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The International Trade Centre has posted a major new report - Diversifying trade in Africa: New strategy approaches for the AfCFTA
This [AfCFTA] greement requires policymakers to align a wide range of complex and divergent trade strategies across the continent. To support this ambitious endeavour, the International Trade Centre has launched a report that assesses Africa’s existing national and sub-regional trade strategies to identify common trends and opportunities in the ongoing AfCFTA negotiations. Diversifying Trade in Africa: New strategy approaches for the African Continental Free Trade Area examines 181 strategic African trade and development documents in ITC’s Trade Strategy Map database. To achieve robust regional integration, the report suggests that Africa should focus more on manufacturing and innovation sectors that can add value. ‘If not designed properly and used by the private sector, the African Continental Free Trade Agreement will foster little economic benefits. This is why investing in the ‘design phase’ will be essential for African policymakers to align often complex and even divergent national trade strategies across the continent,’ said ITC Executive Director Director Arancha González.
Extract (pdf): The report suggests that African trade policy considerations should take into account the following trends:
While Africa’s regional strategy discourse is on manufacturing and industrialization, its national trade strategies continue to focus on agriculture and primary products. Agriculture accounts for less than 20% of the continent’s GDP but more than 60% of the priority sectors in African trade strategies. Manufacturing and high value-added sectors are rarely prioritized at both the country and regional level. This focus on a narrow range of agricultural and primary products only contributes to perpetuate, rather than evolve, existing trade relationships within Africa and between Africa and other regions.
With almost half of the world’s regional trade strategies, Africa is a champion of regionalism. Close to 80% of existing trade strategies in Africa identify trade integration and regionalism as crucial policy areas, but currently only 10% of African strategies have a regional scope, which indicates there is space for regionalism to grow.
There are significant similarities in the sectors that African countries prioritize in their national trade strategies, with agricultural products being prioritized across all regions. Differences can nevertheless be appreciated in the sectoral focus across African regions. North Africa focuses mostly on energy and bio-fuels while textiles and clothing predominate in subSaharan Africa. East Africa and West Africa focus on foodstuffs, animals and animal products. Services sector priorities are highly concentrated on tourism, transport and, to a lesser extent, on information and communications technology, and finance.
Given the degree of overlap of sector priorities at the country and regional level, developing a common space for a regional strategy for Africa is not going to be simple. Overlapping sector priorities could become a potential source of tensions during AfCFTA negotiations. Neighbouring countries find themselves very often prioritizing the same type of agricultural products. Examples include maize (Democratic Rep. of the Congo, Uganda, United Rep. of Tanzania), pulses (Ethiopia, Kenya), mango and onions (Burkina Faso, Mali), and cashew (Benin, Burkina Faso, Mali, Côte d’Ivoire, Gambia, United Rep. of Tanzania) among many other.
Table of contents: Connecting trade strategies with regional ambitions for African industrialization; Challenges facing regional trade strategies; African trade strategies over time; Conclusions
Uganda and the AfCFTA: Impact Assessment Report (ECA)
The ECA and Trademark East Africa launched the national impact assessment report that presented the effects of the AfCFTA on Uganda, during a national AfCFTA stakeholder consultation meeting on 31 October 2019. Emphasizing that regional platforms are “the way to go” for developing countries to overcome trade challenges, the Minister for Trade, Industry and Cooperatives, Amelia Kyambadde, used her opening statement as an opportunity to applaud the ECA/TMEA partnership in supporting regional integration in Eastern Africa.
The forum proceeded to present an Impact Assessment Report, set out by Andrew Mold, Acting Director of the ECA Office for Eastern Africa. With Uganda exporting close to 51% of her exports to the African market, the findings projected welfare gains post-AfCFTA, clearly demonstrating the importance of the AfCFTA to Uganda. To get the most out of the AfCFTA in Uganda, the role of manufacturing, services and value addition were rightly flagged up as priority areas to consider. The stakeholders also discussed how to make the most out of the electronic payment systems that the EAC has put in place to lower transaction costs for intra-regional trade.
Nigeria and the AfCFTA: An interview with the Director General of the Lagos Chamber of Commerce and Industry, Mr Muda Yusuf
Do you think we are ready for the opportunities to be offered by AfCFTA? Well, I will say that some industries are ready. Some big companies are ready to take advantage because of their size, network, capital base, the resources that they have and because they can take the advantages of economy of scale easily. You can say that those ones are ready. You can also say that in the service sector our people are ready. Because the challenges you face in the service sector are not the same that you face in the real sector. We have our people in fashion, creative industry, entertainment, ICT, financial service, legal service, advertising, trading, that are ready to lash on the opportunities. These are areas our people will take advantage in. But when it comes to manufacturing, especially with the SMEs, I cannot say that we are ready.
African Industrialisation Day, World Export Development Forum updates
(i) Arkebe Oqubay: Why industrialisation is vital for the AfCFTA to succeed. In my view, at least three interventions are required for the AfCFTA to succeed as a development opportunity: A commitment and strategic focus on industrialisation; Increase marginal share in global exports; Invest in connectivity and infrastructure.
(ii) ODI Africa Industrialisation Day perspectives: Dirk Willem te Velde: Digitalisation and innovation are vital for African manufacturing; Linda Calabrese: Lessons for Tanzania on value chain integration; Stephen Gelb: Lower tariffs are not sufficient for industrialization; Karishma Banga: The digital economy and the AfCFTA
(iii) World Export Development Forum puts focus on value addition for inclusive growth in one Africa. Inclusive economic growth across Africa hinges on ensuring greater value addition in manufacturing, agriculture and services. The successful implementation of the African Continental Free Trade Area will be critical to ensuring this. That was the message from public and private-sector leaders at the opening of the 19th World Export Development Forum taking place in Addis Ababa. The opening of WEDF 2019 coincided with the 30th anniversary of Africa Industrialization Day reaffirming the event’s focus on addressing key priorities of the African continent. Opening the event, Ethiopian President Sahle-Work Zewde said: “It is high time to expedite [of the African Continental Free Trade Area] implementation in order to unleash a complementary economic ecosystem among African nations. It is imperative we leverage the collective market size that we have as a continent. By creating a complementary economic system, we will be able to reap the full potential of our respective nations and become a major player in the international trade arena.”
(iv) ITC Executive Director Arancha González: "We also know that the AfCFTA has the potential to change the trading landscape of Africa and boost intra-Africa trade by more than 50%. However, if policies are going to work, they need to work for everyone—and that includes women. For this reason, the past two days, ITC, the AUC and the UNECA have worked with more than 40 women business associations representing one million African women entrepreneurs and producers to develop priorities to shape an AfCFTA that works for women. We will continue the discussion into next year by bringing together women and trade policymakers.”
(v) Representatives of over 43 African countries call for harnessing SEZs to drive Africa's industrialization. More than 220 African experts and policymakers representing 43 countries and 60 African economic zones on Tuesday called for harnessing the potential of special economic zones to spur industrialization in Africa. They made the joint call on Tuesday during the fourth annual meeting of African Economic Zones in Addis Ababa, held under the theme "Special Economic Zones: Accelerator for Industrialization in Africa." The Ethiopian Minister of Transport, Dagmawit Moges underscored the crucial imperative to further tap into the economic potential of free zones by creating synergy with other relevant infrastructures. "There is a strong need for transit and transport corridors to link Special Economic Zones with national and regional centers.”
Mehdi Tazi Riffi, AFZO President stressed that "AFZO was put in place by Africans, for Africans and to develop successful African Special Economic Zones." The Africa Free Zones Organization, which currently has more than 72 members representing 37 African countries, envisages improving the attractiveness of economic zones by "setting up of tailored model for economic zones development.” Prior to the ongoing meeting in Addis Ababa, AFZO had previously conducted four similar regional meetings on SEZs in Ghana, Gabon, and Togo, eventually bringing together more than 500 participants from 30 different countries. [Nigeria Export Processing Zones Authority: N1.45trn goods smuggled into Nigeria from Benin Republic annually]
(vi) "China has focused a lot of attention to the industrialization of the African continent" the ITC Executive Director told Xinhua on the sidelines of the Africa Industrialization Day commemoration event. “It (China) has focused a lot in manufacturing," Gonzalez said, as she emphasized other emerging potential areas in the industry sector that are benefiting from and attracting Chinese engagement across Africa. “First, I think now there is interesting opportunity that is coming in two other sectors, one is agro-processing, so helping Africa transform a lot of the raw materials, agricultural commodities that this continent produces into processed products. The second sector, still under leverage in my view, is a big opportunity in the services economy," Gonzalez said, adding investment in the health, education, logistics, and digital connectivity areas will also make a more competitive African economy.
(vii) A high-level meeting of policymakers, regulators and industry experts in the field of pharmaceuticals and trade opened in Addis Ababa, Thursday to discuss a bold path towards affordable pharmaceuticals through leveraging the African Continental Free Trade Area. The Continent is home to 11% of the world’s population yet it carries 25% of the world’s burden of disease. If implemented, pooling procurement of essential drugs and products and expanding local pharmaceutical production on the continent is seen as a critical pathway to the prosperity of African citizens, thereby achieving universal healthcare in Africa. Executive Secretary of the ECA, Vera Songwe, told the meeting that 50% of all children who die before the age of five in the world are in Africa. The meeting discussed the role of African businesses in driving the growth in this sector as well as the need for financing instruments to facilitate pooled procurement. These include a strategic fund, levy and social bonds that can link up with financial markets.
Country updates
(i) Rwandan industrialists have claimed that the importation of rival products, high cost of electricity and imported raw materials and operating below capacity were hampering their competitiveness on local and continental markets. The challenges were highlighted on Wednesday during the celebration of Africa Industrialization day. Constantin Rugaba, the Sales and Marketing Manager at Master Steel, a factory that manufactures construction materials, said imported rival products have led their sales to decrease. Telesphore Mugwiza, Director General of industry and entrepreneurship department in the Ministry of Trade and Industry, said lack of competitiveness among local manufacturers is driven by high production cost and operating below production capacity.
(ii) Nigeria's Minister of Industry, Trade and Investment, Niyi Adebayo, has called on African countries to implement strategies that would promote industrialisation and diversification of their economies in order to optimise the opportunities offered by the AfCFTA agreement to African economy. Adebayo said: “The road ahead to realising these opportunities are tough and challenging but we have no choice but to tackle them head on.” He made the call yesterday at the 2019 edition of the Africa Industrialisation Da), which took place in Calabar, Cross River State. He also called for increased intra-African trade to lessen the continent’s exposure to external macroeconomic shocks and protectionist trade policies. [Nigerian government invests additional $250m in Sovereign Wealth Fund]
(iii) Nigeria's federal government on Thursday said it has resuscitated the Presidential Mines Surveillance Task Force to curb illegal mining and environmental degradation. The Task Force, which would be operating in all states of the federation, will also be responsible for plugging revenue leakages and institutionalisation of the National Council of Mining, and Mineral Resources Development. The Minister of Mines and Steel Development, Olamilekan Adegbite, who disclosed this in his presentation to the National Economic Council also updated members of the current relationship between the federal and state governments in relation to fiscal governance of solid mineral sector.
ATAF conference: AfCFTA deal unsettles revenue authorities
Egypt: 17.2% hike in exports to COMESA in 2018
CBN: Nigeria imports $600 million cassava derivatives annually
Planets aligning for SA firms as huge Mozambique gas projects get moving
South Africa's metals and engineering sector boasts third positive year despite global downturn
Ghanaian businesses must be competitive to benefit from free trade system
Advancing Sustainable Development Goal 14: Sustainable fish, seafood value chains, trade and climate
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The 21st Ordinary Meeting of the Summit of the EAC Heads of State, scheduled for 30 November, has been postponed.
EAC Secretary General, Ambassador Liberat Mfumukeko said on Wednesday that the 21st Summit was postponed after a request by one of the members of the summit, adding that the postponement had nothing to do with a dispute or disagreement among any of the EAC Partner States. Amb. Mfumukeko said that a new date for the 21st Summit meeting would be communicated later after consultations among the EAC Heads of State. Amb. Mfumukeko, however, said that the 39th Meeting of the Council of Ministers slated for 21-27 November, 2019 would proceed as initially planned. Update: According to official correspondence from the Rwandan minister of State in charge of EAC Affairs, Olivier Nduhungirehe, a new date in January or February will be communicated after consultations among EAC heads of state.
The EAC Trade and Investment Report 2018: East African countries turn to neighbours for more trade (The East African)
The East African Community Trade and Investment Report (2018) shows that all EAC member states save for Burundi recorded growth in trade with their regional counterparts. The report prepared by the EAC Secretariat shows that Uganda, Tanzania, Rwanda, South Sudan and Kenya’s combined exports to the EAC and Southern African Development Community regions amounted to $3.1bn and $1.9bn in 2018 respectively.
Burundi’s total trade with other EAC partner states fell by 11% to $150.9m in 2018, from $162.6m in 2017. Kenya’s total trade with EAC partner states increased by 4.7% to $1.95bn in 2018 from $1.86bn in 2017, mainly on account of increased total trade to Uganda, Tanzania and Rwanda. Rwanda’s total trade with EAC increased by 13.4% to $638.8m from $563.2m in the same period. Tanzania’s total trade with other EAC partner states increased by 14.6% to $811.3m, from $707.7m while that of Uganda improved by 21.2% to $2.05bn from $ 1.69bn. However, South Sudan’s trade deficit with the EAC region declined by 15.7% to $375m from $444.6m in the same period.
According to the report, EAC’s increased exports to SADC excluding Tanzania was as a result of the increased benefits arising from the membership to the EAC-COMESA-SADC Tripartite. Total imports from China, India and EU amounted to $7bn, $3.9bn and $3.7bn respectively, constituting 18.1%, 10.2% and 9.8% of total imports respectively. Imports from Asia and the Middle East declined but still constituted 44.3% of total imports.
US - Africa trade trends under the African Growth and Opportunity Act: Report of the Government of the United States for the year 2018 (WTO)
The following communication, dated 12 November 2019, is being circulated at the request of the Delegation of the United States. Extract: In 2018, US imports under AGOA fell 11.8% from $12.2bn to $10.8bn, due in most part to a decrease in the value of imports of mineral fuels (HTS chapter 27) . In 2018, mineral fuels accounted for approximately 72.9% of US imports under AGOA, compared to approximately 75.5% in 2017. Other leading categories of US imports include apparel (HTS chapters 61 and 62) and motor vehicles (HTS chapter 87). South Africa is currently the largest non-oil AGOA beneficiary. Other leading non-oil beneficiary countries are Kenya, Lesotho, Mauritius and Madagascar.
Motor vehicles was the leading AGOA non-oil product sector for most of the period 2016-2018. Imports under AGOA in this product sector reached approximately $537.3m in 2018. Another leading non-oil sector for the period 2016-2018 was apparel. Apparel represented 41.5% of total non-oil AGOA imports (not including its related GSP provisions) in 2018. Imports of apparel under AGOA rose from $1.0bn in 2017 to $1.2bn in 2018. Eighteen AGOA beneficiary countries have shipped apparel products to the United States under AGOA since 2001. In 2018, leading apparel exporters under AGOA were Kenya, Lesotho, Madagascar, Mauritius, Ethiopia, Tanzania, Ghana and South Africa. The leading category of apparel in 2018 was cotton men's or boy's trousers and shorts.
Statistical annexes are provided to present a detailed description of the trade aspects of the AGOA programme from 2010 to 2018. Table 1 provides summary information on US imports for consumption under AGOA from 2010 to 2018. Table 2 provides information on leading US imports for consumption under AGOA provisions from 2016 to 2018. Table 3 provides information on US trade with AGOA countries from 2010 to 2018.
UAE – Africa trade and investment relations: Implementing Dubai's Silk Road Strategy
(i) Global Business Forum Africa 2019 concludes with call to bolster UAE-African economic ties. More than 2,500 delegates from 76 countries attended the fifth edition of Global Business Forum Africa, including presidents of Liberia and Zimbabwe, the prime ministers of Mozambique and Uganda, as well as ministers, policymakers and prominent businessmen, who shared their insights on Africa’s evolving economic landscape. A total of 350 bilateral business meetings were held on the sidelines of the two-day forum, marking a 75% increase compared to the previous edition. Sessions during the event covered a wide range of key issues and trends impacting African economies, including the shift towards regional integration following the launch of the AfCFTA, advanced technologies reshaping the government and business spheres and the role of startups and cross-border cooperation in driving the continent’s next phase of growth.
(ii) Africa has 'a key role' in Dubai's Silk Road Strategy. At the Global Business Forum Africa 2019 organised by Dubai Chamber, Nadya Abdulla Kamali, CEO, Dubai Customs World, said the whole world is looking at Africa for trade opportunities. "That's why Dubai embarked on new initiative in 2019 - the Dubai Silk Road Strategy. The government's approach to looking at Africa is how to unlock the potential. The infrastructure is there, the trade treaties are there. these aren't the challenges any more. The challenges are the lack of soft skills and capabilities. You can have best port, the best airport and the best train station, but the trade facilitation is not there. If we want hubs in Africa to be recognised as trade hubs, we need to sell those hubs as functioning properly. You need to able to reach your destination without being interrupted, in terms of customs, in terms of clearance. it's not just dropping your goods. It's clearing your goods.”
(iii) Dubai’s non-oil trade with Africa to exceed $272bn. Dubai’s non-oil trade with Africa will exceed Dh1 trillion ($272.24bn) for the period extending from 2011 until the end of 2019, asserted Majid Saif Al Ghurair, Chairman of Dubai Chamber. Al Ghurair also noted that it had already reached Dh926 billion ($252.09bn) in the 2011-2018 period.
(iv) Dubai to grant UAE permanent residency visas to 200 African investors. Up to 200 “prominent” African investors will receive the UAE golden permanent residency visas under a new initiative launched in Dubai. The ‘Be Part of Dubai’ initiative has been launched by the Dubai Chamber of Commerce and Industry in collaboration with the General Directorate of Residency and Foreigners Affairs and Dubai Free Zone Council. It aims to support ongoing efforts to attract and retain high net worth businessmen from Africa by providing them with an “easy and streamlined way to obtain long-term visa residency visas and significantly contribute to Dubai’s economy”, a statement said. As part of the agreement, the three entities will work together to identify priority sectors for attracting investments to Dubai, in line with the emirate’s income diversification targets.
(v) Dubai lays out plans for Kigali dry port. The owners of Dubai Ports (DP) World Kigali Logistics Platform, a new modern inland cargo handling facility, are considering the feasibility of running it as a regional e-commerce hub. The $35m facility, launched in October this year, sits on 13 hectares and features an Inland Container Terminal with ample warehousing capacity, a container yard, administrative and services buildings, and parking spaces. Nadya Abdullah Al Kamali, Chief Executive of Customs World, told The New Times here that they are working on aligning the Kigali operations with e-commerce activities. She added that the facility is being marketed as an avenue to serve the regional market as a one-stop-shop facility. This comes at a time when the Dubai-based Customs World is in the process of selecting four hubs in Africa for its Dubai Silk Road Strategy, which seeks to increase UAE’s involvement in transport and logistics services across the globe.
(vi) In brief: Dubai looks to deepen relations with Kenya beyond oil business; Ghana, UAE sign five pacts
Germany – Africa trade and investment relations: G20 Compact with Africa Investment Summit commentaries, updates
(i) Robert Kappel, Helmut Reisen analysis of the G20 Compact with Africa: The audacity of hope. Two years is perhaps not long enough to allow for an appraisal of how effective the CwA has been in achieving its aims. Thus, the dominant approach in the official documents has been input orientation rather than output monitoring. By contrast, this study is data driven. It assembles the most recent data on governance, debt, capital flows and savings in the 12 current CwA partner countries. Governance scores have improved since 2016. However, FDI and national savings have not yet responded accordingly. In fact, both fell for the majority of CwA partners during the 2017–18 period. Thus, it often proved impossible to tame public debt dynamics. In view of the macroeconomic data discussed here, the positive tone of the CwA Monitoring Reports to date appears hollow.
In this study (pdf), we take a more detailed look at three quite different CwA countries, with which Germany has established a special partnership: Ethiopia, Ghana and Senegal. Due to its special agenda focused on developing infrastructure and promoting FDI, the CwA pursues a policy that does not trigger structural change towards the development of local entrepreneurship, industrial clusters, the modernisation of agriculture and thus broad-based employment, but instead is a model oriented towards exports. Exports can help to enable loans to be repaid and thus help to prevent countries from falling into debt traps. This strategy makes sense, but has the disadvantage that endogenous growth generated by the activities of local farms and companies is counteracted to a certain extent. Thus, the CwA strategy can have unintended consequences. These include:
(ii) Speeches by Federal Chancellor Angela Merkel
In addition, we have made the conditions for export guarantees and investment guarantees more attractive. Since 2018, exports to the Compact countries alone, amounting to 330 million euros, have been covered by federal guarantees. There are applications in the amount of one billion euros. So we increase ourselves. We come from a relatively low level when compared to China and other countries. We also know that foreign trade is often the precursor to local engagement, for example in the form of investment. Therefore, these numbers are quite promising. Incidentally, we once looked at ourselves: how has the World Bank's "Ease of Doing Business Index", which is of importance to many investors, developed in recent years among the compact countries? We can say that the index has improved a lot, especially for the Compact countries. I would like to congratulate all of them. So now we can show a lot of practical examples; and if you want to know more, you can find out later in the atrium.
The decision to invest in Africa, of course, remains a private-sector decision. We can not accept this decision from any entrepreneur or entrepreneur. But we can help, we can build trust, and we can say about the Compact states that we have more transparent conditions than we had before. We have, as it were, a further step - as is done in the German Development Ministry by Gerd Müller and his crew - to conclude bilateral reform partnerships with some of the Compact countries. This is already the case with Ghana, Tunisia and Côte d'Ivoire and now also with Senegal and Ethiopia. We can also say that such a reform partnership is open to everyone. Here we talk about the conditions; and the Minister is also in discussion with many representatives of the other Compact countries. So, a lot has started, but I do not want to paint too positive a picture because we still have problems to solve. This includes the big question of security, especially in the Sahel region. Here we have other tools to try to reconcile security and development. The terrorist challenges are serious.
Today's afternoon session serves to discuss the political framework and the conditions of the Compact. This morning, the conversation with the economy was in the foreground. Now it's the conversation between us. It's about getting honest analysis: what progress have we made, what handicaps do we still have, what are the barriers? - I am glad that you are all ready to give us your opinion. Because it is supposed to be a learning process. We do not need to make any window speeches here, it's about getting things done. Because of my visits to Africa, I am well aware of the demanding youth you have, who expects you to act and the results to be visible. That is why I believe that our meeting here on the one hand is a sign of lived multilateralism and on the other hand, it should also be something that bears fruit and brings results.
(iii) Merkel urges reforms in Africa to woo German investors to the region. Welcoming African leaders to Berlin has become something of a routine for German Chancellor Angela Merkel since the Compact with Africa initiative began. This year's summit is the third of its kind, but interest from the region seems to be waning. Only seven heads of state from the 12 Compact countries were in attendance — a far cry from previous years, especially when compared to the first summit in 2017 that was launched with much fanfare. Prominent African leaders like South Africa's President Cyril Ramaphosa and Ethiopian Nobel Prize laureate Abiy Ahmed, who were present at last year's event, were absent. Merkel said the Compact with Africa initiative, which aims to boost private investments in African countries that commit themselves to macroeconomic reforms, has already made progress. That, in turn, could spur investment, she added.
But critics of the initiative say the effects on the ground are negligible. Official figures only show a meager increase in foreign direct investment in the 12 Compact countries — and the response from German countries has been largely lackluster. While German investment in Africa has grown, only some 600 companies with German capital are currently doing business on the continent. "I hear from our African friends time and again that they want more from the German business community. Yes, we will turn our words into deeds", the chairman of the Sub-Saharan Africa Initiative of German business, Heinz-Walter Grosse, told the conference, but admitted: "We have to increase the speed."
Germany's business community, which is traditionally risk-averse, still largely shies away from establishing a presence in Africa. Small and medium-size companies, in particular, that form the backbone of Germany's economy are worried that an investment gone wrong could threaten their existence. Stefan Liebing, chairman of Afrikaverein, a lobby group of German companies that are active in Africa, called on the German government to improve the conditions for public guarantees for German companies wanting to do business in Africa.
(iv) Kagame to German investors: Africa is ripe for investments. Kagame commended Germany Chancellor Angela Merkel’s leadership in prioritizing investment from the German business community. The Head of State highlighted an example of Rwanda’s partnership with Germany companies like Volkswagen (VW), Siemens and SAP, saying that it “demonstrates the competitiveness of our economies and the reforms that have been happening in the ease of doing business." Thomas Schaefer, the Chairman and the Managing Director of Volkswagen South Africa told business executives present especially those from Germany that the continent was particularly ready for investments in the automotive industry where his group is already invested. He pointed out that the continent was faced by challenges of dumping of used cars and extraordinary importation of fuel, saying businesses could tap into that to address challenges. VW presently assembles cars in Rwanda, the journey which Schaefer said started back in 2016. “In the next move, we are going into electric mobility because there is no way a country like Rwanda can continue to import fuel. We believe Rwanda can go carbon neutral,” he noted.
(v) In brief: Egypt, Germany sign agreements worth 330 mln euros on renewable energy, vocational training; Sisi speaks of Egypt's efforts to advance automotive industry with Daimler AG
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Diarise: Sustainable development, sustainable debt: finding the right balance (2 December, Dakar). The conference, convened by the Presidency of the Republic of Senegal and the IMF, in partnership with the UN, will discuss and explore economic policies that would allow SSA countries to meet their development needs without jeopardizing debt sustainability.
Revenue Statistics in Africa 2019
Revenue Statistics in Africa is jointly undertaken by the OECD Centre for Tax Policy and Administration and the OECD Development Centre, the AUC and the African Tax Administration Forum with the financial support of the EU. It compiles comparable tax revenue and non-tax revenue statistics for 26 countries in Africa: Botswana, Burkina Faso, Cabo Verde, Cameroon, Republic of the Congo, Democratic Republic of the Congo, Côte d'Ivoire, Egypt, Equatorial Guinea, Eswatini, Ghana, Kenya, Madagascar, Mali, Mauritania, Mauritius, Morocco, Niger, Nigeria, Rwanda, Senegal, Seychelles, South Africa, Togo, Tunisia and Uganda.
