2018 from $1147.7m in 2017, respectively. FDI into Kenya, South Sudan and Uganda fell by 32.4%, 11.7% and 51.8% to $485.5m, $408.6m and $630.6m, respectively in 2018. Overall, FDI inflows to the EAC were concentrated in manufacturing, construction and services sectors. FDI into manufacturing and construction amounted to $2.1bn and $1bn, respectively in 2018. China and India continued to be the major sources of FDI to EAC with inflows amounting to $1.1bn and $281.02m, respectively.
Chapter 4: Conclusions and prospects. To ensure sustained growth in trade and investment in the Region, the partner states have to support initiatives that reduce the import bill on fossil fuels, motors, crude palm oil, textiles and capital items. Initiatives such as fast tracking the production of EAC oil and gas reserves, assembly of motors in the region and support to improved agricultural production including irrigation, post-harvest handling and value addition should be explored. Further reforms will include establishment of a credible central data unit to capture and disseminate all trade statistics in the EAC for use by the Secretariat and Partner States in planning, management and monitoring of the Single Customs Territory.
EU to consider concession for Kenya on stalled EAC export deal (The Star)
Kenya could be allowed to secure its own preferential market access for exports to the European Union if the regional Economic Partnership Agreement fails to take shape, EU has signaled. This comes amid continued delays by the EAC member states to ratify the EPA deal as a bloc, which would secure duty-free quota-free market access with the 28-member union. EU ambassador to Kenya Simon Mordue yesterday said Kenya could be allowed to go ahead solo under the "variable geometry" provision, which allows certain members states to implement trade agreements faster than others or before others which are not ready. “Kenya is obviously very keen together with Rwanda to move forward and start this trading arrangement with European Union as quickly as possible because they full understand the benefits of this agreement,” EU ambassador to Kenya Simon Mordue said in Nairobi yesterday.
Freight forwarders move to establish self-regulatory body (New Times)
Regional clearing and freight forwarding firms are seeking to improve the professionalism of their operations through a model bill on clearing and freight forwarders industry in the East African Community region. The bill was developed through an initiative by the Federation of East African Freight Forwarders Associations (FEAFFA), in partnership with the revenue authorities and JICA. Under the lead of FEAFA, a model bill on self-regulation was initiated and developed in collaboration with various stakeholders to overcome challenges that are hindering the industry. According to Fred Seka, president of FEAFFA, even though the industry has been championing professionalism through a number of activities such as training, code of conduct, regional accreditation framework, among others, there is need to self-regulate the industry. The Rwandan government has already drafted the national bill and it is ready to be submitted to the concerned authorities, and more than 7000 thousand operators have benefited from the capacity development for international trade facilitation in the region.
Kenyan trade lobby to promote WeChat Pay to boost China-Kenya trade (Xinhua)
Kenya National Chamber of Commerce and Industry, a business lobby, plans to promote the use of Chinese mobile payment service WeChat Pay in order to boost China-Kenya trade, an official said on Wednesday. George Kiondo, deputy CEO of the KNCCI, told Xinhua in Nairobi that adoption of the mobile payment service will be an advantage given that China is a key trading partner. "We are telling our members to use WeChat Pay because it is an affordable and convenient way to pay for imports of goods," Kiondo said on the sidelines of a forum for the preparation of the third edition of China-Kenya Industrial Capacity Cooperation Exposition that will take place 26-29 November. The event will bring about 83 Chinese enterprises which will showcase their latest industrial innovations.
UAE-Kenya Trade and Investment Forum: updates
(i) Kenya National Chamber of Commerce and Industry in partnership with Sharjah chamber of Commerce and Industry has signed a MOU to open a satellite trade office in the United Arab Emirates. The agreement signed on Monday will enable and provide strategic bilateral cooperation between the business communities in Kenya and UAE with an objective to foster cooperation in trade, investment, joint activities, information and trade policy support programmes.
(ii) Sharjah Chamber of Commerce and Industry Chairman Abdulla Sultan Al Owais: “We, at the Sharjah Chamber, are keen to enhance investment and business prospects with Kenya as a regional hub for finance and commerce in East Africa and a business gateway to the region. Likewise, the Emirate of Sharjah is a regional hub and a gateway to Gulf and Middle East Markets. I would like to seize this opportunity to invite the Kenyan business community to invest in Sharjah as an attractive destination for investors from all over the world, thanks to its outstanding strategic location, infrastructure and logistics, motivational investment environment, economic diversity, and pioneering projects in new sectors.”
