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EXIM 2019 Sub-Saharan Africa Advisory Committee convenes interagency meeting to advance President Trump’s Prosper Africa Initiative (Exim Bank, US)
The 2019 Sub-Saharan Africa Advisory Committee of the Export-Import Bank of the United States met earlier this week to discuss how EXIM can work closely with other federal trade agencies to fulfill President Trump’s Prosper Africa initiative aimed at increasing US trade with Africa and fostering Africa’s economic development. Interagency cooperation is vital to the success of President Trump’s Prosper Africa initiative. EXIM convened an open meeting with a wide variety of both public and private stakeholders to explore venues of cooperation on this important subject. “A whole-of-government strategy is necessary to substantially increase two-way trade and investment between the United States and Africa,” said EXIM Board Member Judith D. Pryor. “Working with our sister agencies to leverage our collective resources can help provide the stimulus needed for sustainable economic development in Africa while also supporting US jobs here at home.”
“Since 2009, EXIM has authorized more than $12bn in support of America’s exports to sub-Saharan Africa,” said EXIM Board Member Spencer Bachus III. “We see great opportunities for American businesses, particularly small businesses, to dramatically increase US exports to Africa.”
“It’s critically important the US EXIM Bank be reauthorized to achieve the Trump Administration’s vision for Prosper Africa,” said SAAC Chair Daniel Runde. “There is a bipartisan consensus that we need to see Africa as a business opportunity, and we need the US EXIM Bank to make that happen. If the US EXIM Bank is not authorized, African businesses will work with others, including the Chinese.”
“In Africa, we are the good guys,” said Steven Dowd, executive director of the African Development Bank Group. “If you do business with U.S. firms, buyers will receive quality products and fair value, and they won’t be strapped with unsustainable debt.”
Newt Gingrich: The Export-Import bank is crucial to America’s ability to compete with China (Newsweek)
In the age of Huawei, the Belt and Road Initiative, and China’s state-sponsored companies, we need the US Export-Import Bank more than ever. The EXIM Bank, an independent agency, provides government-backed financing for those looking to export goods and services from the United States. Since the 1930s, it has helped grow the U.S. economy and foil unfairly aggressive foreign competitors. However, due mostly to recent politics, it hasn’t been fully functioning since 2014. This needs to change—for many reasons. [Jomo Kwame Sundaram, Anis Chowdhury: Development banks needed to finance sustainable development]
George Ingram, Sally Paxton: How the new Development Finance Corporation can get off to a solid start (Brookings)
As one of its earliest principles, the leadership of OPIC has stated that it wants the DFC to set the gold standard for a modern and transparent DFI. We think that approach is essential. The private sector is increasingly being looked to as a critical source to fill the financing gap for the Sustainable Development Goals. To mobilize more of this capital, governments are turning more towards utilizing scarce public money as the catalyst. To date, however, it is not clear whether or not this is a wise investment. To what extent, for example, can we measure whether the use of public money - such as a subsidy or de-risking an investment - has actually mobilized more/better private resources? Has the use of public money resulted in improved development outcomes? Has the investment introduced a new business activity that advances development in a business sector, has it brought in a more developmentally impactful approach to business, has it created more jobs than would have happened without the public funds? Do the DFIs themselves even have the necessary information to make their case that they deserve government resources? And do DFI policymakers and shareholders have the data they need to make informed decisions about the right level and type of contributions to DFIs? The bottom-line question on all of this is: Do we know what our public resources are buying?
Manufacturing in SADC: moving up the value chain (Exim Bank, India)
Exim Bank’s study analyses the current trade and commodity export composition in the SADC region. An analysis of the global value chain participation rate for SADC countries, highlights the high rate of domestic value added embedded in other countries’ exports. In this regard, the purpose of this study is to delve on making the region a globally competitive industrial base by having India’s engagements into key potential manufacturing sectors in the SADC region. India’s investment potential in SADC manufacturing:
According to data from the Ministry of Finance and the Reserve Bank of India, India’s approved cumulative investments in the SADC region during April 1996 to March 2019 amounted to $60.5bn. Mauritius, Mozambique and South Africa are the top destinations of India’s investments in the region. India’s investments in the SADC region accounted for nearly 93.8% of Indian investments in Africa during April 1996 to March 2019, mainly dominated by investments in Mauritius. During 2010-11 to 2018-19 the cumulative Indian investment in the SADC region amounted to $51.2bn. The manufacturing sector accounted for the largest share of approved investments from India to the SADC countries (42%) of total investments received by SADC, followed by financial, insurance, real estate and business services (24%), wholesale, retail trade, restaurants and hotels (9%) transport, storage and communication services and agriculture and allied activities both accounting for 8% share in total investments by India. Mauritius has received the highest investment in manufacturing (98.7%), mainly due to the country’s offshore financial facilities and favourable tax conditions. The other SADC countries which have received Indian investments in manufacturing are South Africa, Zambia, Tanzania, Botswana, Zimbabwe and Malawi. [Note: This occasional paper, dated 30-09-2019, can be downloaded from the Exim Bank website’s publication section]
India - North Africa conclave to take place in Cairo in early November
The Confederation of Indian Industry will organize the “Regional Conclave on India - West Asia and North Africa” in Cairo in cooperation with the Ministry of Commerce and Industry and Ministry of External Affairs of the Government of India, along with the Export-Import Bank of India on 6-7 November. In a press release on Thursday, the Indian Embassy in Cairo said this is the first time that the Confederation of Indian Industry will organize a forum in the North Africa region. Hardeep Singh Puri, India’s Minister of State of Ministry of Housing and Urban Affairs; Minister of State of the Ministry of Civil Aviation; and Minister of State in the Ministry of Commerce and Industry will lead the Indian delegation. Egypt’s ministers of trade and industry and investment and international cooperation will take part in the conclave along with a number of dignitaries and businessmen from Egypt, Tunisia, Morocco, Algeria, Jordan, Lebanon, Iraq, Sudan and South Sudan.
India, France explore 3rd country projects in Western Indian Ocean region (Economic Times)
India and France have taken concrete steps to firm up their strategic partnership in the western Indian Ocean, as part of their respective Indo-Pacific strategies, within two months of Prime Minister Narendra Modi’s trip to Paris. Leaders of India, France and Vanilla Islands – consisting of Comoros, Madagascar, Mauritius and Seychelles in the western Indian Ocean – are currently meeting for the first time in Reunion Islands (French territory) for exploring economic and development partnership. India is being represented by the minister of state for external affairs V Muraleedharan at the meet. India, in partnership with France, is keen to focus on port development, blue economy, trade, connectivity, tourism, skill development, hospitality and healthcare in this resource-rich region, said people aware of the matter. India is also eyeing gas deposits in the Mozambique Channel near Vanilla Islands, they said.
Communique on cross-border coordination, partnerships, and communication for Ebola virus disease preparedness in at-risk member states (WHO)
We, the Ministers of Health and senior immigration officials of the DRC and the nine neighboring countries to the DRC, met on 21 October 2019 in Goma in the DRC; Noting with concern the ongoing outbreak of the Ebola virus disease (EVD) in north-eastern DRC and the potential risk for EVD transmission including other public health threats into the neighbouring countries; Aware that there are several African Union Member States neighboring the DRC at potential risk for EVD transmission including Angola, Burundi, Central Africa Republic, Republic of Congo, Rwanda, South Sudan, Uganda, Tanzania and Zambia. Collectively, we resolve to (extract):
Cross-border joint planning and implementation of EVD preparedness and response activities, including risk communication and community engagement campaigns; Movement of people across national borders in accordance with the International Health Regulations; and Legal and regulatory processes and logistics planning for rapid cross-border deployment and receipt of public health experts and medical personnel for EVD response; Establish the Africa Ebola Coordination Task Force (AfECT), hosted at the African Union secretariat in Addis Ababa, under the leadership of the Member States with support from the Africa CDC, WHO and other relevant partners to support the cooperation and collaboration described above. Whilst AfECT maintains political oversight through AU institutional arrangements, technical support would be facilitated through the WHO sub-regional technical coordination platforms in collaboration with the Africa CDC. [Related: Statement on the meeting of the International Health Regulations (2005) Emergency Committee for Ebola virus disease in the DRC]
South Africa: Beitbridge port of entry challenges (SA Parliament)
The Select Committee on Security and Justice earlier this week visited the Beitbridge Port of Entry. The committee received a joint briefing from the Department of Home Affairs, the SA National Defence Force and the South African Police Service who spoke to the responsibilities of the respective departments in managing the border crossing and the systematic challenges they faced. The port services an average of 30 000 trucks, 40 000 light motor vehicles and 10 000 buses a month. The committee noted the vast infrastructural challenges relating to poor road conditions, human resources challenges faced by the departments and the issues around the almost non-existent border fence. Officials from the Border Management Authority requested that the committee assist by asking the Department of Public Works to prioritise these issues, which pose a particular challenge to the South African National Defence Force that has to patrol an area stretching up to 1 000 kilometres. The committee heard that the SANDF budget and its human resources are just not enough to expand on these, and that the redeployment of members from Namibia to the Beit Bridge Port could possibly be an option to investigate. The committee thus notes that areas of high vulnerability need to be prioritised given the lack of resources. Whilst taking cognisance of these challenges, the committee noted the view that the illegal crossing on the South African borders is not necessarily what contributes to the large number of undocumented foreign nationals in the country, but rather those who enter through the legal channels and end up settling in South Africa despite (sic) overstaying their visas.
NACCIMA: Nigeria’s border closure in order (ThisDay)
The Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture has said the recent closure of the country’s borders “is in order and long overdue”. NACCIMA also maintained that the federal government should resist any pressure from any quarters for the reopening of the borders. Speaking to newsmen in Minna on Wednesday, the Director General of the Association in Niger State, Alhaji Adamu Salihu, however asked the federal government to seize the opportunity created by the closure to reform the nation’s ports. “The closure of the borders is a welcome development, it has been long overdue. We should seize this opportunity to reform our ports. We should eradicate human rats in the ports and make the ports safer,” he said. Salihu also tasked the federal government to, while the borders remain closed, put structures in place so that imported goods will be received in good order, insisting that “if we make this effort and no reforms in the ports, it will amount to wasted efforts, time and money”. “This is a good policy. All they need to do is that in the short run the structures should be put in place to avoid any backlash. The closure of the borders is a welcome development, it has been long overdue. We should seize this opportunity to reform our ports.”
Report of the Committee on Rules of Origin to the General Council on preferential rules of origin for Least Developed Countries (pdf, WTO)
This report is being submitted by the Committee on Rules of Origin to the General Council in accordance with the requirements of Paragraph 1.10 of the Ministerial Decision of 7 December 2013 ( WT/L/917 , the “Bali Ministerial Decision”) and of Paragraph 4.4 of the Ministerial Decision of 15 December 2015 ( WT/L/917/Add.1 , the “Nairobi Ministerial Decision”) on Preferential Rules of Origin for Least Developed Countries. Under these provisions, the Committee on Rules of Origin “shall annually review the developments in preferential rules of origin applicable to imports from LDCs” and report to the General Council. Extract (pdf):
To facilitate access to origin-related requirements, the Secretariat informed Members about a collaboration with the International Trade Centre and the World Customs Organization for the development of the online “Origin Facilitator”. The tool allows users to consult and compare origin requirements, at the tariff-line level (origin criteria, origin certification and other related elements) . Because preferential rules of origin entail compliance with dozens of variables, finding a user-friendly way of navigating these requirements is a key aspect of facilitating trade. The Facilitator was publicly available at no cost. It offered a useful tool for government officials in order to identify and compare market access opportunities. In that sense, it is an initiative aimed at facilitating exports from LDCs. Members also heard updates from some preference-granting Members about ongoing efforts to examine current origin practices in light of the Ministerial Decisions. In particular, Members heard an update about the implementation of the self-certification system for registered exporters (Registered Exporter system, REX) being implemented by the European Union; Norway; Turkey; and Switzerland.
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Doing Business 2020: Sub-Saharan Africa
Economies in Sub-Saharan Africa continued to improve their business climates, with the region’s largest economy, Nigeria, earning a place among the year’s top global improvers alongside Togo, according to the World Bank Group’s Doing Business study (pdf). Economies of the region enacted 73 reforms in the 12 months leading to May 1, down from a record high of 108, and the number of countries implementing at least one reform fell to 31 from 40. The regional average ease of doing business score was 51.8 on a scale of 0 to 100, below the OECD high-income average of 78.4 and the global average of 63.0. There were several bright spots in the region. Togo is on the list of top improvers for the second year in a row thanks to reforms lowering fees for construction permits and streamlining property registration procedures, among other measures. Nigeria conducted reforms impacting six indicators, including making the enforcement of contracts easier, which placed the 200-million-person economy among the world’s top improvers. Kenya also carried out six reforms, including improving the reliability of its electricity supply and introducing an online system for social security contributions, positioning it third highest in the regional rankings, behind Mauritius and Rwanda. With four reforms implemented this year, Mauritius remains the easiest place to do business in the region, ranking 13th globally. Among other reforms, the country made resolving insolvency easier and improved contract enforcement.
Elsewhere, Cabo Verde and Eswatini each carried out four reforms, a record for both. Zimbabwe improved in five areas measured by Doing Business while the Democratic Republic of Congo, Gabon and Rwanda advanced in three. Due to active reform efforts, Niger’s and Senegal’s scores improved significantly.
A special feature on the Russia-Africa Summit, which concluded today in Sochi:
(i) Declaration of the First Russia-Africa Summit: profiled outcomes
Establish a Russia-Africa Partnership Forum with a view to coordinating the development of the Russian-African relations, and designate the Russia-Africa Summit as its supreme body to be convened once every three years.
Hold annual political consultations between Ministers of Foreign Affairs of the Russian Federation and African States acting as the present, former and future Presidencies of the African Union in the period between Summits.
Make efforts to substantially expand the trade between the Russian Federation and African States and diversify it, including by increasing the share of agricultural products in import and export operations. Assist the existing bilateral Russian-African intergovernmental commissions and committees on trade, economic, scientific and technical cooperation in their work, and contribute to establishing new similar partnership mechanisms between the Russian Federation and African States.
Provide necessary assistance to major Russian companies working in African markets and entrepreneurs from African States who plan to operate in the Russian Federation through reciprocally improving investment and business climate, as well as through providing possible special preferences.
(ii) Putin seeks to double trade volume with Africa within five years. Military cooperation is set to dominate the first Russia-Africa summit in the Black Sea resort of Sochi, attended by leaders and top officials from all 54 African countries and scores of African businessmen eager to tap into Russia’s emerging market. While opening Wednesday’s summit, Russian President Vladimir Putin told leaders and representatives of Africa’s 54 countries that he would seek to double trade ties between the two partners over the next 5 years. [Putin: Russia exporting more food than weapons to Africa]
(iii) Russia-Africa trade has doubled since engagement, says Afreximbank chief. Trade between Africa and Russia has doubled in the years since the African Export-Import Bank started engaging with the Russian Export Center to promote trade between the two sides, Bank President Prof. Benedict Oramah said yesterday. Professor Oramah, who was speaking during the opening of the Russia-Africa Economic Forum organised as part of the first-ever Russia-Africa Summit taking place in Sochi, Russian Federation, told the heads of state from about 50 African countries from Africa and Russia and other participants that annual trade between Africa and Russia now stood at about $20bn as against $10bn in the past. He announced that Afreximbank and the Russian Export Center had committed to act to achieve another doubling of the trade volume in next two years. Afreximbank would offer guarantees and other programmes to address certain risk perceptions and increase trade, stated Professor Oramah. The Bank was also working with the Russian Export Centre to create a trade information portal which would provide information to businesses to facilitate trade between the two sides.
(iv) Egypt could be the hub for Russian exports to Africa: Russia’s trade minister. In a session on supporting African trade, Russia’s Trade Minister Denis Mantorov pointed to the possibility of enhancing the role of the Egyptian market as a hub for Russian products to access the African continent, where Egypt is a key trade partner of Russia and the volume of trade exchange between the two countries increased by 17% and Egypt accounts for 30% of Russia’s exports to the African continent.
(v) Putin courts Africa and offers to mediate dam dispute. Russian President Vladimir Putin on Thursday sought to expand Moscow’s clout in Africa by touting military aid and economic projects at the first-ever Russia-Africa summit and even offered to help mediate a growing dispute between two of the continent’s largest powers, Egypt and Ethiopia. Kremlin spokesman Dmitry Peskov said Putin addressed the issue with Egyptian President Abdel-Fattah el-Sissi and Ethiopian Prime Minister Abiy Ahmed in separate meetings on the sidelines of the two-day summit attended by leaders of 43 of Africa’s 54 countries. Peskov didn’t say whether Egypt and Ethiopia accepted the mediation offer, which the United States also extended in recent days after talks on the dam collapsed this month.
(vi) Russia sets up $5bn trading platform in Africa. An agreement has been reached at the Russia-Africa summit in Sochi to establish a mechanism for funding trade deals. It is aimed at giving Russian exporters access to the African market. “The deal is designed to develop cooperation with African states by arranging mechanisms of issuing loans for joint foreign trade projects,” the Russian Export Center said. It explained that the deal opens up opportunities for increasing the volume of Russian exports to Africa, including to Angola, Ethiopia, Mozambique, Zimbabwe, and other states. With a volume of more than $5bn, the platform will enable risks related to trade with African countries to be absorbed. According to REC Director Andrey Slepnyov, Russia will “attract at least 10 countries and literally open a trade corridor to the African continent.” That will create “a unique opportunity for Russian businesses to systemically expand presence in the region and consolidate on one of the most promising and dynamically developing global markets opening it for high-tech domestic export.”
(vii) Inside the Russia-Africa matryoshka: summitry, geopolitics and resources. The paper begins with a brief overview of the drivers of recent Russian foreign policy, followed by a focus on the evolution of its Africa engagement and an analysis of the different sectors that have formed the basis of this re-engagement. The paper includes a brief overview of relations with South Africa, probably the most significant country in Russia’s Africa engagement in sub-Saharan Africa, not so much because of commercial relations but because of South Africa’s important regional and global role and its presence in many international forums. The last section focuses on what Africa could expect from Russia and how the continent as a whole should engage with Russia in the future. [The authors: Chris Alden, Elizabeth Sidiropoulos]
(viii) Sochi Summit Quick Links
Landry Signé: Vladimir Putin is resetting Russia’s Africa agenda to counter the US and China
Peter Fabricius: Putin showcases Russia’s support for Africa at inaugural economic forum
President Faure speaks on building Blue Economy partnerships at Russia-Africa Forum
Lavrov inks co-operation agreements with African countries at Russia-Africa summit
Arms, oil and influence: What you need to know about Russia’s first-ever Africa summit
Andrew Hammond: Why is everyone suddenly wooing Africa?
DW: Russia’s comeback in Africa
Rwanda hosts 1st Forum of Owners of Cotton, Textile and Apparels Manufacturing Industries (EAC)
The establishment of fully serviced industrial parks with plug and play facilties to attract investments is one of the proposed actions to gain quick wins in the promotion of the Cotton, Textiles and Apparels (CTA) Manufacturing Industries in East Africa. Themed Promoting Local Production and Consumption of Cotton, Textile and Apparels Made in the EAC Region, the two-day forum was attended by participants from the ministries responsible for industry, trade, agriculture and EAC; private sector players, CTA industry associations, private sector associations, industry associations and development partners, among other stakeholders. The overall objective of the Forum was to ensure that the Owners of CTA industries meet, discuss pertinent issues within the sector and make useful and practical recommendations to the EAC Policy Organs especially the Heads of State Summit for purposes of promoting the sector.