Extracts from the report’s special feature: The AfCFTA and its impact on public revenues
Total revenues from trade were equivalent to 2.1% of GDP in 2017 on average across the 23 non-SACU countries participating in the report. Over the past decade, revenues from trade taxes have declined only slightly as a percentage of GDP: in 2008 they were equivalent to 2.2% of GDP on average (not including Nigeria, for which data in 2003 was not available). Including the SACU countries, trade revenues were equivalent to 1.9% of GDP on average in 2017 and 2.0% of GDP in 2008.
Revenue from trade taxes as a percentage of GDP ranged widely in 2017 (Figure 3.2). They equated to more than 4.0% of GDP in Mauritania (5.0%), Côte d'Ivoire (4.8%), Togo (4.7%) and Cabo Verde (4.0%) and less than 1% in the DRC, Equatorial Guinea, Mauritius, Morocco, Nigeria and Tunisia.
Revenue from trade taxes declined as a proportion of GDP between 2008 and 2017 in 13 of the non-SACU countries, while they increased in nine over the same period. The largest declines occurred in the Seychelles (2.8 p.p.), Morocco (1.1 p.p.), and the DRC (1.0 p.p.), while Mauritania and Togo recorded the largest increases (of 2.3 p.p. and 1.1 p.p., respectively). Revenues from trade taxes as a percentage of GDP were unchanged in Rwanda.
Looking ahead: Although the elimination of trade tariffs may reduce tax revenues across the region in the short term, this decline is expected to be offset in the longer term by increased revenues from other categories of tax as a result of growth in countries' economies generated by closer integration. As data from Revenue Statistics in Africa shows, the region has been progressively less reliant on revenues from trade taxes, in part because of the various trade agreements that have been established since the 1990s. On average across the 26 countries, revenues from trade taxes accounted for 11.8% of total tax revenues and were equivalent to 1.9% of GDP, down from 13.9% and 2.0% respectively in 2008.
Despite this lesser reliance, revenues from trade taxes remain an important source of public income for most African countries, especially among countries at lower income levels. The share of trade taxes to total tax revenues exceeds the regional average in all ten LDCs covered by this report, indicating that they were particularly vulnerable to the elimination of tariffs. The flexibilities envisaged under the AfCFTA, such as a longer transitional period for sensitive products, exclusion lists and adjustment facilities, are likely to be of critical importance, especially in a context where countries are under pressure to achieve the SDGs. AfCFTA State Parties also have an opportunity to implement tax reforms that will support their adjustment to the new trading system.
UNCTAD’s Least Developed Countries Report was released yesterday
Least developed countries, the world’s most impoverished nations, should proactively ensure external finance from all sources is directed to national development priorities. This approach is the best way to manage their aid dependency and eventually escape it, says UNCTAD’s Least Developed Countries Report 2019. The developing world has access to a new aid architecture, with a wider array of external finance sources, but this situation has resulted in more complexity and opacity for the most impoverished nations, the report notes. Moreover, this funding diversity has not translated into meaningful increases in development finance from all sources. Rather it has expanded the number of actors and instruments.
Official development assistance disbursements to LDCs have increased by only 2% annually since the Istanbul Programme of Action of 2011 and remain far from internationally agreed targets, the report observes. “Critically, the linkages between external development finance and national development priorities are weakening,” said Rolf Traeger, chief of UNCTAD’s LDC section. The ectoral composition of ODA continues to be biased towards social sectors, which absorb 45% of total aid, compared to economic infrastructure and production sectors, which receive only 14% and 8% respectively.
Modern development finance is also characterized by a growing number of complex instruments and declining concessionality (a measure of the "softness" of a credit reflecting the benefit to the borrower compared to a loan at the market rate). The net result is that LDCs have increasingly resorted to debt financing, more than doubling their external debt stock from $146bn to $313bn between 2007 and 2017. Currently, one third of LDCs are in debt distress or at high risk of debt distress. “This threatens debt sustainability and economic development potential. These developments are further weakening the limited state capacities of LDCs,” Mr. Traeger said.
Table of contents:
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Chapter 1: Sustainable Development Goals, structural transformation and financing for development
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Chapter 2: Official flows and the evolving terms of aid dependence
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Chapter 3: Private development cooperation: more bang for the buck?
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Chapter 4: How dependence on external development finance is affecting fiscal policies
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Chapter 5: Policies to enhance the development impact and effectiveness of external financial resources
UNCTAD’s International Debt Management Conference concludes today. The keynote address was delivered by Namibia's finance minister Carl H-G Schlettwein:
Let me take this opportunity to share with the conference the polices and measures that the Namibian government has been pursuing over the past four years in regard to shocks on growth and debt management. At the time of the FY 2016/2017 budget statement, our economy was exposed to a complex set of domestic and external shocks. GDP growth had declined from 6.1% in 2015 to 0.6% in 2016; due to a combination of reduced public expenditure and commodity price crashed, the latter having affected our export earnings. As a result, the immediate effect on public debt stock was unprecedented. Debt grew at 30,1% per year and the high debt servicing burden had led to a credit rating downgrade, from investment grade to sub investment grade, for our foreign denominated bonds. Lost fiscal space coupled with high debt burden meant we had limited capacity to implement countercyclical policy to support the economic recovery. We could neither take up more debt, nor implement tax policy changes to boost public revenue or activity in a low growth environment.
Our policy response was two-fold. We chose to prioritize and scale-up spending on development and pro-growth programs and deploy ring-fenced project financing with limited, but targeted debt commitments. We undertook to address constraints on private sector development and support local participation, we strengthened allocative efficiency to ensure that critical service delivery was not impaired due to budget constraints, reviewed SOE governance law to facilitate SOE reforms and improve efficiency, took measures to enhance the competitiveness of the Namibian economy and implemented structural reforms to address impediments to businesses; all at the same time as implementing a sustainable fiscal framework designed to contain wasteful expenditure and reduce the budget deficit and growing indebtedness. I am pleased to say that four years down the line we have achieved the following (pdf):
Profiled presentations: The joint IMF-WB multipronged approach for addressing emerging debt vulnerabilities: presentation by IMF’s Mark Flanagan. Making debt work again for development - current pitfalls and challenges ahead: presentation by UNCTAD’s Stephanie Blankenburg. The full set of conference presentations can be downloaded here.
The AfDB has posted a set of short reports on different aspects of climate change
(i) Feed and prosper Africa today and tomorrow. Scientific evidence suggests that the agriculture sector in Africa could experience prolonged droughts and/or floods due to extreme weather patterns such as El Nino. About 2%-7% of GDP loss is expected by 2100 in parts of the Sahara, 2%-4% & 0.4%-1.3% in Western and Central Africa, and Northern and Southern Africa, respectively. Arid and semi-arid land could widen by 60-80M ha. Fisheries will be particularly affected due to changes in sea temperatures, reducing productivity by 50%-60%. Viable arable land for production is predicted to decline by 9%-20% by 2080. It is likely crop pests and diseases will increase across Africa.
(ii) Clean energy to power Africa’s future. Africa’s vulnerability to climate change means it faces the double challenge of integrating climate change considerations in the pursuit of economic growth and development for its citizens. Africa’s energy sector is central to the advancement of the continent’s growth. Close to 600 million citizens still lack access to affordable and reliable energy, which holds back economic progress, and sets back the continent’s GDP by an estimated 4 percent annually. However, compared to most fossil fuel-dependent industrialized countries, the energy transition in Africa presents an unprecedented advantage. With the exception of a few, most African countries have not exploited their fossil fuel reserves, and are therefore well positioned to meet their energy needs through alternative renewable and cleaner sources.
(iii) Climate information services. From 2005 to 2015, Africa experienced a high number of disasters that affected 180 million people. An average of 157 disasters were recorded each year, affecting nearly 10,000 people annually. Most notable are the 2015-2016 El Niño floods across the Horn and southern parts of Africa; and recently, Cyclone Idai, which wreaked havoc in Mozambique, Zimbabwe and Malawi, causing $1bn in infrastructure damage, according to United Nations estimates. Idai was closely followed by Cyclone Kenneth, just five weeks later. The challenges are compounded by limited national hazard warning capacities—uneven at best and non-existent at worst. The continent also trails among all regions in terms of land-based observation networks, meeting only about one-eighth of the global minimum requirements. The need for high quality climate information, delivered in real time, and fit-for-purpose in Africa’s diverse context, is indisputable.
(iv) Ensuring Africa’s resilience to climate change. Addressing the challenge of access to potable water and sanitation for underserved populations, exacerbated by climate change, requires scaling up of policy, institutional and governance reforms, as well as investments that deliver services to all. The Africa Water Vision 2025 has an ambitious aim “the use and management of water resources are equitable and sustainable and contribute to poverty alleviation, socio-economic development, regional cooperation, and the environment”. An estimated $13bn per annum is needed for Africa to meet the SDG goal 6 of universal access to clean water and sanitation. Proven innovations in the water and sanitation sector will improve water and sanitation access by reducing inefficiencies and high non-revenue water levels among utilities. Promoting uptake of smart technologies in sanitation solutions generate revenue for water utilities and communities.
(v) Paving the way for climate-resilient infrastructure: Building sustainable cities and low-carbon mobility in Africa. Africa is a continent with the most rapidly growing urban population, with more than 80% of its population growth expected to occur in cities over the next 30 years. An estimated $20-25bn per year needs to be invested in basic urban infrastructure, and an additional $20bn per year in housing to respond to urban population growth—these investments need to be climate-proofed to ensure a sustainable pathway for urban build out. The following projects illustrate how the African Development Bank supports Africa’s transition to low-carbon and climate-resilient development in the infrastructure sector. +80%of Africa’s population growth expected to occur in cities over the next 30 years
African Statistics Day: Let us make the invisible visible, says ECA’s Chinganya
The 2019 Africa-GIS Conference underlines the imperatives of technology and innovation for better living conditions
Namibia to implement a Blue Economy governance and management system by 2022
China contributes $500,000 to support LDCs and WTO accession
World Bank: Impact of fiscal policy on poverty and inequality in Uganda
OECD: Summary record of the 1067th DAC meeting (15 October 2019)
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Diarise: Regional workshop for the drafting of specific lists of commitments for liberalization of trade in services by Central African member states in the five priority sectors under the AfCFTA (3-5 December, Douala)
Selected #SheTrades updates:
(i) @AranchaGlezLaya: My message at the opening of the SheTrades Global at the African Union headquarters in Addis. “We need an African Continental Free Trade Agreement that works 4 women entrepreneurs. Women get organized!”
(ii) @MJansenEcon: Women-led firms face more financial obstacles than their peers. See figures for Kenya below. Find out more about women in business by attending SheTrades in Africa today at #WEDF2019 in Addis Ababa and by reading: Promoting SME competitiveness in Kenya
(iii) @EIF4LDCs: "It will take 136 years for Sub-Saharan Africa to achieve gender parity": - @AranchaGlezLaya now at the opening of SheTrades Global 2019. Efforts to empower women will have to start from the poorest countries. Here's why.
(iv) @EIF4LDCs: "Policies have to catch up. The public sector needs to listen and bring up time-bound responses. Let us create an eco-system that works for women!": @SMannette1 told SheTrades Global 2019, calling to enable women to trade. Here's EIF's commitment:
(v) @LPI_voices: #SheTrades informally and across borders! IGAD is strengthening livelihoods of women traders through the IGAD Policy Framework on Informal Cross-Border Trade
Selected #AIW2019 updates:
(i) @AUTradeIndustry: The inaugural meeting of the Pan-African Manufacturers Association (PAMA) kicked off at the African Union. It will join other Pan-African Private Sector Associations that the Commission work with, including @officialPACCI and contribute to an effective AfCFTA market.
(ii) Ambassador Muchanga: The inaugural meeting of PAMA is a dream come true. Manufacturers will contribute to helping Africa actively participate in the 4th Industrial Revolution, bearing in mind that the future will be digital.
Sean Woolfrey, Bruce Byiers: The African Continental Free Trade Area and the politics of industrialisation (ECDPM)
November 20 is Africa industrialisation day. To mark the occasion, the AU has planned a series of activities on the theme ‘positioning African industry to supply the African Continental Free Trade Area (AfCFTA) market’. This choice of theme is apt given momentum around the AfCFTA and its potential to catalyse industrialisation. To position African industries to ‘supply the AfCFTA market’, African governments must address three closely related challenges: (1) actually implementing the AfCFTA; (2) promoting industrialisation at home; and (3) navigating domestic political dynamics that may or may not be conducive to AfCFTA implementation and national industrialisation.
The interplay between regional (or continental) integration and national industrial policies is not always harmonious. Many African countries already have industrial policies, and the policy tools they use often conflict with the goals of regional trade integration. For example, many African governments use tariffs and non-tariff barriers to promote and protect domestic industries, including from competition from other African countries. This runs counter to the logic of the AfCFTA, which seeks to promote industrialisation by creating an integrated and more competitive African market. Perhaps unsurprisingly, when national (industrial) policy objectives conflict with regional integration goals, African countries tend to prioritise their national objectives.
Nigeria’s recent closure of its border with neighbouring Benin provides a good example. Nigeria may be justified in seeking to address smuggling, which undermines its industrialisation efforts. But the step it has taken contravenes its regional commitments under ECOWAS. These tensions come to the surface in countries where local industries (and some public officials) benefit from trade protection and have incentives to lobby the government to maintain this protection. In such countries, the interests of political and business elites generate little pressure for leaders to implement regional trade commitments. Such tensions are not inevitable however. In countries like Kenya, local industries have a strong interest in exporting to regional and African markets, and, as a result, domestic industrial policy objectives go hand in hand with a strong commitment to regional trade integration.
Global Trade Review interview: Africa’s free trade area – where are we now?
But tangible benefits with a wider reach across the continent will likely only be realised from 2030 onwards due to a number of obstacles, says new research from Baker McKenzie and Oxford Economics. Titled AfCFTA’s $3 trillion opportunity: Weighing existing barriers against potential economic gains, the report looks at the gains and benefits for the continent as a whole, and examines the barriers to the deal’s effective implementation. GTR speaks to Mattias Hedwall, partner and head of Baker McKenzie’s global international commercial and trade group, about the progress of the deal thus far, who the winners and losers are likely to be, and how this relates to the report’s key findings. Extract:
The Report compares Africa’s 20 largest economies in terms of the share of exports destined for other economies on the continent. Some economies, such as Uganda and Zimbabwe, buck the overall trend, trading more with their neighbors than other African nations do. Yet, their economies are small in contrast to those of Egypt, Nigeria and South Africa, which together represent more than half of the continent’s GDP. Egypt and Nigeria, for instance, have very limited trade relationships with their African peers. As major fuel exporters, they are focused on exports outside the continent.
“Over three quarters of African exports to the rest of the world are heavily focused on natural resources, primarily raw materials. In contrast, a look at African imports from outside the continent reveals that manufacturing products, industrial machinery and transport equipment constitute over 50% of Africa's combined needs. Currently, Africa's external imports account for more than half of the total volume of imports, with the most important suppliers being Europe (35%), China (16%) and the rest of Asia including India (14%). By contrast imports from other parts of Africa account for only 16% of total merchandise imports. Manufacturing GDP represents on average only 10% of GDP in Africa. This means that limited production capabilities within Africa are currently being compensated for through foreign imports. Yet, this manufacturing deficit could be eventually satisfied within the continent and enabled by AfCFTA. Manufactured products currently exported to African countries by their peers, primarily industrial machinery and motor vehicles, represent a third of the total trade flow in Africa. But a significant share of these intraregional exports of manufactured goods are re-exports of imported manufactured products from the rest of the world,” says Virusha Subban, Partner specialising in Customs and Trade at Baker McKenzie in Johannesburg.
AfDB signs $250m risk participation agreement with ABSA (AfDB)
The African Development Bank has signed an unfunded $250m Risk Participation Agreement facility with ABSA - a pan-Africa financial institution with a solid presence in 12 African countries. Under this 3-year RPA facility, the Bank and ABSA will share default risk on a portfolio of eligible trade transactions originated by African Issuing Banks (IBs) and confirmed by ABSA. Leveraging the Bank's AAA rating, ABSA will underwrite trade transactions issued by African issuing banks across key sectors like agriculture, energy, and light-manufacturing with a special focus on SME's in fragile and low-income African countries. The Bank's commitment under the RPA is to assume up to 50% (and 75% in special cases) of every underlying transaction issued by the IBs, while ABSA will confirm such a transaction and bear not less than 50% of its underlying risk.
Working with strategic partners like ABSA, the Bank's trade finance operations aim to facilitate inter and intra Africa trade by reducing the trade financing gap on the continent. Since 2013, the Bank's RPA program has supported over 16 issuing banks with about $650m limits in Southern Africa alone, with special focus on SMEs and local corporates in manufacturing, agribusiness, import/export and energy sectors. In the same period, the program supported over $4bn in trade volumes across Africa, with $938m of that being intra-Africa trade.
Infrastructure Financing Trends in Africa 2018 (ICA)
In addition to the main report, IFT 2018 includes two separate documents: the first report analyzes the role of the private sector both in terms of additional financing and in terms of specific expertise and skills. The second report addresses the theme of Sustainability and Quality of Infrastructure, with a particular focus on climate resilience of infrastructure, an essential component of sustainability. Climate resilience is now routinely included in feasibility analyses for projects supported by MDBs, and MDBs are committed to monitoring and reporting their investments in climate resilience.
One of the key findings of the report (pdf) is that the financing of infrastructure in Africa has never been as high as in 2018. It reached $100.8bn, thus passing the $100bn mark for the first time, significantly higher than in previous years. The large increase results from concerted efforts from all sources. ICA members continued to play a major role in financing as well as in supporting institutional and policy reform in Africa. African governments markedly increased their commitments, as did China. There has been continued, sustained financing by the Arab Coordination Group, EBRD, non-ICA European bilateral organizations, and India. In addition to self-standing private sector financing, this report captures for the first time commitments from Africa50, AIIB, and IFAD.
One of the most important issues addressed in this year’s report is the persistence of the financing gap. Africa’s infrastructure deficit varies considerably by sector. In mobile banking, Africa is ahead of most other regions with comparable per capita income. In water supply, in spite of improvements, the financing gap remains very high, three to four times the current total level of commitments to the sector. Approximately 340 million Africans do not have access to safe drinking water and one million lives are lost each year because of water-borne diseases. One of the main challenges is to make the sector attractive to the private sector, by improving financing sustainability. In the transport and electric power sectors, financing gaps are much smaller, but still significant. The very small gap in ICT is attributable to the fact that the sector is almost completely privatized.
All sectors were the recipients of increased commitments, some more markedly than others:
- Transport sector 2018 commitments of $32.5bn were 5% higher than the 3-year (2015-2017) average of almost $31bn. Water and sanitation sector commitments, at $13.3bn, were 21% above the previous 3-year average of $11bn.
- Energy sector commitments in 2018 amounted to $43.8bn, 67% higher than the 2015-2017 average. This is the largest level of commitments ever recorded in the sector.
- ICT also saw record commitments in 2018, $7.1bn.
Dubai's non-oil trade with Africa to touch Dh1 trillion over nine years (The National)
Dubai’s aggregate non-oil trade with African nations between 2011 and the end of this year will reach Dh1 trillion, as the emirate continues to build its economic ties with the continent to further diversify its economy. Cumulative non-oil trade with Africa has already reached Dh926 billion for the 2011-2018 period, Majid Saif Al Ghurair, chairman of Dubai Chamber of Commerce and Industry told delegates at the fifth Global Business Forum Africa conference in Dubai on Monday. “Africa is a market of strategic importance to Dubai and Dubai Chamber,” Mr Al Ghurair said. “We have adopted an ambitious expansion strategy focusing on the continent, which is being implemented through our four representative offices in Ethiopia, Ghana, Mozambique and Kenya.” The chamber, a business sector body that supports the growth of businesses in the emirate, is “closely monitoring developments and the business climate in Africa to identify growth opportunities available for our members”, he said. Developments such as the launch of the African Continental Free Trade Area (AfCFTA) earlier this year - a broadened African free trade agreement between 54 countries - offer huge potential to boost UAE-Africa trade and investment flows, Mr Al Ghurair noted.
Somalia: First review under the staff-monitored programme (IMF)
Somalia continues to make progress towards the requirements for debt relief under the Heavily Indebted Poor Country Initiative. Following the successful completion of the third Staff-Monitored program, a fourth successive SMP was approved by management on June 26, 2019, which Executive Directors agreed meets upper credit tranche conditionality standards. This endorsement has opened the way for the authorities to establish the necessary policy track record for a new IMF financial arrangement and the HIPC Decision Point, one of the key HIPC benchmarks. In addition, work on developing the 9th National Development Plan (NDP9), which will be the foundation for the required poverty reduction strategy is near completion. Implementation of the new SMP IV is satisfactory and the economic outlook is in line with expectations. The underlying growth momentum continues, supported by ongoing reforms; however, lower than expected rains in late 2018 and the first half of 2019 threatens Somalia’s already fragile food security and the UN has indicated that up to 2.1 million people face severe hunger through December 2019. The authorities are progressing on the HIPC Decision Point benchmarks, and these efforts must be sustained.
Somalia’s external position remains stable, while technical work to reconcile Somalia’s external debt is advancing. Trade via the Port of Mogadishu has continued to grow, largely thanks to continued inflows of grants and remittances. In July, a joint IMF-WB staff mission was undertaken to conduct the technical work on reconciling Somalia’s external debt data, and the authorities are following-up on a handful of outstanding issues with creditors.
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Underway in Addis Ababa:
(i) SheTrades Global 2019 (held in conjunction with the World Export Development Forum). Discussions will engage with women entrepreneurs from 40 business associations across Africa, to discuss their readiness to take advantage of AfCFTA markets. Twitter updates: #shetrades
(ii) Africa Industrialization Week 2019: Positioning African industry to supply the AFCTA market. Twitter updates: #AIW2019. Key objectives include:
Promotion of startups, small and medium sized enterprises/industries, as well as established middle and high-cap enterprises to strengthen the continent’s capacity to integrate into the global production and trading system.
Providing a platform for public-private engagement between industrial policy makers, the private sector, civil society, and development cooperating partners as they endeavor to share ideas on how to shape the continent’s industrialization agenda.
Development of a continental strategy on the automotive value chain to catalyze industrialization.
(iii) Launching tomorrow, in Geneva: UNCTAD's Least Developed Countries Report 2019
11th African Private Sector Forum: selected highlights from the declaration (AU)
We acknowledge the need to make greater efforts to establish the right business framework to attract sustainable investment and foster our effort for entrepreneurs, small and medium-sized enterprises, and start-ups. We also acknowledge the importance for Africa to adapt clear SMEs policies that puts SMEs at the center of industrialization drive; identify opportunities and create policies that are linked to the domestic delivery; and for African Union Commission, in collaboration with the Regional Economic Communities, to support African member states to create regional value chains that offer greater opportunities for industry.
We call upon the AUC, in collaboration with its pan-African development institutions and other development partners, to establish the necessary mechanisms such as technical and financial capabilities to support the operationalization and seamless implementation of the AfCFTA.
We call upon member states, in collaboration with the private sector, to initiate local currency cross border payments platform to facilitate cross border trade and involve private sector financial institutions in the financing decision.
We call upon the on AUC to set up a committee and develop a strategy focusing on the 4th Industrial Revolution. We also call upon member states to accelerate the training of youth particularly in the areas of Digital and STEM (Science, Technology, Engineering and Mathematics) and provide greater support to incubators. We agree to support start-ups with mentoring and skills development by creating more partnerships between start-ups and established companies.
We encourage member states to involve women and youth in the decision-making process and provide specific entrepreneurship skills and robust training that could help them to reduce their risk of failure. We also encourage member states in collaboration with the private sector to facilitate access to finance for women and youth entrepreneurs through grants that would enable them start up business enterprises.
7th Annual AUC – US High-Level Dialogue: joint communique (AU)
The two sides discussed economic growth, trade, opportunity, and development, commending the entry into force of the AfCFTA, with a market of 1.2 billion people. Highlighting the signing in August 2019 of a joint statement in support for the AfCFTA by Ambassador C.J. Mahoney, Deputy US Trade Representative, and Ambassador Albert Muchanga, AU Commissioner for Trade and Industry, officials welcomed Prosper Africa, the establishment of the US International Development Finance Corporation, and the possibility of Millennium Challenge Corporation regional compacts, as these will promote sustainable economic development in Africa. Both sides further reaffirmed their support for the AfCFTA. The AUC highlighted its development agenda for regional integration, especially enhancing the AfCFTA as a strategic means to increase competitiveness and attractiveness to business.
Officials welcomed the AUC–US joint communique to advance women’s economic empowerment and entrepreneurship, signed in April 2019, and look forward to additional cooperation in the near term. They also acknowledged the importance of investing in projects that promote regional integration as an avenue for creating opportunities for African youth. The AUC noted with satisfaction the endorsement of the second Comprehensive Africa Agriculture Development Program biennial review report on the implementation of the Malabo declaration on agricultural transformation in Africa. The two sides agreed to continue consultations on the establishment of the AU Food Safety Agency.
Four priorities for African aviation: remarks by IATA's Alexandre de Juniac at AFRAA annual general assembly (IATA)
The success of African aviation is also challenged by high costs. African carriers lose $1.54 for every passenger they carry. High costs contribute to these losses: Jet fuel costs are 35% higher than the global average. User charges are excessive: they account for 11.4% of African airlines' operating costs. That is double the industry average. And there is a plethora of taxes and charges, some unique like Redevance fees, Hydrant fees, Railage fees, Royalty Fees and even Solidarity taxes.
Additionally, we ask governments to follow treaty obligations and ensure the efficient repatriation of airline revenues at fair exchange rates. This is an issue in 19 African states: Algeria, Burkina Faso, Benin, Cameroon, Chad, Congo, Cote d'Ivoire, Eritrea, Ethiopia, Gabon, Libya, Mali, Malawi, Mozambique, Niger, Senegal, Sudan, Togo and Zimbabwe. We have had success in clearing the backlog in Nigeria and significant progress has been made in Angola. It is not sustainable to expect airlines to provide vital connectivity without reliable access to our revenues. So, we urge all governments to work with our Africa team to make this a priority.