(iii) Uganda is the second destination of the trade mission, where the first day will feature the UAE – Uganda Forum. The second day will feature bilateral meetings between Emirati businessmen and their Ugandan counterparts.
Kenya: Central governors in bid to revitalise agriculture (The Standard)
Meeting under the umbrella of the Central Kenya Economic Bloc in Nairobi on Monday, the leaders agreed on a raft of measures aimed at speeding up projects and sector-specific interventions in their counties. Under the chairmanship of Nyandarua Governor Francis Kimemia, the regional county chiefs also agreed on the way forward around several issues affecting the bloc, and whose resolutions will be implemented jointly and individually through the regional economic body. Some of the issues discussed include; value chain improvement on milk and agricultural produce from the region, coffee reforms sector report and its implementation, and fast-tracking the establishment of a regional development authority as a special vehicle for regional development programmes.
Mombasa port performance hits new record (Business Daily)
The Port of Mombasa has registered a new performance record of more than 6.24 million metric tonnes throughput in the month of October with containerised cargo taking the largest share of the total cargo handled in the month of September and October this year. Last month, the port recorded 6,245,960 metric tonnes with goods handled in the week of 17-23 October recording 3,269,508 metric tonnes of total cargo. In the same week, the port received 35 vessels that discharged and loaded containerised cargo, while 24 bulk cargo and 21 general cargo vessels were received during the same time. The Kenya Ports Authority weekly report for the month between September and early November indicates that for the last three weeks of October, the port registered the highest number of throughput of more than 1 million tonnes weekly.
Selected updates from the Global Gender Summit in Kigali:
(i) Rwandan firms win big at inaugural women entrepreneurship challenge. Two Rwandan entrepreneurs have been named best in their respective categories during the inaugural women entrepreneurship competition, 2X Invest2Impact, that brought together several entrepreneurs from five African countries. The duo is among the 100 women entrepreneurs selected from the five countries as winners in four categories and will form the first cohort of the 2Xconnect, an online community dedicated to African women entrepreneurs. The announcement was made in Kigali on the sidelines of the Global Gender Summit 2019 that ended Tuesday. The challenge brought together women entrepreneurs from Rwanda, Uganda, Kenya, Tanzania and Ethiopia.
(ii) AfDB, partners officially launch AFAWA Risk Sharing Facility. The African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) programme gained momentum with significant support from commercial banks and a $1m commitment from the government of Rwanda. AFAWA is expected to unlock $3bn in private sector financing to empower female entrepreneurs through capacity-building development, access to finance as well as policy, legal and regulatory reforms to support enterprises led by women. In August, G7 leaders approved a package totaling $251m in support of AFAWA during the summit in Biarritz. Olukayode Pitan, president of Nigerian Bank of Industry said with the signings they could lend more to women. [New Times: Will AfDB’s initiative bridge the $42bn funding shortfall for African women entrepreneurs?]
(iii) Using innovative financing mechanisms to accelerate finance for women in business. Wendy Teleki, Head of the We-Fi (Women Entrepreneurs Finance Initiative) Secretariat and the panel moderator, led the six panelists in exploring how financial institutions and multilateral development banks are innovating to expand women’s access to finance. Aside from risk-sharing interventions like credit guarantees to lenders, panelists said increasing women’s financial literacy was also key to closing the gender gap. “It’s not about corporate social responsibility or charity,” said panelist Barbara Rambousek, Director for Gender and Economic Inclusion at the European Bank for Reconstruction and Development. “It is about developing that business case and developing a proper set of financial and non-financial services.”