Opening the Forum, Rwanda’s Permanent Secretary of Trade and Industry, Mr Michel Minega Sebera, noted that CTA has the potential to create employment, improve economic well-being and widen the tax base in the region. Mr Sebera called on EAC Partner States to fast track the phasing out of the second hand clothes in order to reap the benefits of the sector. He informed the meeting that in 2016, Rwanda started implementing the Summit directives and embarked on the phase out of the second hand clothes. The PS disclosed that the phasing out of second hand clothes in Rwanda had attracted new investments in the sector and led to more than 15 new companies investing in apparels. He further revealed that the country had also developed enabling infrastructure in the exports processing zones. He noted that the region’s efforts to promote the sector comes at a good time as the region stands to benefit with the larger market as part of the Africa continental free trade area.
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OECD’s 2019 Global Forum on Competition (5-6 December, Paris):
The profiled paper: Competition policy within the context of free trade agreements (pdf). This paper reports the findings of a mapping exercise of the competition-related provisions of 267 free trade agreements included in the WTO Regional Trade Agreements database. This represents by far the largest sample of FTAs analysed to date in this type of mapping exercise. Drawing lessons from this mapping exercise, we formulate tentative suggested ways forward, exploring the appropriate fora and methodologies for harmonising competition provisions within the international trade system. [Access other advance Forum documentation here]
South Africa and the AfCFTA: today’s dti AfCFTA policy dialogue. According to the Deputy Minister of Trade and Industry, Mr Fikile Majola the dialogue will focus on the possible trade and economic spin-offs for South Africa from AfCFTA: “The expectation is that this dialogue will expand on the possible areas of gains and identify potential areas where losses for South Africa might be expected. The upshot of this is the creation of a solid platform for South African policy makers to intervene in areas of economic policy, in order to derive maximum gains while reducing the possible losses to a minimum.”
Seminar on the potential impact of the AfCFTA on Maghreb economies (11-12 November, Rabat). Extract from the concept note (pdf): The Maghreb is the sub-region with the lowest level of economic and trade integration in Africa. As it stands, the Maghreb Arab Union’s (UMA) economic grouping is characterized by very limited trade within its borders. In 2018, only 3.34% of exports from UMA member countries were aimed at the Maghreb market, accounting for an extremely small proportion when taking into account the performance achieved by other African regional economic communities and the sub-region’s potential. With the exception of 2018, the past few years have witnessed a decline in intra-Maghreb trade, with a steady downward trend since 2013. In 2018, intra-Maghreb trade amounted to $3.6bn. However, this sharp pick-up of 23% from 2017 happened on the heels of a steady downward trend over the 2013-2017 period during which the volume of intra-Maghreb trade dropped below the $3bn mark in 2017, losing more than 45% in comparison with 2013. There is nevertheless a clear paradox between the current status of intra-Maghreb trade and the potential for intra-regional trade. ECA studies confirm that there is a potential for intra-regional trade growth in the Maghreb of around 70%, assuming that the necessary regulatory conditions are in place to facilitate cross-border trade, by simplifying and harmonizing trade rules in goods and services, alongside those related to enhancing investment, competition and intellectual property policy.
IGAD member states scrutinise regional infrastructure master plan: Entebbe meeting. The joint steering committee’s key objective is to guide the development of the IGAD regional infrastructure master plan that will enhance regional economic integration through trade, free movement of goods and persons and poverty reduction amongst IGAD Member States. The IRIMP covers the regional sub-sectors of transport, ICT, energy and trans-boundary water resources. The workshop was a follow-up and build-up of the previous two workshops conducted in July 2018 in Nairobi, Kenya and the other one in December, 2018 in Mombasa, Kenya on the Inception Report and the Broad Sectors Overview and Project Prioritization Criteria Report, respectively.
Pan African Parliament: Resolutions from the Third Ordinary Session, 6-18 October. Profiled resolutions (pdf): On the adoption of the African model double taxation agreement; On managing debt and fighting corruption in Africa; On the peace and security status on the African continent
South Africa: Cele declares ‘war against the selling of fake goods’, promises greater vigilance at major ports (News24)
Police Minister Bheki Cele says the fight against counterfeit goods in South Africa will now include stricter border control. The minister added that it’s no good cracking down on operations in the country when it’s clear the counterfeit goods emanate from South Africa’s ports. Cele was addressing the International Law Enforcement Intellectual Property Crime Conference in Cape Town on Tuesday. He said as a national police force, “we have declared war against the selling of illegal goods, especially in Gauteng”. The conference - now in its 13th year and making its first appearance on the African continent - is themed “Fighting IP crime through innovation and cooperation” and continues until Wednesday. During his keynote address to delegates, Cele emphasised that raids would continue to take place within the counterfeit market, even going as far as boasting about the successes police have had over the last few months as goods valued at more than R235m were seized. However, Cele said police have asked pertinent questions on how to effectively close the net on the sale of illegal goods. The answer, he said, was in better vigilance and a crackdown on South Africa’s entry points.
Six things to know about women in e-commerce (UNCTAD)
“It’s a well-known fact that women in technology are underrepresented and poorly funded,” said Candace Nkoth Bisseck, UNCTAD’s eTrade for Women project manager for the new initiative. According to Pitchbook, in 2018, start-ups in the US with only female founders took a meagre 2.2% of the $130bn venture capital deployed. Greater momentum behind a new narrative is needed to change the funding landscape while inspiring would-be women digital entrepreneurs to pursue their business ideas. Earlier this year at the fifth annual UNCTAD eCommerce Week in April in Geneva, leading women in e-commerce came together to discuss how to change the women in e-commerce narrative. Here are the six lessons they shared about women in e-commerce and how a narrative change can help:
Lesson 3: We simply need more women on the internet. While the internet has opened new opportunities for women to participate in global trade and businesswomen can access a bigger global consumer base than ever before, there’s a big gap between male and female internet usage. These trends play out in developed and developing countries alike. Overall, 12% fewer women use the internet than men. In sub-Saharan Africa it’s as high as 25%, and in LDCs even 33%. Given the opportunity, women entrepreneurs are more likely to engage in digital entrepreneurship, but the challenge is facilitating this access in the first place. More needs to be done and more attention needs to be focused on digital inclusion. Our women in e-commerce called for greater efforts to achieve gender equality online to inspire more women-led e-commerce.
Inclusion matters in Africa (World Bank)
Social, economic, and political transformations are sweeping the African continent. We discuss transitions under some broad categories: demographic changes and their relationship to the accumulation of human capital; economic changes, of which poverty reduction is a big part; spatial transitions and their social ramifications, including urbanization, spatial inequality, and climate change; the growth of technology and its implications for social inclusion; and the pervasive nature of conflict and fragility, with its implications for a range of outcomes. Finally, we draw attention to the nature of political and civic participation and dynamic social movements. Extract (pdf):
This report sets out Africa’s development imperatives within a framework of social inclusion. It outlines some of the areas in which Africa has taken major strides and simultaneously asks who is left behind, from what, in what ways, and what can be done. The key questions in this report are drawn from the Social Inclusion Assessment Tool and from Das (2016). The report also highlights the many solutions that are already in place in various African countries. It is deeply influenced by the myriad conversations and engagements that World Bank teams have had with partners and counterparts across Africa. The groundswell of thought and action, combined with the strong push from both state and non-state actors for the WBG to articulate social inclusion in the African context, has led to several structured engagements between the WBG and a multitude of its partners. The report contains five chapters: [Inclusion matters in Africa: overview report (pdf)]
Scaling Fences: Voices of Irregular African Migrants to Europe (UNDP)
Achim Steiner, UNDP Administrator: “Scaling Fences (pdf) highlights that migration is a reverberation of development progress across Africa, albeit progress that is uneven and not fast enough to meet people’s aspirations. Barriers to opportunity, or ‘choice-lessness’, emerge from this study as critical factors informing the calculation of these young people. By shining a light on why people move through irregular channels and what they experience when they do, Scaling Fences contributes to a critical debate on the role of human mobility in fostering progress towards the Sustainable Development Goals and the best approaches to governing it.”
New global roadmap of action to guide the future of mobility (Sustainable Mobility for All Initiative)
With growing urbanization, increasing world trade and new technologies, the global mobility system is stressed. More than 1 billion people, or one-third of the global rural population, lacks access to all-weather roads and transport services—a major barrier to social and economic advancement. The GRA will help tackle this urgency by taking a holistic approach of sustainability and offering concrete policy solutions countries can adapt and adopt to achieve sustainable mobility. As a tool, the GRA helps countries identify gaps, crucial steps, and appropriate policies to ensure that transport contributes to attain the Sustainable Development Goals by 2030 and improve the sustainability of their transport system. According to the GRA, globally, one billion more people would be connected to education, health and jobs if we close the transport access gap in rural areas; improvements in border administration, transport and communication infrastructure could increase global GDP by up to $2.6 trillion; and an additional 1.6 billion people would breathe cleaner air if transport pollution was halved. Extract: Universal rural access — Ethiopia (pdf):
Ethiopia belongs to country classification group D for efficiency and for universal access in rural and in urban areas, to country group C in terms of safety, gender equality, and air pollution, and it is among countries in groups A with respect to GHG emissions, shown in figure 6.1. Ethiopia’s rural accessibility index (RAI) is lower than the median RAI in Sub-Saharan Africa and as such, Ethiopia has channeled efforts toward improvement in this area since 2010. Connectivity has been improved over the years because of expansion of rural roads, exemplified by an increase in rural access between 2010 and 2016. In addition, there has been a significant increase in the market accessibility index (a measure of access to markets) for 25% of kebeles (smallest administrative unit in Ethiopia), and approximately an average 20% decrease in travel time to the nearest town since 2010. In 2008–09, only about 37% of kebeles had all-season access, 20% had seasonal (dry season) access, and 43% did not have motorable access, and were impassable or unreachable by motorized transport in any season. More than 91% of rural households traveled a minimum distance of 15 kilometers to reach a health center. Two thirds of the rural population were located more than 5 kilometers from an all-season road, with 48 million people located more than 2 kilometers from an all-season road. The average distance to an all-season road was 11.3 kilometers, equivalent to more than 3.5 hours walk.
2019 ICSID Annual Report (World Bank)
ICSID is an international facility available to States and foreign investors for the resolution of investment disputes. Established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, it is the only global institution dedicated to international investment dispute settlement. Through its specialized rules of procedure, world-class facilities, and expert legal and administrative support, ICSID provides unparalleled dispute resolution services to States and investors. Since the first case was registered with ICSID in 1972, the majority of all known international investment disputes have been administered by ICSID.
Regulating alternative finance: results from a global regulator survey (World Bank)
The survey aims to comprehensively and comparatively analyze how regulators from both developing and developed economies are regulating and supervising online alternative finance activities. This report focuses on peer-to-peer lending, equity crowdfunding and initial coin offerings, which constitute a rapidly growing segment of fintech for meeting credit, savings and investment needs. Survey findings informing this report are based on responses from regulators in more than one hundred and ten jurisdictions across the world. The survey identified expanded access to finance for firms and individuals and strengthened competition as primary triggers for advancing the development of alternative finance.
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Enabling the Business of Agriculture 2019 (World Bank)
Four countries in Sub-Saharan Africa are among the top ten reformers worldwide promoting favorable regulations for farmers in the areas measured, a report issued by the World Bank finds. According to Enabling the Business of Agriculture 2019, the business climate for agriculture worldwide is improving. 47 out of 101 countries measured implemented 67 regulatory reforms over two years making it easier for farmers to manage pest outbreaks, get quality seeds and access credit to invest in production. The report assesses whether government regulations support farmers’ activities in these eight areas: supplying seed, registering fertilizer, securing water, registering machinery, sustaining livestock, protecting plant health, trading food and accessing finance. Based on data collected between July 2016 and June 2018, more than half of reforms affecting farmers were enacted in the areas of protecting plant health, supplying seed and accessing finance, says the report. Across regions, farmers in Sub-Saharan Africa face the toughest regulatory challenges. But many countries are striving to improve the business climate, including through regional agreements facilitated by their membership to regional political and economic unions such as ECOWAS. Sierra Leone, Burundi, Mozambique and Malawi are among the ten countries that improved the most globally, although they have a long way to go. Extract (pdf):
Promotion of fertilizer production, cross-border trade and consumption in Africa (AfDB)
This study, initiated by the AUC, the UNECA and the Africa Fertilizer Financing Mechanism, is part of the efforts undertaken by African leaders to foster access to affordable and quality fertilizers. Its overall objective was to provide a solid background document reviewing the state of selected Africa’s fertilizer clusters and related emerging value chains as well as provide strategic policy options and best practices. All these potential solutions will provide effective and accessible funding mechanisms that support national and regional priorities in the context of ending hunger by 2025, African Union Agenda 2063, and more specifically accelerating the 2006 Abuja Declaration through the Africa Fertilizer Financing Mechanism. The study builds upon agro-industrial clusters and value chain studies that development actors worked on to update key issues affecting fertilizer production, distribution and consumption in Africa. It draws heavily on desk review as well as work previously conducted by targeted development partners on the development of sustainable global supply chains, regional value chains and agro-industrial clusters. Descriptive statistics have also been used to understand current use rates.
The study proposes some key policy recommendations the Africa Fertilizer Financing Mechanism should focus on: Deepen regional integration efforts with a focus on regional infrastructure, trade corridors, and harmonization of fertilizer standards and regulations; Encourage transport policies that increase competition in the trucking industry; Encourage procurement policies that enhance bulk buying of fertilizers if an assessment shows it is effective; Encourage countries to address NTBs both at the regional level such as weighbridges, police road blocks/checks, cross-border procedures, etc.; Supporting some form of guaranteed output markets, complementary measures such as seeds, extension, and research to improve fertilizer use efficiency and effectiveness; and Support improvements of rural/feeder roads that reach agricultural production zones.
Recommendations on fertilizer financing. Set up investor consortia and public-private partnerships for new blending plants, smaller new fertilizer manufacturing plants serving particular markets and expansion/modernization; Implement credit guarantees for fertilizer importers, distributors, and agro-dealers; Assist/facilitate the provision of finance for storage facilities/warehousing space especially at inland transportation hubs; Assist private traders in obtaining lines of credit, hedging, and equity investments from local banks; Develop and promote innovative public-private fertilizer financing schemes as well as credit products.
Africa Fertilizer Financing Mechanism: executive summary of baseline study (AfDB)
The main objective of the baseline study was to collect real data in order to track progress made at the country level regarding actions undertaken in the fertilizer value chain. This study provides an analysis describing the situation prior to AFFM interventions against which progress will be assessed. A number of performance indicators and targets have been defined. Some of these are quantitative while others are related to the qualitative objectives of AFFM with respect to fertilizer use and value chain development. Starting in December 2018, the survey collected data in Cameroon, Chad, Cote d’Ivoire, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Tanzania and Zambia. These countries were selected based on four main criteria: contribution to AFFM seed capital, geographical location, language, and the fertilizer market. Recommendations:
Create profitable demand for fertilizer via subsidies and vouchers: Provide local food farmers with the ability to purchase fertilizer within a transparent system and create a beneficial cycle of growth, while incorporating private sector participation to ensure long-term participation once subsidies end.
Support food processing units to increase fertilizer use and market access: Financially assist food processors, which would provide fertilizer to farmers in order to meet necessary raw good volumes for processing; improved processing reaches more markets, increases revenues, and creates a cycle of increasing fertilizer use, food security, and income growth.
Agro-tech offers answers for African farmers at Iowa meet (Inter Press Service)
Experts vaunted new strains of seeds, drone aircraft and other technological breakthroughs as solutions-in-the-making for farmers in Africa, where hunger, drought and food price hikes are continent-wide problems. At the gathering of nutritionists in the 2019 Borlaug Dialogue International Symposium, held annually in Des Moines, hopes were pinned on a new generation of so-called ‘agro-entrepreneurs’ in Africa. The three-day gathering, which ended on Friday, saw some 1,200 experts, policy chiefs, executives and farmers from more than 65 countries tackle food scarcity and price hikes — blights that disproportionately hurt sub-Saharan Africa. Jennifer Blanke, vice president for agriculture human and social development at the AfDB said Africa “missed out” on the green revolution that bumped up harvests across Asia and Latin America in the 1950s and 1960s. But with new technologies — from unmanned “drone” aircraft to new strains of more resilient crop seeds — coming online, African farmers and policymakers have an opportunity to get agriculture back on track and boost harvests. “You can do so many things with technology,” said Blanke. In the coming months, Blanke aims to bring together researchers, policymakers and investors to foster helpful policies and roll out schemes to buy and spread technology as well as training farmers and officials how to use it.
AI for development: facts and figures (SciDev.Net)
While many countries in the Global North have adopted national strategies for AI in recent years, Global South countries have been slower off the mark. India, Kenya and Mexico are the only ones which have put such frameworks in place, according to an overview of national AI strategies published in Politics+AI. The Kenyan government created a taskforce in 2018 to focus on AI and distributed ledger technology such as blockchain, and set out a roadmap for promoting these technologies in the next five years. India’s AI strategy focuses on social growth and inclusion, and was launched with the hashtag #AIforall in June 2018. It aims to equip Indians with skills to work in the sector, as well as invest in AI research, and export Indian-made AI solutions to other developing countries. However, despite a lack of national impetus in many nations, AI applications already abound which have the potential to improve lives and livelihoods in the Global South.
OCP Africa signs agreement to support Africa’s smallholders, increase yields (Morocco World News)
The International Islamic Trade Finance Corporation, a member of the Islamic Development Bank Group signed a MoU with Morocco’s OCP Africa to increase agricultural production yields and income levels for Africa’s smallholder farmers through strategic funding, innovation, and capacity-building measures. The two parties will strengthen their collaboration in various areas including training for smallholding farmers on sound agricultural practices, soil testing, and fertility management to support better yields. ITFC has been providing significant support to ensure food security in Sub-Saharan Africa. In 2018, ITFC allocated $749.6m to finance the food & agriculture sector, representing 14.4% of the total trade finance portfolio, a 71% increase compared to the previous year. Sub-Saharan Africa accounts for 50% of ITFC’s food & agriculture sector financing in 2018.
Wandile Sihlobo, Tinashe Kapuya: Brexit risks to SA agriculture are now minimal, but not eliminated. As Brexit unfolds without a clear and predictable outcome, the question is, what are the implications of various possible outcomes for South Africa and the region’s agriculture sector?
How SMEs can turn around food production in Africa. The third question is the most interesting one. Contrary to popular belief, African governments should not focus on large companies and corporations that will lead the agriculture and food sectors. The reason is simple: despite their extensive activities, they are not the real growth engine of the field. The real leading growth engine are SMEs, already directly responsible for 64% of the continent’s production chain, according to the latest Africa Agriculture Status Report. Another 20% is produced by farmers who grow for their family’s personal use, while the large companies and corporations are responsible for no more than the remaining 16%, and their scope for growth is limited. Although various governments across the continent have already seen the light, there is a long way to go. [Note: The writer, Yariv Cohen, is the founder of Ignite Power, a solar power firm in Rwanda]
Making agri-food systems work for the rural poor in Eastern and Southern Africa. The IDRC project aimed at achieving four specific objectives: to identify and promote local innovations and adaptation strategies that work for the poor rural men and women to cope with food security vulnerabilities; to adapt and scale up technologies and market innovations for promoting orphan crops that enhance food security, increase incomes and ecosystem integrity in selected areas of Malawi, Kenya and Uganda; to analyze and promote specific policies and governance mechanisms for sustainable agri-food systems; and to determine mechanisms for scaling up agri-food systems and sustainable agriculture. The project was implemented in Kenya, Malawi and Uganda with the participation of five partner institutions.