A further priority for governments is liberalizing intra-Africa access to markets. The high barriers that African states have erected between their neighbors are evident in trade levels. Less than 20% of African trade is within the continent. That compares poorly with Europe at 70% and Asia at 60%. What would help aviation unlock more of Africa's potential, not just for trade, but investment and tourism as well? IATA is promoting three key agreements which, when combined, have the potential to transform the continent:
COMESA Court launches revised rules of arbitration
The COMESA Court of Justice has launched revised arbitration rules aimed at guiding the business of the court more efficiently in the current dispensation. The launch was conducted in Lusaka during the opening of the 22nd Meeting of COMESA Ministers of Justice and Attorneys General. Delegates attending the meeting commended the Court for its consistent improvement of its processes and procedures thus making it a dispute resolution institution of choice for citizens of the regional trade bloc. The revised Rules were adopted by the Council of Ministers in November 2018. Among the key issues in the agenda of the meeting of the Ministers and Attorney’s General were: an Amendment to Article 28 of the Treaty to expand the jurisdiction of the Court to include Investor State Dispute Resolution, amendment of the Treaty to include Arabic as the fourth language of the Court and the renewal of tenure of the judges.
Lesotho: Customs modernization programme zooms in on the harmonized system (WCO)
Deliberations that took place during the workshop addressed a wide range of topics relating to strategies of optimization of the existing tariff classification work practices in the LRA and the underlying infrastructure. Particular attention was paid to the implementation of HS-related standards enshrined in the WCO Revenue Package instruments and Council Recommendations. The detailed gap analysis that was carried out during the workshop revealed that most of the fundamental building blocks of the tariff classification infrastructure were already in place in Lesotho. It was agreed that further modernization efforts should focus on the improvement and fine-tuning of the existing structure and modus operandi. This will become part of the overall modernization plan currently being implemented by the LRA. [WCO participates in a regional ECOWAS workshop on capacity building of women cross border traders]
Bridging the mobile digital divide in Sub-Saharan Africa: costing under demographic change and urbanization (IMF)
Digital connectivity, including through the modern cellular network technologies, is expected to play a key role for the Future of Work in sub-Saharan Africa. We estimate the cost of introducing a full-scale 4G network by 2025 in SSA and an operable 5G network by 2040. We adapt the costing model of Lombardo (2019) by accounting for the significant demographic transformation and rapid urbanization in SSA. We use the WorldPop and GADM databases and the UN’s medium-variant population projections to project the population densities at the highest level of administrative division for each SSA country in 2025 and 2040. For full 4G connectivity, the required capital and operational costs stands approximately at $14bn by 2025 and for 5G connectivity, costs amount to $57bn in 2040, conditional on having the 4G in place by 2025. These costs roughly translate to 8.4% of annual subscriber income, on a median basis, by 2025 for 4G and 4.9% of subscriber income by 2040 for 5G. Having the infrastructure in place is not sufficient to bridge the mobile Digital Divide. In addition, policies are needed to address affordability and knowledge gaps.
Managed trade: What could be possible spillover effects of a potential trade agreement between the US and China? (IMF)
The trade discussions between the U.S. and China are on-going. Not much is known about the shape and nature of a potential agreement, but it seems possible that it would include elements of managed trade. This paper attempts to examine the direct, first-round spillover effects for the rest of the world from managed trade using three approaches. The results suggest that, in the absence of a meaningful boost in China’s domestic demand and imports, bilateral purchase commitments are likely to generate substantial trade diversion effects for other countries. For example, the European Union, Japan, and Korea are likely to have significant export diversion in a potential deal that includes substantial purchases of U.S. vehicles, machinery, and electronics by China. At the same time, a deal that puts greater emphasis on commodities would put small commodity exporters at a risk. This points to the advantages of a comprehensive agreement that supports the international system and avoids managed bilateral trade arrangements.
SA’s biggest retailers commit to local textiles
Nigeria: Petrol importation drops by 512 million litres in 3 months
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North Africa’s 34th ICSOE to focus on trade facilitation, employment issues
AMCEN: Draft Durban Declaration on taking action for environmental sustainability and prosperity in Africa
IGAD: Communique of the 69th session of IGAD Council of Ministers
EAC partner state validate draft EAC Fertilizer Policy, Draft EAC Fertilizer Bill
WTO issues compliance panel report regarding US duties on Indian steel products
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Nigeria to form border force with neighbors Benin and Niger to fight smuggling (Reuters)
Nigeria and neighboring countries Benin and Niger have agreed to set up a joint border patrol force to tackle smuggling between the West African countries, they said in a communique on Thursday. The joint communique from the meeting in Nigeria’s capital, Abuja, said the Benin and Niger delegations had appealed for the immediate re-opening of Nigeria’s borders. The concerns were noted and the delegates agreed on the “establishment of a joint border patrol team comprising the police, customs, immigration, navy and state security services of the three countries”, the communique said. The force will hold its first meeting in Abuja (25-26 November) and will later advise on the re-opening of the borders. The delegates also agreed that the ministers of finance and trade from the countries would set up a committee to promote intra-regional trade, and said they would ensure people crossing their borders would display travel documents recognized by the Economic Community of West African States regional bloc.
The mandate of the newly implemented committee includes:
To adopt measures and actions that will facilitate and enhance the suppression of rice smuggling and other prohibited items along the borders of the three countries; The committee will prepare and put into force the necessary bilateral agreements to combat smuggling along the common borders of the three countries; It will establish a tripartite Anti-Smuggling Joint Border Patrol Team with power to arrest and handover any person arrested to the appropriate authorities in the three countries for investigation and prosecution
It will put in place the modalities for the establishment of Joint Inspection Task Force comprising of the customs of the three countries for the purposes of inspection and excursion of transit goods at the point of entry to their destination; The customs administration of the three countries must ensure strict adherence to the implementation of various agreements entered into; Pursue vigorously the escort and handing over of goods in transit from customs to customs. Initiate anti-smuggling sensitisation and awareness program/measures among the populace of the three countries.
Harmonisation pushes up intra-East African Community trade over 10% (New Times)
Intra-regional trade within the EAC bloc rose by 10.3% last year, courtesy of harmonisation of cross-border rules and procedures. “Reforms taken under the Customs Union has also boosted intra-regional trade,” Christophe Bazivamo, EAC deputy secretary general responsible for productive and social sectors, says. He said intra-EAC trade catapulted to $3.2bn last year from $2.7bn in 2016 and $2.9bn in 2017. Bazivamo disclosed this at the just-concluded second meeting of the EAC Development Partners’ Group. Officials at the EAC secretariat officials say there was “no one rule or procedure” introduced but insisted generally most of the trade procedures within the region have been simplified. They cite the operationalisation of the EAC Single Customs Territory, the Authorised Economic Operator and One Stop Border Posts, and their respective rules and regulations, as having a multiplier effect on the ease of doing business in the region. Alongside with these is enhanced customs operations inter-connectivity in the region which has seen the introduction of Electronic Cargo Tracking System to monitor the movement of traded goods across the region.
East Africa: Maize, regional supply and market outlook (Relief Web)
Preliminary estimates suggest that 2019/20 production in the structurally-surplus countries of Tanzania and Uganda was lower than 2018/19. While production in Tanzania was similar to average, Uganda’s production was 9% below average. Harvests in import-dependent Kenya and Somalia are lower than 2018/19, with Somalia’s production significantly lower than average. Production in Burundi is above average. Production is average elsewhere in the region. After accounting for domestic requirements, aggregate regional exportable maize surpluses will be 18% below average. Tanzania and Ethiopia are expected to have above-average exportable maize surpluses, while Uganda will have a below average surplus. Kenya and South Sudan will have above average import gaps that will be filled through imports from regional markets. Maize prices are expected to remain above average region wide. This will constrain export opportunities to central and southern Africa (e.g. the DRC and Malawi). The region will continue to import wheat and rice from well supplied international markets (Annex 2 and Annex 3).
Kenya: Reprieve for importers as goods to be inspected at point of entry (Standard)
The government has reversed the requirement that all imported goods be inspected in their country of origin to protect the interests of local importers. Trade and Industrialisation Cabinet Secretary Peter Munya said this would ease delays faced by importers as they await clearance from abroad, and also reduce the high costs of navigating through standards in foreign countries. He told the National Assembly Committee on Trade and Co-operatives on Wednesday that his ministry has reversed the 2015 directive that goods be issued with certificates of inspection in their countries of origin to be allowed into the local market. This was to curb the entry of illicit and sub-standard products. But the move was opposed by traders who complained about the high fees they were paying private inspection agencies contracted by the Kenya Bureau of Standards. Mr Munya told a committee chaired by Kieni MP Kanini Kega that the traders had made their case on how they were being exploited by the agencies, necessitating the change to have goods inspected at the point of entry.
Rwanda: $600,000 injected in digitalizing licensing and inspection services (New Times)
Rwanda Utilities Regulatory Authority, together with Trademark East Africa, have put pen to paper on a $600,000 deal to facilitate the digitalization of major processes which will greatly improve ability to provide services to traders as well as monitor and enforce compliance to standards on selected imports. Particularly, the fund will go towards supporting the adoption of Converged Licensing Management Systems that will enhance compliance to standards and enforce regulation in Rwanda’s trade environment by reducing transaction time and costs incurred by businesses through effective trade systems and procedures. The funding will also see to it that licensing gets digitalized, inspection of imported electronics and allied goods as well as protection of intellectual property rights and also greatly contribute towards the government’s ambition to have zero trips and zero paper in all government services.
Nigeria: House urges government to install scanning machines at seaports (This Day)
The House of Representatives has called on the federal government to install scanning machines at various seaports across the country. The House gave the directive following the adoption of a motion of urgent national importance brought by Nicholas Ossai, who lamented that most scanners at various ports across the country are no longer functional. He said between 2006 and 2013, the Nigerian Customs Service entered into a contract with three companies-service providers-got the provision, install, operate and manage the X-ray scanning machines and computerised management for the examination of goods at the various ports. Ossai explained that all the installed scanners had broken down, saying there are no functional scanners in all the port at the moment. He added that scanners, particularly cargo scanners, allow for easy detection of contrabands as well as promote efficient inspection of consignment, which in turn contribute immensely to the ease of doing business at the port. According to him, “At the moment, Nigerian ports are not business-friendly, which has made ports in neighboring countries take over activities that are supposed to be done by Nigerian ports. The House, therefore, mandated the House Committee on Ports and Harbours to urgently organise a one-day stakeholders’ meeting in order to install scanning machines in the country’s ports.
Francophone African firms need better finance to underpin growth, survey finds (ITC)
One in three companies in French-speaking Africa struggles financially and faces difficulties growing as a result, according to a new report by the International Trade Centre. Training and information that help these businesses access finance is the most effective way to support their growth, it says. The report, Promoting SME competitiveness in francophone Africa: Improving access to finance for inclusive growth, is based on a survey of more than 9,500 enterprises in 17 francophone countries in Africa and was prepared in collaboration with the Permanent Conference of African and Francophone Consular Chambers. It finds that small and medium-sized enterprises are more likely to record a fall in turnover, compared to larger companies. The report suggests that the proportion of large companies with falling turnover (15%) is less than half of the proportion of micro enterprises with falling turnover (34%). Economic performance goes hand in hand with financial position. According to the report (pdf), the vast majority (66%) of companies in a difficult financial position are companies with falling turnover.’ French-speaking African firms would also benefit from better access to financial information.
Youth jobs, skill and educational mismatches in Africa (AfDB)
This paper contributes to the empirical literature on the incidence of skill and educational mismatches of African youth and explores the linkages between job mismatch and wages, job satisfaction, and on-the-job search. It uses school-to-work transition survey datasets from 10 African countries and controls for unobserved heterogeneity, sample selection bias and endogeneity problems during the estimation of job mismatch. Results show that skill and educational mismatches are prevalent in Africa: 17.5% of employed youth are overskilled, 28.9% underskilled, 8.3% overeducated and 56.9% undereducated.
Ethiopia’s energy sector transformation (World Bank)
By assisting the Government of Ethiopia in incorporating gender-focused solutions, bolstering markets for off-grid products, and scaling up private sector participation in the country’s vast renewable energy resources, ESMAP has facilitated new investments, strategies, and approaches to help reach the goal of universal electricity access.
Sierra Leone: IMF staff completes 2019 Article IV, Second ECF Review Mission
The economy is continuing to recover, with economic growth set to pick up in 2019 to 5.1%, up from 3.5% in 2018, buoyed by improved activity in agriculture, mining, and construction. While external accounts have improved, the current account deficit is expected to narrow to 14.1% of GDP from 18.7%, and exchange rate pressures remain, in particular during the lean season in the third quarter of the year. Overcoming the legacy of prolonged economic instability and numerous shocks, and improving the wellbeing of Sierra Leoneans remains challenging. In this regard, the Government’s National Development Plan promises to put the country on a sustainable development path.
SADC, EU programme to strengthen capacity of SADC states to undertake climate change adaptation and mitigation actions (SADC)
The SADC Secretariat and the EU launched an Intra African, Caribbean and Pacific Global Climate Change Alliance Plus (GCCA+) programme to strengthen capacity of SADC Member States to undertake climate change adaptation and mitigation interventions. The launch of the programme, an integral part of the implementation of SADC Regional Integration Agenda, was held in earlier this month. The programme aims to support SADC governments, regional organisations, private and public sector, to deliver on the following areas: [COMESA: Regional climate change resilience framework developed]
Asia’s miracle economies have lessons for India’s trade policy (Mint)
Only some of us economists who believe a low-tariff free trade regime can force Indian enterprises to become more competitive have lamented India’s exit. It is seen as part of an ongoing reversal of the liberal trade regime established 25 years ago. Instead of going down, average tariffs in the manufacturing sector have gone up from 11% to around 14% in the last three years and in agriculture, from around 33% to nearly 39%. Quantitative trade restrictions have also come back in various ways. However, it is important to look at the evidence. India’s experience with FTAs has largely been disappointing. While trade has grown, so has India’s trade deficit with most of these countries/groups. It was believed that India had a comparative advantage in services. However, as Amita Batra pointed out, India has not gained any more from FTAs in services than in goods. There is little evidence that FTAs have nudged Indian enterprises towards greater competitiveness. So, where do we go from here? [The author, Sudipto Mundle, is a Distinguished Fellow at the National Council of Applied Economic Research]
Today’s Quick Links: EAC signs MoU with Development Bank of Southern Africa Irish companies ink Sh4.8 billion deals in Nairobi Kenya upgrades Kisumu old rail track, dims SGR Ethiopia’s integrated agro-industrial parks: AfDB appraisal report Kenya committed to meeting maritime framework expectations Measuring the Informal Economy: speech by IMF’s David Lipton International Debt Statistics 2020: Promoting debt transparency through newly published debtor classifications |
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Digitising logistics in Africa (Briter Bridges)
Progressively more businesses operating in African markets are adopting digital solutions to monitor their supply chain or broaden their core business. This applies to startups and large, established corporations such as DHL, who recently ventured into the e-commerce space. The 120+ companies showcased in this report (pdf) reflect the sense of optimism that is being detected across the logistics sector, as investors and businesses begin acknowledging that the digitisation wave in Africa is nothing short of an extension of the increase in connectivity worldwide and the increasing affordability of mobile technology across the continent. In this sense, the improved connectivity in Africa represents a key factor towards the integration of the continent’s supply chains into the global market. Although traditional carriers still vastly dominate the logistics industry, technology-enabled services, from delivery apps to warehousing management platforms, are becoming increasingly popular in the sector for the simple fact that they improve service efficiency by crowding out intermediaries, cutting burdensome operational processes, and optimising supply chains. The survey reveals that 80% of the companies were founded in 2016 or later, and 2019 has so far been the year seeing the highest levels of investment in the sector.
Wider economic benefits of transport corridors: evidence from international development organizations (World Bank)
2019 Africa Investment Forum: updates
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AfDB, EU reaffirm partnership, ambition to de-risk business environment, create jobs. Collaboration between the two institutions would focus on de-risking the business environment in Africa, providing equity, guarantees and other types of non-grant support, AfDB President Akinwumi and EU Commissioner Neven Mimica said at a news conference held on the sidelines of the Africa Investment Forum. Both men stressed the central role of investment in the transformation of Africa. Mimica said the EU whose goal is to move from billions to trillions in investment over the next decade, was encouraged by the Bank’s recent capital increase. “The Bank is our strategic partner – it important that it is well capitalized,” Mimica said. The parties spoke on several areas of joint collaboration, including EU commitment for investments in Africa and its role as a major partner of the Africa Investment Forum. Mimica said the EU would be supporting risk-sharing guarantees of 70 million euros set to unlock hundreds of millions and creating 175,000 jobs. Supporting investments in job creation in alliance with Africa over the next 5 years, the EU would disburse 60 billion euros in one of the largest guarantee funds created, creating 10 million jobs. The EU also took a tranche of risk in Room2Run, the African Development Bank and partners’ innovative $1 billion synthetic securitization of a portfolio of seasoned African Development Bank private sector loans.
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Africa-Europe Alliance: two new financial guarantees under the EU External Investment Plan. Today in the margins of the 2019 Africa Investment Forum, the European Commission signed two guarantee agreements with two member states’ development finance institution: the Dutch ‘Financierings-Maatschappij voor Ontwikkelingslanden N.V’ (FMO) and the Italian ‘Cassa Depositi e Prestiti’ (CDP). These guarantee agreements are part of the implementation of the EU External Investment Plan, the financial arm of the Africa-Europe Alliance for Sustainable Investment and Jobs. Commissioner for International Cooperation and Development, Neven Mimica said: “The agreements signed today, worth €70 million, will help us to unlock more than €500 million in new investment in Africa and the EU Neighbourhood. These guarantees aim at mitigating and sharing the risk with other private investors in countries where otherwise these investments would not be as attractive. They will help to boost access to finance for small businesses, notably in the tech sector – and create up to 175,000 jobs directly and indirectly.” The two guarantees will significantly boost investment and access to finance for small businesses, especially in the technology sector, in the countries covered by the Plan.
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Estimating investment needs for the power sector in Africa 2016-2025. How much investment is needed to realize the AfDB’s New Deal on Energy for Africa? This is the overriding question that is thoroughly analyzed from the bottom-up for 54 countries in Africa, covering generation, inter-connectors, transmission and distribution (T&D), mini-grids and off-grid access options. Underlying the analysis is an unprecedented collection of data, high-resolution regional power investment optimization and a tailor-made access expansion model for the continent. The answer to this question is an average annual investment of $29bn-$39bn until 2025, depending on the continent’s ambition as to avoided greenhouse gas (GHG) emissions. In total, $230bn-$310bn is required until 2025, while an additional $190bn-$215bn is required for the period 2026-2030. The total average annual investment from 2018 to 2030 is estimated at $32bn-$40bn.
IMF statements on Rwanda, Mozambique, Lesotho
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Rwanda: Economic activity outpaced expectations in the first half of 2019, with real GDP growing by 10.3%, based on a pronounced increase in construction and services activity. The uptick in construction reflects both public infrastructure projects and private investment. Growth is projected to remain strong, at around 8$, over the next 2-3 years.
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Mozambique: The outlook for 2020 is for a strong rebound in economic activity and low inflation. Real GDP growth is projected to reach 5½% in 2020, from 2.1% projected for 2019, supported by post-cyclones reconstruction efforts, a recovery in agriculture, and economic stimulus from further gradual easing of monetary conditions and clearing of domestic payments arrears to suppliers. Construction and other activities should also be boosted by investments in the liquefied natural gas megaprojects. Inflation is projected to remain low, increasing slightly to 5% at end-2020, from 3% at end-2019.
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Lesotho: While the authorities’ efforts to maintain economic stability have ensured that international reserves remain at adequate levels, Lesotho continues to face challenges in adjusting to a context of lower SACU revenues. With sluggish growth limiting the potential for domestic tax receipts, an improved outlook for government finances will require strong policy actions on spending. In this context, effective expenditure controls, including careful vetting of new projects and their financing, will be more important than ever. The constrained environment for government finances implies a need to keep public sector wages in check until such time as efforts to increase the size of the economy through private-sector driven growth can bear fruit.
President Cyril Ramaphosa: Remarks on the AfCFTA during a reception for African Ambassadors accredited to Brazil (GCIS)
BRICS Business Forum: updates
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BRICS business leaders call for stronger economic cooperation. Business leaders from the BRICS bloc of emerging economies on Wednesday called for stronger integration among member countries to deepen economic cooperation amid rising protectionism. Integration “is a necessity and a historic trend, and there is no way to stop it,” Xu Lirong, a Chinese member of the BRICS Business Council, said at this year’s BRICS business forum. “Two-thirds of global production is chain (production) with integrated economies. We are at a new stage of the industrial revolution, with new companies, and right now we are seeing major changes,” said Xu. Xu suggested that BRICS, which groups Brazil, Russia, India, China and South Africa, should adopt a new scheme of economic cooperation, so that member countries “can upgrade their economies,” especially as “the old multilateral practices are under threat.”
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Busi Mabuza: Expanding SA’s economic profile is the business of BRICS Summit. Before last week’s second presidential investment conference and this week’s BRICS Summit and the African Development Bank’s Africa Investment Conference, the Industrial Development Corporation and Invest SA prepared a very detailed booklet, The Case for Investing in SA - Accelerating Economic Growth By Building Partnerships (pdf) - outlining the case for investing in SA. It provides an extensive list of available investment incentives and where these opportunities are. We have circulated an electronic copy of the booklet to all the partner secretariats of India, Brazil, China and Russia, and given copies to all the 850 business delegates to the BRICS Business Forum today. These are just not high-level opportunities. These are specific bankable projects. [Note: The author is the chairperson of the IDC and chairs the SA chapter of the BRICS Business Council]
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India, China meet at BRICS: New panel for trade deficit should meet early. India and China have agreed that a new committee, headed by senior ministers and set up to discuss ways to pare the $53-billion trade deficit between the two countries, should meet at an early date. This was one of the outcomes of the meeting held between Prime Minister Narendra Modi and Chinese President Xi Jinping in Brasilia on Wednesday. According to a person familiar with the development, Hu and Sitharaman could explore a bilateral understanding on an auto-trigger mechanism coming into effect if imports from China surge beyond a point. Hu and Sitharaman could also discuss India’s concerns on rules of origin such as Chinese goods making their way into India through a third country.
Andrew Green: Germany’s €1B push into Africa (Devex)
Five years ago, Europe’s “migration crisis” vaulted German policy toward Africa to the top of Chancellor Angela Merkel’s development agenda. While her coalition government agreed Germany needed a development policy that would help stem the flow of people from African countries to Europe, her cabinet struggled to agree on what that policy might look like. This year, as the government began rolling out programs under its €1bn ($1.1bn) Development Investment Fund for Africa, Germany’s development strategy for the continent is finally coming into focus — and it looks a lot like private sector growth. Most of the fund is dedicated to easing the entrance of German businesses into African markets or helping African businesses grow. Details are still scant on AfricaGrow, which will be administered by Germany’s flagship development bank, Kreditanstalt für Wiederaufbau. A BMZ spokesperson told Devex it will launch before the end of November with a focus on funding initiatives with high-growth potential and an export focus, and that there will be no prioritized industries. AfricaConnect is much further along.
It’s all about trade and investment: Trump’s ambassador to South Africa, Lana Marks (Daily Maverick)
Marks also insisted that she saw no danger of South Africa being suspended or disqualified from the trade benefits of the African Growth and Opportunity Act. In 2016 the US provisionally and temporarily suspended some SA AGOA benefits - rescinding duty-free access to the US market on wine and fruit — because of import barriers on US poultry. Recently the threat has re-surfaced as the US trade representative announced in October 2019 a new review of South Africa’s AGOA benefits in response to a petition filed by the International Intellectual Property Alliance about South Africa’s poor protection and enforcement of copyrights. The IIPA - which represents the Motion Picture Association of America and other entertainment, software and publishing groups - has been reported in trade media as saying it had numerous concerns about South Africa’s copyright protection and enforcement regime. “No, it’s not a danger at all,” Marks said about the apparent threat of South Africa losing AGOA benefits. I just don’t see that happening with the current robust relationship, working so closely together. All our agencies working together in such a positive way. I just don’t see that being a problem at all.”
UNCTAD’s Investment, Enterprise and Development Commission concludes tomorrow. Download the presentation by James Zhan: Recent Global Investment Trends and Policies (pdf)
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Diarise:
Committee on Private Sector Development, Regional Integration, Trade, Infrastructure, Industry and Technology (11-12 December, Addis Ababa)
In 2019, the ECA Conference of African Ministers of Finance, Planning and Economic Development was held in Marrakech. Emerging from that meeting was the message that there was a clear need for African countries to integrate digitization into their national development strategies and plans, and for the private sector to work collaboratively with Governments in both policy formulation and implementation. African countries could harness the opportunities of a digital economy through the implementation of policies, programmes and regulations designed to remove national barriers, promote connectivity, digital skills, research, innovation and entrepreneurship.
Extracts from the pdf Issues Paper (709 KB) : The present issues paper explores the role of the private sector in harnessing the full potential of digitization to deepen the integration of African countries. Following this introductory section, the paper is organized as follows: sections II, III and IV provide discussions on the nexus between digitization and trade, digitization and industrialization, and digitization and infrastructure development, respectively, from a regional integration perspective, while highlighting the role of the private sector. Section V explores the opportunities and challenges of digitization and the role of the private sector in tackling these challenges. Section VI presents the conclusion and questions raised for discussion.
Enhancing trade integration through digitization. Furthermore, regional markets, such as the one created by the AfCFTA, can be served more effectively using digital technologies (including ecommerce, e-payments, e-governments, regional broadband infrastructures and smart cities). E-commerce is expanding rapidly in developing countries as more goods and services are traded online, facilitated by improved connectivity and the rapid proliferation of mobile phones, social media and new innovations. For e-commerce to expand the market access of manufactured products in Africa, it is important that there are uniform cross-border e-commerce rules and regulations. Cognizant of this, several African countries are implementing policies, individually and collectively, towards harmonization for the digital economy. Digitization constitutes part of the broader effort to eliminate non-tariff barriers through paperless trade and digitization of trade measures, which also reduce international trade costs. If efficient technology is not deployed, this may create another non-tariff barrier. Most regional economic communities continue to improve their trade facilitation measures by embracing digital technologies to complement, and make more effective, the physical infrastructure connecting the regional economic community member States.