(iv) McKinsey Global Institute: The power of parity - advancing women’s equality in Africa. If Africa steps up its efforts now to close gender gaps, it can secure a substantial growth dividend in the process. Accelerating progress toward parity could boost African economies by the equivalent of 10% of their collective GDP by 2025, new research from the MGI finds. Advancing women’s equality can deliver a significant growth dividend. In a realistic “best-in-region” scenario in which the progress of each country in Africa matches the country in the region that has shown most progress toward gender parity, the continent could add $316bn or 10% to GDP in the period to 2025 (see Exhibit 1). Another increasingly important gateway to economic opportunity is access to digital technologies. Africa’s progress toward parity on digital inclusion is not far below the global average (0.81 female-to-male digital inclusion ratio vs. 0.86 globally), but that progress has stagnated. The continent still has the second largest gender gap in mobile ownership at 15% and only one woman out of three has access to the mobile internet in Sub-Saharan Africa compared with one man in two. [Acha Leke, Lohini Moodley: The economic potential of gender parity for Africa]
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pdf Request for observer status by the African Union at the WTO (61 KB)
The following communication, dated 22 November 2019, addressed to the Chair of the General Council and the Director-General of the World Trade Organization, is being circulated at the request of the delegation of Benin on behalf of the African Group:
I wish to request Your Excellency to allow the African Union to have an observer status in the WTO. The African Union is Africa's inter-governmental Organization with the ultimate objective to accelerate the political and social-economic integration of the Continent. As you may be aware, the African Union operationalized the AfCFTA at the 12th Extraordinary Summit of the Heads of State and Government of the African Union in Niamey, Niger, on 7 July 2019. Once fully implemented, this historical continental flagship project of the AU’s development Agenda 2063, would make the continent the world's largest single market with 1.5 billion people and a combined GDP of $2.5 trillion. In recognition of the determinant role that trade plays for economic growth and sustainable development in today's globalized economy, the African Union attaches great importance to the enhancement of trade performance of its Member States of which 44 are Members of the World Trade Organization. Nine African countries are currently candidates to the WTO, including 6 LDC's.
Africa remains committed to the rules-based multilateral trading system in which WTO serves as the principal global organ of governance. To ensure that Africa is effectively integrated and represented into this international trading system and that its interests and concerns are adequately taken into account, the AU has been given the mandate by its Member States as per its policy organs, to coordinate and harmonize the position of African countries and regions, with a view to speak with one voice in international trade negotiations and fora. I have no doubt that the granting of observer status to the AU and its participation in the activities of the WTO and its technical sub-committees will facilitate the formulation of common African policies and enhance the equitable participation of the member States of the WTO to contribute to a rules-based multilateral international trading system. Above all, this will greatly reinforce the growing strategic partnership between the African Union and the WTO.
Note: Text of letter from Mr Moussa Faki Mahamat, Chair of the African Union Commission, addressed to Ms Sunanta Kangvalkulkij, Chair of the General Council and Mr Roberto Azevêdo, WTO Director-General, on 17 November 2019
pdf African Group elements on agriculture: For meaningful development outcomes (89 KB) at the 12th Ministerial Conference (WTO)
The following communication, dated 22 November 2019, is being circulated at the request of the delegation of Benin of behalf of the African Group:
Agriculture is a vital sector for achieving Africa's aspirations to growth and development. Agriculture contributes by almost 15% to the total GDP of the continent, creating job opportunities for almost half of its working force, and therefore agriculture for Africa is a matter of food security, employment, income and mere existence.
The negotiations on Agriculture in the DDA are therefore of paramount importance to the African Group. It is widely known that Agriculture remains the most trade-distorted sector in the context of WTO rules. Hence, reforming the agricultural rules is a critical development outcome in the DDA.
The African Group reiterates its position that discussions on reforming the Agreement on Agriculture (AoA) in particular and the WTO in general shall be revolving around the means to make the rules more development oriented and responsive to the challenges our continent is facing. Therefore, our priority in Agriculture negotiations is to correct the historical imbalances in the AoA in a manner that would enable our countries to respond to the challenges of food security compounded by climate change.
On the Special Safeguard Mechanism:
African countries have been subject to massive and repetitive import surges, resulting over the years and in the absence of any means to safeguard the market in substantial reductions in production mounting in some cases to more than 50% decrease, and the loss of numerous jobs.
Members are to intensify the discussions in the dedicated session on SSM of the Committee on Agriculture in Special Session with the view of concluding the negotiations on the SSM by MC12.
The Mechanism shall cover both price-based and volume-based triggers with no a priori product limitations as to its availability, and it shall be easily applied by developing countries, with flexible time limits for application to address the needs of the developing Member utilizing the mechanism.