Today’s Quick Links: Ethiopia, Kenya explore grain trade opportunities GDO Analytical Report: Drought in southern Angola - October 2019 The New Humanitarian: Indian Ocean Dipole spells flood danger for East Africa Science Daily: Large-scale afforestation of African savannas will destroy valuable ecosystems Ghana expects to end importation of rice by 2022 Nigeria’s 2019 Farmers Field Day: FG to boost research institution |
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Diarise:
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EAC Regional Meeting on Trade Facilitation (22-25 October, Dar es Salaam). The meeting, under the leadership of the EAC Secretariat with the participation of the Chairs of the NTFCs, Representatives of the Customs Authority and the East African Business Council, will ensure a coordinated and harmonized implementation process of the trade facilitation policies in the EAC region.
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In-country consultations, in Rwanda and Uganda, for the draft EAC Informal Sector Paper and the Corresponding Principles (22-26 October)
- 31st EAC Sectoral Council on Cooperation in Defence (22-26 October, Arusha)
Selected WTO documentation, now circulating:
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WTO work programme on small economies: proposal for ministerial decision (pdf). The following communication, dated 16 October 2019, is being circulated at the request of the delegation of Guatemala on behalf of the Group of Small, Vulnerable Economies.
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Feedback session on the WTO’s publications and online tools to disseminate tariff and import data: summary by the Secretariat
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Committee on Sanitary and Phyto-sanitary Measures: overview regarding the level of implementation of the transparency provisions of the SPS Agreement (revised Secretariat Note, pdf)
COMESA Common Market Levy: update
In a move to entrench financial independence and sustainable implementation of regional integration agenda in COMESA, a joint committee of ministers of finance and central bank governors have decided to set up a technical working group to assess and come up with modalities for the operationalization of the COMESA Common Market Levy. The meeting of the Joint Ministerial and Governors Committees took place on 16 October 2019 in Washington, DC on the sidelines of IMF/World Bank 2019 Annual Meetings. It was attended by Ministers of Finance and Governors of Central Banks from Djibouti, DR Congo, Egypt, Eswatini, Libya, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Tunisia and Zambia. Making the case for implementation of the common market levy, the Secretary General of COMESA, Chileshe Kapwepwe, emphasized the need to intensify efforts to deepen the process of macroeconomic convergence and financial intermediation in COMESA region given the current enormous challenges. “COMESA needs a guaranteed, predictable and adequate financial resources for the smooth execution of its regional integration agenda. Introducing the community levy is in line with COMESA Treaty provisions and will go a long way in raising significant resources for harmonious development of the region.” Similar regional economic communities such as ECOWAS and ECCAS have successfully implemented such levies for sustainable financing of their integration agenda. Former Deputy Chair of the AUC Mr. Erastus Mwencha, who is also a former Secretary General of COMESA was the key note speaker and shared insights on financing of regional integration in Africa in general, and the operationalization of the COMESA Common Market Levy, in particular.
China signs its first Free Trade Agreement with an African country - Mauritius (GoM)
Mauritius and China have strengthened their bilateral relations with the signature of a Free Trade Agreement on 17 October in Beijing. The Agreement is the first FTA which China has signed with a country of the African continent. The FTA which represents a major achievement for Mauritius will give the country access to a huge market of 1.4 billion inhabitants, with a GDP of some $13 trillion. The FTA will enable Mauritius to benefit from duty free access on the Chinese market on some 8,227 products, representing 96% of the Chinese tariff lines. The duties applicable on 88% of these tariff lines will be eliminated with immediate effect, while the remaining tariffs will be eliminated over a five to seven-year period. These products include key export items such as rum, frozen fish, noodles and pasta, wafers and biscuits, fresh fruits, juices, mineral water, linen, garments, watches and articles of leather. Mauritius struck a significant deal with China on special sugar, which is expected to generate export revenue of some $40m over a period of 8 years.
China agreed to grant Mauritius a Tariff Rate Quota of 50,000 tons market access for special sugar with an in-quota rate of 15%. As regards trade in services, Mauritius service providers will have access to more than 40 service sectors, including financial services, telecommunications, ICT, professional services, construction and health services. Mauritius will also be able to establish businesses in China as wholly owned entities or in joint partnership with Chinese operators. Furthermore, the FTA will create new investment opportunities in Mauritius targeting the Chinese market. Regarding the Economic Cooperation chapter of the Agreement, Mauritius and China have agreed to collaborate in 10 areas:
Xinhua update on the FTA: Mauritius will open up more than 130 sub-sectors in important service fields such as communications, education, finance, tourism, culture, transportation and traditional Chinese medicine to China. This is the highest level of opening up in the field of services in Mauritius so far. In the field of investment, the agreement has been greatly upgraded from the 1996 China-Mauritius bilateral investment protection agreement in terms of protection scope, protection level and dispute settlement mechanism. This is the first time that China has upgraded the previous investment protection agreement with an African country, which will not only provide stronger protection for Chinese enterprises to go to Mauritius, but also help them further boost investment cooperation in Africa through the platform of Mauritius, according to the MOC.
Togo’s AfCFTA implementation strategy: update
Aimed at promoting exports within the African market, industrial development and job creation, this national strategy also sheds light on Togo’s strategy for managing its overall participation in regional integration efforts. The strategy document, which was made possible by the contribution of several public and private sector organisations, institutions and actors, with the support of the ECA in collaboration with the African Union Commission, is based on an assessment of Togo’s trade performance and participation in intra-African trade. It also outlines the risks associated with the AfCFTA and potential mitigation measures. It also identifies the goods and services sectors that have comparative advantages for diversification as well as the development of priority value chains.
SADC Monitoring Control and Surveillance Coordination Centre: Angola becomes 8th SADC state to sign the Charter
Angola became the 8th State Party to the Charter establishing the MCSCC, joining Eswatini, Lesotho, Mozambique, Namibia, South Africa, Tanzania and Zambia. Two thirds of SADC Member States are required to sign the Charter for it to enter into force. Angola’s Minister of Fisheries and Sea of the Republic of Angola, Honourable Dr Maria Antonieta Josefina Sabina Baptista, encouraged the SADC Secretariat to continuously engage Member States which have not signed the Charter to do so, to enable the region to realize the commitment to fight IUU fishing through establishment of the MCSCC. She also committed to engage other Ministers to commit to signing of the Charter in order to strengthen cooperation and capacity to stop illegal fishing and to build sustainable blue growth in the SADC region.
DP World’s Kigali Logistics Platform opens
The facility, which has been operational since September 2018 in test mode, has an annual capacity of 50,000 TEUs. When operating at full capacity, it has the potential to save Rwandan businesses up to $50 million a year in logistics costs. Since the commencement of its operations in the Rwandan capital last year, Kigali Logistics Platform has reduced truck-turnaround time which used to be an average of 10-14 days to just 3 days. Kigali Logistics Platform serves as a gateway to the heart of Africa, connecting Rwanda to neighbouring countries including he DRC, Burundi, Uganda, Tanzania and Kenya. The facility will also access the port of Mombasa in Kenya and Dar Es Salaam in Tanzania, securing two trade gateways to the sea. The railway from Mombasa port in Kenya will pass through Uganda to Rwanda and also the railway from Dar Es Salaam to Kigali is under construction and will have its final cargo rail siding located at Kigali Logistics Platform. Linking railways to the Kigali Logistics Platform has the potential to dramatically reduce logistics costs for exports and imports via international gateways on the coast. At present it costs three times more to transport a container from Kigali to Dar Es Salaam as it does to transport the same container from Dar Es Salaam to Shanghai.
How did Cotonou become an attractive port of entry for Nigerian importers even when Nigeria has the largest ports in West Africa? Why do Nigerian importers prefer Cotonou to Lagos ports? In an attempt to answer some of these questions Saturday Vanguard within the week, had several interactions with several importers whose many containers are either incurring demurrage at the Cotonou ports or rotting on the queue to enter Nigeria at Seme due to the border closure. They offered some insightful explanation of the issue.
Lesotho: World’s second-biggest mohair industry restarts as monopoly ends (Bloomberg)
Mohair sales in Lesotho, which produces a fifth of the world’s supply of the luxury fiber, have restarted after the government buckled to pressure from farmers and ended a controversial monopoly handed to a Chinese entrepreneur. The first auction conducted by locally-owned Maluti Wool and Mohair Centre took place on 7 October and the first shipments of the fiber were made 17 October, said David Telford, the company’s managing director. Record prices were achieved and farmers will be paid by 28 October, he said. The sale eases a crisis that left most of an estimated 48,000 wool and mohair farmers without earnings for more than a year after Guohui Shi and his Lesotho Wool Centre were unable to pay for the product they bought. Wool and mohair are Lesotho’s main exports. Shi didn’t answer a call made to his mobile phone.
Sacramento conference promotes California-Africa trade
One of the main goals of the conference was to start to reestablish a permanent office to facilitate and promote California-Africa trade. The state used to have an office based in South Africa, but it was closed to save money when Arnold Schwarzenegger was governor. Grant Harris, who runs a private consulting firm helping US companies do business in Africa, spoke at the opening reception for the conference on Tuesday about the potential on the continent. “We need to think about the many diverse markets across Africa,” he said. Previously Harris worked in the White House as the principal adviser on African affairs for President Barack Obama. He said that US businesses tend to be more likely to invest in markets they’re already familiar with, like Europe. “Everyone says capital is cowardly,” he said. “Many investors, particularly in the West, overestimate the risk of investing in African markets.” Last year, California exported more than $1bn worth of goods to the continent, with electronics, machinery, chemicals and agriculture as some of the biggest commodities.
Today’s Quick Links: Mauritius-Kenya: Expansion of the Double Taxation Avoidance Agreement network Mauritius has becomes the 42nd State Party to the AU Convention on Preventing and Combating Corruption Six COMESA states take steps to access climate change funds Nigeria, Africa’s biggest oil producer, can’t beat fuel-imports addiction South Korea to discuss developing nation status with US China seeks $2.4bn sanctions against US for not complying with WTO ruling on Obama era tariffs Euractiv trade debate: A new trade policy with teeth and muscle |
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WBG/IMF Annual Meetings: selected updates
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The Broadband for All Working Group: Achieving broadband access for all in Africa comes with a $100bn price tag
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Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development: statement
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WBG’s President David Malpass: transcript of opening media conference
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The IMF will release its Sub-Saharan Africa Regional Economic Outlook later today
Two forthcoming AU publications to note:
(i) Africa’s Development Dynamics: Achieving productive transformation. This report emphasises the need for Africa to accelerate its productive transformation to create quality jobs, grow their businesses from lagging firms to leading firms producing more and better products in order to compete in the upcoming new open market of the AfCFTA. To achieve this goal, the report puts forward three key policy priorities: developing strategic clusters of firms; facilitating regional productive networks and enhancing firms’ abilities to thrive in new markets
(ii) Domestic resource mobilization: Fighting against corruption and illicit financial flows. This publication contributes to the AUC’s efforts to raise awareness on the impacts of Corruption and Illicit Financial Flows on the continent. Although it is difficult to quantify the amounts loss due to Illicit Financial Flows and Corruption, statistics estimate that between $50 and $80bn are lost annually and these figures seem to be on an upward trajectory. This amount is higher than the annual Official Development Assistance (ODA) that the continent receives. [Note: Both reports will be launched on 5 November in Antananarivo]
Towards the harmonization of African automotive standards: The ARSO/THC 08-4 Technical Working Group meeting on automotive technology and engineering standards concludes today in Rwanda. Representatives of 17 African states attended the meeting.
The third edition of the NACCIMA-Deloitte AfCFTA Dialogue series (31 October, Lagos): towards a consensus on strategy for Trade in Goods under the AfCFTA Agreement.
The East Africa Chamber of Commerce’s 13th Annual Trade Conference (14-16 November, Dallas): discussion will revolve around the Big Four Agenda – affordable housing, manufacturing, food security, and affordable healthcare.
Launched: The Mo Ibrahim Foundation’s African Governance Report 2019
Africa is halfway through the First Ten-year Implementation Plan (2014-2023) of the African Union’s Agenda 2063, and about to enter the last ten years of the UN’s Agenda 2030 and the completion of its Sustainable Development Goals. These frameworks contain many overlapping themes, and key to effective implementation is the capacity to monitor progress in order to adapt resources and policies as soon as needed. Strengthening Africa’s fragmented data landscape is vital for meeting these development targets. This is the core message of the Foundation’s recently published African Governance Report (pdf), which outlines the common elements of the Agendas and their relationship with public governance in Africa. This report draws on data from the Ibrahim Index of African Governance to share insights into progress, analyse the measurability of the Agendas, data availability, and provide a high-level overview of the state of statistical capacity in African countries. The report identifies five core overlapping themes between all three frameworks, which are: access to and quality of education, health and nutrition, women and youth inclusion, prosperity and economic opportunity, and security, justice and strong institutions. The following are the top-level findings for some of these themes, since 2014, when the implementation of Agenda 2063’s FTYIP started. The report also highlights that African countries face enormous challenges both in terms of working on the measurability of the targets of the Agendas and developing the statistical capacity required to collect enough data to measure those targets. There are two key findings. The first is that sometimes targets or indicators are not easily measurable, and the second is that when they are, there is a lack of data.
AfCFTA should take lessons from failed agreements (Engineering News)
The architects of the proposed AfCFTA should learn from the failed Free Trade Area of the Americas, says Export Credit Insurance Corporation senior economist Tsidiso Disenyana. The FTAA, which had been in the process of being negotiated by 34 diverse countries of the Americas, failed in the final stretch, owing to the gradual diversion of negotiating attention from the FTAA towards the Doha Round. Another challenge to the FTAA was the major changes in the political governance and economic circumstances of countries in the western hemisphere in 2002, which changed the focus of key participants and altered the basis of consensus on which the FTAA negotiations had been conducted. Disenyana mentions four lessons that the CFTA should learn from the FTAA to ensure that the agreement is successful.
Comesa agency approves Telkom and Airtel merger (Business Daily)
Telkom Kenya and Airtel have received the Comesa Competition Commission greenlight to merge at a time the deal has run into local headwinds. The regional trading bloc’s competition watchdog said that the merger of the two telcos would not skew competition in the regional market. It also noted the takeover would lead to a vibrant market. “The committee responsible for initial determination determined that the merger was not likely to substantially lessen competition in the common market or any part of it,” said the agency’s commissioners in a letter dated 16 August. “Consequently the transaction is not likely to negatively affect trade between members. The CID therefore approved the transaction. The decision does not relieve the merging parties from their obligation to comply with other applicable laws,” it said. The announcement comes as the two telcos eye approval from Kenyan regulators.
Uganda’s 10th annual trade, industry and cooperative sector review: Industrialists want access to regional markets improved (Daily Vision)
Richard Mubiru, a member of the Uganda Manufacturers Association said Uganda has big potential to supply markers like DR Congo, South Sudan, Kenya. “We need to consolidate the regional markets and consolidate the external markets. We need to improve roads to the neighbouring countries, build warehouses near the borders. We need insurance services to provide facilities to cover risks arising during the export of products. The region is volatile and exporters need insurance covers. The Insurance Regulatory Authority should create insurance facilities that speak to our needs as exporters, manufacturers, traders,” Mubiru also the executive director for Sothern Range Nyanza Textile Lt said. He also asked the government to change its bidding documents to favour SMEs otherwise money will be leaving the country through large foreign corporates. Mubiru proposed that NSSF funds should be used to provide long term funds for industries.
Kenya: Bakers seek lower duty for wheat imports to boost trade (Business Daily)
SGR updates, commentaries:
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Naivasha SGR starts operations amid viability concerns. As the second phase of the Standard Gauge Railway (SGR) opens Wednesday, questions abound on its viability even as uncertainty remains over the funding to complete last phase to Ugandan border in order to make it commercially viable. The launch today will only be for passengers with cargo expected to be introduced later. The Chinese funding for the last phase of the SGR to Malaba had been pegged on the willingness by Uganda to build its part from the Kenyan border to Kampala. However, Uganda seems to have hit a snag in terms of funding after China turned down their proposal, forcing the landlocked neighbour to start rehabilitating its metre gauge railway. Cargo brings the bulk of revenue for the Kenya Railway and with incomplete phase, it makes it difficult for the government to recoup money to pay Sh150 billion loan spent on this section alone as the volumes of goods will be inadequate. “The government has apparently put money on something that do not have viability at the moment. The essence of the second phase of SGR was to serve businesses at the proposed industrial park in Naivasha, but at the moment we do not know how far the plans have moved,” economist Toni Watima told Digital.
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Uhuru Kenyatta: “The completion of Nairobi to Suswa section of SGR is expected to revolutionize the development of this region through affordable transport. It will also stimulate tourism in the greater Rift Valley.”
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Kenya’s extended railway to reduce region’s transport costs. Edward Kusewa, economic lecturer at St Paul’s University said that the Nairobi-Naivasha railway line will benefit local horticulture and cash crop farmers through enhanced movement of their produce to export destinations. Fresh produce from Naivasha will now arrive at the Jomo Kenyatta International Airport faster and at more affordable rates as compared to when transported by road,” he added. Kusewa said that tourism will boom in Naivasha and surrounding regions thanks to the availability of a hassle-free mode of transporting visitors to scenic attractions that dot Kenya’s expansive Rift Valley region. Kenyan tea producers said recently they are anticipating seamless transportation of the commodity from the country’s highlands to the port of Mombasa from where it is shipped overseas, once the Nairobi-Naivasha SGR is operational.
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Jaindi Kisero: Railway projects will worsen debt woes. That the portion of the standard gauge railway line to Naivasha has been dubbed “railroad to nowhere” may not be a joke after all. It could actually come to pass. Clearly, the government will face major challenges in trying to make this part of the railway line economically feasible especially if the Chinese don’t give us the money to extend the line to Malaba. For now, our only option is to quickly pump money into new investment to achieve the ambition of developing Naivasha into a key regional logistics hub. Fortunately, indications are that some of our regional neighbours appear to have the same ambition of building cargo transit logistics infrastructure in Naivasha. Naivasha surely has the potential of emerging as a major regional logistics hub along the Northern Corridor. It will all depend on whether we have the fiscal space to invest the construction of feeder roads connecting the SGR to the existing metre gauge railway. The biggest headache for us remains how to shift traffic from road to rail to ensure that SGR’s market share is expanded. The biggest mistake made by the government was to assume that it was feasible to migrate traffic from road to rail by fiat - by forcibly ordering truckers out of business. Still, the biggest elephant in the room are the Chinese loans we borrowed for the Naivasha section of the SGR. What are the bare facts about this Chinese loan?
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The East African: Kenya launches second phase of SGR line as China cuts funding
ICJ agrees to delay Kenya-Somalia maritime case (Business Daily)
The International Court of Justice has agreed to Kenya’s request to delay the public hearing in its maritime boundary case with Somalia. In a statement issued on Thursday night, the Hague-based court said the decision was reached after Mogadishu and Nairobi agreed to send legal teams on the new agreed dates. “The court has duly considered the views and arguments of the parties regarding Kenya’s request. It has decided to postpone oral proceedings to the week beginning on Monday 8, June, 2020. This postponement is granted on the understanding that both parties will be represented in the hearings and that no further postponement will be granted,” the statement reads. The move could come as a relief for Nairobi which had earlier complained that the initial date of November 4, was not enough for its legal team to prepare for the case. Last month, Kenya asked for a delay by up to a year, saying it needed time to reconstitute a legal team. But the ICJ, which had initially set a September 9-13 date, pushed the public hearings to 4-8 November.