Digitization in the transport sector. There are, however, several hurdles to the application of digital technologies in the transportation sector in Africa. For example, a lack of funding hampers the implementation of IT projects in African countries, in particular cross-border projects such as those designed in the context of the SMART corridor initiative. The inadequate capacity of member States and regional organizations to implement such projects, or even to raise the awareness and understanding of stakeholders on the importance of IT systems, has also been identified as a challenge.
Africa Investment Forum 2019: selected updates
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Potential of the Fourth Industrial Revolution in Africa. A report compiled by the African Development Bank reveals a continent that is embracing the brave new world of the Fourth Industrial Revolution but needs to improve access to finance, skills and inclusive growth. The report, titled “Potential of the Fourth Industrial Revolution in Africa”, was launched on Monday at the Africa Investment Forum, found significant uptake already in Africa of the Internet of Things – a market that could be worth as much as $12.6bn by 2021 – and strong investment growth in new technology-led areas of AI, Big Data Analytics, blockchain, additive manufacturing and drones. Main conclusions: In 2019, approximately 6,500 technology start-ups were identified on the continent, among which around 10% develop 4IR applications (712 start-ups). These 4IR start-ups received $210m of venture capital investments. Africa’s large population, which is expected to double by 2050 to 2.4 billion, presents both a source of data to feed innovation in 4IR technologies as well as a valuable market. There is margin for growth on the supply side as proposed products and services in Africa stand way below the estimated demand levels. Overall, the importance of export-led manufacturing will be diminished by these technologies, as manufacturing facilities will be relocated to developed countries. However, the two most promising sectors for 4IR market applications are agriculture and energy.
Extract (pdf): The private sector has also begun to explore the impact of Blockchain on trade logistics. IBM has conducted two pilots using Blockchain within the context of trade logistics. One pilot was conducted with Maersk to track shipments of flowers from Kenya to Rotterdam. A second pilot was conducted with the Singapore Customs Administration, which incorporates customs in the supply chain. This suggests a real potential for integrating customs and border authorities with the supply chain to achieve significant benefits in terms of facilitation. There has been a significant increase in banks’ interest in the development and use of Blockchain technology in the context of trade finance operations. For example, Barclays and Wave, an innovative start-up company, executed a global trade transaction platform using distributed ledger technology. This platform, where trade documentation was processed with funds remitted via Swift, facilitated a letter of credit transaction in a very short time. Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit have decided to cooperate to develop and commercialise a Digital Trade Chain consortium, the aim of which is to simplify trade finance for businesses. The banks worked with IBM to assist with the development of the platform.
Downloads include five country case studies – Cameroon, Morocco, Nigeria, South Africa, Uganda; two benchmarking reports – South Korea and India; and a SADC regulation case study
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The European Investment Bank has announced a $1.1bn lending programme to help women entrepreneurs on the continent. EIB Vice President, Ambroise Fayolle, also revealed that the bank has signed three further agreements to boost sustainable development on the continent. But the major deal is what the EIB has dubbed SheInvest. The EIB expects the gender-lending initiative to allow women to play a more active role in economies. Note: The SheInvest initiative will focus its efforts on investing in digital innovation, as well as providing financial products and services designed to support women who would not usually have access to finance; with the goal of shoring up women’s economic opportunities and social inclusion. It will also support women in Africa in gaining access to finance, will be informed by the criteria set in the 2X Challenge, an EIB-endorsed initiative promoting gender equality in the financial sector.
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FinDev Canada invests in gender-lens fund to bolster women-owned SMEs in Africa. FinDev Canada has announced an investment of $7.5m to Alitheia IDF, a fund supporting women-owned and led businesses, to boost women’s economic empowerment and access to finance in Sub-Saharan Africa. A joint venture between women-owned and led funds Alitheia Capital in Nigeria and IDF Capital in South Africa, Alitheia IDF Fund was seeded with $12.5m from the African Development Bank. The first fund of its kind in Africa, AIF uses a gender-lens investing approach to support high-growth African SMEs that help improve women’s access to finance and foster their economic empowerment.
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AfDB, US International Development Finance Corporation MoU to mobilise private capital for Africa’s development. Adam Boehler, DFC Chief Executive Officer: “The MOU will help harness the diverse strengths of DFC and the AfDB to make tangible progress on our shared goals across the continent. To tackle the multitude of urgent development challenges facing Africa—from infrastructure development to financial inclusion and food security—collaboration with like-minded partners is essential.” African Development Bank president Akinwumi Adesina: “Through these efforts, DFC and the Bank aim to invest a combined $2bn, with a goal of mobilizing an additional $3bn from the private sector alongside its investments. Doing so would support total investment of $5bn in regional development projects. The partners will use debt financing, equity investments, political risk insurance, and other financial tools to meet these goals.”
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“Build mutual trust to attract capital to Africa,” says investors’ panel. African, European and American investors and the President of the African Development Bank held a panel discussion on Tuesday at the Africa Investment Forum 2019 to collectively reflect on the theme: “Destination Africa: Leveraging Institutional Investors”. Panellists included Adam Boehler, Chief Executive Officer of the United States International Development Finance Corporation; Rob Hersov, founder of the Invest Africa platform; Uche Orji, CEO of the Nigeria Sovereign Investment Authority; and Sola David Borha, CEO of Africa Regions, Standard Bank. Linda Mateza, CEO of the South African Eskom Pension and Provident Fund; Lerry Knox, CEO of the Sovereign Infrastructure Group; and Richard Ingram, Executive Director of the Teachers’ Retirement System of Illinois also participated in the panel.
Hersov said: “To mobilize investment on the African continent, it all comes down to trust. Many of our investors have never set foot in Africa, because they believe that everything happens on the trading floors of the United States. So why come to Africa? This is a problem to solve and see the opportunities: of the 54 countries that form Africa, we have 16 in which we can invest.” Richard Ingram added that US investors had realized the importance of African markets. However, he said: “There is a need to remove certain obstacles in their perception and to invest in projects where demand is already present.” Knox took this thought further, saying a regulatory framework needed to be established. Orji recommended the building of trust to attract capital to Africa, calling for “the creation of co-investment funds. We must work in synergy. The sovereign wealth funds of Morocco, Angola and Nigeria have a role to play. If multilateral development banks wish to invest, we will help them.”
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MOU brings good news for Africa’s rail networks. Afreximbank and Thelo DB on Tuesday signed a MoU at the Africa Investment Forum in Johannesburg. The agreement will give both parties an opportunity to develop, finance and operate railway projects across Africa. Thelo DB is looking at projects in Southern, East and West Africa, which the company believes are home to corridors that transcend country borders. “The MOU solves a very important part of the puzzle for us, which is, when we’re doing these big capital projects, how do we finance them? Rather than building our own expertise as Thelo DB, working in an integrated manner with Afreximbank magically gives us a solution to that challenge. So we can now sit down with our clients and say not only do we bring technical capacity of a global standard, we bring you unbelievable capital mobilisation in the MOU we signed this morning,” said Ronald Ntuli, Thelo Group Chairman.
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Peter Fabricius: Africa is changing from aid recipient to trade partner. “The way we talk about Africa — and the way we talk about Africa-Europe relations — has radically changed during my time in office,” said Neven Mimica, the European Union’s Commissioner for International Co-operation and Development, who has been in the job for five years. “Gone is the narrative of “donor-recipient” and the outdated perception of Africa as a primary commodity exporter or a continent of instability,” he told journalists on the sidelines of the investment forum. “Gone is the narrative of charity and development assistance. Now is the time for investment, win-win partnership based on mutual interests,” he said, noting that by 2050, Africa would be home to one-fourth of the world population and remain the world’s youngest region.
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CNBC Africa multimedia: Hello Tractor CEO Jehiel Oliver on unlocking opportunities for African farmers; Africa’s new free trade deal presents great opportunities for MTN; Moloi-Motsepe on what the free-trade agreement means for Africa’s fashion industry
Today’s Quick Links: Eswatini next to suspend South African animal imports after foot and mouth outbreak Zimbabwe central bank will not allow miners to keep all forex earnings IMF: Mozambique GDP growth seen at 5.5% in 2020 Mauritius appoints Renganaden Padayachy as its new finance minister Halima Dangote takes charge of Dangote Group Commercial Operations EU Council approves EU-Singapore Free Trade Agreement, which takes effect on 21 November World Bank: Bangladesh can boost its exports with better logistics |
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Trade and development events to diarise:
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Africa Forum on Mining (13 November, Accra). The forum will launch a regional platform, where African countries, regional organizations and continental institutions will discuss issues of strategic importance for the mining sector in Africa, and for Africa.
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Can Special Economic Zones drive growth in urbanising Africa? (13 November, Johannesburg)
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The XI BRICS Summit starts tomorrow in Brasilia (see below for further details)
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The African Industrialisation Week 2019 (18-22 November, Addis Ababa)
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The UAE’s Global Business Forum on Africa 2019 (18-19 November, Dubai)
MSMEs and trade statistics: informal working group on MSMEs (WTO)
The following communication, dated 12 November 2019, is being circulated at the request of the Coordinator of the Informal Working Group on MSMEs. The purpose of this submission is to kick-off discussions on the importance of trade statistics linked to firm-size characteristics for understanding MSME-trade with the view of developing possible language for a Ministerial Declaration.
Draft recommendation on cybersecurity for MSME traders: Recognizing that current trade data has limitations for analysing MSME-specific participation in international trade; Acknowledging that value chains are an important entry point for MSME international trade integration; Seeking a better understanding of the role of MSMEs in global value chains; Desiring increased coordination and granularity of trade data;
Recommends that: Members encourage national efforts to gather trade statistics that include enterprise characteristics (such as information on firm size) to better understand MSMEs’ roles in global value chains and the impact of policies aimed at increasing MSME integration in international trade; Members support efforts at the OECD to expand the TiVA database to include more detailed statistics, including enterprise characteristics.
Barclays Ghana to hold first Absa AFCFTA conference in 2020 (GhanaWeb)
Barclays Bank Ghana, part of the Absa Group, has declared its intentions and committed to organise the first AFCFTA conference in 2020 under the auspices of the Office of the President. This was announced by the Managing Director of Barclays Bank, Mrs Abena Osei-Poku at the opening session of the 8th Ghana Economic Forum, which was lead-sponsored by Barclays Bank and held in Accra on 30 October. According to the Bank, the Absa AFCFTA conference is in response to President Nana Addo Dankwa Akufo-Addo’s call for Ghanaians to support the AFCFTA to harness the opportunities that intra-Africa trade provide for economic growth and transformation. The AFCFTA conference, she noted, will contribute to positioning Ghanaian businesses appropriately to benefit from the continent’s free trade agreement. According to her, Absa has deep insights and understanding of the African continent and “we intend to use these expertise to drive and stimulate the right engagements between governments and the private sector.”
Ronak Gopaldas: Can African leaders put free trade above nationalism? (ISS)
The issue of sovereignty and ceding trade decision-making powers to a centralised body will be particularly challenging in Africa, where the election cycle and political and presidential churn is relentless. Despite several similarities with the US and Europe, the African situation is also unique, and a smooth transition to free trade is unrealistic. Political will and the maturity to compromise will determine whether the free trade agreement succeeds. Achieving the ratification of the AfCFTA shows that such positive change is possible. Already countries have made concessions in getting the deal signed, and more will have to be made in its activation. Free trade agreements are complex and fragile treaties, and their impact is only as strong as the willingness of signatories to adhere to the rules. In order to move from theory to practice, Africa needs to reject nationalism and fully embrace a pan-African vision that could catapult the continent not only to a higher growth path and real-world prosperity, but significantly elevate its global leadership and standing.
Tanzania: Exports value increase 5.2% (Daily News)
The value of goods and services exports rose by 5.2% to over 21tri/-($9,205.2m) in the year ending September due to increase in services receipts and value of non-traditional goods exports. The Bank of Tanzania monthly economic review for October shows that the export of non-traditional goods was 9.18tri/-($3,991.9m), higher than 7.41tri/- ($3,222.1m) in the corresponding period in 2018. Earnings from all major categories of non-traditional goods exports increased, except for fish and fish products, and re-exports. Export of gold accounted for 48.6% of nontraditional goods exports and increased by 26.1% to 4.46tri/- ($1,940.3m) on account of volume and price effects. Export value of manufactured goods grew by 32.6% to 2.37tri/- ($1,032.4m), driven by exports of sisal products, iron and steel, glass and glassware, manufactured tobacco, and fertilizers. Traditional goods exports declined to 1.29tri/-($563.5m) in the year ending September from 2.66tri/- ($1,160.8m) in the corresponding period in 2018, as all traditional goods declined, save for coffee and tea. [Access the BoT October monthly economic review (pdf); Related: Goods, services imports up]
Ghana, Cote d’Ivoire cocoa partnership yielding dividends – Akufo-Addo (GhanaWeb)
The strategic partnership entered into between Cote d’Ivoire and Ghana has begun yielding dividends in cocoa production and marketing policy, President Nana Akufo-Addo has said. A living income differential of $400 per tonne will be paid to farmers for all categories of cocoa beans from Ghana and Cote d’Ivoire for the 2020/2021 crop season when implementation of the new price mechanism begins. Under that, cocoa from the two countries will be sold $2,600 per tonne. This policy, Nana Akufo-Addo said, has found support even from major chocolate producers like Mars, who recognize the need to make the cocoa industry sustainable. He made this known at the African Investment Forum’s “Invest in Africa’s Space” event, on Monday when a question was posed to him. With Ghana and Cote d’Ivoire responsible for 65% of the world’s output of cocoa, and with the global chocolate industry worth some 100 billion dollars, he noted that it is not right that the farmers, whose hard work and toil is responsible for growing the cocoa, get only 6 billion dollars for their effort. [Reuters: Ghana sells 200,000 tonnes of cocoa with farmer premium]
Egyptian exports expected to rise 20% by end of 2019 (Ahram)
Egypt’s exports are expected to rise by 20% by the end of 2019, Egypt’s Minister of Trade and Industry Amr Nassar said, adding that Egypt’s Sustainable Development Vision 2030 targets an increase in the macroeconomic indices, including the export sector as a key source of hard currency. Nassar made his statements during his participation in the Egypt Economic Summit on Tuesday on behalf of Prime Minister Mostafa Madbouly. Nassar explained that the government has undertaken legislative and structural reforms including new laws and amendments, including an amendment to the investment law, a new industrial licenses law, a competitiveness protection law, as well as laws on customs system and SME development.
Dubai’s DP World signs deal to develop business park in Namibia (Reuters)
Dubai’s DP World has signed a preliminary agreement with the Nara Namib Free Economic Industrial Zone to develop a dedicated business park in the Namibian port town of Walvis Bay. The park will be a ‘free economic zone’ for industry and logistics and initially cover an area of 50 hectares, according to a statement on Dubai’s government media office website on Tuesday. The park could eventually be spread across 1,500 hectares, it said. DP World and Nara Namib aim to reach a final agreement in the second quarter of 2020, the statement said.
Africa Energy Outlook 2019 (IEA)
The new report is the IEA’s most comprehensive and detailed work to date on energy across the African continent, with a particular emphasis on sub-Saharan Africa. It includes detailed energy profiles of 11 countries that represent three-quarters of the region’s gross domestic product and energy demand, including Nigeria, South Africa, Ethiopia, Kenya and Ghana. The report makes clear that Africa’s energy future is not predetermined. Current plans would leave 530 million people on the continent still without access to electricity in 2030, falling well short of universal access, a major development goal. But with the right policies, it could reach that target while also becoming the first continent to develop its economy mainly through the use of modern energy sources. Drawing on rich natural resources and advances in technology, the continent could by 2040 meet the energy demands of an economy four times larger than today’s with only 50% more energy.
For this report, the IEA developed a new scenario that analyses how the energy sector can spur Africa’s growth ambitions while also delivering key sustainable development goals by 2030, including full access to electricity and clean cooking facilities. The Africa Case is based on Agenda 2063, African leaders’ own strategic framework for the continent’s economic and industrial development. Economic growth in the Africa Case is significantly stronger over the next two decades than in the scenario based on today’s stated policies, but energy demand is lower. This is linked to an accelerated move away from the use of solid biomass (such as wood) as a fuel and to the wide application of energy efficiency policies. The IEA has been monitoring Africa’s energy sector closely for a long time: IEA analysis of energy access issues on the continent began in 2002 and is set to expand significantly. This new report comes at an important time in the IEA’s deepening engagement with Africa. In May, the IEA and the African Union Commission co-hosted their first joint ministerial summit at which the two organisations signed a Memorandum of Understanding to guide future collaboration. A second ministerial forum will be held in 2020. [Various downloads available]
WTO ruling against export incentives: Should Indian exporters be worried? (Business Standard)
A WTO dispute panel ruled on 31 October that India’s key export promotion schemes violated WTO rules and hence should be withdrawn within six months. The verdict has raised several questions. What will be the impact of the ruling for India? Will Indian export of steel products, pharmaceuticals, chemicals, information technology products, textiles and apparel continue to be competitive in the absence of this subsidy? Is the ruling final? The short answer is that the ruling, in itself, does not pose an immediate threat to Indian exports. Before we come to explain why, let’s understand some basics:
Indo-Pacific Business Development Mission: remarks by Commerce Secretary Wilbur Ross (DoC)
BRICS trade ministerial: India’s Minister of Commerce and Industry & Railways, Piyush Goyal
Commerce and Industry Minister in his address, in the session on Advancing BRICS Trade and Investment Cooperation- the Road Ahead, urged the BRICS countries to develop digital infrastructure, skills and institutions with special focus on the developing countries and LDCs while highlighting the adverse impact of predatory pricing that is practised by some e-commerce players that adversely affects millions of small retailers. He reiterated that e- commerce players must follow the letter and spirit of the law of the country. In his address the Commerce and Industry Minister also spoke about the need to ensure that the WTO reform process does not dilute the basic principles like Special and Differential Treatment to developing countries and consensus-based decision making. He urged the BRICS countries to collectively take the lead in shaping the narrative on reforms within the WTO in order to enhance its relevance and effectiveness in the contemporary technological and trade environment.
The Commerce and Industry Minister in his closing remarks at the Trade and Industry Minister’s meeting said that the MoU amongst BRICS Trade and Investment Promotion Agencies signed at this meeting provides a framework for forging collaboration between countries and facilitating greater trade amongst BRICS member countries. He expressed his confidence that the MoU will further promote trade and market studies and will narrow gaps in trade facilitation measures in BRICS countries. Piyush Goyal urged all BRICS member countries to maintain the momentum in all the areas agreed upon during the Brazilian Presidency especially cooperation initiatives in MSMEs, Intellectual Property Rights, e- commerce, technical regulations, investment facilitation and trade and investment promotion as cooperation through these frameworks will encourage value added outcomes for stakeholders.
XI BRICS Summit: In the closed session, the discussions are expected to be focused on challenges and opportunities for the exercise of national sovereignty in the contemporary world. This will be followed by the BRICS Plenary Session where the leaders will discuss the intra BRICS cooperation for the economic development of BRICS societies. Thereafter Prime Minister shall participate in the meeting of the BRICS leaders with BRICS Business Council where in the Chairman of the Brazilian BRICS Business Council and the President of the new Development Bank are expected to submit reports. Immediately thereafter a BRICS MoU between Trade and Investment Promotion agencies will be signed. [Related: President Ramaphosa to lead SA’s delegation to the 11th BRICS Summit, Deutsche Welle: Have the BRICS hit a wall?, BRICS, one decade later: Has the hype matched the substance?]
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2019 Africa Visa Openness Index: AUC, AfDB report shows wins in visa restrictions across Africa
For the first time, African travellers have liberal access to over half the continent, the 2019 Africa Visa Openness Index published by the African Union Commission and African Development Bank, reveals. The report was launched on Monday on the sidelines of the Africa Investment Forum, which opened in Johannesburg, South Africa.
The progress on visa openness in Africa follows growing momentum for greater integration between countries and signals that policymakers across the continent are pushing reforms, making it easier for African businessmen and women, investors, students and tourists to travel.
This fourth edition of the Index shows that 47 countries improved or maintained their visa openness scores in 2019. African visitors no longer need a visa to travel to a quarter of other African countries, whereas visa-free travel was only possible to a fifth of the continent in 2016. Currently, 21 African countries also offer eVisas to make travel more accessible, up from up from 16 in 2018, 13 in 2017, and 9 in 2016).
The 2019 top performers on visa openness rank among the top countries for foreign direct investment in Africa, and benefit from strong levels of growth, including in tourism. The Index shows that Seychelles and Benin remain the top two countries on visa openness in Africa, with their visa-free policy for all African visitors. Ethiopia moved up a record 32 places on the Index and entered the top 20 most visa-open countries in Africa.
African Development Bank President Akinwumi A. Adesina said, “Our work on the Africa Visa Openness Index continues to monitor how Africa is doing on free movement of people. Progress is being made but much still needs to be done. To integrate Africa, we should bring down the walls. The free movement of people, and especially labour mobility, are crucial for promoting investments.”
The Visa Openness Index has inspired reforms in more than 10 African countries including Ghana, Benin, Tunisia, Ethiopia and Kenya, unlocking tremendous potential for the promotion of intra-regional tourism, trade and investments.
Despite the gains shown in the report, there is the need to move further. In 2019, only 26% of Africans are able to get visas on arrival in other African countries, up by only 1% compared to 2016.
Countries need to make more progress on visa regimes, including introducing visas-on-arrival. By breaking down borders, Africa will be able to capitalize on gains from regional integration initiatives such as the African Continental Free Trade Area, the Single African Air Transport Market, and the Protocol on the Free Movement of Persons.
“It cannot be stressed enough how crucial integration is for the development of the continent and the fulfilment of its people’s aspiration to well-being. I congratulate those member states that have taken measures to ease the procedures for the entry of African nationals into their territories, and urge those that have not yet done so to join this growing momentum,” said Moussa Faki Mahamat, Chairperson of the African Union Commission.
About the Africa Visa Openness Index
The Africa Visa Openness Index measures how open African countries are when it comes to visas by looking at what they ask of citizens from other countries in Africa when they travel. The Index is tracking changes in country scores over time to show which countries are making improvements that support freer movement of people across Africa.
Download the 2019 Africa Visa Openness Index and find out more at www.visaopenness.org
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2019 Visa Openness Index Report (AfDB, AU)
For the first time, African travellers have liberal access to over half the continent, the 2019 Africa Visa Openness Index published by the AUC and the African Development Bank, reveals. The report was launched today on the sidelines of the Africa Investment Forum, which opened in Johannesburg. The progress on visa openness in Africa follows growing momentum for greater integration between countries and signals that policymakers across the continent are pushing reforms, making it easier for African businessmen and women, investors, students and tourists to travel. This fourth edition of the Index shows that 47 countries improved or maintained their visa openness scores in 2019.
The 2019 top performers on visa openness rank among the top countries for foreign direct investment in Africa, and benefit from strong levels of growth, including in tourism. The Index shows that Seychelles and Benin remain the top two countries on visa openness in Africa, with their visa-free policy for all African visitors. Ethiopia moved up a record 32 places on the Index and entered the top 20 most visa-open countries in Africa. The Visa Openness Index has inspired reforms in more than 10 African countries including Ghana, Benin, Tunisia, Ethiopia and Kenya, unlocking tremendous potential for the promotion of intra-regional tourism, trade and investments.
Average visa openness: Africans do not need a visa to travel to 25% of other African countries (also 25% in 2018, and up from 22% in 2017 and 20% in 2016); Africans can get visas on arrival in 26% of other African countries (up from 24% in 2018 and 2017 and 25% in 2016); Africans need visas to travel to 49% of other African countries (down from 51% in 2018 and 54% in 2017, and 55% in 2016)
eVisas: The number of countries offering eVisas increased by 31% in 2019, with 21 countries now hosting an online platform. Two-thirds of countries that offer eVisas also made the most progress on visa openness since 2016, with the majority having recently introduced the system.
Regional integration: 12 out of the top 20 countries have signed the Protocol on Free Movement of Persons. 10 out of the top 20 countries have ratified the African Continental Free Trade Area. Nine out of the top 20 countries have signed the Single African Air Transport Market.
The 2019 Africa Investment Forum opened today in Johannesburg: The opening ceremony was attended by President Cyril Ramaphosa of South Africa; President Nana Akufo Addo of Ghana; President Paul Kagame of Rwanda; and Prime Minister Agostinho do Rosario of Mozambique. “The time is now to move with speed to ensure that we unlock our potential…Indeed our continent is ripe for investments, but more importantly, it is also brimming with enormous profitable opportunities,” President Ramaphosa said in his address, as he urged investors to move beyond pledges. “As the investor community, your presence here shows your unwavering will to help us and support us to succeed. I invite you, therefore, to join us as we pass the flickering torch of progress across every border of this great continent until the light of development and economic prosperity illuminates every African village, every African town, every African city, in every African household.” he said.
African oil states offer new deals to lure more selective investors (Reuters)
Lower prices and increasing competition for investment are driving many African states to make it easier and cheaper for overseas companies to keep their oil and gas output flowing. From Ghana to Gabon, governments are adjusting terms to lure picky investors who are also increasingly concerned about long-term demand for fossil fuels as renewable energy gains ground. The shift follows declining oil production in Angola and Cameroon and disappointing bid rounds in Ghana. It also marks an recognition that the era of $100 per barrel oil is over. “Because of increased competition for investment in Africa, we are changing our strategy,” Mohammed Amin Adam, Ghana’s deputy minister for petroleum, said at last week’s Africa Oil Week in Cape Town. Ghana’s Adam was not alone in announcing plans to revise oil and gas licensing laws in an effort to spur output.