The operation of the SSM shall be carried out in a transparent manner, and the Member invoking the SSM should afford any interested Member the opportunity to consult with it in respect of the conditions of application of the measure. Transparency requirements shall be conducted in a manner that would not impose onerous burden on developing countries and especially LDCs and NFIDCs.
Communiqué on the Chairperson’s working visit to South Africa (AU)
The Chairperson of the AUC Moussa Faki Mahamat concluded a two-day working visit to the Republic of South Africa. Accompanied by Dr Ibrahim Assane Mayaki, CEO of AUDA-Nepad and other senior officials, the Chairperson held discussions with President Cyril Ramaphosa, Foreign Minister Naledi Pandor, Finance Minister Tito Mboweni and senior officials from the Department of International Relations and Cooperation. The two leaders and their teams held discussions to discuss the strategic priorities of South Africa ahead of the country’s assumption as Chair of the African Union in 2020.
President Ramaphosa emphasised his commitment to deepen engagement regarding unresolved conflicts on the continent, including Libya, as part of South Africa’s desire to accelerate action to Silence the Guns by 2020. President Ramaphosa also reaffirmed South Africa’s support to the AfCFTA and the critical role that infrastructure development should play in making the AfCFTA a reality. For his part, the Chairperson of the Commission Moussa Faki Mahamat noted the importance of the upcoming presidency of South Africa to head the Union in 2020, and reaffirmed the commitment of the Commission and to support South Africa in preparing for this crucial role to push ahead with promoting the continental agenda. [Communiqué on the Chairperson’s working visit to Botswana]
South Africa: Staff concluding statement of the 2019 Article IV Mission (IMF)
IMF staff projects economic growth to remain sluggish in 2020 - below population growth for the sixth consecutive year. On current policies, the medium-term growth outlook would remain subdued accompanied by somewhat muted inflationary pressures. With low growth and low job creation, the increasing labor force is projected to exacerbate unemployment pressures, poverty, and inequality. Amid weak economic performance, credit expansion remains low, notwithstanding an uptick in unsecured loans. External debt and gross financing needs remain elevated, while external financing continues to be heavily reliant on non-FDI inflows. However, the relatively easy global financing conditions are providing breathing space to finance government operations. South Africa’s undeniable economic potential remains largely untapped and the recent economic performance points to rising risks. The economy faces three immediate challenges...:
The vulnerable outlook emphasizes the urgency of rebuilding policy buffers and implementing reforms to put the economy on a sustainable and inclusive growth path. Failure to implement the needed adjustment in government and SOE spending and efficiency will worsen debt dynamics, erode financial stability, and further raise the country risk premium. With delays in structural reforms, growth and social conditions will worsen. Implementing the reforms now will benefit from the benign financing conditions in international markets and prevent disruption from an abrupt adjustment in future.
Ethiopia: Science, Technology and Innovation Policy Review (UNCTAD)
The STIP review contrasts Ethiopia's rapid economic growth with much slower growth in technological learning and innovation capacity as a major obstacle to sustaining this impressive performance and achieving more sustainable development. It shows that on paper, Ethiopia has most of the policies, regulations, background studies and roadmaps necessary to kick-start a successful process of technological learning, innovation and technological upgrading. However, in reality the country faces challenges in policy implementation across public institutions related to capacity constraints and sub-optimal allocation of efforts and resources. “Innovation ultimately takes place at the firm-level, but the state plays a key role as a facilitator of the national innovation system,” said Shamika N. Sirimanne, UNCTAD’s director of technology and logistics division during the report’s launch in Addis Ababa. “The state is the glue that holds the innovation system together.”
The STIP review also provides an in-depth analysis of two sectors as case studies for understanding how STI policy can stimulate technological upgrading and innovation and thereby improve the performance of industries identified as important for Ethiopia's development. They are the apparel and textile sector for resource-based labour-intensive exports and the pharmaceuticals sector for knowledge-intensive import substitution. The STIP review is based on fact-finding missions to Ethiopia conducted in December 2018 and March 2019.