Today’s Quick Links: Africa gets first smartphone manufactured in KZN after R1.5bn investment A strong rationale for reviving the cashew nut industry at the Kenyan Coast SEACOM partners with Vodacom to expand reach across Africa Launching of the Mauritius Trade Link: DVS Import Permit and Clearance Modules Mauritius compliant with EU Tax Good Governance Principles AfDB’s Morocco Country Result Brief 2019 Import-heavy Arab nations offer untapped trade opportunities for Ireland |
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African trade policy events to diarise:
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The first meeting of the AfCFTA Council of Ministers responsible for trade takes place next week in Addis Ababa (24-25 October). It will be preceded by a meeting of senior technical officials (21-23 October).
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Rwanda National Trade Facilitation Committee meeting (29-31 October, Kigali)
WTO’s Sub-Committee on Least Developed Countries: Market access for products and services of export interest to LDCs (pdf, WTO)
This Note, which is prepared by the Secretariat on an annual basis, provides an update on the trends in the least developed countries’ trade and market access conditions. Between 2011 and 2018, exports of goods and services of the 47 LDCs increased at an average annual rate of 1.4%, less than the growth of exports of other developing economies during this period (2.0% per year). Low energy prices had an adverse impact on LDC exports of goods during 2014 to 2016, while LDC exports of services showed a more stable development during this period. In 2018, LDC exports of goods and commercial services grew by 12% compared to 2017, reaching a nominal value of $235.4bn. The share of LDCs in world exports of goods and commercial services increased slightly, from 0.92% in 2017 to 0.94% in 2018.
LDCs’ overall trade deficit deteriorated from $94.0bn in 2017 to $98.2bn in 2018, which was more than twice the deficit in 2011, when the trade balance of goods was equalized. Close to two thirds of the LDCs’ trade deficit in 2018 can be attributed to their deficit in goods trade ($64.4bn), while about one third was due to their deficit in commercial services trade ($33.8bn).
Merchandise exports of LDCs have grown at an average annual rate of 0.3% since 2011, slower than world merchandise exports (0.8%). In 2018, LDC exports increased by 12.7% compared with 10.0% at the world level. As a result, the LDCs’ share of world merchandise exports reached 1.02%. The LDCs’ share in merchandise imports remained at 1.4% in 2018.
Exports of LDCs continue to be concentrated in primary products. In 2018, primary products accounted for 58% of LDC merchandise exports, which is however significantly lower than in 2011 (73%). The share of manufactured products in LDC merchandise exports increased from 22% in 2011 to 37% in 2018, mainly reflecting an increase in the share of clothing products from 13% in 2011 to 27% in 2018. The share of agricultural products (agricultural raw materials and food) in LDC exports increased from 8% in 2011 to 13% in 2018.
The EU was the top destination for LDC merchandise exports in 2018 (28.5%), closely followed by China (27.8%), which had been the top destination in 2017, and the US (9.3%) . The top ten importers accounted for 87.5% of LDC merchandise exports in 2018, a slight increase compared to 85.4% in 2011.
In 2018, the LDCs recorded the most rapid export growth in services since 2012 (over 16%) reaching $39.8bn. Services exports grew faster than in developed economies (7%) and in other developing economies (9%). As a result, the LDCs’ share in global services exports increased to 0.69%. However, participation remained concentrated within a few economies, in particular in Asia, with most LDCs struggling to participate in services exports.
Travel exports, which cover foreign tourists’ expenditure on goods and services, remains the leading service export sector for LDCs (49.8% of total commercial services), with a share in world exports of 1.4%. However, transport exports rose by 22% to $10.1bn and, for the first time, the LDCs’ contribution to global transport exports reached 1.0%. Despite a 12% rise, LDCs’ contribution to world exports of other commercial services was negligible at 0.27%.
WTO General Council meeting: DG Azevêdo says “People recognize things are happening here; they expect concrete outcomes”
At a meeting of the full WTO membership on 14 October, Director-General Roberto Azevêdo observed that members had barely two months left to solve the Appellate Body impasse and meet a negotiating deadline on fisheries subsidies. Looking ahead, he said that in order to lay the groundwork for meaningful outcomes at the Ministerial Conference in Kazakhstan next June, members would need to bridge substantial differences in a short time frame. DG Azevêdo urged members to swiftly reach consensus on a new chair for the Negotiating Group on Rules. Failing to do so would endanger their prospects for meeting the end-of-year deadline for a fisheries subsidies agreement, he warned.
Related:
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Informal process on matters related to the functioning of the Appellate Body: report by the Facilitator, Dr David Walker (pdf)
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US statement at the WTO General Council meeting
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Allow self assessment of developing country status, 45 nations insist
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WTO General Council documentation can be accessed here
COMESA’s Policy Dialogue on Simplified Trade Regime Implementation: outcomes
The range of goods traded under the COMESA Simplified Trade Regime (STR) is set to expand following policy recommendations made last week by trade experts. Meeting in Kenya during a Policy Dialogue on STR Implementation (8- 9 October), the experts proposed that imports from countries participating in the COMESA Free Trade Area, should be accorded preferential tariff treatment in bilateral STR arrangements. “As long as the goods qualify under the COMESA Rules of Origin, they should be granted preferential treatment in the bilateral STR,” the experts said in their report. The goods from third party countries should however be listed in the bilateral Common List agreed upon by two neighbouring countries. The experts proposed reforms targeted at border posts implementing the STR to harmonize the operations across the region. Specifically, they cited inspections for Sanitary and Phytosanitary Standards and the speed of clearance by Customs as key impediments that require changes to facilitate trade. They also agreed on the need for Member States to increase the frequency of updating their STR Common Lists on an annual basis through bilateral consultations. Further, they agreed on the need to develop a sustainability and reporting framework for Trade Information Desk Officers, who facilitate small-scale traders at border points. In this regard, COMESA Secretariat will conduct studies to develop the framework after which it will be validated by all stakeholders in the member states.
Zimbabwe’s trade deficit narrows (The Herald)
Zimbabwe’s trade deficit narrowed to $57,5m after the country recorded a 24,9% growth in its exports to $299,5m for the month of July 2019 up from exports of $239,8m in June 2019. In June, the trade deficit was $218,8m. According to the Reserve Bank of Zimbabwe’s latest report for the month of July 2019, the increase in exports was attributable to a rise in export earnings from gold, nickel ore and concentrate; and ferrochrome. Exports for gold were up by 40,8%; nickel ore and concentrates up by 27,8%; and ferrochrome up by 28,1%. The country’s major export destinations included South Africa, which absorbed 32,8% of total exports, followed by Singapore (28,9%), China (9,7%) India (2,7%) and UK (2,6%). Meanwhile, merchandise imports registered a decline of 22,2%, from $458,6m in June to $357m in July 2019. The decline was largely underpinned by lower imports of fuel, notably diesel and petrol according to the RBZ.
India’s Federation of Indian Export Organisations: Nairobi, Addis Ababa engagements
A high level 37 member FIEO business delegation led by Israr Ahmed, regional chairman, FIEO southern region will be visiting Nairobi and Addis Ababa (17-22 November) to explore business opportunities in agriculture, machinery and food processing sector. The programme is organised with the support of International Trade Centre in Geneva. FIEO is taking the delegation in the background of building on the momentum of the newly ratified AfCFTA. The product profile of FIEO delegation comprises agricultural including fruits, vegetables, meat, cereals, dairy, tea, coffee, spices as well as agri-processing technologiesNSE 1.51 %, machinery and packaging solutions.
World Bank court orders Tanzania pay $185m to Standard Chartered (Reuters)
Tanzania has been ordered by a World Bank arbitration court to pay $185m to the Hong Kong subsidiary of Standard Chartered for breaching an energy contract. The court’s ruling, which was released on Tuesday, adds to pressure on the East African nation, which faces at least two other multi-million claims from international investors. The case stems from a legal battle between the Tanzanian government and privately-owned independent power producer IPTL, which led to the dismissal of several cabinet ministers in 2014. The award by the World Bank’s International Centre for Settlement of Investment Disputes is less than the $352.5m sought by Standard Chartered Bank Hong Kong, which was not immediately available for comment. The government of Tanzania denied any responsibility and said it was not planning to pay the damages.
The IMF’s latest World Economic Outlook is posted: Global manufacturing downturn, rising trade barriers
In sub-Saharan Africa, growth is expected at 3.2% in 2019 and 3.6% in 2020, slightly lower for both years than in the April 2019 WEO. Higher, albeit volatile, oil prices earlier in the year have supported the subdued outlook for Nigeria and some other oil-exporting countries in the region, but Angola’s economy - because of a decline in oil production - is expected to contract this year and recover only mildly next year. In South Africa, despite a moderate rebound in the second quarter, growth is expected to be weaker in 2019 than projected in the April 2019 WEO following a very weak first quarter, reflecting a larger-than-anticipated impact of labor strikes and energy supply issues in mining, together with weak agricultural production. While the three largest economies of the region are projected to continue their lackluster performance, many other economies - typically more diversified ones - are experiencing solid growth. About 20 economies in the region, accounting for about 45% of the sub-Saharan African population and 34% of the region’s GDP (1% of global GDP), are estimated to be growing faster than 5% this year while growth in a somewhat larger set of countries, in per capita terms, is faster than in advanced economies. Prospects vary across sub-Saharan Africa, but growth for the region as a whole is projected to increase from 3.6% in 2020 to 4.2% in 2024 (although for close to two-fifths of economies, the average growth rate over the medium term is projected to exceed 5%).
The FAO’s latest State of Food and Agriculture 2019 report is posted: Moving forward on food loss and waste reduction
According to the State of Food and Agriculture 2019, globally around 14% of the world’s food is lost after harvesting and before reaching the retail level, including through on-farm activities, storage and transportation. However, the food losses vary considerably from one region to another within the same commodity groups and supply chain stages. The report highlights the need, and offers a new methodology, to measure carefully losses at each stage in the food supply chain. The report urges countries to step up efforts to tackle the root causes of food loss and waste at all stages and provides guidance on policy and interventions to reduce food loss and waste. Reducing food loss and waste generally entails costs, and farmers, suppliers and consumers will only take necessary measures if their costs are outweighed by the benefits. Thus, changing incentives for various stakeholders in the supply chain will involve identifying options that either increase the net benefits or provide better information on the existing net benefits, the report states. Extract (pdf):
The meta-analysis finds a wide range of values for percentage losses even within the same region or commodity group, or at the same point on the supply chain. For example, in sub-Saharan Africa the observations on fruits and vegetables report on-farm losses ranging from 0 to 50 percent, a very broad range. An intervention to reduce these losses needs to target the upper end of this range to have maximum impact. Another example concerns losses of cereals and pulses in the processing and packaging phase in sub-Saharan Africa, which would appear to be low on average (the median loss is less than 5 percent), but where one quarter of the observations report between 10 and 20 percent losses. Looking only at average losses may not give an accurate picture regarding whether an intervention for a specific commodity would make sense, nor would it indicate where a potential intervention should take place.
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Concluding today, in Lusaka: CII-Exim Bank Regional Conclave on India-Southern Africa Project Partnership
A guide to the WB/IMF 2019 Annual Meetings (which concludes on Sunday)
Updates, outcomes from last week’s EAC Council of Ministers meeting:
(i) Death of the East Africa shilling dream? The EAC Council of Ministers, the central decision-making and governing organ of the EAC, has resolved that the 2024 deadline by which the region was supposed to have formed a monetary union and adopted a common currency is not attainable. The Council, which was on Friday locked in a day-long meeting in Arusha, has therefore resolved to draw new timelines to achieve the ambitious target of creating an EAC Monetary Union, which is one of the four pillars of regional integration. Kenya’s Cabinet Secretary in-charge of EAC Affairs Adan Mohamed, who sits on the EAC Council of Ministers, in an interview said that there is still a lot of work needed towards implementation of the Monetary Union. “I think the first thing to do is to set up the East African Monetary Institute then we take it from there in terms of making the necessary progress. However, the necessary instruments for the creation of this body have been approved by the heads of state.”
The EastAfrican has learnt that the EAC Council of Ministers has agreed to review the roadmap for the implementation of the single currency with the technical committees expected to draw new timelines. “The review is on-going and we expect it will be completed by early next year. We will then know if new timelines will be proposed or not,” said the EAC’s director of Monetary and Fiscal Affairs, Pantaleo Joseph Kessy.
(ii) With reforms, EAC set to save $2.5m. Ministers responsible for EAC affairs on Saturday approved an institutional reform plan that will see the six-member bloc save up to $2.5m annually in staff salaries. The reforms were approved during an extraordinary meeting at the end of a week-long 30th Meeting of the Sectorial Council of Ministers responsible for EAC Affairs and Planning, held at the EAC Headquarters in Arusha. Amb. Olivier Nduhungirehe, Rwanda’s Minister of State in charge of the East African Community told the New Times on Sunday: “The institutional reform of the Community has been in the pipeline for almost a decade and we, yesterday [Saturday], agreed to have a reform of the structure of organs and institutions of the Community.” According to the Minister, once the new plan is implemented, job positions will fall from 529 to 402 for all organs and institutions of the EAC.
Nduhungirehe said: “Now we will have two DSGs. And those two will share the responsibilities along the four pillars of integration of the Community; meaning that the first DSG will be in charge of the Customs Union and the Common Market and the other one will be in charge of Monetary Union and Political Federation. We will no more have a Director-General in charge of Trade and Customs but we will have a Director-General in charge of Corporate Services. This is a comprehensive overhaul of the structure of the community in order to make it more efficient.”
(iii) EAC ministers to fast-track alternative funding mechanism. Regional ministers in charge of EAC Affairs on Friday resolved to accelerate a proposal to find an alternative financing mechanism as they discussed ways of pulling the six-member bloc out of its financial hole. Amb. Olivier Nduhungirehe, Rwanda’s Minister of State in charge of the East African Community, who chaired the extraordinary meeting, said a report of current contributions for the fiscal year 2019/20 shows that only Uganda, Rwanda, and Tanzania paid some money. Nduhungirehe said: “For now, Uganda has paid 72% of this contribution, which is around $6m. Rwanda paid 14%; $1.2m, and Tanzania paid 13% which is $1m. Other partner states, meaning Burundi, Kenya, South Sudan, are yet to pay for this fiscal year. But we still have arrears to be paid by South Sudan, $19m from previous fiscal years; Burundi has to pay $3.9m of arrears, and then Kenya also has a small amount of arrears of $160,000.”
Nduhungirehe said: “We decided that we should fast-track the process for an alternative funding mechanism because this issue of contributions by partner states will continue if we, as partner states continue to pay the same amounts of contributions yet we don’t have the same economic size. There is a process now which is with the Ministers of Finance of the EAC to find alternative funding mechanisms. There are several options and proposals, including a levy on imports basing on the model of what was done by the African Union.”
EALA calls on Burundi, Tanzania to embrace single tourist visa. A report of the Assembly on the Oversight activity on the Performance of the Tourism Sector in the region, wants the EAC to fast track the conclusion of the EAC Protocol on Tourism and Wildlife Management, as well as strengthening a pool of EAC Classification Assessors to ensure efficiency and effectiveness in classification of tourism establishment. The Assembly is also reiterating the creation of a well-coordinated and digitized information exchange hub for the advancement of joint tourist visa mechanism in a bid to attract tourists in the region. EALA Member Mary Mugyenyi from Uganda, who presented the report to the House, said it was necessary for the Partner States to harmonise their national laws on tourism and related sectors. The EAC Council of Ministers is further urged to follow up with Burundi and South Sudan and Tanzania to join the EAC Single Tourist Visa. According to the report, EAC tourism arrivals have increased from 3.5 million persons in 2006 to 5.7 million persons in 2017. However, this is still substantially low, given that it represents only 8.6% of the Africa market share and 0.3% of the global market share. Tourism contributed to the Gross Domestic Product of the EAC Partner States by an average of 8.8% in 2017. [The EALA statement; Dr Betty Radier: The trailblazing woman defining the tourism sector]
Today, in Arusha: Evaluation of the 2nd Action Plan for EAC Industrialization Policy
A summary by the Institute of Economic Affairs of the East African Community’s Trade Policy Review (20-22 March, Geneva)
Critical commentaries on the finances of Kenya’s SGR: An economic miracle needed to save new railway; Wheels come off SGR dream as Sh35 billion loan comes due
Two updates on Nigeria’s border closures:
(i) What Benin, Niger must do to get borders reopened. The Federal Government has commenced negotiations with the nation’s neighbours, especially Benin Republic and Niger, with a view to re-opening Nigeria’s borders with them. Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, disclosed this at the 2020 Budget briefing, in Abuja, yesterday. She said that once the neighbours demonstrated enough commitment to past deals, the borders would be re-opened, adding that Nigeria’s interest was uppermost in the border issue. Responding to a question on the border closure, the Minister said: “It is not forever. There will be an end to it. The government of Nigeria is currently in discussions with the governments of neighbouring countries, including Niger and Benin Republic. We are negotiating to make sure that the challenges that brought about closure of the borders are addressed on both sides but especially, we want our neighbours to meet the commitments we signed unto several years ago. Once those discussions are concluded, the borders will be opened again.”
(ii) Stakeholders yesterday warned the Federal Government that the complete closure of the nation’s land borders portends danger to the economy. Mr Increase Uche, President, National Association of Government Approved Freight Forwarders, described the policy as ill-timed and of great danger to Foreign Direct Investment. He said while Buhari’s security advisers might have genuine concerns, the “unfortunate” decision is coming at a time Nigeria had just signed the AfCTA agreement. According to him, the measure would make investors view the nation as “unserious” and as a place where a stable environment is not guaranteed. “As we speak, there was a global body that was planning an international conference in Nigeria, trying to drag multinational companies to the conference. But they have changed the venue to Ghana. That is one of the disadvantages, when you take such actions suddenly. You will impede programmes that are aimed at boosting the economy.”
But Minister of Agriculture and Rural Development Sabo Nanono yesterday maintained that Nigeria is not in jeopardy of a food crisis. “I think we are producing enough to feed ourselves. I think there is no hunger in Nigeria. There could be inconveniences. When people talk about hunger in this government I just laugh,” he said at a media briefing to mark World Food Day in Abuja. He added: “That’s the basis for the closure of the border. And I think Nigeria tried to make these neighbouring countries understand our predicament but to no avail. So long as these countries bordering us will not respect Nigeria’s stand on food importation, the borders will remain closed.” [Rice smuggling: Court orders interim freezing of 45 bank accounts; Jibrin Ibrahim commentary: Policing our borders]
Kagame: Africa must fund her own transformation (New Times)
The African continent cannot continue to rely on foreign aid to finance its transformation, President Paul Kagame has said. Kagame was speaking in Abidjan at the 8th CGECI (Confédération Générale des Entreprises de Côte d’Ivoire) Academy, the largest annual gathering of the private sector in the West African country. “We have to reach a point where our countries have the capacity to finance our own transformation. Development aid has been useful and it continues to be useful, especially when we work to get the most impact out of every cent that we receive. But the point has never been to remain dependent forever when we have always had the potential to be wealthy ourselves,” Kagame said during the keynote address. Rather than continuously look to other countries for aid, Kagame said that there are more productive ways for Africa to partner with various countries and regions for mutual benefit. The 8th edition of CGECI Academy brings together private sector from across West Africa with Rwanda featuring as the guest country with the aim of exchanging lessons on improving doing business and enabling private sector to reach its full potential. Close to 50 members of the Rwandan Private Sector from diverse fields ranging from agriculture, manufacturing and ICT are also are taking part and are scheduled to hold business to business meetings with members of the Ivorian private sector.