In Kimberley, the world’s diamond capital, illicit mining fight flounders (Reuters)
The first South African project to bring illegal miners into the formal fold has been plagued by violence in diamond capital Kimberley, dealing a major blow to national efforts to stem a booming illicit trade. The project was launched 18 months ago in Kimberley, the site of a 19th-century diamond rush that lured fortune-seekers from the world over. Mine owners granted more than 800 unlicensed, or informal, small-scale miners the right to legally mine around 1,500 acres of diamond-rich waste fields. The aim of the government-backed scheme was to curb illegal mining and black-market trade of diamonds, and serve as a blueprint for future attempts elsewhere in the country, not only in the diamond sector, but also potentially manganese, gold and chrome. However the project has been hit by violence, with informal miners not included in the scheme attacking infrastructure and even members of the newly licensed cooperative, according to mine owner Ekapa Minerals which is running the initiative. Asked whether he was pleased with the results of the Ekapa project, minerals minister Gwede Mantashe told Reuters: “I’m not. We will have to assign somebody to work on it.” He did not elaborate on what would have to be done, adding only: “I am not happy because it (informal mining) must be in the mainstream of mining, it must not be in the periphery.” The project’s troubles also demonstrate the perils of piecemeal formalisation in a country whose regulation of small-scale mining lags far behind its African counterparts.
New ITC handbooks guide Chinese investors through sustainable investment in Africa
With more than 10,000 Chinese-owned firms now operating in Africa and an estimated 12% of Africa’s industrial production (valued at $500bn a year) handled by Chinese firms, China has become a major investor in Africa. To maximize sustainable growth for Chinese-owned businesses in Africa, the International Trade Centre has launched four sustainable investment handbooks at the China International Import Expo in Shanghai. These country-specific handbooks on Sustainable investment in agroprocessing and light manufacturing guide Chinese investors through compliance with environmental and social sustainability requirements and voluntary standards in Kenya (pdf), Mozambique (pdf) and Zambia (pdf). “Foreign investment in agroprocessing and light manufacturing can unlock opportunities to increase exports to regional and global markets, while contributing to the country’s development agenda” said ITC Executive Director Arancha González. “To do so, investors need to implement more sustainable environmental and labour practices, aligned with the United Nations Sustainable Development Goals.”
East Africa Law Society Annual Conference: speech by President Kagame
I want to emphasise that your voices are very much needed to keep the integration agenda on track. Indeed, the survival of our East African Community depends on professionals like you. You are uniquely positioned to advocate for the benefits of fully implementing the integration agenda. You are also called upon to hold governments accountable for respecting the common rights enjoyed by East African citizens, throughout our Community. Lawyers should constantly be in the trenches defending these rights and freedoms, without apology. To deepen the economic integration agenda, which includes trade in services, qualified lawyers should be able to practice anywhere in the East African Community, removing unnecessary barriers. Let us work together to sign and implement the Mutual Recognition Agreement without further delay. This should be a win for all of us in the region and also serve as an example for other regulated professions.
Can EAC capital markets learn from SADC model? (The East African)
The Southern African Development Community integrated stock markets offer good lessons for the East African Community as it seeks to integrate its stock exchanges via a suitable interconnectivity window. This was laid bare at a meeting of capital markets experts held in Kampala recently. The SADC operates a shared model that makes it possible to procure affordable digital operating platforms and reasonable sharing of commissions between stockbrokers. According to Paul Bwiso, the chief executive officer of the Uganda Securities Exchange; “Our stock markets are in different stages of development and this makes system integration more difficult than expected. “While Uganda and Tanzania’s stock exchanges appear more compatible with each other based on results of trades done in the past, Rwanda’s stock exchange shares a CDS platform with the central bank in a very entrenched arrangement. Kenya’s securities exchange operates an internal CDS platform separate from that of the central bank while Burundi is yet to establish an exchange. Due to divergent technological factors, the integration of the local stock market trading platforms across East Africa has been pushed to first quarter of 2020. But finding consensus on a trading revenue sharing ratio remains one of the biggest obstacles facing the stock market integration agenda.”
Today’s Quick Links: The WTO’s Keith Rockwell on his organisation, Trump, Brexit and Africa’s free trade area Ghana now imports flowers from SA: Osafo Maafo laments high importation rate Nigerian traders beg Akufo-Addo, Buhari for help Investment case for LNG imports into South Africa to be completed by year-end Reuters: Moody’s cuts global sovereign rating outlook to “negative” for 2020 Multimedia: Moody’s Alastair Wilson explains how the increasingly antagonistic global political environment |
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3rd Ordinary Session of the STC on Migration, Refugees and Internally Displaced Persons: updates, documentation
(i) AU member states urged to ratify the protocol on free movement to achieve free trade. In her opening remarks the African Union Commissioner for Social Affairs, Mrs Amira Elfadil Mohammed Elfadil, said the AUC, together with Governments of Mali, Morocco and Sudan, are in advanced stages of establishing the African Centre for the study and Research on Migration in Mali; the African Migration Observatory in Morocco and the Continental Operational Centre in Khartoum for Combating Irregular Migration as directed by the AU Assembly. The host agreements have been signed with all these governments and AUC is now at an advance stage of putting necessary legal and operational institutional framework to ensure their operationalization. Ms Judith Uwizeye, Minister in Office of the President of the Republic of Rwanda and the Chairperson of the outgoing STC, highlighted that the Protocol on Free Movement of Persons in Africa requires 15 ratifications to enter into force. She emphasized the importance of Member States to make an effort to expedite ratifications in order to accelerate mobility and integration in Africa. “Without mobility and free movement, even the AfCFTA will stay challenged as we cannot achieve free trade properly without free movement”, she said. The minister urged other Member States to ratify the protocol in the months to come under the new leadership of this STC so that the protocol comes into force.
(ii) Progress in the implementation of free movement of persons in Africa: signatures and ratifications (pdf). Ratifications have increased from one to four. The countries that have ratified and deposited the Protocol with the AU, include Rwanda, Niger, Mali and Sao Tome and Principe. The Protocol requires 15 ratifications to enter into force. Signatures to the Protocol remains at 33, including Angola, Bukina Faso, Central African Republic, Chad, Cote d’Ivoire, Comoros, Congo, Djibouti, Democratic Republic of Congo, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia Mali, Malawi, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, South Sudan, Sao Tome & Principe, Sudan, Tanzania, Togo, Uganda and Zimbabwe.
Recommendations in the implementation of free movement in Africa:
In order to address the challenge of slow pace of ratification of the Protocol on Free Movement of Persons, there is need for the AU Commission to intensify advocacy of the Protocol and African Passport.
The Free Movement Champion should promote, support and be the voice of free movement, he will nominate regional champions to work collaboratively with him to accelerate continental popularisation of free movement including lobbying for the production and issuance of the African Passport, amoungst other key activities he has been entrusted with. He will motivate Member States to ratify and deposit the instrument with an aim of getting the Free Movement Protocol come into force as soon as possible. Finally, his role will ensure that this flagship project is regularly monitored and reported on. The AUC, RECs and relevant Partners should support Member States to ratify and implement the Protocol, including to produce and issue the African Passport by lobbying for more financial and technical resources.
(iii) A study on the operationalization of the African Humanitarian Agency (pdf). The Department of Political Affairs is currently charged with the African Union’s efforts on humanitarian actions. In this respect, the Humanitarian Affairs, Refugees and Displaced Persons Division is one of the two Divisions that currently make up the Department of Political Affairs. This is expected to change in 2021 as a result of the merging of the Humanitarian Affairs Division with the Social Affairs Division under the current AU Reform process. When operationalized, the AfHA would be expected to fill a major lacuna in humanitarian action in Africa by providing effective coordination effort on the handling of humanitarian crises on the African Continent. This would involve contributions at the strategic level as well as synchronizing and sharing best practices all over the continent in interactions with Member States that have the ultimate responsibility for the protection of citizens either directly and/or, through regional mechanisms, in particular, the Regional Economic Communities (RECs). The AfHA expected to have on the ground presence in humanitarian operations in Member States in a collaborative manner with emergency response and assessment teams data bases with RECs, regional mechanisms and Member States. The African Union, through the AfHA, is expected to provide support and intervention on as needed basis when nationals of Member States face dire situations. In effect, AfHA will combine a heavy strategic orientation with a light footprint on operations. [Member states experts’ meeting on the operationalization of African Humanitarian Agency: report of Johannesburg workshop (April 2019)]
#ICSOE2019 for Eastern Africa. Asmara communiqué reaffirms benefits of regional integration: The final communiqué insisted on the importance of regional cooperation to tap on the potential benefits of the AfCFTA, for job creation, social cohesion and industrialization. Extract on AfCFTA issues:
The meeting considered that global ‘risks’ such as Brexit and the U.S-China trade dispute could in fact be a source of opportunity for the continent. Meanwhile, more information was requested on: the informal parts of Eastern African economies, cross-border trade and migrant remittances. Other points raised were the role of RECs in AfCFTA acceleration and the opportunities presented by shared waters in regional integration. The session ended recognising: the need for concrete plans to accelerate regional tourism; the need to involve youth in blue economy activities; and lastly the success of the Government of Rwanda in their detailed and effective monitoring and evaluation framework.
The meeting provided a common understanding of AfCFTA implementation, determining the back story, current status and recommended ways forward. The meeting ascertained that many technical parts of the Agreement are in place. Participants understood that services liberalization will not happen instantly – with the Protocol for services merely establishing the parameters for a first round of negotiations on business, communications, financial services, tourism and transport services. The meeting recollected the five ‘operational tools’ that were launched at the July 2019 Summit.
Having recognised the profound benefits of the AfCFTA, the meeting recommended next steps for the African continent, including the Eastern Africa region. These were to:
Finalize remaining critical components
Increase the number of state parties
Create institutions, establish operative mechanisms, introduce obligations into law and regulation: optimise implementation, through complementary measures such as national strategies
Conclude Phase II of negotiations and use the AfCFTA as a vehicle for achieving the African Single Market.
Zambia finalizes its AFCFTA strategy and implementation plan (UNECA)
Speaking during the closing session of the experts meeting to finalize Zambia’s AfCFTA strategy and implementation plan (5-6 November), Mr Paul Mumba, Ministry of Commerce, Trade and Industry chief economist, informed the meeting that the work on the AfCFTA, “does not end here, but starts now, he urged the participants to collectively own the strategy and share with their respective constituencies”. He assured the meeting that sensitisation is continous and called on every one to take a personal responsibility in raising awareness about the AfCFTA. The Chief Economist said that “the final draft of the AfCFTA Strategy will be submitted to the Minister of Commerce, Trade and Industry by Friday 8 November 2019”. Once submitted it will be reviewed internally by senior management before submission to Cabinet. Once cleared, the strategy will be officially launched by Ministry. He further advised that, once the Strategy is approved, it is critical to undertake national sensitization and continued advocacy so that the Zambian stakeholders own the document.
Industrial Development Report 2020: Industrialising in the digital age (UNIDO)
The top 50 economies in advanced digital production: Figure 1.12 (pdf) provides an early glimpse into how different economies are engaging with advanced digital production technologies. It lists the top 50 economies in the patenting, exporting and importing of these technologies, ordered by their corresponding shares in world totals. Ten frontrunner economies account for 91% of patents, 70% of exports and 46% of imports of new technologies. But, looking just at global shares may be deceptive: Figure 1.13 illustrates how the ranking of economies in each dimension changes using alternative indicators: for patents, using regular (those not defined as global) instead of global patent families, and for exports and imports, using revealed comparative advantage indices instead of world market shares.
Much of the world, especially in Africa, is not engaging with the new technologies. First, large parts of the world, especially on the African continent, remain excluded from recent technological breakthroughs. These economies are not producing or importing any significant values of the most representative goods within this technological realm. In fact, about half of all economies included in the analysis can be considered excluded from the current wave of technological change.
The manufacturing sector has the lion’s share of technologically advanced firms. Manufacturing tends to be the key sector for innovation, though the analysis also includes service industries. In India, 8% of all firms belonging to the digital leaders group are in the manufacturing sector, in Nigeria, 75% and in Kenya, 50%. In India 94% of highly innovative firms are in manufacturing, in Pakistan, 92% and in Kenya, 58%. This result is hardly surprising: as the IDR 2016 showed, the manufacturing sector normally has higher levels of R&D and innovation expenditures. This has traditionally been considered a key explanation in the academic and policy debate of manufacturing’s prominence as an engine of economic growth. [UNIDO: Innovation and connectivity required for a smooth transition to Industry 4.0]
A smoother trade transition for graduating LDCs (CGD)
Assuming that the post-Brexit tariff schedule will maintain some tariff peaks, British policymakers will face the conundrum of what happens to LDC exports of those high tariff products when they graduate. One option would be for the UK to replicate the EU’s GSP+ program and help LDCs transition into that as they graduate, as the EU did with Cape Verde. But if the eligibility conditions and other provisions remain the same, this will not be an option for some graduating LDCs. Most notably, Bangladesh would not meet the vulnerability criteria that exclude large exporters and other apparel exporters would struggle with the more restrictive rules of origin (Annex A, pdf). In other cases, countries may not be ready to take on the commitments involved with ratifying and effectively implementing 27 international conventions related to labor standards, the environment and good governance.
Whether or not GSP+ is an option, the UK - and other preference providers - should have a clear strategy for graduation that includes a transition period - such as the three years that the EU currently offers. During that period, full benefits continue. This gives a graduating country, which is likely to still be relatively poor, additional time to consolidate its progress. At that point, however, a sudden jump in tariffs could still have a significant negative impact on the country’s exports. To avoid sudden trade shocks related to graduation, the UK should go beyond what the EU does and phase in the higher MFN or standard GSP tariffs slowly, adding no more than, say, two to three percentage points per year. So, for example, an apparel exporter transitioning to a MFN tariff of 12% would gain an additional four to six years to adjust to increased competition from other exporters. The gradual phasing in of UK tariffs should be authorized in the trade preference legislation and it should apply automatically to all graduating LDCs—unless they become ineligible for another reasons. Since it would be available equally to all LDCs, it should not conflict with WTO rules governing nondiscrimination (Annex A). [The author: Kimberly Ann Elliott. Related: The G20 Initiative on "Supporting Industrialization in Africa and LDCs"- a review of progress]
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Domestic resource mobilization: fight against corruption and illicit financial flows (African Union)
The aim of this report is to share experience on the initiatives set up by members states and international organizations to mobilize domestic resource and optimize tax collection, win the fight against corruption and strengthen tax cooperation to stem IFFs. The report is divided into two parts and fourteen chapters. The first part comprises analytical contributions while the second part presents specific actions that are being taken by AU Member States, to mobilize domestic resource and fight against corruption and IFFs. This type of partnership is to be continued. Extract from Chapter II - Taxation and Domestic Resource Mobilization (pdf):
The first section describes developments in revenue-to-GDP and tax-to-GDP ratios in Africa compared with other regions. It shows an improvement in revenue mobilization in African countries over the past two decades. However, the continent still has, on average, the lowest revenue-to-GDP ratio compared to other regions. The section also shows how low efficiency of some of the most important sources of taxation, such as the value-added tax and the corporate income tax), are significant constraints to better performance.
The second section analyzes some of the structural conditions that may account for the lower tax-to-GDP ratios in Africa, including the level of development, trade openness, sectoral structure, income distribution and institutional quality. It shows that African countries could, on average, mobilize up to 5% of GDP in additional tax collection, through a combination of reforms that improve the efficiency of current systems (including through the reduction of tax exemptions), and through institutional changes (such as improvements in governance and measures to control corruption).
The third section analyzes lessons from revenue mobilization case studies. It emphasizes the elements of successful medium-term strategies for revenue mobilization and the importance of political economy factors, such as building broad-based support for the reform process through proactive outreach strategies to both the public and private sectors. Finally, the chapter also discusses the role of recent technologies (that is, digitalization) to empower tax policymakers with quicker access to more reliable information and to deepen the tax base.
Horn of Africa countries launch regional initiative as peace dividend beckons: $15bn investment on the cards (AfDB)
The initiative was formalized on 18 October, on the sidelines of the World Bank Group/IMF Annual Meetings in Washington. The countries (Djibouti, Eritrea, Ethiopia, Kenya, Somalia) agreed on priority projects and programs that will constitute the initiative, which is being developed by the countries with support from the AfDB, the EU and the World Bank. The effort will culminate in a financing forum next year to seek investors to realize a package of priorities identified by the quintet, which has over the past decade registered some of the highest growth rates in Africa. The Horn of Africa nations identified four priority areas: (i) improving regional infrastructure connectivity; (ii) promoting trade and economic integration; (iii) building resilience; (iv) strengthening human capital development. Most of the Horn of Africa countries easily outpaced the continent’s average growth rate in 2018. Extract from the communiqué (pdf): The attached table comprises the agreed package of initial priorities. The cost of the economic corridors component is put at $9bn. The regional trade facilitation component is estimated at $0.45bn. It covers technical assistance (corridor approach, tackling NTBs, harmonization of products standards), 13 one-stop border posts, and dry ports
Concluding today, in Asmara: the 23rd conference of the Intergovernmental Committee of Senior Officials and Experts for Eastern Africa.
(i) UNECA news updates: Eritrea’s Saleh urges Africa to tap into her potential and capabilities to spur regional integration, East Africa needs a better quality of economic growth to tackle the job challenge; Clean energy for all in Africa need sustainable long term financing
(ii) Profiled session concept notes, documentation: How to fast-track AfCFTA implementation in Eastern Africa, Creating a unified regional market towards the implementation of the AfCFTA in Eastern Africa, Promoting regional trade for faster job creation, Boosting regional tourism in Eastern Africa, Harnessing the blue economy for regional integration, Crowding-in investment for energy and infrastructure development
Sustainable financing of regional infrastructure and industrial projects in SADC: a PPM posted by the AfDB. Consultancies include developing financial instruments for Member States; the compilation of a regional project briefs report; the development of a methodology for SADC industrial value chain project prioritization framework; value chain analysis and mapping.
A preview of Friday's Uganda-DRC Business Forum: Uganda is set to host the first joint bilateral business talks with the DRC aimed at providing a platform to the business communities from the two countries to share experiences. The joint business summit (9 November) is also aimed at identifying opportunities for trade and investment. State Minister for Trade, Michael Werikhe Kafabusa, said Uganda will soon embark on constructing One-Stop Border Points on most of most crossing border points with DR Congo to ease trade among the two countries. “We have done it with Rwanda and now we shall be embarking on Uganda-DRC borders. Our traders are experiencing challenges in obtaining travel and other trade-related documents to DRC. With the One-Stop Border Points, such challenges will be solved."
Nigeria’s neighbours must obey fair trade rules, says Emefiele (ThisDay)
Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, says Nigeria’s neighbours must comply with fair trade practices to avoid depriving Nigeria the benefits of the AfCFTA agreement, explaining that Nigeria would prevent itself from becoming a dumping ground for goods that did not originate from Africa. "If the agreement is going to be of value to our country, the situation where other countries and goods are on transit point to enable a type of subsidised imports in Nigeria which harm our local farmers and industries cannot and should not be tolerated. All parties must work to encourage fair trade in order for the gains of AfCFTA to be achieved. The CBN will continue to implement policies that will enable improved domestic productivity and further the growth of non-oil exports in Nigeria as a more diversified economy is crucial in promoting stable growth and in creating job opportunities on a wider scale and it would also help to improve our non-export earnings thereby protecting our economy from the volatility of the crude oil market." [AfCFTA: Nigeria's FG seeks private sector collaboration]
Republic of Congo: IMF staff completes mission for 2019 Article IV and First ECF Review
Non-oil growth could turn positive for the first time since 2015 thanks to the recovery in the agricultural, forestry and transportation sectors, but it will remain below 1 percent, and with many economic sectors still in recession. The mission welcomed the projected GDP expansion, but noted that growth remains too low to reduce poverty and too dependent on developments in the oil sector. Greater efforts are needed to improve economic management and advance reforms to support private sector activity to achieve higher and more inclusive growth. Inflation remains subdued, running at 1.7 percent year on year through September. “The current account surplus is expected to reach 8 percent of GDP in 2019, in part due to growth in mining and forestry exports. These developments are particularly welcome as export diversification is essential to supporting a healthy balance of trade once oil production begins to decline.
Joint Ministerial Statement on Investment Facilitation for Development (pdf, WTO)
The following communication, dated 5 November 2019, is being circulated at the request of the delegations of...: We recognize the reinforcing relationship between trade and investment and their key role to leverage development in today's global economy, as well as the need for closer international cooperation at the global level to create a more transparent, efficient, and predictable environment for facilitating cross-border investment. We fully support the 2017 Joint Ministerial Statement1 adopted in Buenos Aires aiming at developing a multilateral framework on Investment Facilitation for Development. We also agree that facilitating greater developing and least-developed Members' participation in global investment flows should constitute a core objective of the framework. The discussions shall not address market access, investment protection, and Investor-State Dispute Settlement.
Expanding trade in information technology products (pdf, WTO)
The Committee of Participants on the Expansion of Trade in Information Technology Products, hereinafter referred to as "the Committee", was established pursuant to the provisions of the Ministerial Declaration on Trade in Information Technology Products, and the provisions for the Implementation of the Ministerial Declaration on Trade in Information Technology Products, in order to carry out the provisions of paragraphs 3, 5, 6, and 7 of the Annex to the Declaration. The Committee has held two formal meetings in 2019: on 14 May and 31 October.
The total number of WTO Members that are participants to the Ministerial Declaration is 82. The Committee has consistently reviewed the status of implementation, a summary of which is provided in document G/IT/1 and its revisions. The document details that all but one participant had submitted the formal documentation for the rectification and modification of their WTO schedules in order to incorporate the commitments arising from the Ministerial Declaration, and that they had been certified by the Director-General. Three implementation issues, concerning India, China and Indonesia, have been raised at the May and October meetings of the Committee. The Committee continued its deliberations on the NTMs Work Programme in 2019. Regarding its work on the EMC/EMI Pilot Project, the Committee took note that, among the 53 participants, 42 had provided survey responses and the Committee encouraged those that had not yet done so to provide the information without any further delay. In considering ways to advance and expand its work on NTBs other than EMC/EMI, the Committee continued its discussions on the follow-up to the workshop held on 7 May 2015 on NTBs affecting trade in IT products and to the Symposium for the 20th Anniversary of the ITA held in June 2017. At the request of the Committee, the Chairperson undertook informal consultations with interested delegations to examine the recommendations and avenues that were suggested by industry representatives and such consultations will continue in 2020.
Ensuring frontier and space technologies bring development to all (UNCTAD)
A global middle class has emerged, fuelled by rapid growth in emerging economies and other populous and relatively poor countries. At the same time, wealth is more concentrated with 26 billionaires owning as much as half the global population. With the right policies, frontier technologies can help make economies and societies more inclusive and address environmental concerns, but they also pose new challenges. They could disrupt labour markets, exacerbate or create new inequalities and raise ethical questions. To address these challenges, the UN Commission on Science and Technology for Development inter-sessional panel for 2019-2020 is set to continue deliberations on how to make rapid technological change work for all. The discussions (7-8 November, Geneva) will explore how to tackle inequalities linked to digital frontier technologies such as artificial intelligence (AI), big data and robotics. Extracts from the two draft Issues Papers prepared for the meeting:
A new wave of business ideas has emerged that are considered promising investments (pdf). According to market data from one venture fund, tech start-ups in Africa raised more than $1bn in equity funding in 2018. This represents a growth of 108 year-on-year. Nine countries received funding of more than $10m: Kenya, Nigeria, South Africa, Tanzania, Egypt, Malawi, Senegal, Rwanda and Ethiopia (see Figure 3). Some of the largest recipients have business models which align with the SDGs, especially in the domain of financial inclusion, such as Tala from Kenya which offers loans via a mobile app using non-traditional loan scoring. Other vital areas for inclusive and sustainable development and achieving the SDGs still need to generate promising solutions. For example, education and health received only 2.7 and 1.5% of all equity funding respectively, whereas fintech dominates (see Figure 4).
At the moment, only eight African countries have launched their own satellites (pdf) (Algeria, Angola, Egypt, Ghana, Kenya, Morocco, Nigeria, South Africa), with more than half of the satellites being launched in the last five years (Space in Africa, 2018). As more and more developing countries consider using space technologies, it is important that they make the right technical, social and political decisions recognizing their needs and priorities.
Afrobarometer: Africa’s digital gender divide may be widening
Egypt is Brazil's No 1 trade partner in Africa, Arab region
Ethiopia’s mining sector has potential to stimulate economic growth and poverty reduction, says Chinganya
Rob Swinkels: How can Zimbabwe tackle its entrenched poverty traps?
Chad: IMF staff completes review mission
Cabo Verde: WBG launches new country partnership framework
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Trade and trade diversion effects of US tariffs on China (UNCTAD)
Tariffs imposed by the US on China are economically hurting both countries, UNCTAD warned in a paper released yesterday. The study, Trade and Trade Diversion Effects of United States Tariffs on China, shows that the ongoing US-China trade war has resulted in a sharp decline in bilateral trade, higher prices for consumers and trade diversion effects (increased imports from countries not directly involved in the trade war). By analysing recently released trade statistics, the study finds that consumers in the US are bearing the heaviest brunt of the US tariffs on China, as their associated costs have largely been passed down to them and importing firms in the form of higher prices. However, the study also finds that Chinese firms have recently started absorbing part of the costs of the tariffs by reducing the prices of their exports. “The results of the study serve as a global warning. A lose-lose trade war is not only harming the main contenders, it also compromises the stability of the global economy and future growth,” cautioned UNCTAD’s director of international trade and commodities, Pamela Coke Hamilton. “We hope a potential trade agreement between the US and China can de-escalate trade tensions.”
The analysis shows that US tariffs caused a 25% export loss, inflicting a $35bnblow to Chinese exports in the US market for tariffed goods in the first half of 2019. This figure also shows the competitiveness of Chinese firms which, despite the substantial tariffs, maintained 75% of their exports to the US. The office machinery and communication equipment sectors were hit the hardest, suffering a $15bn reduction of US imports from China as trade in tariffed goods in those sectors fell by an average of 55%. Trade of tariffed goods in sectors such as chemicals, furniture, and electrical machinery also dropped substantially according to the analysis. Extract (pdf):
Trade diversion effects in favour of the Republic of Korea, Canada, and India were smaller [than Taiwan, Mexico and the EU] but still substantial (between $0.9 and $1.5bn). The remainder of the trade diversion effects was largely to the advantage of other South East Asian countries ($1.7bn). The rest of Latin America, Sub Saharan Africa and the rest of the world were only marginally able to benefit from trade diversion effects.