PIDA Week 2019 is underway in Cairo on the theme: Positioning Africa to deliver on Agenda 2063 and economic integration through multi-sectoral approaches to infrastructure development
(i) Extracts from the concept note: Intended outcomes of PIDA Week include (pdf). Validation of key studies that contribute to the PIDA PAP 2 process; Validation of the Dispute Settlement Mechanism for operationalization of the Single African Air Transport Market; Progress on the Digital Transformation Strategy; Validation of the Strategy to unlock access to rural areas; Validation of the strategy paper as well as the Detail scoping study of the Continental High Speed Railway Network, followed by a capacity building workshop on the Luxembourg Protocol on railways; Launch of the African Network for Women in Infrastructure (ANWIn)
Sector specific workshops will be also held during the week, including: Validation workshop of the detailed scoping study for the Continental High Speed Railway Network; Efficiency and competitiveness of ports in Africa; Coordination workshop on the implementation of the Tourism Action Plan 2019-2021; Meeting of the working group in charge of the feasibility study on the African Tourism Organisation
(ii) Speech by AUC Commissioner for Infrastructure and Energy, Dr Amani Abou Zeid: Yesterday the Members of the Bureau of the STC on Transport, Transcontinental and Interregional Infrastructure, Energy and Tourism composed of the Arab Republic of Egypt, Democratic Republic of Congo, Somalia, Lesotho and Togo, met and validated the PIDA PAP 2 integrated corridor approach, the projects selection criteria, the strategy to unlock access to rural areas and the detailed scoping study of the Continental High Speed Railway Network.
With the validation of the PIDA PAP 2 studies by the Ministers the African Union Commission in collaboration with AUDA-NEPAD, the RECs and the Member States will engage the consultations for the selection of the list of priority projects which are expected to be implemented from 2021-2030.
At the political level, there is a need for African countries and RECs to mainstream PIDA projects into their national and regional development plans. It is also important that African Member States take ownership in the development and implementation of national and continental initiatives. This is necessary to ensure that there are clear and harmonized ambitions, strategies and political commitments towards ensuring access to infrastructure services as well as provide the necessary policy and financial instruments for infrastructure development at the local, national and regional levels.
(iii) Speech by AUDA-NEPAD CEO, Mr Ibrahim Mayaki: As we embark on the development of the next set of priority projects in PIDA PAP 2 we should take note of the lessons learned and match these with the imperative to deliver on the promise of infrastructure for Africa’s people. We particularly welcome the integrated corridor development approach for PIDA PAP 2.
With the aim of fully implementing MoveAfrica, AUDA-NEPAD developed a Traffic Light System (TLS) to rank and track the level and the quality of the service of Africa’ s transport corridors, starting with border posts as a point of departure. Four border posts, Beitbridge, Chirundu, Kasumbalesa and Kazungula along the North-South Corridor in the SADC Region were selected for the pilot phase. If we have to achieve the Continental Free-trade Area we must reprioritise African border posts and commit to addressing the unnecessary delays at these critical trading routes. To date the TLS has been expanded into 21 COMESA member states, 15 SADC members states and 15 West African countries. The current corridor coverage is on the North South Corridor, Abidjan Lagos Corridor and the Trans Kalahari Corridor. The TLS under MoveAfrica is growing becoming a credible tool that ensures the Africa Continental Free-trade Area is actualised.
(iv) PIDA Week Programme (pdf)
CFA franc reform: CEMAC launches deep reflection (Cameroon Tribune)
The 15th Extraordinary Summit of Heads of State and Government of 22 November, in Yaounde, mandated the CEMAC Monetary Union and BEAC to carry out a study and make proposals within reasonable time. The six countries of the Economic and Monetary Community of Central Africa (CEMAC) have unanimously agreed to reform its currency so as to have a stable and strong legal tender capable of giving the economies the boost for better development and population's livelihood. The direction the reform will take can only be known when the CEMAC Monetary Union and Bank of Central African States, mandated by the Heads of State of CEMAC to carry out the study, must have tabled their proposals in the shortest or reasonable time possible.
According to point seven of the 16-point resolutions read by the President of the CEMAC Commission, Daniel Ona Ondo, "... concerning monetary cooperation with France on the CFA Franc, the Heads of State decided to engage a deep reflection on conditions and framework of new cooperation. To this effect, they mandated the Central African Monetary Union and BEAC to propose within a reasonable timeframe an appropriate scheme that can lead to the evolution of a common currency."