Today’s Quick Links: Financial Times Africa Summit 2019: Andrew Stephenson, UK’s Minister for Africa, previews the UK-Africa Investment Summit (20 January 2020, London) 5th Conference of African ministers responsible for civil registration: Africa urged to harness digital technology for legal identity. Download all conference documentation here. EITI discussion paper, by Alexandra Gillies: The EITI’s role in addressing corruption Egypt’s trade deficit drops nearly 19% Long-term macroeconomic effects of climate change: IMF’s cross-country analysis |
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Underway in Geneva: UNCTAD’s NTMs Week
Sessions will cover topics such as the costs and benefits associated with NTMs from a sustainable development perspective, trade tensions beyond trade wars and e-commerce. The event will look at ways of reporting and eliminating ‘ugly’ NTMs, promoting transparency in trade regulations and replicating lessons being learned from the African Continental Free Trade Area’s mechanism for reporting, monitoring and eliminating non-tariff barriers. [Download: Draft agenda]
Financial Times Africa Summit 2019: keynote address by President Cyril Ramaphosa (The Presidency)
The new generation of leaders of Ahmed Abiy’s ilk are bold, courageous and are focused on creating an Africa that is at peace with itself and growing the economies of African countries through innovation, infrastructure development and trade. Their interest extends beyond the borders of their countries to promoting greater economic development within the respective economic regions on the continent. As we pursue economic integration, these regions are taking on a greater significance.
The borders drawn up in the palaces of Europe will gradually become less significant than the infrastructure matrix that will link African economies together. The AfCFTA will also have a broader international impact as Africa will be able to deal with other trade blocs from a position of greater strength, able to demonstrate economies of scale. As the incoming chair of the African Union next year, South Africa will put great emphasis on giving effect to the agreement on the Continental Free Trade Area. There is much work that needs to be done and many obstacles that need to be overcome, but we are determined that Africa should seize this moment. The convergence of economies and the integration of markets under the AfCFTA will make the case for investing in the African continent even stronger.
I call on the investor community to harness the climate of reform that is sweeping the continent and take advantage of its momentum. There has never been a better time to invest in Africa. As the continent grows and develops, the benefits will continue to be reaped in years and decades to come. As African nations, there has never been a better time to deepen our collaboration to ensure the African Continental Free Trade Area, our most ambitious collective venture yet, is a success. As Kwame Nkrumah famously said: “Divided we are weak; united, Africa could become one of the greatest forces for good in the world.”
The LDC Group has circulated two reports to the WTO’s Committee on Rules of Origin:
(i) Further evidence from utilization rates: utilisation by LDCs of China’s preference rates. The following submission, dated 7 October 2019, is being circulated at the request of the delegation of Tanzania on behalf of the LDC Group:
Figure 1 reports the full distribution of tariff lines over the utilization rates with covered imports from LDCs above $10,000. Chinese utilization rates appear to be relatively polarized around zero and (to a significant lower extent) around 100%. More specifically, in 2016, 70% (880 out of 1,250) of the tariff lines were reported to have zero utilization rate. This percentage remains unchanged (69%) when we consider a preference margin above 5%. This proportion increases to 74.4% when considering utilization rates between 0 and 5% (930 out of 1,250). In contrast, 157 tariff lines (12.5% of the tariff lines) present a utilization rate between 95% and 100%. This frequency of high utilization rate is bigger than those of intermediate values of utilization rates between 5% and 95%, with frequency ranging between 2 and 23 tariff lines (see lower part of Figure 1. However, it is still far from the 74% (930 tariff line) at the lower level of the utilization rate distribution, with utilization rates between 0 and 5%. Therefore, the polarization exists and is heavily biased towards zero.
Strong variations of utilization rates are observed between LDCs. Figure 2 depicts utilization rates and imports from LDCs covered by preferential treatment with a value above $50m. While some LDCs exhibit high utilization rates, it is remarkable to observe that the five biggest LDC exporters to China - trade values between $626m and $2bn - all face difficulties to benefit from DFQF preferential treatment. Indeed, four of these five LDCs (Zambia, DRC, Cambodia, Myanmar) report an utilization rate of zero. Bangladesh, the third biggest exporter to China in terms of covered imports only reaches 45%.
(ii) Direct consignment rules and low utilization of trade preferences. The following submission, dated 7 October 2019, is being circulated at the request of the delegation of Tanzania on behalf of the LDC Group:
The LDC Group believe that the non-alteration principle provision introduced by the EU or similar arrangements such those adopted Australia and New Zealand may constitute a best practice that should be progressively adopted by other preference-giving Members. The LDC Group calls to the other preference-giving Members to start considering the move to a similar approach abandoning requirements for a through bill of lading and certificate of the non-manipulation that do not adhere to business realities and trade facilitation practices. The LDC Group will enter into consultations with the EU to share the experience gained from the adoption of the non-alteration principle and the advantages to be gained in adopting similar best practices. The results from such consultations will be shared in the forthcoming CRO meetings to accelerate adoption of best practices in line with trade facilitation objectives and simple and transparent rules of origin for LDCs.
WTO’s Deputy Director-General Alan Wolff: “There should be a WTO 2.0. The level of ambition needs to be raised.”
SheTrades: Promoting SME competitiveness in Nigeria (ITC)
Women’s participation in Nigeria’s labour force is low and hasn’t evolved much over the past 20 years. In 2018, only 50% of all women in Nigeria participated in the labour force – a mere 3% increase since 1990. Yet, recent shifts to a services-based economy and the prestige associated with women’s entrepreneurship are opening up opportunities for Nigerian women to play a more active role in business. However, according to a new ITC report, Nigerian women will only be able to seize these opportunities with the right support systems in place. The publication is based on results from the ITC Small and Medium-sized Enterprise Competitiveness Survey of about 400 women-owned or led businesses in Nigeria. More than half of the women-owned or led firms surveyed were not registered with a local or national authority, and about half of all surveyed firms reported poor access to information on domestic standards certification. Certification bodies received a poor rating by 42% of respondents. These are both impediments to growth, as registering a business and attaining certifications are often required to reach international markets. To encourage women to register their businesses, the ITC report recommends that trade and investment support institutions build awareness among women entrepreneurs about Nigeria’s Corporate Affairs Commission, which is in charge of registering businesses. The report also highlights that sector associations, TISIs and Nigeria’s Standards Organisation are well placed to help firms of all sizes become compliant with international standards by building awareness of certification options and their benefits.
The DRC: Joint World Bank-IMF Debt Sustainability Analysis (September 2019)
According to the updated Low-Income Country Debt Sustainability Framework, the DRC’s debt-carrying capacity was assessed as weak. DRC remains at a moderate risk of external and overall debt distress, with limited space to absorb shocks. The debt coverage has been improved since the last DSA, especially on domestic debt. The external nominal debt ratios are lower than at the time of the 2015 debt sustainability analysis, however the country shows vulnerability in debt repayment capacity, even under the baseline, due to weak revenue mobilization. Most external debt thresholds are breached under the stress tests, highlighting the country’s vulnerability to external shocks. Given limited buffers, prudent borrowing policies are essential by prioritizing concessional loans and strengthening debt management policies
The [DRC] authorities broadly agreed with the overall assessment of the country’s debt sustainability (pdf). The new government supported increased transparency and full disclosure of public debt. The authorities committed to further broaden debt coverage, especially for SOEs, and to audit the rest of the legacy arrears. While committed to prioritize concessional borrowing, they also noticed the scarcity of it. They agreed with the need to prepare a medium-term strategy to help frame the debt policy and strengthen debt management capacity.
The impact of remittances on rural transformation in Africa: from commitments to action (AU)
Recent estimates showed that remittances sent by the over 30 million African migrant workers reached more than $85bn in 2018, supporting over 200 million family members living back home. Estimates including unregistered flows double this figure. Against this backdrop, the AU hosted the first event of the Global Forum on Migration and Development, in partnership with the African Institute for Remittances and the International Fund for Agricultural Development under the theme: The impact of remittances on rural transformation in Africa: from commitments to action (pdf). During the meeting (11 October, Addis Ababa) participants discussing the following sessions: The remittance market in Africa: leveraging inclusive remittance business models and innovation towards cost reduction and increased financial inclusion; Concrete responses to the international commitments on reducing the costs of remittance transfers and maximizing their impact to development. The outcome of the forum will directly contribute to build the discussions on one of the thematic priorities (i.e. harnessing migration for rural transformation and development) of the upcoming 12th GFMD Summit, which will be held from 18-22 November 2019 in Quito, Ecuador.
Comparative perspectives on growth, trade and regional integration:
(i) Trade integration as a pathway to development? (World Bank’s Chief Economist Office for Latin America and the Caribbean)
The Latin America and Caribbean (LAC) region has entered a new phase of weak economic performance, but increased integration in international trade and global value chains could reinvigorate economic growth. Steps toward greater trade integration include the United States Mexico Canada (USMCA) and the EU-Mercosur agreements signed in the last year. Both could have substantial positive effects on growth, but environmental impacts and the potential for negative effects in some areas must be addressed, according to Trade Integration as a Pathway to Development?, the latest semi-annual report from the World Bank’s Chief Economist Office for Latin America and the Caribbean. “After rapid economic growth due to high commodity prices during the first decade of the 21st Century, the region is in a new phase of lackluster performance,” said Martín Rama, World Bank Chief Economist for Latin America and the Caribbean. “The years of high commodity prices are now clearly behind us, and we need to focus on areas like trade integration to boost the region’s productivity.”
GDP in the Latin America and Caribbean region (excluding Venezuela) is expected to grow 0.8% in 2019 and 1.8% in 2020, according to the report. Countries in the Pacific subregion, as well as in Central America and the Caribbean will continue to experience faster economic growth, on average, than countries on the Atlantic. The largest economies in the region have faced recession, macroeconomic turbulence or growth deceleration. The short and medium-term outlook is not particularly encouraging. Export performance has been relatively weak and limited fiscal space leaves little room to stimulate domestic demand. The Argentinian recession will become deeper before the economy starts recovering and Mexico’s deceleration is expected to continue. In addition, a global downturn could cause the outlook to deteriorate further.
(ii) Weathering growing risks: World Bank’s East Asia and Pacific Economic Update
Growth in developing East Asian and Pacific economies is expected to slow from 6.3% in 2018 to 5.8% in 2019 and to 5.7% and 5.6% in 2020 and 2021, respectively, reflecting a broad-based decline in export growth and manufacturing activity. Weakening global demand, including from China, and heightened uncertainty around ongoing US-China trade tensions has led to a decline in exports and investment growth, testing the resilience of the region, according to Weathering Growing Risks (pdf), the October 2019 edition of the World Bank’s East Asia and Pacific Economic Update, released today. In the region excluding China, consumption growth remained steady, though slightly lower than the same period last year, supported by monetary and fiscal policies. Growth in the smaller economies of the region, however, remained robust, reflecting country-specific circumstances including steady growth in the tourism, real estate, and extractive sectors. The report makes clear that increasing trade tensions pose a long-term threat to regional growth. While some countries have hoped to benefit from a reconfiguration of the global trade landscape, the inflexibility of global value chains limits the upside for countries in the region in the near term.
(iii) Asia-Pacific Trade and Investment Report 2019: Navigating non-tariff measures towards sustainable development (UNCTAD)
While applied tariffs in the Asia-Pacific region have halved over the past two decades, the number of non-tariff measures – policy regulations other than tariffs affecting international trade - has risen significantly, according to a new report launched on 14th October by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and UNCTAD. The Asia-Pacific Trade and Investment Report 2019 (APTIR) finds that NTMs are now affecting around 58% of trade in Asia and the Pacific. One reason for the rise of NTMs is their growing popularity as weapons of trade policy in regional and global trade tensions. This can include government procurement limitations, subsidies to export and import restrictions as well as import and export bans through unilateral or multilateral sanctions. Meeting these complex and often opaque rules can require significant resources, affecting in particular SMEs. However, the report also notes that NTMs as policy instruments can often be legitimate. Most of the NTMs are technical regulations, such as sanitary and phytosanitary requirements on food. The average cost of these measures alone amounts to 1.6% of gross domestic product, roughly $1.4 trillion globally. But they also serve important purposes such as protection of human health or the environment; and can even boost trade under certain conditions.
NTMs are often very different between countries, making it difficult for firms to move goods from one country to another. Regulatory cooperation at the regional and multilateral level and the use of international standards when designing or updating NTMs is therefore important in overcoming challenges related to the heterogeneity of regulations. Looking ahead, the report also highlights that trade costs of NTMs can be significantly reduced by moving to paperless trade and cross-border electronic exchange of information. This could lower costs by 25% on average in the region, generating savings for both governments and traders of over $600bn annually.
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Commonwealth trade ministerial: Reform WTO and resist protectionism
Following a meeting in London, ministers from the 53 Commonwealth member countries declared their collective support for free trade in a transparent, inclusive, fair and open multilateral trading system, with the WTO as its core institution. They agreed that any WTO reform should take into account the views of all members, underlining the special circumstances of the developing and the least developed countries, as well as small and vulnerable economies, including Small Island Developing States. Ministers also endorsed an action plan designed to boost trade among their countries to at least $2 trillion by 2030, through the Commonwealth Connectivity Agenda. Intra-Commonwealth trade is projected to reach $700bn by next year. Commonwealth Secretary-General Patricia Scotland: “Building on this, the Commonwealth Connectivity Agenda will help businesses, including micro, small and medium sized enterprises, to plug into global trade networks and benefit from world trade. In this way, intra-Commonwealth trade offers immense opportunities to contribute to reducing poverty and achieving sustainable development.” [Note: The communiqué includes the Commonwealth Statement on the Multilateral Trading System]
African airlines passenger traffic rises by 4.1% (IATA)
A suite of postings on
Nigerian trade policy issues, trends:
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National Bureau of Statistics: Commodity Price Indices and Terms of Trade, Q2 2019 (pdf). Nigeria's major trading partners (both imports and exports) in Q2, 2019 were India, China, Spain, United States and Netherlands.
The All Region group export index, on average, rose by 1.02%, following a (0.19%) increase in May and 0.83 % in June. In May, the rise in the All Region group export index was mainly attributable to increases in the prices of export trade to Asia (1.5%) which was, however, partly offset by decreases in the prices of export trade to America (-0.56%), Africa (-0.32%) and Europe (-0.2%). In June, the rise in the all regions group export index was attributable to increases in trade with Asia (4.56%) and Europe (0.56%). These increases, however, were partly offset by decreases in the prices of export trade to America (-2.63%), Africa (-2.04%) and Oceania (-0.96%).
The All Region group import index, on average, fell by 0.25%, following a 0.17% decrease in May and 0.08% decrease in June. The 0.17% decline in the All Region group import index, in May, was mainly attributed to decreases in the prices of import trade from Oceania (-7.92%), America (-4.35%) and Europe (-0.34%) though the decline was partly mitigated by increases in the prices of import trade from Africa (+2.48%) and Asia(+1.19%). Similarly, the All Region group import index declined in June, by 0.08% , driven by decreases in the prices of import trade from Africa (-3.72%), America (-2.46%) and Asia (-0.60%). The decline was partly mitigated by increase in the prices of import trade from Oceania (23.78%) and Europe (0.64%).
The All Region group terms of trade stood at 102.5 in April, 102.9 in May and 103.8 in June. This represents an increase of 0.36% in May and of 0.9% in June. On average, the terms of trade increased by 1.27%.The increase was a result of the rise in the prices of goods traded with Asia (5.54%), America (3.78%) and Europe (0.06%), but was partly offset by decreases in the prices of goods traded with Oceania (-10.36%) and Africa (-0.98%) during the quarter.
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Reuters: Nigeria plans to team up with Cameroon to agree cocoa premium. Nigeria aims to team up with Cameroon to agree a premium for their cocoa with buyers, the vice president of the World Cocoa Producers Organisation told Reuters, after top growers Ivory Coast and Ghana moved to boost prices for their crops. The plan suggested by Nigeria, the world’s fourth-largest cocoa producer, is part of a drive by growers in West Africa and Latin America to try to address a perceived imbalance between farmers’ incomes and money made by big commodities traders. Ivory Coast and Ghana, which account for nearly two thirds of global output, have imposed a fixed “living income differential” of $400 a tonne on all cocoa contracts sold by either country for the 2020/21 season. World Cocoa Producers Organisation Vice President Sayina Riman, who doubles as president of the Cocoa Association of Nigeria, said Ivory Coast and Ghana had effectively agreed a $400 per tonne premium above global prices for their cocoa, and that Nigeria wanted to follow suit to protect its farmers. Nigeria has had informal discussions with Cameroon, Riman said.
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Dairy product imports drop by 25.19%. Following the Central Bank of Nigeria’s restriction on foreign exchange for importation of certain products, Nigeria has witnessed a 25.19% drop in importation of dairy products from New Zealand and three other countries. The country imported N211 billion ($578.97m) worth of the product between 2017 and 2018. Findings by New Telegraph revealed that the sharp drop had to do with CBN’s policy on foreign exchange restriction on the product, as data by International Trade Statistics show that the country imported $331.19m worth of the product in 2017 and $247.78m in 2018. According to details of the ITS data, New Zealand export dropped by 9.4% from $122.4m to $110.9m, while that of Netherlands declined by 41.97% from $107.94m to $62.6m.
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Nigeria records N323.4bn agric trade in three months. The total foreign trade of agricultural goods recorded in the country amounted to N323.4bn between April and June 2019. N73.5bn, or 22.7% of this figure, was exported while N249.95bn was the import value, according to figures obtained from the National Bureau of Statistics. “The value of agricultural exports was 14.66% lower than in Q1, 2019 and 14.48% lower than in Q2 2018. By economic region, agricultural goods were exported mainly to Asia and Europe, valued at N49.2bn and N18bn respectively. The dominant agricultural products were sesamum seeds mainly exported to Japan (N5.9bn), Turkey (N4.8bn) and China (N2.8bn). Other major drivers of agricultural exports were cashew nuts in shell, mainly exported to Vietnam (N12.7bn) and India (N4.2bn), as well as good fermented Nigerian cocoa beans exported to the Netherlands and Germany, valued at N3.3bn and N2.7bn respectively.”