China International Import Expo: full text of President Xi Jinping's keynote speech
What I want to say to you today is that the Chinese market is such a big one that you should all come and see what it has to offer. China will better leverage the fundamental role of domestic consumption in economic development and foster a more robust domestic market to boost growth at home and create more room for global growth. China will give greater importance to import. We will continue to lower tariffs and institutional transaction costs, develop demonstration zones to promote import trade by creative means, and import more high-quality goods and services from around the world. We will take steps to promote balanced development of both imports and exports, of trade in goods and services, of two-way trade and investment, and of trade and industry. This way, we will ensure a free yet orderly flow of both international and domestic factors of production, improve the efficient allocation of resources, and deepen integration of markets.
Second, China will continue to optimize its opening-up structure. China's opening-up is all-dimensional and all-sectoral. A new structure of all-out opening-up is quick in the making. China will continue to encourage bold trials and experiments in pilot free trade zones and quicken the development of the Hainan Free Trade Port as pacesetters of opening-up in China. China will continue to implement integrated regional development strategies for the Beijing-Tianjin-Hebei region, the Yangtze River Economic Belt, the Yangtze River Delta region, and the Guangdong-Hong Kong-Macao Greater Bay Area, and draw up a new national strategy for environmental protection and high-quality development in the Yellow River basin. The purpose is to seek greater synergy of opening-up among different parts of the country. [China's Ambassador to ASEAN: Upgraded protocol of China-ASEAN Free Trade Area brings "visible and tangible" benefits]
China's Informal WTO Ministerial Meeting:
(i) Over 200 attendees, including ministers or representatives from 33 WTO members and WTO director-general Roberto Azevedo, were invited to the small-scale ministerial meeting in Shanghai. It was the second time China had held such an event since it joined the WTO in 2001. In the meeting, ministers or their representatives agreed that the rule-based multilateral trading system should be firmly supported, and international trade should play a role in driving economic growth, job creation and sustainable development, according to a statement from China's Ministry of Commerce. They also supported necessary WTO reforms and called for resolving the issue of appellate body appointments-which have been blocked by the United States-and working on issues such as fishery subsidies, the statement said.
(ii) Remarks by WTO DG Roberto Azevêdo on investment facilitation for development. In July, you circulated a Working Document that reflects the areas of common ground and of common interest. This is progress. And I understand that these efforts have helped other WTO members better understand where participants are heading. I am pleased to hear that the discussions around the Working Document are progressing well, with a high level of engagement. This process has clearly demonstrated what can be achieved when members work together, with a clear sense of direction. I hope you will keep up this momentum. Facilitating investments for development is in everyone's interest. The joint ministerial statement today sends an important political message about your engagement. It also illustrates how the support for this initiative has grown significantly, with 92 members co-sponsoring the statement – up from 70 in Buenos Aires.
China risks overplaying its hand on trade (Bloomberg)
The US-China trade war has been driven by successive rounds of misunderstanding and overconfidence. Until the collapse of an initial hoped-for agreement in May, the Pollyannas were mainly in Washington. US Trade Representative Robert Lighthizer and his allies in the Trump administration were gunning for a wholesale remaking of the Chinese state’s relationship with the economy which was never likely to happen. Now it’s Beijing’s turn to come to the table with unrealistic expectations.
India and the RCEP: selected updates, commentaries
(i) As it sits out of RCEP, New Delhi gets time to kick-start reforms. Modi seems to have delivered a strong statement vis-à-vis China, say analysts. India has been at a disadvantage vis-à-vis China with a trade deficit of $53bn in 2018-19. The worry was that joining RCEP could have meant Chinese goods entering India through a third RCEP country. There are, however, implications for remaining a hold out. “Everything these days has geopolitical and geostrategic consequences. India’s heft is because of its economic potential. Looking protectionist has its consequences," said Sachin Chaturvedi, director general at New Delhi-based Research and Information System for Developing Countries think tank. If India is looking at forging a free trade agreement with Africa, for example, it would be better to negotiate as part of RCEP (or an economic bloc). “If you negotiate as a bloc, there are some distinct advantages because you are negotiating as a group, there are numbers with you.”
According to former foreign secretary Kanwal Sibal, India opting out of RCEP would slow down its “Act East" and “Indo-Pacific" policies. “We now have all the more reason to work for an FTA with the European Union and resolve our trade differences with the US"—the single-largest market and the largest economy in the world respectively, Sibal said. In terms of technology that will help India leapfrog into the $5 trillion economy bracket that it wants to, it is Europe that India should look at partnering, he said. “If you look at IT, it is the US that is your biggest market. So these are the areas India should be looking at.”
(ii) Pradeep S. Mehta, Amol Kulkarni: Why India shouldn't view its refusal to join RCEP as a victory. The RCEP negotiation still offers a few important lessons for India. The assumption that the world will bend to our demands given the size of our market doesn’t hold good any more. We need to put our house in order to take on global competition and benefit from export opportunities that external markets offer, and such multilateral agreements create. No country has grown without strong export performance and thus it is important for India to understand this simple fact. This is also vital for our aspirations to become a $5-trillion economy by 2024. The refusal to join RCEP is an acknowledgment to ourselves and the world that our house is not in order. Acknowledgment of a problem is the first step in addressing it. At the same time though, the refusal is not enough to boost domestic productivity, and needs to be complemented with reforms to reduce input costs such as finance, power and logistics, remove bureaucratic hindrances and encourage active cooperative federalism. Only then will we be able to overcome our limitations, confidently enter into such multilateral agreements, compete effectively in global markets and realise our potential.
(iii) RCEP didn’t make much sense for India. There were at least two reasons why Indian entities were worried about their future if the government had signed on to RCEP. The first is that the three FTAs, with ASEAN, Japan and Korea, implemented from the beginning of the current decade, have not served India well. In every case, the trade deficit with the FTA partners has ballooned, owing to a double whammy, namely, increasing imports, but more importantly, the lack of momentum in exports. In fact, the trade deficit with ASEAN had seen a spike recently, rising from about $13bn in 2017-18 to nearly $22bn in 2018-19. No wonder then that the prime minister has called for a review of the India-ASEAN FTA. The second factor is the large footprint of Chinese products in the Indian economy. But more significant than the sheer size of the trade deficit, once again caused by India’s inability to penetrate China’s market, is the fact that India exports raw materials and intermediates to its northern neighbour and imports finished products, not to speak of critical electronic items. This almost resembles the colonial pattern of trade, which we thought was behind us seven decades ago.
(iv) China's Vice-commerce minister Wang Shouwen, speaking at a news briefing in Beijing, said he understood those concerns, but the deal could benefit Indian exporters and help create more local jobs. “We understand that some industries in India will have some concerns, but RCEP will also bring huge export opportunities to the Indian industry“, adding that the deal includes a protection mechanism that can be used to put the tariffs back on if India does find the deal damaging to its domestic industries.
(v) India's trade minister Piyush Goyal: “For the present, it is the final decision that we are not joining RCEP. The doors are not shut for anybody. If the 15 RCEP nations make a sincere effort to resolve our concerns, to give us confidence and help us to balance the trade inequality which Prime Minister has raised, then every nation should talk to their friends. We have not become enemies of each other."
(vi) India should hold talks with the European Union for a free trade agreement, the government said on Tuesday, a day after it refused to join a China-backed regional trade pact for fear of a flood of cheap Chinese imports. Trade Minister Piyush Goyal said sectors such as gems, textiles and agriculture have pushed for a trade pact with the EU. German Chancellor Angela Merkel has also called for talks to restart to finalize an agreement. [In strategic shift, India mulls a trade agreement with US]
(vii ) Peter Drysdale, Adam Triggs: Asia pushes back against global protectionism with big trade and cooperation agreement. In signing RCEP, Asia has chosen openness over protectionism, regionalism over nationalism, cooperation over confrontation, and solidarity over suspicion. They have sent a clear and unambiguous signal to the world: that Asia remains very much open for business, committed to the open regionalism that has seen East Asia’s share of global GDP soar from 15 to 30 per cent since 1980, while South Asia’s remains stubbornly has not budged, stuck around 3 to 4 per cent. RCEP was hard fought, but a choice made easier by the calculation that Asia needed to push back against protectionism even as the United States chose that path. For countries seeking new sources of growth, increased living standards and fresh productivity growth, regional cooperation was the answer. Analysis by Australia’s Productivity Commission presented the options in stark detail: choose protectionism, and ASEAN+6 GDP would fall by more than 8%. Choose openness, and ASEAN+6 GDP would rise by up to 4%. Asia has made the right choice. The path of protectionism is costly. Almost 100% of President Trump’s tariffs have been paid for by American citizens, plunging the poorest Americans into an even deeper poverty. President Trump’s misguided desire to reduce the US trade deficit has seen the deficit blow-out by more than a third. His trade war has forced the US Federal Reserve to cut rates in a desperate effort to ward off what the yield curve and financial markets are overwhelmingly predicting: a looming US recession. [East Asia Forum editorial board: Straining to achieve potential at the East Asian Summit in Bangkok]
New Zealand's trade minister: Absence of RCEP will lead to uncertainty, would want India to be in final pact
Bloomberg Quint Debates: Was India right to quit RCEP?
14th East Asia Summit: chairman's statement
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Diarise:
(i) Africa’s money for African development: A future beyond aid (7 November, Accra). The event is part of series of high-level meetings to be held by the senior management team of UNDP in Africa, dubbed the UNDP Africa Cluster Meeting. Discussions will focus on the future of development in Africa and how to capitalize on the implementation of the AfCFTA, as well as opportunities emerging from the Fourth Industrial Revolution.
(ii) SADC Ministers of Health, HIV and AIDS (7 November, Dar es Salaam)
Africa's Development Dynamics 2019: achieving productive transformation (AUC, OECD Development Centre)
Without bold policy changes, most African businesses may not be ready for reaping the benefits of the AfCFTA which is projected to offer African firms the new opportunities of a 1.2 billion consumers strong continental market. Africa's Development Dynamics 2019, released today, shows that Africa’s expanding domestic markets offer great opportunities for transforming production systems across the continent. Africa recorded 4.6% annual GDP growth between 2000 and 2018; with domestic demand accounting for 69% of it. The continent’s growth is projected at 3.6% in 2019 and should remain robust at 3.9% between 2020 and 2023. The regional demand for processed food has been growing 1.5 times faster than the global average. Large Pan-African firms and some dynamic start-ups are seizing these opportunities to grow, as highlighted in the report. However, the report finds that Africa needs more dynamic enterprises to turn these opportunities into higher profits, more investment and new, decent jobs.
This is especially true of small and medium enterprises in employment-intensive sectors. Firms fail to tap the growth in neighbouring markets: exports of consumption goods to other African markets decreased from 0.8% of Africa’s GDP in 2009 to 0.5% in 2016. Currently, most African firms are losing out to new competitors both at home and in emerging markets. Only 18% of Africa’s new exporters survive beyond three years. Productivity is not catching up. Since 2000, Africa’s average labour productivity has stagnated at around 12% of US levels. The Africa-to-Asia labour productivity ratio has decreased from 67% in 2000 to 50% in 2018.
AfDD 2019 puts forward a systemic approach to productive transformation by focusing on three sets of policies. Develop effective clusters of firms, by providing them with business services that improve specialisation in niches, reinforce linkages between the most productive ones and the others, and address skill shortages. Encourage the creation of regional production networks to generate economies of scale between African countries, attract new investors, develop complementarities within the value chains, and avoid a competitiveness race to the bottom. Enhance firms’ abilities to thrive in new markets. Policies can provide extra support to exporters by removing non-tariff barriers to the continental trade, simplifying administrative procedures and custom services, and improving connective infrastructure - especially flights, roads and ports.
Nigeria gets tough with ECOWAS, bans repackaged imported goods (Punch)
The Federal Government has listed five conditions for reopening of the country’s land borders for goods importation from neighbouring countries. As one of the conditions, the Federal Government said Nigeria would not accept imported goods that were repackaged by neigbouring countries and brought to Nigeria. It said the conditions which would be presented to Benin and Niger Republic in two weeks, must be met before the Nigerian land borders would be re-opened. The Minister of Foreign Affairs, Geoffrey Onyeama, disclosed this during the meeting of the Inter-Ministerial Committee on the Temporary Partial Closure of Land Borders in Abuja on Monday. He insisted that neighbouring countries must respect ECOWAS ‘rules of origin’ if they must bring goods into the country. The preconditions for both goods and humans coming into the country, however, applied to all ECOWAS member states. Onyeama said that goods imported for the Nigerian market must be escorted directly from the port of member states to the nation’s land borders. These conditions, the minister said, would be presented to Benin and Niger Republic at a tripartite meeting scheduled for next two weeks in Nigeria. He also said that the only travel document allowed for anybody coming into the country through the land borders is the passports, stressing that the country would not accept any other documents such as the identity card.
Olu Fasan: Nigeria is trampling upon the world legal order (BusinessDay)
Of course, at the heart of all this is Nigeria’s determination to pursue its own development agenda without international constraints. But the truth is that it could do this without breaching international rules by legally using any of the several safeguard and escape provisions in WTO law. For instance, Nigeria could invoke Article VXIII that allows “governmental assistance to economic development”, including supporting infant industries, or the emergency safeguards provisions under Article XIX if it felt too much imports were damaging its domestic industries. Nigeria could invoke these provisions provided it negotiates with other WTO members with a substantial trade interest and offers acceptable concessions to them. What’s more, Nigeria could justify the closure of its borders on the ground of curbing smuggling or customs enforcement under Article XX or on the ground of national security under Article XXI, provided the border closure does not constitute “a disguised restriction on international trade”.
But everyone knows that the underlying reason for the border closure was not smuggling or national security concerns, but the protection of local industries, and, thus, it’s a disguised restriction on international trade! Truth is, Nigeria’s deep-seated protectionism is not compatible with its international legal commitments. It would have to decide whether to comply with its international obligations, legally invoke the escape provisions in international trade agreements or withdraw from them altogether. It cannot continue to trample on international rule of law. The border closure, apart from its economic and social costs, has done further damage to Nigeria’s already battered reputation for utter disregard for international rule of law.
EABC Consultative Dialogue on Economic Diplomacy: the key take aways from yesterday’s discussions
(i) Ambassador Dan Kazungu (Kenya’s High Commissioner to Tanzania): Full implementation of the Single Customs Territory, Harmonization of the legal and regulatory framework in the EAC.
(ii) Kenyan ambassador John Mutinda Mutiso: Need to embrace East African identity, Need to address institutional memory challenges, Kiswahili as a local regional dialect, Benchmarking against best performers in trade and investment promotion, such as ASEAN, Continuous dialogue on how NTBs can be resolved, EABC to consider the establishment of a diplomatic interface desk to ensure a sustainable partnership.
Strengthening private sector engagement in the oil and gas value chain in Uganda and Kenya (AfDB)
Building the capacity of the private sector to engage in the oil and gas industry will boost local skills development, job creation and inclusive economic development. There is little doubt that small and medium size enterprises form an integral part of socio-economic transformation; and so, their engagement in the nascent petroleum sector is imperative. SMEs, for instance, contribute about 27% to Tanzania’s GDP. In Uganda, SMEs account for about 18% of the GDP and 99% of Ugandan businesses. In Kenya, SMEs’ contribution to the GDP stands at about 33.8%. In the larger part of the EAC region, SMEs represent the biggest part of all registered enterprises in nearly all activities, averaging 60% in number or 90%, if micro enterprises are also included. It should however be noted that oil and gas is a new resource in East Africa, and that SMEs lack adequate capability to effectively compete for contracts in the sector.
The paper comprises four sections. Section One provides a general background and context to the oil and gas sector in Kenya and Uganda, the oil and gas value chain, potential business opportunities for SMEs, and key milestones in SME participation in Kenya and Uganda. Section Two examines the SME legal and policy framework in both countries, including regional instruments that seek to promote SME development and the ease of doing business, general and country-specific constraints to effective SME participation in the petroleum sector, as well as the challenges and opportunities for women and youth enterprises. The paper ends with a conclusion highlighting some of the key issues relating to SME participation in the oil and gas sector in Kenya and Uganda. [The companion country policy briefs: Kenya, Uganda]
Investment climate in South Africa: discussion paper (pdf, EU Chamber)
This paper has been prepared for the Southern Africa Europe CEO Dialogue 2019 (Ambrosetti Forum) and the South Africa Investment Conference 2019. The paper analyses the status of the investment climate and conditions of doing business from the angle of EU companies operating in South Africa as well as prospective investors. This paper identifies five key investment climate issues where strategic policy recommendations are proposed.
Eswatini: IMF staff completes 2019 Article IV mission
In recent years, GDP growth has averaged 2%, but fiscal and macroeconomic imbalances have built up. Since 2016, rising government spending and low revenue from SACU have widened the fiscal deficit. Public debt has increased, domestic arrears have accumulated, and international reserves have declined. Absent policy action, the economic outlook remains fragile. In 2019, growth is projected to decelerate to around 1%. In a scenario with no policy action, IMF staff expect the fiscal deficit to remain large and domestic arrears to accumulate, weighing on the economic outlook. Growth would remain subdued over the medium term as fiscal imbalances persist and the private sector remains hamstrung. Downside risks to this outlook include lower SACU revenue and possible fiscal slippages. Eswatini’s key challenges are to implement fiscal adjustment measures to reduce the fiscal deficit and stabilize public debt, and roll out structural and governance reforms to boost long-term growth and reduce poverty and unemployment.
Ambassador Lin Songtian: Sharing development opportunities through opening up (IOL)
As South Africa hosts the second Investment Conference (5-7 November, Johannesburg), the second China International Import Expo (CIIE) will be held in Shanghai (5-7 November). These two grand events not only are a coincidence of timing, but also highlight that China and South Africa, as two major emerging markets, firmly support trade liberalization and economic globalization, and demonstrate our two countries’ solemn commitment and concrete actions to open up our markets to the world. As a pioneering undertaking in the history of international trade, the CIIE is the world’s first ever state-level import expo. The first CIIE held in Shanghai in 2018 achieved great success, reaching deals worth of $57.8bn. Its unprecedentedly large scale, high-end expo and fruitful outcomes have been universally acknowledged by the international community.
New WEF reports:
(i) World Economic Forum Global Future Council on Infrastructure: "Infrastructure is far from being a staid industry devoid of innovation – indeed, new technologies and ideas are flourishing. Integrating these innovations, which could change the way infrastructure is designed, developed and delivered, requires aligning stakeholders, implementing effective strategies and creating fertile enabling environments. This will allow existing innovation into the space and provide opportunities for new ideas. The Council thus decided to create a guidebook, contained here (pdf), that explores major questions about how to bring the Fourth Industrial Revolution to infrastructure."
(ii) Policy Pathways for the New Economy: "Implications for governments on future paths for policy-making in three important and interrelated areas are developed in this White Paper (pdf): The future of innovation policy: How does innovation policy need to evolve to ensure more productive and inclusive economies? The future of labour policy: How must labour policy be updated for the new world of work? The future of fiscal policy: How will approaches to taxation and government spending have to adapt to the transformation of labour and product markets?"
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Starting tomorrow, in Johannesburg: UNCTAD’s Empowerment Programme for Southern African National Transit Coordinators. Event objectives include training representatives of Botswana, Eswatini, Lesotho, Malawi, Namibia, South Africa and Zambia on transit coordination and the role of transit coordinators, as per Article 11 of the WTO Trade Facilitation Committee.
A reminder that the 11th African Private Sector Forum starts on Wednesday in Antananarivo. And the launch of two major reports at a side event tomorrow: The 2019 Africa’s Development Dynamics report and Domestic Resource Mobilization: a fight against corruption and illicit financial flows
David Pilling: The 'Uber of trucks' shakes up freight transport across Africa (Financial Times)
Lori Systems was established in Kenya in 2016 by co-founders from South Africa and Togo to simplify the fragmented and notoriously inefficient trucking industry. Lori, which is inevitably most often described as the “Uber of trucks”, prefers to call itself “a logistics co-ordination platform”. Whichever way it is described, the company acts as a matchmaker between people who own trucks, and companies that want to shift cargo, such as Lafarge, Unilever, Olam or Maersk. Lori is not the only such company in Africa.
Second Tripartite Sectoral Ministerial Committee on Infrastructure: outcomes
Ministers responsible for infrastructure from the tripartite group (COMESA, EAC, SADC) have called for the speedy implementation of regional infrastructure programmes in energy, transport and ICT sectors to accelerating economic integration. This was after reviewing the status of implementation of these key programmes during the Second Tripartite Sectoral Ministerial Committee on Infrastructure in Lusaka on Thursday. The meeting was a follow up to the first one held in Dar es Salaam on 26 October 2017. Ministers noted the need to facilitate the development of a more competitive, integrated and liberalised regional road transport market in the Tripartite region, under the supervision of the Tripartite Transport and Transit Facilitation Programme. So far, two multilateral agreements, namely the Vehicle Load Management Agreement and the Multilateral Cross Border Road Transport Agreement, have been developed and validated to support an envisioned harmonized legal framework in the Tripartite region. Sixteen Member/Partner States (Angola, Burundi, Egypt, Eswatini, Ethiopia, Kenya, Lesotho, Malawi, Mozambique, Rwanda, South Africa, Sudan, Tanzania, Zambia, Zimbabwe) participated in the Lusaka meeting. [COMESA, TMEA sign MoU to promote trade]
13th Steering Committee Meeting of the Abidjan-Lagos Corridor Highway Development Project: outcomes
The ministers in charge of road infrastructure from Benin, Cote d’Ivoire, Ghana, Nigeria and Togo have applauded the steady progress in the execution of the feasibility and detailed engineering design studies for the Abidjan-Lagos Corridor Highway feasibility study. They also commended the injection of an additional $16m from the AfDB and the EU to bridge the funding gap for the technical preparatory studies and establishment of the Corridor Management Authority. Among others, the Ministers urged the ECOWAS Commission to strengthen their monitoring of consultants in the execution of respective contracts for the feasibility and detailed engineering studies. They also called on Consultants to ensure adequate consultations with all related authorities and stakeholders at the national levels on critical issues such as alignment definition, national development plans as well as social and environmental impacts of their proposals before concluding draft reports for submission to ECOWAS. [Related: Ghana’s VP demands formation of Abidjan-Lagos Corridor Authority]
Nigeria: Businesses express support for FG’s extension of border closure to Jan 2020 (ThisDay)
Business leaders and other stakeholders have expressed support for the decision by the federal government to extend the closure of all the country’s land borders to its neighbours to 31 January 2020. The Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture and the Manufacturers Association of Nigeria commended the federal government, saying it is an indication that the government has the progress of Nigerian business community at heart. In line with the president’s new order, the land borders will now be reopened on 31 January 2020, sealing the expectations of industrialists in the West African region, who were hopeful that the Nigerian government would reopen the borders on or before Christmas. This is coming as the Nigerian Customs Service yesterday said the 31 January date, which was contained in what it described as a leaked memo is not the terminal date for the border closure. NCS’s Public Relations Officer, Mr Joseph Attah, said the 31 January date was just for this phase of the operation: “Please note that the internal memo is referring to the end of this phase of the joint security Exercise Swift Response and not a terminal date for the partial border closure. Security operation of this kind is usually in phases. The partial border closure will continue until the set objectives are achieved."
However, the Lagos Chamber of Commerce and Industry viewed the entire closure of the border and its anticipated reopening in an entirely different manner. The chamber, in a statement by its Director General, Mr Muda Yusuf, said it, however, appreciated concerns of government regarding security and economic sabotage which informed the action. “But the demands of sacrifice imposed on business and the citizens by the border closure is disproportionate and becoming unbearable. The effect is perhaps more pronounced in the south western part of the country being the financial and commercial hub of the country and the sub-region. This has grave consequences for investments and jobs. Many industries have invested in products registered under the ECOWAS Trade Liberalisation scheme. These are investors whose business models were anchored on market opportunities in the ECOWAS. These investments have been completely disrupted and dislocated. Majority of the victims of the border closure are small businesses, most of them in the informal sector. Their means of livelihood has been put in great jeopardy. This class of traders does not have the capacity to move their products by sea because of the modest scale of their operations. Supply chain of some business has been completely disrupted. Maritime sector investors have been denied opportunities offered by transit cargo destined for landlocked countries which normally comes through the Nigerian ports. The closure has triggered an unprecedented hike in prices with a devastating impact on the poor. This implies further aggravation of the poverty situation in the country.” [Why unmonitored borders, fuel subsidy are harmful to Nigerian economy: transcript of interview with the Matrix Group CEO]
You won’t prosper closing your borders: IMANI Africa's Franklin Cudjoe to Nigeria (GhanaWeb)
The President of Policy think tank, IMANI Africa, Franklin Cudjoe has observed Nigeria’s decision to shut its border with Benin, ostensibly to prevent goods it produces from entering the country, will not make Nigeria prosper in any way but rather make matters worse for them. He has stated that the closure of borders for reasons of import substitution does not work but rather leads to inefficiency and a rise in the cost of production. He has, therefore, cautioned the government of Ghana to resist the temptation to also close its borders.
“There is an assumption that Nigeria will automatically become prosperous by closing its borders to other markets, in furtherance of the age-old but discredited policy of import substitution. Some are urging Ghana and others to do same. But lessons must be learnt from the mistakes of others who took that path. In the 1950s and 1960s, governments of many countries in Africa and Latin America erected trade barriers. The plan was to enable the industries of their countries to grow, “protected” from outside competition. What actually happened was the opposite. Although the industries in these “protected” countries grew for a short period, the lack of competition meant that their industries became inefficient and fell behind the rest of the world. Also, because imports were very expensive or even unavailable, their costs of production rose as they were stuck using old technologies. Soon these “protected” industries were producing goods that few people wanted, exports fell and, in many cases, the industries – usually run by friends of the president – had to be subsidised by the state in order to keep them afloat."