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A preview of the East African Business and Investment Summit (28-29 November, Arusha)
Harmonising airspace is one of the issues that the East Africa Business Council will discuss during the East African Business and Investment summit slated to take place in Arusha later this week. Denis Karera, vice chairman of the Council, said the summit seeks to address the most pressing issues challenging business in the region, especially cross border trade. “Non-tariff barriers impede cross border trade. One of the key things we want to raise, again, is domestication of airspace so that our airlines can move easily and quickly and tickets can become cheaper as well.
He said that non-harmonized and heavy duties imposed on airlines landing at different African airports drives up the flight ticket prices. “You have to wonder why flight tickets are expensive in the region. Rwanda charges taxes, Kenya charges taxes, and Uganda charges taxes among others on handling services for every landing. We have to deal with this and domesticate airspace as it is happening elsewhere. We want to advocate so that governments slash such heavy taxes. We have been discussing this for so many years and now we need harmonization of the airspace.” He cited an example of some airlines that charge $800 for a passenger flying from Kigali to Nairobi for one hour. “This impedes movement of people. A flight ticket price could go for $110 but due to heavy taxes, it rises,” he said.
India, South Africa adopt tough stand on e-commerce moratorium (The Hindu)
India and South Africa have adopted a tough stand against the current moratorium on levying customs duties on electronic transmissions at the World Trade Organization, forcing the US to come to the negotiating table for the first time, said trade envoys. The existing moratorium will expire at the end of next month, unless it is extended for another six months. The moratorium has been extended since 1998 on a biennial basis at every WTO trade ministerial conference. At a meeting of the WTO’s informal General Council on Monday, the US offered a quid pro quo for extending the e-commerce moratorium by six months until the World Trade Organization’s twelfth ministerial conference in Nur Sultan, Kazakhstan, in June 2020.
In return, the US has indicated that it will agree to organise a workshop early next year, as demanded by India and South Africa, for assessing the scope and potential revenue implications of electronic transmissions, said a trade envoy, who asked not to be quoted. Previously, the US had vehemently opposed a proposal from India and South Africa for organising a workshop by experts drawn from the UNCTAD (United Nations Conference on Trade and Development), the ECIPE (European Center for International Political Economy) and the Paris-Based OECD (Organization for Economic Cooperation and Development) to present their conflicting assessments on what would constitute the e-commerce transmission and their potential revenue implications.
Work programme and moratorium on electronic commerce: Communication from Chad on behalf of the LDC Group
The following communication, dated 14 November 2019, is being circulated at the request of the delegation of Chad on behalf of the LDC Group: As the expiration of the e-commerce decision approaches at the end of 2019, the LDC Group calls n the four designated bodies under the Work Programme, to delve deeper into the benefits and costs of e-commerce for LDCs. LDCs are interested in both aspects of this platform and the relevance of e-commerce in improving trade for LDC traders and consumers. The LDC Group appreciates the submissions of others in the context of the Work Programme over recent years, including those on data flows and on the customs duties moratorium. In its interventions regarding the Work Programme at the Council for Trade in Goods and the Council for Trade in Services, the LDC Group has identified some challenges for LDCs in the utilization of e-commerce for consideration in the WTO e-commerce Work Programme including the following:
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Limited knowledge among enterprises, government players, and regulators of e-commerce;
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Lack of mechanisms to start up enterprises in e-commerce business;
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Concerns about possible adverse effects of e-commerce and how to mitigate them;
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Limited existence of and affordable information technology (ICT) infrastructure (noted above, e.g., internet, broadband coverage, electricity, telecommunications infrastructure and services);
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Access to credit cards (the main vehicle for on-line payments) and high incidence of unbanked consumers or limited experience with on-line payments;
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Adequate facilities for physical delivery of purchases online;
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User mistrust of quality and effectiveness;
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Inadequate online payment facilities;
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Trade finance for LDC e-commerce enterprises;
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Limited skills among enterprises desiring to use e-commerce and ICTs strategically for B2B, B2C, or B2G buying and selling goods and services;
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Lack of statistical data on electronic commerce in LDCs;
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Weak legal and regulatory frameworks where needed for example consumer protection laws;
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Lack of clarity on the nature of electronic transmissions and the ability of LDCs to apply internal taxes versus customs duties, where appropriate.