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Manufacturers Association of Nigeria Export Promotion Group. Nigeria’s manufacturers and exporters have been called upon to explore opportunities presented by the AfCFTA, by moving away from commodity export to exportation of finished goods. Stakeholders who spoke at the AGM of the Manufacturers Association of Nigeria Export Promotion Group made this call and maintained that AfCTA offered Nigeria, as the largest economy in Africa, and one of the leading intra-African trading nations, huge export opportunities. The managing director, Intra-African Trade Initiative, The African Export-Import Bank, Ms Kanayo Awani, noted that manufacturers represented the largest collection of entrepreneurs in Nigeria, and would ensure robust and competitive manufacturing sector that would make the country a regional and global economic power. The Chairman, MAN Export Group, Chief Ede Dafinone, expressed concerns over the low performance in the non-oil export earnings for the year 2018, and called for a more export-friendly government. While he said the group was engaged in several meetings with the National Assembly and the Nigeria Export Promotion Council on the approval of exporters to participate in the promissory notes programme of the Federal Government, Dafinone added that the body would continue to liase with the government on the need to reverse its stand on the closure of the country’s borders. [Border closure: MANEG warns on manufacturing, exports collapse]
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Pharmaceutical firms seek N300bn bailout. Chief executive officers of top pharmaceutical companies under the auspices of Pharmaceutical Manufacturers Group-Manufacturers Association of Nigeria, PMG-MAN are seeking N300 billion bailout funds from the Federal Government to enable them reposition the industry in anticipation of the AfCFTA agreement take-off. In an interview with this newspaper in Lagos, the Chief Executive Officer, Biotec Pharmaceutical Limited and a chieftain of PMG-MAN, Dr Eugene Okorie, explained that the AfCFTA pact would put the country’s economy on the edge, especially the pharmaceutical sector’s contribution to the growth and development of GDP. He said that the sector was in dire need of funding, saying that N300 billion bailout was needed very urgently to salvage the pharma industry if Nigeria does not want to remain a ‘dumping ground’ for all sorts of illicit drugs.
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FG sets up 89-person team to monitor daily importation, consumption of petrol. The team, according to a statement from the Nigerian National Petroleum Corporation, was drawn from five key agencies comprising the corporation itself, Department of Petroleum Resources, Petroleum Products Pricing Regulatory Agency, Petroleum Equalisation Fund, and Department of State Services. Their job, the statement explained, would be to ensure transparency and accountability in the distribution of petroleum products across the country. It said the team, code-named ‘Operation White’, was inaugurated by the Minister of State for Petroleum Resources, Mr Timipre Sylva, who reportedly noted that they would help to authenticate the actual volume of products imported and consumed in the country and ensure that Nigeria attained energy security. Sylva equally observed that the initiative was long overdue for the country and charged members of the team to carry out the assignment with commitment, zeal and patriotism. He stated that he was optimistic that the operation would stem the smuggling of petroleum products by some unscrupulous operators, stressing that the savings from the exercise would support infrastructural development in the country. He also recalled that few weeks after the closure of the country’s land borders, daily petrol consumption dropped from 60 million litres to 52 million.
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Reuters: Nigeria seeks $62 bln from oil companies – attorney general. Nigeria is seeking $62bn from oil companies under regulations that allow the government to revisit revenue-sharing deals on petroleum sales if crude prices exceed $20 a barrel, the attorney general told Reuters on Thursday. The government in Africa’s largest oil exporter relies on oil for some 90% of foreign exchange. Oil prices rose to more than $100 a barrel in 2014 before a sharp drop that triggered a 2016 recession in Nigeria, leaving the government struggling to fund its budgets. A law dating back to the 1990s that governs oil production sharing contracts allows the government to review revenue sharing once the oil price rises above $20 per barrel.
Other country trade updates
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South Africa: Absa plans China office in Asia investment banking expansion (Bloomberg)
Absa Group Ltd.’s corporate and investment banking unit plans to open an office in China as part of an expansion that will also target other parts of Asia and the Middle East. “Next year, we will be seeking strategic approval from our board for an on-the-ground presence in China,” Charles Russon, the division’s chief executive officer, said in an interview in Johannesburg. “My hunch is it will be Beijing. It’s actually one of the questions we’ve asked the strategic team to figure out.”
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Malawi: Consultations on a National Export Strategy and Action Plan, 2020-2025 (Commonwealth)
The new strategy, to be developed with Commonwealth technical assistance, will cover the period from 2020 to 2025, building on key lessons learned from the national export strategy of 2013-2018. The keynote speaker at this week's consultations, Minister of Industry, Trade and Tourism Ibrahim Salim Bagus said: “We cannot continue to do business as usual and expect different results. There is a need for a complete overhaul in the way we conduct our business as a sector if we are indeed going to meet our objectives in the new export strategy.” Malawi faces a significant trade deficit, importing about twice the value of goods as it exports. A review of the previous strategy (2013-2018) found that Malawi was able to strengthen its oil seed sub-sector, but broadly, exports lagged behind imports with its export basket remaining narrow and market diversification remaining slow.
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Kenya: Exports to China up 74% on farm produce orders (Business Daily)
Chinese orders for Kenyans goods jumped 74.13% in the first six months of the year, signalling economic dividends from a diplomatic charm offensive that Nairobi has mounted from late 2018. China bought goods worth a record Sh7.48 billion compared with Sh4.30 billion in the same period of 2018, Kenya National Bureau of Statistics indicates. Nairobi has been conducting aggressive trade promotion and marketing campaigns in China, primarily aimed at growing and expanding the market for Kenyan farm produce. Coffee, specialty tea, cut flowers and avocados are some of the farm produce which continue to gain market access to China, Kenya Export Promotion and Branding Agency chief executive Peter Biwott said. India is, however, proving hard to crack thus far, with Kenyan exports falling Sh1.84 billion, or 37.61%, to Sh3.05 billion in the half-year period of 2019 compared with a year earlier.
Demand for Kenyan products has slumped in Rwanda and Burundi amid competition from China, India and Saudi Arabia, a study by Kenya Export Promotion and Branding Agency (Keproba) shows. Kenya, which mainly exports iron sheets, steel, oils, perfumes, paints, paper and cigarettes to the two landlocked States, has recorded slow export growth as other players come into their turf. “There is a notable trend in the abandonment of the Kenyan brands in Rwanda and Burundi due to increasing prices, unavailability of products, competition from substitute products and counterfeiting,” says the study released yesterday. Kenya commands three percent share of the import market in the two countries, valued at about Sh6.5 billion in Burundi and Sh17.8 billion for Rwanda. [Related: Kenya to set up product warehouses in Rwanda, Burundi and Congo]
@KEPROBA: Kenya’s trade surplus in the EAC has been on a dwindling trend with imports from the region growing at twenty times faster (22%) than exports (1%) in the period 2014-2018. This study gives us an analysis of what we need to do to gain export market share. [KEPROBA infographic: Kenya's exports to Rwanda, Burundi 2010-2018]
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Zambia says it owes major mining firms $215 million in tax refunds (Reuters)
Zambia owed major mining companies 2.8 billion kwacha ($215m) in tax refunds as at 30 June, 2019, Finance Minister Bwalya Ng’andu said on Thursday, the latest development in a long-running dispute with the miners. In December, the Zambian government withheld payment, saying the correct documentation had not been provided. The government has verified that it owed the companies 2.834 billion kwacha in Value Added Tax refunds although the mining firms were claiming an additional 4.955 billion kwacha without providing evidence, Ng’andu said.
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Africa’s Pulse (World Bank)
Sub-Saharan Africa’s economic performance has remained sluggish, hampered by persistent uncertainty in the global economy and the slow pace of reforms to enhance domestic resilience. Regional growth is projected to rise to 2.6% in 2019 (0.2 percentage point lower than the April forecast) from 2.5% in 2018. On the demand side, growth of real gross domestic product weakened due to slower gross fixed capital formation and net exports, thus reflecting weaker investor sentiment against the backdrop of global policy uncertainty. On the supply side, the manufacturing and mining industries saw a modest expansion, while the services sector lost some momentum and agricultural sector growth remained subdued due to drought. The external environment is challenging for Sub-Saharan Africa. Global growth has continued to slow amid rising policy uncertainty due to the renewed intensification of trade tensions in the global economy. Partly as a result, the prices of most of Sub-Saharan Africa’s commodity exports have weakened since the second quarter of 2019. Prices of crude oil and base metals are expected to remain below their 2018 peak. While global financial conditions have eased, capital inflows in the region have remained modest, as trade policy uncertainty continues to weigh on investor sentiment. Reflecting the effect of heightened policy uncertainty on global economic activity, real GDP growth is also expected to slow significantly in other EMDE regions. The Middle East and North Africa, Latin America and Caribbean, and South Asia regions are expected to see larger downward revisions in their growth forecasts than Sub-Saharan Africa for 2019. Extract (pdf):
Leverage the food system, on and off the farm. Improving production and productivity in agriculture has historically had poverty-reducing effects, especially at low income levels, and the conditions for leveraging the food system for poverty reduction in Africa today are especially favorable. Food demand is robust; world food prices are still about 70% higher than they were before the 2008 world food crisis (40% in real terms); and urbanization and income growth provide opportunities for product differentiation and value addition and thus off-farm employment opportunities in agribusiness. The domestic agricultural policy and trade environments (including intraregional) have improved, and political leadership remains largely supportive. Against this background, supply has responded, but insufficiently - Africa’s food import bill has risen steeply, by $30bn over the past 20 years (figure 2.4). Many of these imports could be competitively produced domestically, although climate change and resurging conflict also pose challenges. Yet, the expected climatic changes are not unequivocally detrimental. Maize yields, for example, are predicted to increase in the Sahel and many parts of eastern and central Africa. And agriculture plays an important role in the prevention of conflict - which often finds its origins in climate-related agricultural shocks - as well as in the recovery of fragile states.
Underway, in Arusha: EAC Sectoral Council of Ministers responsible for EAC Affairs and Planning
The SCMEACP will consider the report on implementation of previous decisions of the SCMEACP; a progress on the status of implementation of the EAC Common Market; status of EAC integration (2000 – 2017); consideration of the global and sector-specific priorities for the FY 2020/21; terms of reference for the formulation of the 6th EAC development strategy (2021/22 – 2025/26); the report of the meeting of Chiefs of Immigration and Directors of Labor; and the status of Partner States’ contributions to the EAC budget; and progress on COMESA-EAC-SADC tripartite free trade area negotiations. [Posted: EAC Gazette 2 October, 4 October]
Paul Nugent: The Noepe-Akanu joint border post revisited
I was present for the inauguration of the Joint Border Post (elsewhere known as a One-Stop Border Post) by President Mahama of Ghana and President Faure Togo back in November 2014. The buildings lay empty until October 2018 when it was formally opened for business the mismatch between the grand vision of regional integration, as articulated at the ECOWAS level, and the perceived interests of member states who often have other priorities: [Tanzania and Zambia’s new $6m border post to boost trade]
Here is how the Ghana Exports Promotion Authority intends to reduce the impact of how Nigeria’s border closure (Pulse)
Nigeria: President Buhari’s 2020 budget presentation (Pulse)
The 2020-2022 MTEF and Fiscal Strategy Paper set out the parameters for the 2020 Budget. We have adopted a conservative oil price benchmark of $57 per barrel, daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020. We expect enhanced real GDP growth of 2.93% in 2020, driven largely by non-oil output, as economic diversification accelerates, and the enabling business environment improves. However, inflation is expected to remain slightly above single digits in 2020. Accompanying the 2020 Budget Proposal is a Finance Bill for your kind consideration and passage into law. This Finance Bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to our fiscal laws. These objectives are: Promoting fiscal equity by mitigating instances of regressive taxation; Reforming domestic tax laws to align with global best practices; Introducing tax incentives for investments in infrastructure and capital markets; Supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business reforms; Raising revenues for government. [Buhari: World Bank, IMF, others ‘publishing inaccurate data about Nigeria’
25th Nigerian Economic Summit: keynote address by Atedo Peterside
Before going into prescriptions it is important to update this audience about the current structure of the Nigerian economy, which is significantly different from what prevailed in 1993 in 5 important areas: Over 50% of our GDP now comes from the services sector; Inward diaspora remittances now eclipse the oil and gas sector as the number one source of forex for Nigeria; Our ICT sector’s GDP contribution has since outgrown the oil and gas sector share of GDP and so it should be heralded and nurtured instead of being attacked by rogue regulators as has become fashionable; The split of aggregate demand between the Private Sector and the Government Sector (all 3 tiers) is now 91.5%/8.5%; In 2018, Nigeria’ Foreign Direct Investment inflows slipped behind Ghana’s for the first time.
We cannot afford to approach the next 25 years by repeating the errors of the last 25 years. The shared responsibility includes getting the elite to become less insular or less sycophantic and to learn to speak truth to power. The recently appointed Economic Policy Advisory team is a step in the right direction by FG. Their job will be made a lot easier if this Summit can help establish an elite consensus on the unfinished business that is still holding us back from building and sustaining a strong economic future for Nigeria. [Related NES updates: President Buhari’s remarks; Key highlights, Adoption of global standards key to maximising benefits of AFCTA, says Ecobank MD]
Uganda and the IMF:IMF staff statement. After last year’s strong performance in domestic revenue collection, execution of the current budget (fiscal year 2019/20) is challenging. Delays in the implementation of some revenue measures and shortfalls in non-tax revenues are likely to widen the overall fiscal deficit. The authorities need to adopt measures of around 1 percent of GDP to safeguard their budget targets and prevent a recurrence of domestic arrears. The government’s medium-term fiscal policy framework rests on the assumptions that oil sector investments proceed as planned, implementation of the domestic revenue mobilization strategy yields ½ percent of GDP in additional revenue collection per year, and the government achieves improvements in public investment management, in particular in project selection, planning, and execution, to ensure that infrastructure investment yields the envisaged growth dividend.
Tanzania: Gold export earnings up 25% in year to August – central bank (Reuters)
Gold exports fetched $1.91bn in the year ending 31 August, up from $1.53bn the previous year. “Gold export rose by 25.1%, driven by volume, and accounted for more than half of non-traditional exports,” the Bank of Tanzania said in its latest monthly economic report (pdf). It did not give figures for export volumes.
Botswana forecasts slower GDP growth, wider deficit this year (Reuters)
Gross domestic product growth in the diamond-producing southern African nation is projected to slow down to 4.3% in 2019, from 4.5% last year, deputy finance secretary Kelapile Ndobano said. Economic growth is later projected to pick up to 4.6% in 2020, supported by ongoing structural reforms aimed at diversifying the economy, he said. “The medium term growth outlook remains positive,” Ndobano told a budget conference. “The non-mining sector, particularly services, will drive growth, signalling that our economy is now more diversified as diamonds are no longer the biggest contributor to growth.” Botswana’s diamond sales fell 16% in the second quarter of 2019, Ndobano said. Debswana, a partnership between Anglo American’s De Beers and Botswana, reported that production fell by 9% to 5.7 million carats in the second quarter.
West Africa Fertilizer Financing Forum: outcomes (AfDB)
A major outcome of the forum was the signing of a MoU between the West Africa Fertilizer Association and ECOWAS. The agreement aims to strengthen the fertilizer value chain in West Africa and set the scene for the implementation of the regional agenda on sustainable agriculture. Financing remains one of the missing links for a robust agricultural value chain in West Africa, participants said. They also pointed out that fertilizer suppliers and distributors are facing several challenges when it comes to accessing financing through commercial banks and other financial institutions. The challenges include limited working capital, a low equity base and lack of trust. Major regional commercial banks attending the meeting expressed their interest in risk-sharing facilities and said stronger collaboration with fertilizer suppliers is needed to facilitate bank access to relevant financial information. Bank representatives also suggested increased working relationships with small and medium fertilizer suppliers and distributors from the West Africa Fertilizer Association in order to boost trade credit with guarantees from the Africa Fertilizer Financing Mechanism.
India’s proposal to tax global digital platforms gets a boost (Mint)
India and South Africa received a boost to their campaign at the WTO against the current moratorium on customs duties on electronic transmissions, after a proposal to advance international negotiations for taxing global digital platforms and digital services was presented on Wednesday at the Paris-based Organisation for Economic Co-operation and Development. OECD’s proposal (pdf) seeks to “re-allocate some profits and corresponding taxing rights to countries and jurisdictions where MNEs (multinational enterprises) have their markets”. “We’re making real progress to address the tax challenges arising from digitalization of the economy, and to continue advancing toward a consensus-based solution to overhaul the rules-based international tax system by 2020,” said Ángel Gurría, OECD’s secretary general. [Note: The new OECD proposal brings together common elements of three competing proposals from member countries, and is based on the work of the OECD/G20 Inclusive Framework on BEPS, which groups 134 countries and jurisdictions on an equal footing, for multilateral negotiation of international tax rules, making them fit for purpose for the global economy of the 21st Century.]
Today’s Quick Links: Follow debates at the WTO’s Public Forum 2019: Audio recordings of completed sessions; CUTS’ Bulletin No 1, No 2 Commonwealth Trade Ministers Meeting: comments by UK’s International Trade Secretary, Liz Truss High-level panel highlights urgent need for WTO deal to limit harmful fisheries subsidies |
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A special feature, profiling the annual flagship reports released today by the WTO and the WEF
(i) World Trade Report 2019: The future of services trade
On average, services account for about half of GDP worldwide. For developed economies, they account for around three-quarters of GDP and their proportion is increasing rapidly in developing economies. According to the report (pdf), services trade has grown 5.4% per year since 2005, while trade in goods has grown at 4.6% on average. Trade in computer services and research and development have recorded the most rapid annual growth over the past decade. According to the WTO Global Trade Model, a new quantitative trade model used by the WTO to make projections about global trade, the share of services in global trade could increase by 50% by 2040. This is thanks to lower trade costs and the reduced need for face-to-face interaction due to digitalization. It is also dependent on policy barriers to services trade being lowered. Many developing economies are becoming increasingly services-based and their share of world services trade has grown by over 10 percentage points since 2005. However, services trade is concentrated in five developing economies – China; Hong-Kong China; India; the Republic of Korea and Singapore – accounting for over 50% of developing economies’ services trade in 2017.
The report says that services trade may help women and micro, small and medium-sized enterprises play a more active role in world trade, particularly in developing economies, helping to reduce economic inequality. When MSMEs in developing countries start exporting services, they are on average two years younger than manufacturing firms. However, they export less than 5% of total sales. Services are the main source of employment for women. However, the service sectors that account for most women employment have been so far among the least traded. Despite their decline by 9% between 2000 and 2017, barriers to trade in services remain much higher than in goods trade. This is largely due to the limited possibilities to supply certain services across the border and the regulatory intensity of many service sectors.
Technologies are key drivers of services trade, enabling cross-border trade of services that have traditionally needed face-to-face interaction. Digital technologies are also reducing the cost of trading services. The report finds that if developing countries are able to adopt digital technologies, their share in world services trade could increase by about 15% by 2040.
The report notes that policy barriers to services trade – mainly regulatory measures –are much more complex than in goods trade. The authors of the report note that for services trade to be a powerful engine of economic growth, development and poverty reduction international cooperation will need to be intensified and new pathways will need to be found to advance global trade cooperation and make services a central element of trade policy.
Note: To complement the survey of the empirical evidence, case studies describing successful developmental outcomes resulting from an expansion of trade in services in Ethiopia, India, Kenya, Mauritius, Mexico and the Philippines are discussed. These case studies are of salient interest given the geographical diversity of the economies involved, hinting perhaps at the strength of the link between increased trade in services and development. [Air transport in Ethiopia, ICT services in India, Financial services in Kenya, Health, tourism and financial services in Mauritius, Tourism in Mexico, The business process outsourcing sector in the Philippines]
Remarks by DG Azevêdo: So, what can we expect in the years to come? And how can this untapped potential be realized?
Downloads: Individual chapters: Introduction, Services trade in numbers, Why services trade matters, Services trade in the future, What role for international cooperation on services trade policy?, Conclusions]
Downloads: Commissioned pieces
Alan Beattie: The case of the missing services?