Kenya-Uganda to upgrade third border point (Daily Monitor)
The Uganda Revenue Authority says Kenya and Uganda have resolved to upgrade the Suam border point to ease pressure on Malaba and Busia. Addressing leaders in Mbale, James Malinzi, the URA regional customs manager eastern Uganda, said this is part of the support the Japanese International Cooperation Agency is giving URA to develop capacity to control borders. Kenya and Uganda share a long border stretching from Lake Victoria to Karamoja and River Nile. However, the most commonly used borders are Malaba and the recently upgraded Busia One Stop Border Point, which controls 80 per cent of the goods that enter Uganda, Burundi and DR Congo. The Suam border post is expected to ease pressure on the two border points.
Unlocking Africa’s $100bn public-finance opportunity (McKinsey)
Yet, as this paper shows, African governments have more scope than is often assumed to mobilize domestic resources for their own development and improve efficiencies in public spending. Several pioneering governments have already achieved big gains in revenue collection through tax-system reform, while others have delivered significant budgetary savings in areas such as public procurement and capital expenditure. Each of these countries has delivered annual revenue improvements of between $1bn and $5bn, or budgetary savings of at least 5% of total budget, or both. McKinsey’s analysis shows that programs to enhance tax and tariff-collection performance have the potential to deliver between $45bn and $65bn in additional annual tax and customs collection across Africa within three years (see Exhibit). That translates into additional revenues of between 2% and 3% of GDP—without changes to tax rates or trade tariffs. In addition, programs to improve public-spending efficiency have the potential to deliver between $40bn and $60bn a year from expense efficiencies, such as implementing leaner capital expenditure practices, revamping procurement procedures, and eliminating “ghost” workers. Those savings represent between 8% and 12% of the aggregate budgets of African governments. [The authors: Acha Leke, Yaw Agyenim-Boateng, Francisco Mendes, Aurelien Vincent]
Financing for development: International development cooperation and interrelated systemic issues (UNCTAD Secretariat Note)
Extract: Private donations- a drop in the bucket? (pdf). Philanthropy has increasingly attracted attention. While this represented 1.9% of ODA in 2009, it increased to 3.7% of ODA in 2017. According to OECD data, private foundations provided $13.9bn for development from 2015 to 2017 (figure 6). In specific sectors, the relative size of philanthropic funds makes them a crucial source of funding. These private resources appear to target social issues more than other private international flows, with philanthropic activities toward the Sustainable Development Goals focused mainly on general health and education (62% of the total), followed by agriculture, forestry and fishing (9%), and government and civil society (8%). Africa is the main beneficiary region of philanthropic giving (28% of the total), followed by Asia (17%), Latin America (8%) and Europe (2%). Figure 7 shows that lower-middle-income countries and the least developed countries have been the main recipients of philanthropic flows. [Note: This document was prepared for the Intergovernmental Group of Experts on Financing for Development, third session, starting today in Geneva]
2nd EAC Joint Ministerial, Development Partners and Investors’ Roundtable on Investment in Health: communique
We, the Ministers responsible for Health in the EAC partner states in collaboration with investors, development partners, private sector and civil society organizations’ leaders, assembled here in Nairobi (1 November) resolve to (extracts):
Explore and implement innovative financing mechanisms to increase domestic resources for health in Partner States
Continue to support the strengthening of EAC regional capacities for infrastructure and human resources development for the prevention, preparedness, response and recovery from epidemic prone infectious diseases
Support mechanisms geared towards strengthening health professional regulatory bodies to ensure availability and performance of qualified and skilled workforce for the delivery of quality health care services;
Strengthen the capacities of National Medicines Regulatory Authorities to improve access to quality, efficacious and affordable medicines in Partner States in line with the EAC decision.
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Next week in Durban: Afreximbank’s Trade Finance Seminar (4-7 November), to be followed by a one day Factoring workshop. The programme can be accessed here.
AfDB shareholders approve landmark $115bn capital increase (AfDB)
At an extraordinary shareholders’ meeting yesterday in Abidjan, Governors of the African Development Bank, representing shareholders from 80 countries, approved a landmark $115bn increase in capital for the continent’s foremost financial institution. The capital increase, the largest in the history of the AfDB since its establishment in 1964, is a remarkable show of confidence by shareholders. With the approved increase, the capital of the Bank will more than double from $93bn to $208bn. This solidifies the Bank’s leadership on development financing for the continent.
The AfDB's VP for Finance, Bajabulile Tshabalala: Why global and pan African investors need to set their sight on the 2019 Africa Investment Forum (Brussels Times)
The timing of the coming into being of the Forum is fortuitous, coming on the heels of the AfCFTA and the Single African Air Transport Market, ratified by the majority of AU members. New investments made possible through the Africa Investment Forum (11-13 November, Johannesburg) have the potential to spur an explosion in trade, contribute to Africa’s re-industrialization and promote cross-border regional economic integration. Indeed, while the platform continues to ramp up and grow, the Forum offered some very important lessons. In particular, additional resources are required to adequately prepare projects which are crucial for Africa’s development. Well-prepared projects minimize negative environmental and social issues, while maximizing development and economic outcomes, thus contributing to enhanced bankability.
Joint Labour Migration Governance Programme for Regional Development and Integration in Africa: African ambassadors meet Middle East, Gulf Cooperation Council
African experts drawn from major countries of origin of migrant workers in the Middle East and the Gulf Cooperating Countries met to share experiences on international labour migration cooperation mechanisms aimed at improving labour migration governance and to explore avenues for policy dialogue with Middle East Countries. This meeting responds to the recommendations by stakeholders in labour migration governance in Africa, for a multilateral process, for enhanced protection of teeming number of migrant workers of African descent in the Middle East. Available data show that the Middle East region is the second largest region of destination for African migrant workers due to cultural, religious and historic factors. An increasing number of African member states have negotiated bilateral labour agreements with Middle East countries, including Jordan, Qatar and Saudi Arabia, mainly for the supply of domestic workers. Egypt, Ethiopia, Kenya, Sudan, South Africa and Uganda account for top African migrant workers in the Middle East.
In spite of this, labour migration governance in the Middle East and GCC region is in dire need of policy and structural reforms in various areas including training and ethical recruitment, decent jobs, skills recognition, legal and consular services as well as protection of human rights in line with international standards. Unlike Asian countries, Africa does not have any labour migration multilateral cooperation agreement with the Middle East, hence there are gaps in the protection of African migrant workers and their families. To address this, Sri Lanka as the previous Chair of the Colombo process was invited to the meeting to share its experiences in managing Asian labour migrant workers.
South Africa: Implementing focused and flexible industry and trade policy (National Treasury)
Due to a lack of more effective and appropriate trade agreements, South African trade policy evolves on a piecemeal basis through applications to ITAC. A major challenge for ITAC is that trade support is provided on a product-by-product basis. This lends to the process an inherent bias towards products produced by large and well-organized firms that can adhere to the administrative requirements associated with ITAC applications, which can reduce overall competitiveness. These industries tend to be further upstream while downstream industries (which are often less concentrated and more dynamic) tend to have less participation in the process. It is also important for ITAC to take Competition Commission findings into consideration when making their assessments. ITAC should be capacitated so that it conducts broader value chain analysis of the impacts of submissions and is proactive in addressing the current biases of trade policy. Although ITAC is able to initiate investigations, the information required for the initiation of an investigation is still provided by industry. As such, it is imperative to consider what support can be given to small companies in unorganised industries which need assistance collecting the data required to initiate an investigation. ITAC also conducts some impact assessments to evaluate the effect its interventions have on industry. However, these cannot be conducted widely and comprehensively due to limited resources.
Following the initial release of this paper the dti and the Presidency have embarked on a reimagined industrial policy aligned to some of the proposals in this paper. The reimagined industrial policy is not the development of a new industrial policy action plan, but rather a process allowing for the use of existing policy levers in a more coordinated way to derive maximum impact. This involves a shift towards a regional and global value chain approach to industrial policy, anchored by masterplans in key priority sectors developed together with the private sector and unions. [Note: This is an extract from Chapter 7, Implementing focused and flexible industry and trade policy, in the National Treasury report Economic transformation, inclusive growth, and competitiveness: A contribution towards a growth agenda for the South African economy (pdf). See also Chapter 8: Promoting export competitiveness and harnessing regional growth opportunities]
South Africa: September 2019 trade surplus (SARS)
The South African Revenue Service yesterday released trade statistics for September 2019 which recorded a trade surplus of R5.16bn. The year-to-date (1 January - 30 September) trade surplus of R2.51bn is an improvement from the R1.76bn surplus for the comparable period in 2018. Exports decreased by 2.2% year-on-year whilst imports for the same period showed a decrease of 9.8%. August 2019’s trade surplus was revised downwards by R2.30bn from the previous month’s preliminary surplus of R6.84bn billion to a revised surplus of R4.54 billion as a result of ongoing Vouchers of Correction.
South Africa: Task force to tackle illicit cross-border flows, tax evasion. National Treasury has set up a Financial Action Task Force in an effort to curb illicit cross‐border flows and tax evasion. Delivering the 2019 Mid-Term Budget Policy Statement in Parliament on Wednesday, Finance Minister Tito Mboweni said the task force will review government’s approach in dealing with money laundering. “Steps are also being taken to strengthen cooperation between the Financial Intelligence Centre, the South African Reserve Bank and SARS,” the Minister said. To promote investment and reduce unnecessary, burdensome approvals, Mboweni said the Reserve Bank will propose a more modern, transparent and risk‐based approvals framework for cross‐border flows.
Related: The South African Revenue Service is investigating criminal syndicates operating in the scrap metal, fuel and gold industries and responsible for value-added tax and customs fraud estimated at “tens of billions of rand” a year, the tax commissioner said on Thursday. “In terms of the total fraud our estimate is it runs into tens of billions of rands, if you take the scrap metal, if you take the oil majors, if you take the cigarette industries,” commissioner Edward Kieswetter told Reuters. Kieswetter did not mention any companies or intermediaries involved, but said it affected the entire value chain.
Mombasa seaport stakeholders agree on measures to address illegal wildlife trade (TRAFFIC)
Recognising the urgent need for action against illegal wildlife trade, 76 port and maritime supply chain representatives from 12 countries convened last week to agree measures to address wildlife trafficking through Mombasa seaport. Specific actions discussed included enhancement of inter-agency, inter-sectoral and international collaboration, cargo risk profiling, policy enforcement and prosecution capacity, as well as information and intelligence exchange to curtail wildlife crime. Participants identified key gaps and opportunities in the port management systems to prevent, detect and intercept illegal wildlife products and determined next steps. The port of Mombasa is the largest seaport in Africa and is a key exit point for trafficking of African wildlife. Drew McVey, East Africa Wildlife Crime Technical Advisor for WWF-Kenya: “It is not enough to stop poaching in our country if we are on a transit route for the rest of Africa. To do this takes co-operation between various government agencies, the private sector and other stakeholders.”
UNCTAD and partners make progress on measuring illicit financial flows: Addis meeting summary
UNCTAD’s head of statistics and information, Steve MacFeely, and UNODC’s chief of research and trend analysis, Angela Me, presented the inter-agency work done so far at the 10th meeting of the Inter-Agency and Expert Group on SDG indicators on 22 October in Addis Ababa. They stressed three important features of their approach: Disaggregated and modular, Country-level, Compatible. MacFeely and Me also stressed that UNCTAD, UNECA and UNODC have undertaken a wide consultation, including two expert group meetings, that comprised academics, private sector, NGO and international organization experts. They also explained how a task force comprising the three UN agencies as well as the IMF, Eurostat, the OECD and national statistical offices from Europe, Latin America, Asia and Africa have worked to develop and refine the methodology. This work was also presented at the International Statistical Institute World Congress in Kuala Lumpur, in August 2019, and will be presented at the IMF statistical committee meeting in Washington in November 2019. The next steps are the development of training modules, followed by pilot testing in Latin America, African (and later Asian) volunteer countries. [Note: Documents from the Addis meeting can be accessed here]
Rwanda protests mineral traceability scheme (New Times)
Rwanda has said that the ITSCI programme, an international scheme designed to regulate minerals mined from the Central African region, is expensive, unnecessary and prohibitive for miners. Rwanda is subject to what is known as Section 1502 of the US Dodd-Frank Wall Street Reform and Consumer Protection Act, which covers tin, tantalum, tungsten and gold, all of which are produced in large quantities in the country. It is also a party to the International Conference on the Great Lakes Region (ICGLR) and the Organisation for Economic Co-operation and Development (OECD) due diligence guidelines. “We continue to argue that the cost of traceability and due diligence must be reduced to make it affordable and fair,” Francis Gatare, the Chief Executive Officer of Rwanda Mines, Petroleum and Gas Board (RMB), told participants at a mining forum taking place in Kigali. “It’s a reason why we have tried as a country to attract other competing instruments.”
Nigeria: Private sector mulls measures to overcome AfCFTA constraints (ThisDay)
Members of the Organised Private Sector (OPS) have stated that a lot still needs to be done to enable Nigerian manufacturers to maximise the benefits offered by the AfCFTA agreement. The OPS clarified that Nigeria lacked the capacity to compete with small African countries that serve as an outpost for highly industrialised economies to penetrate and subjugate the Nigerian economy in spite of its status as the biggest economy in Africa. They enjoined the government to ensure that goods coming into the country from neighbouring countries in the name of AfCFTA are truly made in Africa. Laying the groundwork yesterday for the discussion to prepare the Nigerian private sector to grasp the proper understanding of the details of the AfCFTA’s agreement (such as the Rules of origin, protocol of trade in goods and services, dispute resolution) at the AfCFTA Dialogue Series organized by the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) in collaboration with Deloitte, the Director-General of the Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadiri urged members of OPS to make their businesses competitive enough in order to benefit from the opportunities will derive from AFCFTA.
Towards a customized Trade Map tool for the West African region (ITC)
The International Trade Centre has initiated preliminary discussions with ECOWAS to launch a customized Trade Map tool for the West African region. The trade information tool will serve as a key resource for business owners seeking to identify potential business partners in the region. Through an ECOWAS trade portal, Trade map users will review up-to-date trade statistics, an outline of applicable regional tariffs and existing public tenders available in the region. “The installation of the Trade Map tool is a significant first step towards achieving ITC’s larger mandate of providing comprehensive trade data and intelligence for the entire continent through the Africa Trade Observatory as tasked by the African Union. Direct access to this tool will give West African MSMEs valuable data to pursue their strategic business objectives including for intra-African trade,” said Ashish Shah, ITC Director of Division of Country Programmes. In addition to the Trade Map, ITC is also expanding the use of its Trade Alert Obstacles Mechanism tool, which is already implemented in the francophone West African region of UEMOA. The alert tool tracks trade barriers at a national and regional level for SMEs and MSMEs.
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David Luke, Gerald Masila: A trip to Seme-Krake - mending the cracks in the Benin-Nigeria trade relationship (UNECA)
A single trip to the Seme-Krake border and surounding trade routes is enough to veryify that smuggling is a very real problem, that requires targeted treatment. The blanket closure of the border to all trade is, however, not the right medicine. This is because, since the establishment of ECOWAS in 1975, the region has made significant strides in regional integration. The fifteen ECOWAS member countries have become one interdependent system. The Seme-Krake border closure thus has significant knock-on effects.
If a blanket closure of the Seme-Krake border is not the correct medicine to mend the cracks in the Benin-Nigeria trade relationship, what is the appropriate remedy? Smuggling along unofficial trade routes has significantly reduced, but as highlighted in this article, this has not been at a small cost. Instead, the main complaint of smuggling must be tackled through specific and targeted measures. The Nigerian government are urging Benin to sign an agreement that commits the country not to import goods that are onwardly smuggled. However, effective enforcement of such an agreement would require the deployment of security forces from both countries along the entire length of the porous border. This would be a worthwhile exercise, but not a cheap one. A more cost-effective treatment, and one in the spirit of furthering regional integration, would be to fully-implement the ECOWAS Common External Tariff that officially entered into force in 2015. This would mean that all externally imported goods would face the same tariff in Benin and Nigeria. This would go a long way to eliminating the unfair price differentials which currently incentivise smuggling. At the same time, governments must continue to invest heavily in transforming agriculture with a view to boosting local production and competitiveness. This will remove the need to resort to trade policy measures to remain competitive.
Finally, the cracks at the Seme-Krake border have surfaced due to much deeper cracks in the implementation of ECOWAS trade policy. For effective functioning of the ETLS, the Nigerian and Beninois customs authorities must cooperate to enforce the ETLS, including through joint operations at the border. If start of trading under the AfCFTA, from 1st July 2020 is to work, strong political commitment and reliable institutional arrangements to keep the continent’s 107 land borders open will be critical. [Note: David Luke is the Coordinator of the African Trade Policy Centre; Gerald Masila is the Executive Director of the Eastern Africa Grain Council]
AU STC on Communication and Information Technologies: ministerial report
The Rapporteur of the outgoing bureau (Ghana) presented the Report of the Experts’ Session highlighting progress attained on various ICT and Communication projects and programs as well as the outcome of the discussions on the draft Africa Digital Transformation Strategy and the implementation of the African Union communication and advocacy strategy. Following very constructive discussions on the Digital Transformation Strategy, member states commended AUC for the initiative and requested more time to provide inputs to the DTS. It has been agreed to open the DTS for online contributions until 8 November 2019. The AU Commission is requested to duly consider the received inputs and finalize the document by 15 November 2019 and submit for consideration and adoption by the AU Summit in January 2020.
Competition provisions in trade agreements: inputs for the OECD's Global Forum on Competition (5-6 December)
(i) Contribution from the European Union (pdf): The EU approach on competition provisions in trade agreements is not a “one-size fits all approach”. The approach chosen depends on elements such as the overall aim of the agreement, taking into account the economic interconnectedness between the EU and the other Party. Against this background, this EU contribution provides an overview of the objectives and practice of competition provisions in EU trade agreements (overview provided in the table in the annex), focussing on provisions relating to anticompetitive conduct and merger control, subsidies and state aid, as well as public enterprises and private enterprises entrusted with special or exclusive rights. Cooperation agreements dedicated to competition matters do not fall in the scope of this paper. However, the paper touches upon competition related cooperation provisions to the extent that they are figuring in EU trade agreements.
(ii) The United States is a party to eight trade agreements with competition chapters (about one third of its total number of free trade agreements):
(iii) Contribution from Canada (pdf). This submission sets out Canada’s governance model and the Competition Bureau’s role in negotiating competition provisions in Canada’s free trade agreements (FTAs). It also provides examples of how FTAs can impact Canada’s competition law and policy framework, particularly in the area of information sharing and other cooperation activities. Lastly, the submission highlights the importance of monitoring cross-cutting issues in other chapters of Canada’s FTAs, such as provisions that address disclosure of information.
(iv) Contributions from the Philippines (pdf), Ukraine (pdf), World Bank (pdf)
Kenya Economic Update (World Bank)
The contribution of net exports to growth remains negative (pdf), although its drag is much weaker than in previous periods. In static analysis, net exports constitute a drag to growth for non-resource rich economies, although in a dynamic setting, access to imports contributes to productivity gains through technology spillovers and learning by doing. Nonetheless, from short term static analysis, imports have more than offset Kenya’s exports (tea, coffee, horticultural, and tourism receipts) constituting a drag to growth (Figure 14). However, over the last two years trends in the value of imports have been falling (as food and SGR imports have decreased), which has reduced the downward impact of net exports on growth. While Kenya’s agricultural exports destined for advanced economies have remained stable, manufactured exports to Africa (which accounted for about 35.3% of Kenya’s merchandise exports in 2018) have contracted for the third consecutive year from Ksh.242.2 billion in 2015 to Ksh.216.2 billion in 2018 (or an average of 3.6% decline per year). The contraction is in part due to intensified competition in these markets with data showing shipments to countries such as Democratic Republic of Congo, South Sudan, Ethiopia, and Somalia decreasing. Further, rising policy uncertainty on international trade (the US-China tariff war, and the exit of the UK from the EU) as well as ongoing global slowdown are likely to adversely affect Kenya’s exports, tourism receipts and remittances, although such effects tend to materialize with a lag (Box 1).
The external sector position is expected to remain favorable and supportive of macroeconomic stability. Exports are projected to improve marginally over the medium term, growing on average by about 4.5% - assuming steady demand from Kenya’s trading partners for its tea, coffee, and horticultural exports. Exports to Uganda (manufacturers) and Pakistan (tea) are expected to increase in line with projected expansion of these economies. Receipts from tourism are expected to continue uninterrupted in 2019 (due to forward planned tours) but to marginally decrease with weaker growth prospects in advanced economies. Imports are projected to expand in line with Kenya’s projected real GDP growth, barring any unanticipated shocks in food or oil import prices. Although the current account deficit is projected to widen from 5.3% in 2019 to about 5.7% of GDP in 2021, it is adequately funded by continued access to international financial markets (both official and nonofficial debt) and portfolio inflows.
Mozambique: Mid-term review of the national financial inclusion strategy for 2016-2022 (World Bank)
In Mozambique, despite considerable efforts to promote financial inclusion, less than half the population in 2016 had access to a bank account, mobile money account. In response, the government of Mozambique launched an ambitious national financial inclusion strategy in July 2016. The NFIS implementation period is from 2016 to 2022, with an initial phase to 2018. By 2018, the percent of population with access to a bank account had declined slightly but was compensated by growth in mobile money accounts. A mid-term review (MTR) of the NFIS was undertaken to assess progress at the end of the first phase, recommend requisite course corrections, and establish priorities for the second phase. Extract (pdf): Mozambique has made considerable progress in financial inclusion during the first half of the implementation period for the NFIS (2016-2018). Notable accomplishments include the opening of over 4 million new accounts, the growth in mobile money transactions, the expansion of financial access points, strengthening of the financial infrastructure for credit and secured transactions, and improvements in the legal and regulatory framework. The main driver of this financial inclusion has been the growth in mobile wallets, while deposit accounts with banks have remained flat (see Figure 1). The number of registered mobile money accounts surpassed bank accounts in 2016 and the gap continues to widen. Since 2015, bank account ownership has grown by 8% a year on average, while mobile wallet ownership has grown at nearly 3 times that rate (23% a year). The trend towards mobile has also been pronounced in the value of transactions, which went from an average of 1% of GDP in 2014-16 to 19% in 2017. Women are significantly under-represented in terms of account ownership, with Mozambique having the third largest gender gap in sub-Saharan Africa.
Review of Maritime Transport 2019 (UNCTAD)
World maritime trade lost momentum in 2018 as heightened uncertainty, escalating tariff tensions between the US and China and mounting concerns over other trade policy and political crosscurrents, notably a no-deal Brexit, sent waves through global markets, according to UNCTAD’s Review of Maritime Transport 2019. Volumes in the sector grew by only 2.7% last year, below the historical averages of 3% and 4.1% recorded in 2017, according to the report. UNCTAD expects international maritime trade to expand at an average annual growth rate of 3.4% over the 2019–2024 period, driven in particular by growth in containerized, dry bulk and gas cargoes. However, uncertainty remains an overriding theme in the current maritime transport environment, with risks tilted to the downside.
Reflecting slower maritime trade, growth in global port traffic also edged down, with container port traffic increasing by only 4.7% in 2018, from a 6.7% growth rate in 2017. Similarly, container trade growth weakened. In 2018 volumes only increased by 2.6%, compared with 6% in 2017. This was matched with a sustained delivery of mega container ships, with container fleet supply capacity in 2018 increasing by 6% as compared to 4% in 2017. In an already overly supplied market, these developments further compressed freight rates in 2018. Despite the setbacks, a milestone was reached, with total seaborne trade volumes amounting to 11 billion tons. [Downloads: Full report, by chapter]
Too small to succeed: reforming the AfDB’s financial governance (CGD)
Why isn’t the African Development Bank Group bigger? Africa’s low country per capita incomes and high poverty rates offer the strongest case for development finance of any continent, but the AfDB Group is the smallest of the major development banks. In recent years, the African Development Fund - the AfDB’s concessional lending window - has actually shrunk. Annual commitments from IDA, the arm of the World Bank that lends to the lowest-income countries, to sub-Saharan Africa now stand at around $15bn a year, while the AfDF has barely surpassed an annual $2bn this replenishment cycle.
So what is limiting AfDB growth? Ironically, it may be too much regional ownership. Regional countries currently account for 60% of the AfDB shareholding but only four regional member countries are currently AfDF contributors. The countries of the region like their dominant role in AfDB shareholding. But as Nancy Birdsall explains in the The Dilemma of the Africa Development Bank, the AfDB’s governance arrangements are not conducive to raising money. They do not incentivize higher-income countries from outside the region to take on the responsibility and cost of becoming champions of the institution. Moreover, non-regional shareholders are generally skeptical of the institution’s operational effectiveness, making the World Bank a consistently more appealing choice for donors. Negotiations for a replenishment and a general capital increase are currently underway, but this tug of war is likely to continue to constrain the African Development Bank‘s size. Even if the current GCI negotiations result in a doubling of AfDB's capital, annual financing from the AfDB group as a whole would grow to only about 1-3 percent of Africa's annual SDG financing gaps. Stay tuned for a forthcoming policy paper that will flesh out the elements of this proposal. [The authors: Clemence Landers, Nancy Lee]
UNSC debate on the AU-UN partnership: meeting summary
Hanna Serwaa Tetteh, Special Representative of the Secretary-General to the African Union and Head of the United Nations Office to the African Union, speaking via videoconference from Djibouti, introduced the report of the Secretary-General on strengthening the partnership between the two organizations (document S/2019/759). “The partnership between the African Union and the United Nations continues to grow from strength to strength,” becoming more systematic and predictable, she noted. With the complexity of peace and security in Africa, such collaboration is absolutely necessary, she said, pointing to successful joint work in the Central African Republic, Sudan and other situations. However, challenges to lasting peace and security persist on the continent due to a range of root causes, exacerbated by climate change, violent extremism and the absence of effective national authority in large areas, she continued. Financing of African Union peace operations remains an important challenge, she acknowledged. In that regard, she commended contributors to the African Union Peace Fund, noting that operationalization of the Fund is a significant factor. She also said she looked forward to further strengthening of the partnership between the two organization in a major meeting scheduled for February 2020. [Security Council: Situation in Burundi]
African Business Magazine: What’s next for Botswana?