ATAF 4th International Conference on tax in Africa: Outcome statement
The conference (19-21 November, Kampala) was held on the theme: Innovation – digitization and harnessing technology to improve tax systems.
Extract: Participants recognised that private sector players in Africa including the African Industries Tax Association, need to understand the global tax debate of taxing the digitalised economy. Therefore, participants required African governments and ATAF to include African Industries in the discussions as businesses can add a lot of practical business inputs and systems expertise.
Participants at the 4th ICTA expressed outrage with regard to a moratorium by the WTO on imposing customs tariffs on e-commerce transactions. They observed that a temporary or permanent ban results in more significant revenue losses for African countries that are net importers, quoting research that shows that revenue losses due to the moratorium are significantly larger than the revenue losses for developed economies.
The meeting highlighted that African countries seek to expand their revenue base and domestically expand the economies. However, participants were concerned that a permanent moratorium would limit their options to protect domestic products and services traded online. They urged policymakers to actively challenge the moratorium based on these key arguments, both individually through their missions, or through the African Union. They welcomed the objective of the OECD’s “Unified Approach” of allocating taxing rights to market jurisdictions, and were particularly supportive of the following details of the Unified approach;
The meeting agreed that as a result of digitisation, African countries should be able to apply VAT/GST on digital services acquired by their citizens from suppliers outside their jurisdictions. As the norm in international trade for VAT/GST systems is the destination principle, participants agreed that countries should apply the destination principle to services and intangibles acquired from overseas businesses. Additionally, similar to South Africa’s application of VAT on digital services, participants felt that African countries should require foreign suppliers of digital services to VAT in their countries. Nonetheless, participants acknowledged the potential challenge of enforcing collection of such VAT; hence, the need for investing in technologies to track the transactions digitally.
It was observed that as countries introduced VAT, revenue shot up and immediately went down as a result of more significant trading through e-commerce, which existing VAT legislation had not previously foreseen. While e-commerce has resulted in decreased VAT revenue collections, it has provided authorities with an opportunity to enhance the audit trail through the use of data-driven methodologies. It was, therefore, up to tax administrations to take advantage of this opportunity to strengthen audit capabilities, mainly where countries are willing to procure effective systems.
As a result of the various changes in policy and law brought about by digitisation, participants called on African governments and tax administrations to improve engagement with the private sector. Although the private sector is deemed in many countries as being on the other side of the fence, participants recognised that they are essential stakeholders in the tax collection process, and their involvement provides policymakers with a business perspective of the issues which is invaluable to policy design. The engagement of private actors will also reduce the uncertainty that may harm business decisions.
Participants recognised that private sector players in Africa including the African Industries Tax Association, need to understand the global tax debate of taxing the digitalised economy. Therefore, participants required African governments and
ATAF to include African Industries in the discussions as businesses can add a lot of practical business inputs and systems expertise.
The meeting observed that based on the current digital debate, in 2020 the world will decide on new taxing rules that will drastically change the international tax system. Therefore, participants called on African countries to mobilise mainly through the African Union by Heads of States and Finance Ministers the pursuit of African tax interests on the global stage. Concern was expressed that if Africa doesn’t act now, it will be too late to influence the outcomes.
The African Union and the WTO: updates
Ambassador Muchanga addressed the 2019 Annual Retreat of the African Group of Ambassadors in Geneva on WTO issues. Ambassadors were invited to lobby for the support of the African Union renewed application for observer status at the WTO, which was formally submitted recently.
Addressing the 2019 Annual Retreat of the African Group of Ambassadors in Geneva on WTO issues, WTO Director General Ambassador Roberto Azevêdo reiterated the WTO's readiness, within its ability, to extend support for the implementation of the AfCFTA.