Sonja Grater, Ali Parry, Wilma Viviers: MSMEs and services trade - a pathway to inclusive growth in developing economies?
Matteo Fiorini, Bernard Hoekman: Services trade policy and the United Nations, Sustainable Development Goals
Rupa Chanda: Ensuring inclusive services trade - role of complementary domestic policies
Richard Baldwin: Digital technology and telemigration
Natallie Rochester: The potential of trade in services for developing countries
Jane Drake-Brockman: Why regulatory cooperation matters for business
(ii) Global Competitiveness Report 2019: How to end a lost decade of productivity growth
This year’s Global Competitiveness Report is the latest edition of the series launched in 1979 that provides an annual assessment of the drivers of productivity and long-term economic growth. With a score of 84.8 (+1.3), Singapore is the world’s most competitive economy in 2019, overtaking the United States, which falls to second place. Hong Kong SAR (3rd), Netherlands (4th) and Switzerland (5th) round up the top five.
Extract (pdf): Led by Mauritius (52nd), sub-Saharan Africa is overall the least competitive region, with 25 of the 34 economies assessed this year scoring below 50. South Africa, the second most competitive in the region, improves to the 60th position, while Namibia (94th), Rwanda (100th), Uganda (115th) and Guinea (122nd) all improve significantly. Among the other large economies in the region, Kenya (95th) and Nigeria (116th) also improve their performances, but lose some positions, overcome by faster climbers. On a positive note, of the 25 countries that have improved their Health pillar score by two points or more, 14 are from sub-Saharan Africa, making strides to close the gaps in healthy life expectancy.
Chapter 2 features regional trends and selected country analysis from the 2019 edition of the Global Competitiveness Index 4.0 (see page xiii for the full rankings). Combining the GCI scores at a regional level reveals significant differences in both median competitiveness levels across regions as well as dispersion of performances within regions.
Overall, the results show that East Asia and the Pacific (17 countries) achieves the highest median score (73.9) among all regions, followed closely by Europe and North America (70.9, based on 39 countries). However, within the East Asia and the Pacific region the competitiveness gap between the best and worst performers is significantly larger (34.7) than in Europe and North America (28.9). This shows that, while many countries in East Asia and the Pacific have come a long way to bring their competitiveness up to a high level, there are a few that need to progress faster to bridge their gaps. [Companion feature analysis, by Emma Charlton: The secrets of the world's most competitive economies]
Trade policy to catalyze export diversification: what should landlocked fragile countries do? (World Bank)
The landlocked and fragile countries Mali, Niger, and Chad have suffered, to varying degrees, from Dutch Disease, with high export concentration in natural resource commodities and in a few foreign markets, and little development of their non-resource economies. The three countries' ability to create a sustainable path to economic growth and poverty reduction is inextricably linked to their connectivity with external markets, in the region and beyond. Thus, Mali, Niger, and Chad are first challenged by their geography -- their landlocked nature creates a barrier to market access beyond their immediate neighbors, while their vast and thinly populated lands serve to isolate the most vulnerable communities from external and internal markets.
Adding to these geographic disadvantages, the incentive environment - defined by high and variable customs common external tariff regimes resulting from multiple overlapping regional trade arrangements - places a wedge between domestic and international prices that provides a disincentive to exports in favor of non-tradable and domestic-oriented sectors. By bringing greater coherence and convergence between the many common external tariff regimes in operation and the rationalization of their structures, and improving connectivity within and between markets, Mali, Niger, and Chad can better promote the reallocation of resources toward tradable goods and services, putting the countries on a path toward greater economic inclusion and sustainable growth.
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AfCFTA Ratifications Update, from @AmbMuchanga: Good news. Mauritius has ratified the African Continental Free Trade Area Agreement. We are moving and growing. 27 more ratifications remaining to create One African Market.
Opportunities for women entrepreneurs in the context of the AfCFTA. This UN Women study identifies opportunities for women entrepreneurs with regard to the AfCFTA, focusing on three areas of interest: women in informal cross-border trade; gender and value chain analysis; and affirmative action/preferential public procurement. The study looked at inter-linkages between trade, public procurement, value chains and gender inequality. It assessed potential ways for improving regional integration frameworks from a gender perspective. It also analysed potential ways of integrating gender concerns into value chain development projects and programmes to help women maximize their profitability and competitiveness. Finally, the study analysed different preferential procurement schemes adopted in four countries, namely Kenya, Rwanda, Uganda and South Africa. Selected recommendations (pdf):
Improve the availability of relevant gender-disaggregated data; Conduct comprehensive gender analysis and studies to support evidence-based AfCFTA policymaking; Conduct advocacy and awareness raising on gender and AfCFTA issues; Monitor AfCFTA processes in responding to gender gaps in trade; Strengthen women’s trade associations and networks; Support capacity-building initiatives for SMEs on international and regional trade requirements. Note: While trade in services (as soft goods) is also included in the AfCFTA, it is not considered in this analysis, even though it holds great potential for employment and wealth creation by women. Note too that the discussion here on value chains is focused solely on agricultural value chains, although other chains, such as manufacturing, can provide similar avenues of opportunities for women.]
AfDB announces new accountability index to measure institutional lending to women. A new tool to track the level of lending to women across the continent will be important for ensuring women get the critical financial help they need, AfDB president Akinwumi Adesina told attendees at a public event held on the sidelines of the UN General Assembly. The Women’s Financing Index, currently under development, will rate banks and financial institutions who apply for loans from the AfDB, against the amounts they have lent or are lending to women. Top institutions will be rewarded with preferential financing terms from the AfDB. The Bank, through its AFAWA, initiative – Affirmative Finance Action for Women in Africa - aims to mobilise $3bn to bridge the financing gap for women on the continent.
AfDB Group approves loans of €209m for expansion of Kenya's ‘Great North Road’
The Board of Directors of the AfDB Group has approved loans of around €209m to fund the expansion of a highway that links major economic hubs in Kenya. The total project cost is €257.68m, of which €178.02m (69%) will be financed by the Bank Group, while 12% will come from the Africa Growing Together Fund, set up by the Bank and the People’s Bank of China in 2014. The remaining 19% will be financed by the Kenyan government. The five-year project will convert the 84km Kenol–Sagana–Marua Road in central and eastern Kenya from a two-way single carriageway into a dual bypass, and is due for completion in 2025. The new road will enhance traffic flow between the port city of Mombasa and major centres like Nairobi. It will also ease transport between Nairobi and the Mount Kenya region; and ultimately Ethiopia. Kenol–Sagana–Marua Road is also part of the Trans-Africa Highway, commonly known as the Cape to Cairo route.
Tanzania: Transit motor vehicles at Dar port in sharp increase (IPPMedia)
The number of imported on-transit motor vehicles that pass through Dar es Salaam port to neighboring land-locked countries rose to 159,639 from January this year, the Tanzania Ports Authority says. TPA Director General Deusdedit Kakonko attributes the increased number of consignments to higher efficiency and interventions by the port authority to curb tampering of goods amongst port officials. Statistics indicate that the number of vehicles passing through Dar es Salaam port in the 2017/2018 financial year stood at 132,035 after having dropped to 93,000 in 2016/2017. About 164,000 cars were ferried through Dar port in 2014/15 and 127,335 in 2015/2016. “The drop was a shock. I had to go on a campaign to sensitize our neighbours to continue using Dar port after we successfully controlled such practices and improved efficiency. I met with stakeholders in Lilongwe (Malawi), Uganda, Zimbabwe and Lubumbashi in the Democratic Republic of Congo (DRC). Most vehicle importers complained of chaotic inspections by traffic police officers along with theft of goods and car parts,” he said. The traders also accused officials from both public agencies and private institutions of extortion especially at Kasumuro border post between Tanzania and Malawi. “Vehicle importers from Zimbabwe had already started to use a port in Mozambique, but they are mostly back to our port,” he said.
Kenya and AGOA: Trade PS @Kiptoock this morning chaired private sector stakeholder engagement meeting which focused on how to maximize exports to the USA before expiry of AGOA pact 6 years from now.
Kenya: Ngilu eyes international textile market (The Star)
The Kitui county government aims to sell locally made clothes in the international market. “We have an ambitious plan to ensure that Kitui apparel products are on international markets,” Governor Charity Ngilu said on Sunday. She said the dream was achievable if the county attained a high level of efficiency and deployed the latest technology at Kitui County Textile Centre. The governor is in Taiwan attending the 23rd edition of Taipei Innovative Textile Application Show. “From TITAS, we hope to see a better and more efficient Kicotec. We will utilize the lessons from TITAS 2019 to accelerate production of world-class apparels,” Ngilu said in a statement.
Rwanda launches first 'Made in Africa' smartphones (Reuters)
Rwanda’s Mara Group launched two smartphones on Monday, describing them as the first “Made in Africa” models and giving a boost to the country’s ambitions to become a regional technology hub. The Mara X and Mara Z will use Google’s Android operating system and cost 175,750 Rwandan francs ($190) and 120,250 Rwandan francs ($130) respectively. They will compete with Samsung, whose cheapest smartphone costs 50,000 Rwandan francs ($54), and non-branded phones at 35,000 Rwandan francs ($37). Mara Group CEO Ashish Thakkar said it was targeting customers willing to pay more for quality. Mara Group hopes to profit from the AfCFTA, a pact aimed at forming a 55-nation trade bloc, to boost sales across Africa, Thakkar said.
Economic transformation through digital technologies: Will Africa make the right decisions? (World Bank)
The policy brief is for ministers and parliamentarians responsible for policies on ICT and innovation, the development of the informal sector, and broader economic growth and equality issues, education, finance, and labor and social protection. The policy brief was prepared to inform deliberations on policies and programs for job creation and economic growth through digital technologies by presenting the best available evidence and policy implications based on this evidence. Extract (pdf): About 60% of the Sub-Saharan Africa labor force comprises adults who are ill-equipped for jobs, a cloud that hangs over the region. The silver lining is that lower-skilled workers in Sub-Saharan Africa may benefit more from digital technology than workers in other regions. There are at least three possible reasons for this:
State of Sustainable Markets 2019 (ITC)
The State of Sustainable Markets 2019: Statistics and Emerging Trends provides a snapshot of substantial growth of sustainability standards for bananas, cocoa, coffee, cotton, oil palm, soybean, sugarcane, tea and forestry products. It points out that the share of certified agricultural land is expanding and that this trend likely to continue. A joint publication by the International Trade Centre, the Research Institute of Organic Agriculture and the International Institute for Sustainable Development, the fourth edition of the State of Sustainable Markets presents data on area, production volume and number of producers that comply with a sustainability standard. The complete findings of the report – the only global publication highlighting sustainable market trends – can be found on a new interactive website featuring data from 14 of the world’s leading standards organizations.
The report notes (pdf) that in the past five years, land area dedicated to growing certified cotton has grown by 172%. Meanwhile, land certified as sustainable for sugarcane grew by 80%, whereas for cocoa, it more than doubled. In 2016–2017, the certified areas for the nine commodities increased at least 18%, led by sugarcane and cotton. At least 17.9 million hectares of farmland for nine agricultural crops singled out in this report were certified in 2017, equalling 7.6% of the total area for them. Organic farmland covers the greatest area. In fact, almost 70 million hectares – roughly the size of Myanmar – were certified as organic in 2017, representing 1.4% of the world’s farmland– but most of the other standards have grown more in recent years.
The IMF’s Kristalina Georgieva: Decelerating growth calls for accelerating action. So why the slowdown in 2019? There are a range of issues and one common theme: Fractures. I will start with trade. We have spoken in the past about the dangers of trade disputes. Now, we see that they are actually taking a toll. Global trade growth has come to a near standstill. In part because of the trade tensions, worldwide manufacturing activity and investment have weakened substantially. There is a serious risk that services and consumption could soon be affected. And the fractures are spreading. Even if growth picks-up in 2020, the current rifts could lead to changes that last a generation — broken supply chains, siloed trade sectors, a “digital Berlin Wall” that forces countries to choose between technology systems. Our goal should be to fix these fractures. Our world is intertwined. So our responses must be coordinated. I believe we can do it.
I said trade tensions were now taking a toll. Let me show you what I mean. This graphic is part of the updated analysis on tariffs we will release next week. It shows the projected global GDP loss from the escalating trade conflict between the US and China. The blue, yellow, and purple blocks show the direct costs on businesses and consumers from the three rounds of implemented and announced tariffs. Now, look at the red blocks. This is what happens when the expected secondary effects are added in — including the loss of confidence and market reactions. The results are clear. Everyone loses in a trade war.
Free trade zones: A Pandora’s box for illicit money (Global Financial Integrity)
Governments around the world are increasingly turning to free trade zones (FTZs) as a means of promoting economic growth and investment: Ghana recently signed an agreement with Iran to bolster cooperation between their free zones, while the Dubai Multi Commodities Centre announced 1,868 new companies have registered in its free zone in 2018 – an all-time record. Further, last year the tiny country of Djibouti launched Africa’s largest FTZ. Even UK Prime Minister Boris Johnson has announced plans to create up to ten free ports in the UK to offset post-Brexit tariffs and attract investment. But the risks of FTZs are glaring, with the EU discouraging their existence, labelling FTZs as a “new emerging threat” in the world of financial crime.
But FTZs have a darker side, too. Criminals see them as perfect places to manufacture and transport illicit goods, as controls and checks by authorities are often irregular or absent. Illegal transactions can be easily disguised as legal, using trade-based money laundering (TBML) schemes that are notoriously difficult to detect. If an offshore financial center is thought of as a tax haven for illicit finance; think of an FTZ as a haven for illicit trade (and associated crimes): Customs authorities have little or no oversight of what actually goes on in an FTZ, goods are rarely ever inspected and companies operating in FTZs tend to benefit from low disclosure and transparency requirements. With the number of FTZs around the globe a continuing mystery – some estimate the number at 4,300 – the opacity inherent in the zones is a massive security, crime and tax challenge.
If we are to see any significant improvements in FTZ governance and oversight, the WTO and WCO should, at the very least, enforce some basic requirements. Stricter measures need to be in place when it comes to issuing trading permits in FTZs, the national customs authority must be physically present and inspection of goods should be carried out routinely in warehouses. The cost of engaging in TBML practices in FTZs should always outweigh the benefits reaped from illicit activities, which means that prosecution of such crimes should be more aggressive, sustained and targeted by authorities. Until these basic requirements are met, free trade zones will continue to be haven for free crime. [South African Special Economic Zones: history of limited successes]
Today's Quick Links:
Why are Irish supermarkets selling apples from Chile, South Africa and New Zealand?
Land reforms, climate change, cheap imports pose risks to agriculture in KZN says FNB's Dawie Maree
Britain says 88% of imports to face no tariffs in event of no-deal Brexit
Mauritius workshop: Socio-economic impacts of international exhaustion of trademarks
African Peer Review Mechanism: Mauritius to finalise its first progress report
Transparency in fisheries subsidies: Notification-driven analytics of country performance and disclosure requirements
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Diarise: The next meeting of the joint initiative on e-commerce at the WTO will be held on 22-25 October. The meeting will address data flow, privacy and facilitation of digital commerce.
Highlights from today's inaugural World Cotton Day in Geneva
(i) Today's event, hosted by the WTO, responds to a draft resolution submitted by Benin, Burkina Faso, Chad and Mali (the "Cotton-4" countries) to the UN General Assembly for recognition of a World Cotton Day, reflecting the importance of cotton as a global commodity. Through its technical cooperation work, UNCTAD has assisted cotton-producing countries, mainly in Africa, to improve their yields, meet international standards and attract investments in value-added industries.” “More can be done to realise the development potential of cotton, especially in Africa,” Dr. Kituyi said. “Trade negotiations must foster regional integration and provide equitable trading opportunities for producing countries, big and small.”
Approximately 26 million farmers grow cotton, in 75 countries. Growing cotton and processing it into, for example, textiles and apparel, provides jobs and incomes to approximately 100 million families worldwide. Cotton is a drought-resistant crop, providing reliable income to farmers in areas where agriculture is under serious threat from climate change and/or recurrent drought. Cotton occupies just 2.1% of the world’s arable land, yet it meets 27% of the world’s textile needs. It is also one of the most important traded commodities, with an annual traded value of approximately $8bn.
(ii) World Cotton Day side events covered:Trade, Value addition, Sustainability, Technology and innovation, Market outlook
(iii) Twitter updates: #WorldCottonday
(iv) Unlocking the hidden value of cotton by-products in African Least Developed Countries (EIF)
Cotton is a predominant cash crop for many African LDCs, providing income to over 3.5 million farmers and their families, and 17% of those lead farmers are women. Sub-Saharan African countries export more than 90% of the raw cotton lint they produce, earning approximately $15.5bn in 2018 for over 1.5 million metric tonnes of lint. Africa's lint exports are important for the livelihoods of millions of people, but this also underlines the commodity dependence of producing countries. Despite many efforts to enhance local value addition, integrated cotton-to-textile value chains in Africa are currently inactive or absent. As a result, of the 1,272 million metric tonnes of lint produced in French-speaking Africa in 2018, only 19,000 tonnes, or 1.5%, was consumed (i.e. processed) locally, for example.
According to the International Cotton Advisory Committee June 2019 workshop, "cottonseed by-products have growing markets and are potentially an important complementary source of revenue for the cotton sector in Africa." Ginning seed cotton yields roughly 55% cottonseed and 40% lint. By crushing and processing cottonseed, an edible oil is obtained. Cottonseed oil is the most valuable cotton by-product in price-to-weight terms, hence it has the greatest commercial and income potential. Cottonseed oil represents approximately 5.2% of world edible oil production. According to the International Trade Centre at the 2019 workshop: "The co-product of lint, cottonseed and the other cotton by-products are underutilized, or even neglected, in Africa, despite their numerous and diverse potential uses." Indeed, Africa produces about 2.5 million tonnes of cottonseed, which is 5.8% of global production. Only 75% of the seed is crushed for oil and seed-meal, and that means that 25% of cottonseed produced in Africa goes unused. The estimated value of that unused seed is about $237m, most of which is in West Africa. Mali is an exception in the region, processing all of its cottonseed, as shown in the graph below, presented by the ICAC at the cotton by-products workshop. [Downloads from the workshop on cotton by-productscan be accessed here; Promoting cotton by-products in Eastern and Southern Africa: lessons from an UNCTAD technical assistance project]
Report of the EALA’s Committee on Communication, Trade and Investment on the status of ratification of the amended article 24(2)(a) of the Protocol on the Establishment of the East African Customs Union to provide for the establishment of the Trade Remedies Committee (pdf)
The delayed ratification of the amended Article 24(2) of the Protocol and establishment of the EAC Trade Remedies Committee makes it impossible to effectively implement the EAC Elimination of Non-Tariff Barriers Act, 2017 especially Section 12(2), (3) and (4) which allows the Council of Ministers to refer matters on elimination of NTBs to the EAC Committee on Trade Remedies.
The non-existence of the Committee on Trade Remedies makes it impossible for the Council of Ministers to refer matters of elimination of NTBs to the EAC Committee on Trade Remedies as provided for in the Act. This implies that any person aggrieved by a directive, decision, or recommendation of the Council may refer such matter to the East African Court of Justice. Such litigation would be exorbitantly expensive and time-consuming for most traders and businesses.
Further delay implies that all the issues/challenges arising out of trade related aspects such as Rules of Origin, Anti-Dumping Measures/Regulations; Safeguard Measures; Safeguard Measures, Dispute Settlement Mechanism Regulations cannot be effectively addressed because the Committee dedicated to handle these regulations has not been established and operationalized.