US Deputy Secretary of Agriculture: We are ready to offer assistance for AfCFTA
CUTS Geneva: The AfCFTA - opportunities and challenges
Damali Ssali: Tariffs and intra-Africa trade
Virusha Subban: Africa needs to seize the gaps created by US-China trade war
Impact of fiscal policy on poverty and inequality in Uganda: fiscal incidence analysis using the NHS 2016/17
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Diarise: World Bank Group's Fragility Forum 2020 (2-4 March, 2020):
The Forum will focus on implementation: the concrete approaches that are needed to maximize our collective impact and more effectively respond to dynamic, multidimensional, and global challenges affecting countries around the world. The Forum’s sessions - selected through a global Call for Proposal - will focus on five themes:
UNCTAD's Global Investment Trend Monitor (pdf)
FDI flows to developing economies, largely unaffected by repatriations, remained relatively stable at an estimated $342bn, a decline of 2% compared to 2018H1. Flows were 2% lower in Africa and developing Asia, and 4% lower in Latin America and the Caribbean. Three of the top 5 recipients of FDI in the world were from developing countries.
FDI flows to Africa in 2019H1 were an estimated $23bn, a decline compared to 2018H1. Subdued global economic growth, persistent trade tensions and political instability in a few countries on the continent are acting as dampeners for investment in Africa in 2019, despite the recent coming into force of the AfCFTA agreement. In terms of sub-regional groupings, East, West and Southern Africa registered upticks, while North and Central Africa had lower flows compared to 2018H1. Egypt continues to be the largest recipient of FDI on the continent, attracting $3.6bn in 2019H1; a significant number of new investment deals have been announced. FDI flows to Nigeria - the largest economy in Africa, picked up significantly, possibly driven by reforms in regulations for oil and gas companies, including lowering mandatory public ownership requirements.
FDI flows to South Africa dropped from $4bn in 2018H1 to $2.6bn in 2019H1. However, indications of several large deals in the third quarter could put the country on track towards higher FDI flows for 2019 as a whole. Ethiopia also experienced a moderate slowdown in FDI in the first half of this year with inflows amounting to $2.1bn, a decline of about 20% compared to 2018H1. In contrast, inflows increased by almost 75% in Uganda to nearly $1bn on account of increased Chinese investment as well as some progress in the development of the country's oilfields. Mozambique and Zambia also experienced rising inflows in 2019H1, with investments in oil and gas and copper fields, respectively.
Financing Africa Industrialization: AU validation workshop
The AUC Department of Trade and Industry successfully hosted a high-level stakeholders validation workshop (24 October, Abuja) for the study it undertook earlier this year. The workshop capped the Department’s RECs strategic interface mission that was focused on the ECOWAS region, and delivered from 21 - 25 October. Participants at the validation workshop noted the need for tailor-made financial products targeting the peculiar needs of SMEs, given the critical role they have towards advancing Africa’s industrialization agenda. It was further noted that SMEs constituted 90% of Africa’s industrial ecosystem, hence the need to afford them more attention in designing interventions to boost their viability, and survival. Thus, it was noted that the banking sector had to design SMEs financing products that were aligned to address the challenges of this strategic sector, if the continent was to create employment, and boost incomes for the populace.
Whilst acknowledging the importance of SEZs and industrial parks across Africa as a catalyst for upscaling industrialization in the continent, participants highlighted the need to ensure that this production model also accommodates the need to grow local industries. The participants, further noted the need to mainstream digital industrial policy and financing of investments in that sector to enhance the continent’s capacity to tap into the benefits of Industry 4.0, the current global high-tech centred industrial production wave. Cross-border and regional integrated industrialization projects were encouraged to strengthen the continent’s prospects to deliver balanced and shared industrialization benefits, as well as to improve the risk profile of most member states in the continent.
Richard Baldwin: Globalisation, robotics and pathways to development (EIF)
TfD: Least developed countries have young and rapidly growing populations. As discussed, wages will become less important in global manufacturing and the sector may no longer offer its historical pathway for poor nations to create jobs and develop through labour-intensive and productivity-enhancing activities. How best should these countries prepare tomorrow’s workforce for the future of work?
RB: This is something that needs to be thought through hard because the traditional development route is being shut off by automation. There is simply no way that human wages – as cheap as they are in countries like Burkina Faso – will compete with robots in mass manufacturing. It may not be in ten years, but most manufacturing will probably be automated within forty years at most. So policymakers need to prepare for the challenges and opportunities ahead. However, I do not think that preparing the workforce for service exports is any different to preparing them for the jobs of the future. They must be literate, healthy and connected. When looking at robotics and pathways to development, I am combining two strands in the literature. The first is that manufacturing’s contribution to employment and growth will change because of automation. The second is that service exports offer an alternative route. In fact my argument is stronger: there will be no more Chinas. Not because of trade restrictions but automation. The service-led development path will become the norm and that is what we need to think about. [Related: Trade4DevNews - Aid for Trade & LDCs (pdf)]
Guy de Jonquières: The WTO struggles to remain the world’s trade rule-maker (Prospect Magazine)
When the WTO was founded in 1995, its first director-general, the late Peter Sutherland, described it as “the pre-eminent institution for managing global economic integration.” That phrase captured the widespread sense of optimism at the time that the organisation would be steward of a more harmonious world order based on increasing cooperation, shared values and common rules. A quarter of a century later, that optimism has evaporated amid growing global tensions and instability. Today, the WTO looks less like the herald of a bright new era than a monument to a fast-fading vision of a future that has failed to arrive.
Roberto Azevêdo: Regional and multilateral efforts are key to Africa’s integration strategies (WTO)
Meeting with ministers and senior officials in Ouagadougou, WTO Director-General Roberto Azevêdo discussed the importance of regional and multilateral trade efforts to help drive Africa’s economic integration, growth and development. During his visit, the Director-General met with Burkina Faso's President Roch Marc Christian Kaboré. He also met with the President of the West African Economic and Monetary Union, Mr Abdallah Boureima, at the group's meeting for trade ministers, attended by Mr Harouna Kaboré, Minister of Trade and Industry (Burkina Faso); Mrs Shadiya Alimatou Assouman, Minister of Industry and Commerce (Benin); and Mr Iaia Djalo, Minister of Trade and Industry (Guinea-Bissau). At the WAEMU gathering, the Director-General discussed how work at the multilateral level, including at the WTO, could complement the economic integration efforts spearheaded by WAEMU countries. He gave a round-up of ongoing initiatives by the WTO to help build trading capacity in the region, and highlighted discussions in Geneva aimed at making the organization more responsive and agile, including on issues where WAEMU members have shown great interest, such as agriculture, cotton, fisheries subsidies and e-commerce.
Women cross-border traders: Uganda - South Sudan Elegu OSBP (EAC)
The EAC Secretariat, supported by GIZ-AUBP and GIZ-SEAMPEC, in collaboration with the South Sudan Women Entrepreneurs Association (SSWEA), convened a three-day training programme for women cross-border traders between Uganda and South Sudan (16-18 October) at the Elegu One Stop Border Post. It was attended by 25 women cross-border traders from Uganda and South Sudan. The women learned how to engage in cross-border trade, making use of the economic opportunities provided by the EAC without suffering from harassment and other challenges at border crossing points. Using the ‘EAC Simplified Information Package for Micro and Small-Scale Women Cross Border Traders and Service Providers in the EAC’, the women learned how to apply the EAC trading rules.
Nigeria’s border closure has implications for Africa’s economic integration (The Conversation)
Border closures are not new in Africa. But Nigeria’s actions raise important concerns about the seriousness and prospects of regional integration in Africa. African countries have different economic configurations and strategic priorities. The huge number of diverse countries within the free trade area isn’t going to make things easy. Indeed, free trade has its benefits, but it also has costs. Nigeria’s bid to protect a declining rice farming industry and save foreign exchange has led to protectionism that defies the principles of a free trade area. The African Union (AU) has been muted on the issue of the border closures. This might be because it does not yet have detailed institutional arrangements for settling disputes within the free trade area. Another factor might be that it has been quiet because Nigeria is involved. As Africa’s largest economy, the AU courted it earnestly to sign. The agreement needs Nigeria, arguably at whatever cost. [The author, Tahiru Azaaviele Liedong, is attached to the University of Bath]
Nigeria needs a competent customs and immigration service, not border closure (The Conversation)
Informal trade along the borders is carried out by hawkers of assorted goods such as textiles, footwear, alcohol and non-alcoholic beverages. There is also trade in food, fuel, transport services and foreign currencies. The poor in Nigeria typically don’t engage in large-scale smuggling. They lack the means of acquiring, transporting and warehousing large volumes of smuggled goods. Some poor unemployed Nigerians may engage in petty and innocuous smuggling, as a means of survival. But they are paying the price for the border closure, while those responsible for the worst cases of smuggling live comfortably. Apart from its domestic implications, the border closure is also inconsistent with the spirit of regional economic integration. Nigeria spearheaded the establishment of the Economic Community of West African States (ECOWAS) 44 years ago with the major goal of a “free trade area” among member countries. Nigeria’s unilateral decision reinforces the general notion that the regional bloc has not been successful at freeing up the movement of goods, services and even people within the sub-region. If that were the case, Nigeria would have coordinated its efforts at curbing smuggling with other member states. [The author, Stephen Onyeiwu, is attched to Allegheny College]
Bad bilateral trade deals haunting Africa (The East African)
According to Nicomedes Kajungu, secretary general of the National Union of Mines and Energy Workers of Tanzania (Numet), the growing number of legal suits that multinational companies are bringing against Tanzania and other African countries is a major concern. Mr Kajungu told The EastAfrican that most of these suits stem from bilateral investment treaties (BITs) signed between countries over the past three decades. “So far, African countries have signed 568 BITs and free trade agreements with investment provisions, mainly with other countries outside Africa,” he said. Mr Kajungu dismissed claims that BITs guaranteed greater foreign direct investment inflows into a country. “Huge FDI flows have been registered in countries like Brazil which do not have a single BIT in force,” he said. Numet are calling for an overhaul of the country’s 1997 Investment Act in the wake of a recent order against the government by the International Centre for Settlement of Investment Disputes.
Liberia: AfDB's Country Strategy Paper 2019-2023
In direct response to Liberia’s overarching development challenge, the main objective of the Bank’s CSP 2019-2023 is to tackle key drivers of fragility and to strengthen the country’s resilience, in a selective manner and in close alignment with the Bank’s corporate strategic framework and Liberia’s development priorities as spelled out in the PAPD. To achieve this objective, the CSP will support private sector driven economic diversification and strengthen economic governance. Accordingly, the CSP is articulated around the following two priority areas for Bank support: Priority Area 1: Economic diversification through improved transport and energy infrastructure; and Priority Area 2 –Improving economic governance and enhancing private sector development.
Liberia's external sector: Liberia has faced various external shocks in recent years, including the Ebola crisis in 2014 to 2016, commodity price shocks, and a significant reduction in economic activity resulting from the United Nations Mission to Liberia withdrawal in March 2018. The current account balance as a percentage of GDP averaged -22.7% in the last 6 years and it is projected to remain around that level in the next two years. The year 2014 was an outlier due to the response to Ebola crisis as large foreign aid flows supported remediation of the Ebola epidemic. Minerals (iron ore, diamond and gold) and rubber account for 90% of total export value of which 55% is from the minerals sector. Total exports for 2018 are estimated at $490m - an increase from $279m in 2016. In terms of imports, food imports account for 25% of import value followed by machinery and transport equipment (24%), petroleum products (15%) and manufactured goods (15%). Total imports value for 2018 was estimated at $1.0bn - a marginal increase from %0.99 billion for 2017. The over reliance on imports is not sustainable as the trade balance continues to grow hence the need for economic diversification to high value exports.
Regional Integration and Trade: Liberia ranks below average with an index of 0.31 against an Africa average of 0.39 on the Africa Regional Integration Index. At ECOWAS level, Liberia is the second bottom out of the 15 member countries. This shows that non-tariff barriers to trade are significant and these include poor infrastructure for regional connectivity and their limitation to trade facilitation beyond its bounders. The Liberian Parliament passed the ECOWAS Common External Tariff and ECOWAS trade liberalization scheme in September 2016. The Government of Liberia has signed on to the treaty connecting Liberia to the West African Power Pool (WAPP).
Related: IMF reaches staff-level agreement with Liberia on an economic and financial programme
Since the Article IV consultation, in a context of intensifying economic challenges, the Liberian authorities and IMF staff have now agreed on an economic and financial program that could be supported by Fund resources. A key element of the program is the FY2020 budget recently approved by the Legislature that constrains expenditure to available resources, and avoids inflationary and reserve-depleting borrowing from the CBL. This budget is underpinned by important reporting and institutional safeguards aimed at preventing slippage and avoiding the re-occurrence of domestic payment arrears. The budget faces tight financing constraints at a time of significantly reduced fiscal buffers and will therefore need to be strictly implemented. Importantly, this budget retains its intended pro-poor orientation. It protects essential social spending, while providing enough resources to allow the CBL to use monetary policy aggressively in the fight against the inflation that has been so damaging to the living standards of the most vulnerable members of society.
Staff welcomes the Liberian authorities’ determination to restructure the wage bill. This is a key policy reform needed to free up fiscal space and make a credible and viable budget possible, while also increasing transparency, accountability, and equity. It is noteworthy that all three branches of Government participated, and that the process yielded a progressive outcome, in that the burden was borne by the higher paid employees with the poorest benefiting from salary increases, including among teachers, health workers and line security forces.
Solving the Indian export puzzle (East Asia Forum)
The finance minister’s announcement flagged the most critical area for exports — complying with international standards. Market access barriers have shifted from the conventional instrument of tariffs to standards compliance and this has hurt Indian exporters. The inability of domestic producers to meet exacting standards in international markets is a well-established fact. Sitharaman’s proposed roadmap for the adoption and enforcement of standards seems to be the way forward. The issue of standards has been discussed by the Department of Commerce on several occasions in the past. The critical issue now is to examine the non-implementation of past recommendations and to identify bottlenecks, particularly at the institutional level. Standards must be enforced in every sector and yet the finance minister has focussed solely on the engineering sector. This appears inadequate given that exports of agricultural and agro-processed products are among the worst-performing in terms of standards compliance. In 2018, the government announced the Agriculture Export Policy that noted India’s inability to export its horticultural products was partly due to a lack of uniformity in quality and standardisation. [The author, Biswajit Dhar, is attached to Jawaharlal Nehru University; Asean trade facilitation instrument for trade in services fully operational
Mauritius wants to sign FTA with Eurasian Economic Union "in near future"
EAC explores potential for Russo-EAC cooperation
South African businesses in Uganda hold forum on strengthening bilateral trade
ECOWAS Commission, UN Women partner on gender mainstreaming
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The October Commodity Markets Outlook: prices revised down as global growth weakens and supplies remain ample
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Diarise: SheTrades Global (to be held in conjunction with the World Export Development Forum, 18-22 November, in Addis Ababa)
Themes that will be discussed include how free trade agreements catalyze more inclusive trade for women, with a spotlight on the AfCFTA, innovative tools that promote trade and women’s economic empowerment such as the SheTrades Outlook; and priorities that SheTrades private sector partners are acting upon. SheTrades Global will be preceded by two days of closed workshops where women’s business associations will discuss how the AfCFTA can deliver economic opportunities for women. In addition, key SheTrades partners will discuss business models to deliver together on shared goals.
R35bn in South African exports to the USA are at stake in a 'review' just triggered by SA's copyright reform efforts (Business Insider)
South African exports to the US - worth some R35bn last year - will be at stake when the Office of the United States Trade Representative launches a review of SA's eligibility for duty-free imports under the US system known as the Generalized System of Preferences (GSP). The US federal government announced plans for the review on Friday. The exports threatened include – but go beyond – exports to America under the African Growth and Opportunity Act. AGOA exports are predicated on participating African countries being eligible under GSP rules, the US embassy in Pretoria's spokesperson Robert Mearkle told Business Insider South Africa on Sunday. That implies that should a review end in South Africa being ejected from the GSP, it will automatically be ejected from AGOA too.
"US imports from South Africa under GSP and AGOA equaled a combined total of $2.379bn in 2018," Mearkle said. That is the equivalent of R34.8bn. All those exports will not necessarily halt if they can no longer be sold in the USA duty-free, but they will become price-uncompetitive if any other countries can sell the same items while still benefiting from AGOA, or the broader GSP. "During the review, there will no change to GSP participation or to benefits under the African Growth and Opportunity Act. The government of South Africa will have the opportunity to participate in the review process," said Mearkle. [USTR statement: USTR announces GSP enforcement actions and successes for seven countries]
Simplice A. Asongu: Can a West African currency union work? (Project Syndicate)
After all, the France-backed currency, which is currently pegged to the euro, offers significant advantages, including exchange-rate stability and lower interest rates. Members of the West African CFA franc currency union might not want to risk these benefits by joining an unproven currency union with countries that have a history of high interest and inflation rates. And France itself has an interest in the CFA franc countries’ rejection of the ECO, because they deposit half of their foreign reserves in the French treasury. Despite these formidable challenges, there are reasons to be optimistic about the ECO – beginning with its potential to accelerate regional integration. A successful ECOWAS currency union would likely spur progress on the proposed East and Southern African Monetary Zones. This would go a long way toward advancing progress on the ambitious African Continental Free Trade Area. The eurozone’s experience showed how unruly currency unions can be, and how important it is to continue experimenting and adapting. An ECOWAS union will be no different. But if member countries commit to making it work, the ECO could be a boon to regional – and continental – growth and development. [Note: The author is lead economist and Director of the African Governance and Development Institute]
IGAD battles internal wrangles as Horn of Africa craves for mediation (Daily Nation)
Services at the Inter-governmental Authority on Development could be crippled following a stalemate on who becomes chief executive officer and chairman of the bloc. Normally a calm organisation focusing on Horn of Africa’s political scene, members seeking to lead Igad for the first time since its formation in 1996 are agitated. The spark occurred 10 days ago when Ethiopian Prime Minister Abiy Ahmed, the current chairman, appointed his former Foreign Minister Workneh Gebeyehu as the executive secretary. Workneh is supposed to take office on November 1, according to details contained in the appointment a letter. Member states complain that the decision did not follow laid down procedures. Ethiopia has chaired IGAD since 2010 when Kenyan President Mwai Kibaki handed the mantle to PM Meles Zenawi. Zenawi died in 2012 but the chairmanship has continuously been held by his successors Hailemariam Desalegn and now Abiy Ahmed, despite it being rotational. In fairness, there were no complaints before, probably because those interested now had other targets. A Somali diplomat told the Nation that the rotation policy “seems to have been discarded years ago”. IGAD bureaucrats, however, told the Nation that there are no wrangles but “competition”.
EAPP Regional Power Market Trade Project: project appraisal report on capacity building issues (AfDB)
The Capacity Building for the Operationalization of the EAPP Regional Power Market Trade Project will provide support to EAPP to establish the regional power market trade in Eastern Africa, thereby improving access to reliable, clean and affordable electricity in the Region. The key output is finalization of shadow market operations, i.e. power market modelling and simulation of the existing bilateral trade, which is a final step in the transition to real market trade. The second output is the full establishment of the EAPP Market Committee, with capacity in regional power market development. The Project will also support the harmonization of regulatory framework for power trading, such as wheeling arrangements to facilitate cross-country power trade. It will also enable the integration of the EAPP and the Southern Africa Power Pool, thereby creating the largest power market anywhere in the world, spanning from Cape Town in South Africa to as far North as Egypt and Libya. This will greatly ease the challenges of access to clean, affordable and reliable energy by enabling countries that will generate surplus power, such as Ethiopia, Kenya and others, to share with those in deficit.
Rwanda: Why government has mixed feeling over Doing Business Ranking (New Times)
However, despite the reforms and progress, the report ranked Rwanda 38th globally from 29th in its previous ranking. The drop was traced to an indicator, protecting minority investors, where Rwanda was placed 114th globally from 14th in the previous report. The drop in ranking was however not a result of performance but a change in the methodology and approach of measurement. It is this review of the methodology and approach in the process of compilation of the report that led government officials to receive it with mixed feelings. Among the changes made by the World Bank in the evaluation of the indicator was the late addition of assessment of the stock market performance as part of the sub-indicators in the report. According to the latest ranking, for an economy to be seen as having an active stock market that protects minority investors, it has to show at least 10 companies listed and trading equities. Rwanda’s grievances with the review were that it was not communicated as is the standard practice of the World Bank Doing Business Report ranking methodology. [New Times editorial comment: Doing Business report is about results and not ranking]
Madagascar Economic Update: new start? (World Bank)
Growth continued apace in 2019, although moderating slightly to an estimated 4.7%, according to Madagascar’s latest Economic Update. The report highlights two main decelerating factors: export revenues and industrial activity were adversely affected by a significant deceleration in major export markets, and execution of public spending was slow in the first half of the year, as the new government took office following the presidential election at the end of 2018. A post-election rebound in public and private investments is expected to raise growth to 5.3% in 2020, offsetting the impact of softening activity in China, Europe, and the United States. However, risks to the outlook have intensified due to the international context and the potential for higher and more inclusive growth continues to be held back by inadequate infrastructures, low human capital, and weak governance. Extract: Trade and balance of payment (pdf): Weakening export revenues and sustained imports were reflected in a deteriorating current account balance. In the first semester, the current account recorded a deficit of $220.4m, compared to a surplus of $213.9m in the first semester of 2018. The shift mainly stems from a deceleration of export revenues, including from cash crops and nickel. In recent years, vanilla has been the main source of export receipts, supported by exceptionally high prices and robust demand. Both export quantities and unit prices, however, shrank in the first half of 2019. Despite vanilla being a key source of foreign exchange and income for Madagascar, gains are accruing to intermediaries and exporters, rather than to smallholders (see Chapter 3). Nickel is the second largest source of export revenues, and while export volumes continued to grow in the first semester, lower international prices on expectations of slowing demand from China and other major industrial economies have reduced export revenues there as well. [Related blog analysis, by Marc Stocker: Time to review costly tax exceptions in Madagascar]
Djibouti: 2019 Article IV Consultation (IMF)
Large-scale infrastructure investments and a rapid expansion of trade and logistics activities have fueled strong growth in recent years. The authorities’ development strategy aims at positioning Djibouti as a regional trade and logistics hub. Since 2014, the government has promoted investments in ports, free trade zones, a water pipeline, and a railway from Djibouti to Addis Ababa. Against this backdrop, real GDP growth averaged close to 7% during 2014-17, driven by buoyant trade and logistics activities. The latest national account and external sector statistics attest to the importance of these sectors in the economy. Supported by IMF and World Bank technical assistance, the authorities have overhauled their national accounts and international trade statistics to include new information on the activity of ports and FTZs (Annex I). Driven by higher value added in the trade and logistics sectors, nominal GDP was revised up by close to 38% relative to the last Article IV Consultation. Activity in the FTZs grew by about 10.5% during 2014–17, and now accounts for one-fifth of the economy. Exports and imports were also revised up significantly to account for the large re-exports out of the FTZs.
Using regularized labor migration to promote Nigeria’s development aims (World Bank)
By 2050, Nigeria’s working-age population will have increased 125% (see figure 1). It is estimated 30 million additional jobs will be needed by 2030 to keep the employment to population ratios at current levels, let alone improving them. Even maintaining the assumption of an economic growth rate of 6% per year, only one in four Nigerians entering the labor market will be able to obtain good, wage-paying jobs in the formal sector. The World Bank is currently exploring where Nigerian job-seekers can be competitive in external labor markets, and which skills are in demand in both contexts. This analysis will allow Nigeria to craft a pathway that maximizes the benefits of migration to all parties, including by promoting development and combatting skills drain at home. As shown above, this model will benefit both countries, and promote sustainable economic development. To date, the number of workers involved in these projects is small, and we acknowledge that the model is unlikely to meet all demand, both in Nigeria and abroad. But it should be viewed as one tool which can be used to manage migration in a mutually beneficial way — a tool that is hitherto missing from the development community’s toolkit. The scale of the demographic shifts highlighted above means Nigeria, and key countries of destination, cannot wait until migration flows visibly increase to implement new legal labor migration pathways. Tools such as the Global Skill Partnership should be tested now, in a period of relative manageability, before the scale and pace of migration makes innovation difficult.
Kenya: Only 1 in 100 firms meets China rules for avocado export (Business Daily)
Only one firm out of over 100 has met the requirements laid down by the Chinese for export of avocados to the Asian country, six months after Nairobi and Beijing signed the deal. The deal agreed in April this year between President Uhuru Kenyatta and his Chinese counterpart Xi Jinping allowed Kenya to export frozen avocado to tame pests common with Kenyan fruits. The Government, through the Ministry of Trade, has started negotiations to have the directive eased and allow local firms to export fresh avocado as they work towards laying necessary infrastructure to meet the requirements. “The Ministry of Trade has opened negotiations with China over the matter and we expect a positive response,” said Ojepati Okesegere, chief executive officer of Fresh Producers Consortium of Kenya. [Kenyan bank mulls partnership with Chinese fintech firms]
When two elephants fight: Unstable relations between Nigeria and South Africa threaten the future of pan-African integration (IPS-Journal)
In the long term, the AfCFTA envisions a protocol on free movement of persons and seeks to establish a visa-free zone within member countries and an African Union passport. Given current tensions, however, any such common pan-African project looks to show little promise. And unless the respective governments and elites address their internal challenges and include civil society, labour organisations and the ever-growing informal sector in the debate on national development and wealth distribution, the AfCFTA with its neoliberal inclination will only make things worse. The aggressive expansion of big capital will prevail and intra-continental migration to the economic centres and megacities will increase. If left unregulated and unprotected, exploitation of and rivalry among the poorest are likely to continue their violent trend. Nationalistic sentiments and scapegoating of immigrants spread easily among the downtrodden. [A note on the authors: Ulrich Thum is Resident Representative of the Friedrich-Ebert-Stiftung office in Abuja; Bastian Schulz is the Director of the FES Trade Union Competence Centre for Sub-Saharan Africa based in Johannesburg]