Ethiopia, Alibaba Group sign agreements to establish eWTP Ethiopia Hub (Walta)
Ethiopian Prime Minister Abiy Ahmed, Alibaba Group founder Jack Ma, and Alibaba Group Director and Ant Financial Services Group Chairman and CEO Eric Jing witnessed the signing of three Memoranda of Understanding between the Ethiopian Government and Alibaba establishing a eWTP Hub in Ethiopia. Speaking after meeting with him, Prime Minister Abiy indicated that the platform will support the country’s national digital transformation strategy, PM Office said. “I am quite pleased to welcome Jack Ma, Founder of Jack Ma Foundation and Partner of Alibaba Group, to Ethiopia,” the Prime Minister noted. His visit follows our meeting at Alibaba HQ in Hangzhou earlier this year, Abiy added.
The eWTP (electronic world trade platform) Hub is intended to enable cross-border trade, provide smart logistics and fulfillment services, assist Ethiopian small and medium-sized enterprises (SMEs) to reach China and other markets, and provide talent training. “We will continue to support the creation of a more inclusive, digitally-enabled global economy, where small businesses can participate in global trade. We look forward to working together with entrepreneurs and SMEs from Ethiopia and other African nations to seize the opportunities provided by the digital era,” Jack said.
University of Pretoria - US forum on Africa’s digital economy
The University of Pretoria’s Future Africa campus, in partnership with the US Chamber of Commerce’s US-Africa Business Center and Microsoft, recently hosted a multi-partner forum on digital drivers that could grow Africa’s digital economy. The forum, themed “Digital Drivers: Enabling the Growth of Africa’s Digital Economy”, aimed “to bring together government, policy and industry experts, academics and innovators to stimulate and foster discussion on relevant topics, with the aim of highlighting the policy issues and recommendations needed to effectively address the challenges.” The event was the second in the US-Africa Business Center’s Digital Transformation Series, launched last year in Nairobi with Kenyan President Uhuru Kenyatta, where a report was delivered on the evolution of digital economy development across Africa and the best ways in which African economies can maximise the benefits of implementing the technology.
WTO’s new Trade Monitoring Report: Trade restrictions among G20 economies remain at historic highs
The WTO’s new Trade Monitoring Report (pdf) issued on 21 November shows that G20 economies from mid-May to mid-October 2019 introduced import-restrictive measures covering an estimated USD 460.4 billion worth of traded merchandise. This represents a 37% increase over the previous period going back to mid-October 2018, and is second only to the $480.9bn coverage of import-restricting measures reported between mid-May and mid-October 2018. The report notes that with restrictions accumulating over time, the share of global trade covered by such measures has soared. WTO Director-General Roberto Azevêdo called on G20 economies to de-escalate trade tensions to spur investment, growth and job creation. “The report's findings should be of serious concern for G20 governments and the broader international community. Historically high levels of trade-restrictive measures are having a clear impact on growth, job creation and purchasing power around the world. We need to see strong leadership from G20 economies if we want to avoid increased uncertainty, lower investment and even weaker trade growth. We have seen how world trade has stalled during the review period. The WTO downgraded its forecast for merchandise trade growth in 2019 to 1.2%, the slowest since the crisis a decade ago, much lower than April's estimate of 2.6%. New trade restrictions and increasing trade tensions will only add to the uncertainty that is dragging down growth in the world economy. This trend needs to be reversed.”
WTO reform 'urgent', G20 ministers agree at Nagoya meeting (Japan Times)
Foreign ministers from the Group of 20 major economies agreed Saturday that it is “urgent” to reform the World Trade Organization, Foreign Minister Toshimitsu Motegi said, amid an escalating U.S.-China tit-for-tat tariff trade war. Motegi, serving as the chairman of the G20 foreign ministers gathering in Nagoya, also said at a news conference that ongoing negotiations on a sprawling Asia-Pacific free trade agreement should be concluded by all the original 16 member states, including India, which pulled out of the agreement earlier this month. “As trust in the multilateral framework is now being undermined, the G20 has shared the view that the WTO should be reformed so that it can address several current issues,” Motegi said after the end of the two-day meeting. At the gathering, the foreign ministers discussed reforms to the WTO, as Japan, the United States and other countries are pushing for the Geneva-based organization to improve its dispute settlement system — a point touched on in a declaration issued by G20 leaders after their summit in Osaka in June. US Secretary of State Mike Pompeo, however, did not participate in the G20 meeting, apparently reflecting Washington’s lack of interest in multilateral economic and financial policy dialogue. [Statement delivered by SA's Deputy Minister Mashego-Dlamini]