Further delay implies handling disputes such as Rules of Origin, NTBs, Other Charges of Equivalent Effect, and Discriminatory Tax Practices prohibitively becomes more expensive for traders as it may involve litigation or negotiation among EAC Partner States after an alleged violation of trade measures has occurred. Currently, the time frame for resolving trade disputes or elimination of identified NTBs is too long and depends on winding EAC processes such as bilaterals between the Partner States.
In view of the foregoing, the Committee recommends as follows: The Council of Ministers should operationalise the East African Committee on Trade Remedies by 30th April 2020.
The Council of Ministers recommends to the Summit of Heads of State sanctions against any Partner State that will not have ratified Article 24(2)(a) of the Protocol on the Establishment of the East African Customs Union Customs Union and deposited instruments of ratification with the Secretary General by 28th February 2020.
Related EALA updates: Amendment to EAC Customs Management Act in the offing; EALA calls for embrace of Single Tourism Visa; EALA says EAC's financial status worrying
Cyril Ramaphosa: South Africa’s future lies in Africa (The Presidency)
President Buhari and I had an opportunity also to discuss the various difficulties that South African and Nigerian businesses encounter when trying to invest and operate in each other’s countries. There was a clear message from the business forum that was held on the sidelines of the state visit that there is a great deal of business interest in both South Africa and Nigeria, and that we need to work harder to clear the blockages. We have therefore set up a Joint Ministerial Advisory Council on Industry, Trade and Investment that will meet regularly to facilitate bilateral business and, where necessary, sort out problems. In just a few months, South Africa will be taking over chairship of the African Union. In that role, we will have a great responsibility to guide the implementation of the agreement on the Continental Free Trade Area. We will need to work to turn aspirations into action. As the countries of Africa, we will need to put in place all the rules, regulations and mechanisms needed to make such a free trade area work. But we will also need to invest in the infrastructure that we need to move goods from one African country to another, and that we need to produce such goods in the first place.
Car exports are racing to a record in South Africa (Moneyweb)
Vehicle exports from South Africa, the continent’s largest automaker, could reach a record R140bn in 2019, partially offsetting a drop in domestic sales. The value of car shipments was R127.5bn in 2018 when the industry exported just over 351 000 vehicles. The country is expected to ship around 388 000 units this year as assemblers including Ford Motor ramp up production, according to Renai Moothilal, executive director of the Automotive Industry Export Council and chairman of the National Association of Automotive Component and Allied Manufacturers. Almost 19% more vehicles were exported in the nine months through September, compared with the previous year, data from the National Association of Automobile Manufacturers of South Africa show. Vehicles, ranging from passenger cars to trucks and buses were shipped to 155 countries in 2018, up from 149 in the previous year. Daimler’s Mercedes-Benz C Class set the pace for passenger car and light commercial vehicle shipments, with more than 90% of locally produced models destined for export, said Mike Mabasa, chief executive officer of Naamsa.
African Space Strategy: towards social, political and economic integration (AU)
Professor Sarah Anyang Agbor (Commissioner for Human Resources Science and Technology): This strategy has been developed to advance an indigenous space sector and provides direction for a formal African space programme. The strategy is aligned to Africa’s aspirations and is premised upon the following core principles:
Development of the services and products required to respond effectively to the socio-economic needs of the continent;
Development of indigenous capacity to operate and maintain core space capabilities;
Development of an industrial capability that is able to translate innovative ideas from research and development into the public and commercial sectors;
Coordination of space activities across member states and regions to minimize duplication, but maintaining sufficient critical mass;
Fostering international cooperation within Africa and with the rest of the world as a means of realizing the full value proposition of the space sector.
The implementation of this strategy (pdf) is important if we are to transform Africa’s resource-based economies into the knowledge-based economies to which we aspire. The space sector is not only a high-end technology sector, but also provides the tools required for effective decision making in the management of our natural resources and providing essential communications links, especially to our rural communities. We are therefore at an important juncture, where decisions pertaining to formalizing an African space programme will have long-term sustainable benefits, which will help this great continent realize its social and economic potential across public and private sectors. [Related AU publication: Global Monitoring for Environment and Security and Africa Training Strategy (pdf)]
IBSA: Joint statement on the reform of the multilateral system (GoB)
The reform of the international economic governance architecture, including the WTO and the international financial institutions, should also be a priority. IBSA countries have contributed meaningfully in making the international economic governance architecture more representative and democratic, and will continue to work together to advance an agenda that promotes sustainable development and inclusive growth. The process of WTO reform must keep development at its core, promote inclusiveness and non-discrimination, build trust and address the inequalities and asymmetries in existing agreements. It should take into account the diversity of interests and concerns of the whole Membership, including developing Members, in particular LDCs. IBSA countries recognise the central role played by the WTO in promoting the interests of developing countries on issues such as agriculture.
Strengthening the global financial safety net, with a strong, quota‐based, and adequately resourced International Monetary Fund at its centre, is essential. We must work towards concluding the 15th General Review of Quotas, including a new quota formula at the Annual Meetings of 2019. [Note: This statement was issued 26 September]
Today’s Quick Links:
Towards the AfDB's West Africa Regional Integration Strategy Paper 2020 – 2025
The World Bank Annual Report 2019: Ending Poverty, Investing in Opportunity
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South Africa's former chief trade negotiator Wamkele Mene says South Africa can lead on improving the ease of movement of business people across borders on the continent, through the introduction of a trade visa:
Global trade arrangements on services under the WTO, which SA is party to, already make provision for the movement of business people. SA can replicate this in the context of the AfCFTA to demonstrate its commitment to the continent, he said. A large number of African economies were increasingly driven by services such as tourism and telecommunications, which relied on the ability of business people to travel more freely. “In the context of the [AfCFTA] agreement, like we have done in the WTO, this is something we will have to strongly consider and take a lead on.”
Related: Algeria starts its AfCFTA consultations next week (7 October)
Zimbabwe: Public Expenditure Review with a focus on agriculture (World Bank)
This report is the last part of a programmatic Public Expenditure Review, with previous reports focusing on education, municipalities, and state-owned enterprises. This report focuses on agriculture which plays a particularly important role in economic development in Zimbabwe: about two thirds of Zimbabweans work in agriculture and it is an important sector both for poverty reduction and food security. Agriculture remains a backbone of the economy and is identified as a priority sector under government’s 2018-2020 Transitional Stabilisation Programme. This PER develops some concrete policy recommendations. The analysis points to strong links between agriculture and the broader economy. While land reform and agricultural spending could have caused macroeconomic dislocations since the 2000s, agricultural production has also been a victim of these dislocations. Rebuilding sources of resilience is critical, and this includes recreating fiscal buffers, beyond agricultural spending. Such buffers are particularly important to mitigate droughts, which are becoming more severe with climate change. Secondly, the analysis suggests that agricultural spending responds to structural constraints, in the agricultural sector, without addressing these constraints it will be difficult to control spending on agriculture. The PER thus develops some immediate recommendations to reduce the cost of the Command Agriculture program, while also looking at the structural issues that need to be addressed to raise productivity in agriculture. Extract (pdf):
The external environment started to become less favorable in 2011 (Figure 3.10). Agricultural prices started their descent from the highs of the commodity super cycle in 2011, providing less uplift to Zimbabwe’s terms of trade and farming incomes. From 2015, the US dollar started strengthening. Although this partly offset the lower agricultural prices, it affected the competitiveness of Zimbabwe’s exports, in agriculture as well as other sectors. The loss of an independent exchange rate and monetary policy following dollarization meant that Zimbabwe would have needed to make internal adjustments, but most prices—most notably wages – are downwardly rigid. Accordingly, Zimbabwe’s real exchange rate appreciated, most notably in relation to its main trading partner South Africa. The appreciation supported imports but limited Zimbabwe’s ability to strengthen its economic base through exports. Reserve cover (in months of imports) declined (Figure 3.10). Financing the current account gap was rendered challenging by a lack of foreign capital inflows and exacerbated by the lack of access to borrowing from international finance institutions.
Zimbabwe’s AfCFTA strategy to be finalised by month end (UNECA)
A two-day workshop to validate Zimbabwe’s strategy for implementing the AfCFTA ended in Harare Thursday with participants agreeing to fine tune the plan to ensure the country effectively benefits from opportunities that will be availed once trading commences under the agreement in July 2020. In closing remarks to the workshop, Ms Beatrice Mutetwa, Chief Director for Economic Cooperation, International Trade and Diaspora in Zimbabwe’s Foreign Affairs and International Trade Ministry, said meticulous implementation of the strategy was key to Zimbabwe benefiting from the free trade area once trading starts. “Now that the document has been introduced and presented to you, it is my hope that you will further digest the document and make more inputs which will further refine the document which will be finalised by end of October 2019,” she told stakeholders attending the workshop, including representatives of the private sector, academia, parliamentarians, civil servants and civil society. “Therefore, the proof of the pudding is in implementation. The onus is on the private sector to seize the opportunities presented by the AFCTA and run with it. Remember that the rules of origin allow one to cumulate with the rest of the continent not just our traditional partners.”
EU launches negotiations to deepen trade relations with Eastern and Southern Africa countries (EU)
Zimbabwe is one of five Eastern and Southern Africa partners (so-called ESA: Comoros, Madagascar, Mauritius, Seychelles and Zimbabwe) that the EU has started negotiations with this week to deepen the existing Economic Partnership Agreement. Given the positive results generated by the current agreement, now in its 8th year of implementation, the five countries have declared their readiness to move beyond trade in goods, towards a more comprehensive agreement. The EU has welcomed this step, especially in the context of the Africa-Europe Alliance for Sustainable Investment and Jobs. Since the initial agreement started to apply in 2012, exports of goods from the five ESA countries to the EU have increased by almost a quarter, reaching nearly €2.8bn in 2018. European businesses are also increasingly investing in the region. The new agreement should cover other important trade related areas and trade related rules, such as services, investment, technical barriers to trade, intellectual property rights as well as trade and sustainable development. At the request of the five ESA countries, the EU has agreed to provide financial assistance for the setting up of an EPA Coordination Mechanism. Its aim is to ensure appropriate coordination and technical support to the five ESA countries so they can engage effectively in the negotiation process. The Coordination Mechanism has already contributed on the ESA side to the preparation of the scoping phase for the upcoming negotiations.
FIATA's 2019 World Congress concludes tomorrow: selected updates from its Cape Town conference
(i) Unprecedented disruptions to global trade, freight conference hears. There are major disruptions in global trade due to factors like trade wars and Brexit, according to Babar Badat, president of the International Federation of Freight Forwarders Associations. "Protectionism is occurring and the premise of the WTO is being challenged," he said at the opening of the FIATA conference in Cape Town on Wednesday. "These are times with challenges we have never seen before. It means the reduction of trade and our industry is affected in the front line." He said for FIATA – the largest organisation in the logistics and supply chain industry in the world – seamless connectivity is very important. "Governments need to put investment into infrastructure and the private sector must have good connections with governments and associations to create seamless trade connections," said Badat. "We must have collective thinking in our industry for trade to grow."
(ii) The 3 biggest problems doing business in Africa. The three biggest hurdles hampering business in Africa are liquidity, infrastructure and corruption, according to Celeste Fauconnier, an economist at RMB. Although politics remains among the top 10 problematic factors making it harder to do business on the continent, it is not among the top three, she said on Wednesday. She spoke at the FIATA conference in Cape Town. Fauconnier explained RMB research on where to invest in Africa: "Regarding the top challenge of liquidity, a business must establish whether it would be easy for a client to pay and if the client has access to hard currency. Furthermore, establish how easy it would be for you to repatriate funds from the particular African country. “ As for Zimbabwe, Fauconnier said that the country actually has the infrastructure needed: "If they start refurbishing infrastructure, I predict Zimbabwe could become one of the fastest growing economies in Africa. I know this is a bold statement, but Zimbabwe borders SA and we have seen a lot of business from SA corporates going back there.”
(iii) Cross-border organised crime on the rise, warns SA Revenue Service commissioner Edward Kieswetter . "We still have too many information asymmetries between our data and those of China and India, for example. Therefore, blatant invoicing fraud is a significant focus for us. We want to be a lot more interventionist. If not, the only winners will be thugs and thieves." He said it is very important for SARS employees to be professional and incorruptible - and promised to crack down on offenders. "Any party seeking to collude with our officers must know that we will not tolerate collusion of any kind," warned Kieswetter. "We are considering stopping all mismatched consignments to force compliance or to implement penalties starting in December this year. Let us make sure we define a higher purpose of embracing a common goal between SARS and the freight forwarding industry in order to create better and healthy societies,"
(iv) Drones set to reshape cargo, transportation sector. The emergence of cargo drones is set to radically improve the cargo and transportation sector, as they are able to offer autonomous quality service 24 hours a day, the yearly World Congress of the International Federation of Freight Forwarders’ Association (Fiata), has heard. Massachusetts Institute of Technology (MIT) Aeronautics and Astronautics Professor Wesley Harris explained the benefits of huge, industrial quality drones that are able to move heavy containers. The opportunities presented by these driverless, freight delivery drones would be “reduced costs, reduced time to delivery, reduced environmental impact and transport on demand”, Harris said at the Fiata World Congress in Cape Town on Wednesday. [New technology is focus of FIATA congress in Cape Town]
(v) Saudi Arabia aims to be global logistics hub. The Governor of Saudi Arabia’s General Customs Authority Ahmed Alhakbani this week said the country was ramping up its customs services in line with the goals of Saudi Vision 2030, which aims to attract international investment and drive overall growth. Alhakbani told the International Federation of Freight Forwarders Associations (Fiata) World Congress 2019, being held in Cape Town, that the Saudi customs authority was adopting an integrated technical system, while also moving towards automating clearance procedures. It was also among the first customs authorities in the world to adopt blockchain technology for shipping operations.
Replacing fossil fuel generators offers clean-energy options (IFC)
The initial findings of the research are detailed in the report The Dirty Footprint of the Broken Grid: The Impacts of Fossil Fuel Back-Up Generators in Developing Countries. The study explores fundamental questions about the scope and impacts of backup generators that have been largely unanswered beyond anecdotal and local or regionally focused studies. For the first time, we are able to see a global picture of the aggregate costs of backup generators. The study examines the impacts of backup generators in 167 developing countries. The countries modeled represent 94% of the people living in low- and middle-income countries, excluding China. It explores the extent to which running these engines imposes economic burdens, compromises health, and contributes to climate disruption. It also addresses several basic but important knowledge gaps related to the topic. The report details the long-term costs of backup generators, finding that users spend $30bn to $50bn annually on fuel, and noting that the value of generators imported into developing countries exceeded $5bn in 2016. In many countries, electric utilities are struggling to keep up with surging demand, suggesting that grid reliability will worsen and spending on backup generation will increase, at least in the near term.
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Regional Risks for Doing Business 2019: Sub-Saharan Africa (WEF)
Unlike other regions, the leading risks in 2019 in sub-Saharan Africa did not change from the prior year (pdf): “Unemployment or underemployment”, “failure of national governance”, “failure of critical infrastructure” and “energy price shock” all remain the top four risks. The only issue that emerged as a major concern for business in the region was “fiscal crises”, which ranks fifth this year. These findings reflect the fact that economic and governance concerns are felt deeply among executives and come at a time when sub-Saharan Africa faces opportunities, but also vulnerabilities, because of its growing population.
Again this year, climate and health risks are not perceived as the most concerning risks to business in sub-Saharan Africa. Guinea is the only country where “spread of infectious diseases” ranked as a major risk, while “extreme weather events” and “natural catastrophes” topped the list only in Mauritius and Mozambique. Looking back at the devastation caused by Cyclone Idai (March 2019), for which costs were estimated at over $2bn, and at the 2,052 fatalities from Ebola so far (September 2019) in the DRC the absence of these risks from the list continues to represent a potential blind spot that could considerably hinder the economic and social progress that the region has achieved.
Debt stocks of developing countries rose to $7.8 trillion in 2018 (World Bank)
Total external debt of low- and middle-income countries climbed 5.3% to $7.8 trillion last year, while net debt flows (gross disbursements minus principal payments) from external creditors tumbled 28% to $529bn, the World Bank’s International Debt Statistics 2020 shows. Although on average the external debt burden of low- and middle-income countries was moderate, several countries have been on a deteriorating debt trajectory since 2009, the report indicates. The share of low- and middle-income countries with debt-to-GNI ratios below 30% has shrunk to 25%, down from 42% ten years ago. Similarly, the share of countries with high debt-to-export ratios has climbed. Debt stocks were driven up by a 15% jump in China, fueled by investor appetite for renminbi-denominated assets. Excluding the ten largest borrowers (Argentina, Brazil, China, India, Indonesia, Mexico, the Russian Federation, South Africa, Thailand, and Turkey), external debt stocks rose 4%. Sub-Saharan countries excluding South Africa saw debts stocks swell by 8% on average in 2018, and over half the countries in the region have seen external debt stocks double since 2009. Extracts (pdf):
For sovereign borrowers in Sub-Saharan Africa, 2018 was a banner year for issuance. Sovereign bond issuance by Sub-Saharan countries continued apace in 2018 to reach a new record high of $17.4bn (excluding South Africa) — well over double the $9bn issued in 2017. Major oil exporters, Angola and Nigeria, led the way, issuing $3.5bn and $5.4bn respectively. Cote d’Ivoire, Ghana, Kenya, and Senegal each tapped the markets for around $2bn. .
Proceeds from these issuances were used for infrastructure financing, balance-of-payments support, and refinancing of prior operations. All issues were heavily oversubscribed, a reflection of investor confidence in the region and attractive yields. The 2018 sovereign issues were characterized by longer maturities, and all included a 30-year tranche. Between 2009 and 2018, sovereign borrowers in Sub-Saharan Africa active in international markets (excluding South Africa) issued around $46bn; countries eligible for IDA resources accounted for 85% of those bond issues. [Note: The report includes one-page summaries per country, plus global, regional and income-group aggregates showing debt stocks and flows, relevant debt indicators and metadata for 5 years (2014-2018)]
Second PIDA Policy Dialogue: outcomes (AU)
In their final communiqué, delegates called upon AU member states and PIDA stakeholders to fast track the assessment of the PIDA mid-term review and engage the preparation of the PIDA PAP 2 with an updated list of the priority projects; promote integrated corridor development using data-driven decision-making models to prioritise projects for commercial viability and promote the setting up of legal frameworks and instruments for corridor management. Also crucial, the delegates recommended the need for the continent to institute an elaborate financing strategy for PIDA projects that member states could use to mobilise funds for projects.
In addition, it was agreed that PIDA stakeholders engage the private sector, diaspora and development financing institutions to prepare projects as they could bring huge experience and knowledge into ensuring quality projects are developed and presented for financing. Member states were also requested to speed up ratification of pending legal instruments related to infrastructure, notably the African Maritime Transport Charter and the Intergovernmental Agreement on Trans-African Highways. The communiqué emphasized the use of cross-sectoral approaches, including the maritime sector in the integrated corridor approach, and adopt a framework for exchanging best practices and propose suitable instruments/mechanisms to integrate rural and remote areas in the next phase of PIDA PAP 2. [Maritime transport sector key to corridor approach of PIDA PAP 2]
Nigeria and the AfCFTA: Afreximbank President urges creation of specialised agency to take advantage of AfCFTA opportunities. Delivering the keynote address at the 2019 Independence Day Dinner and Gala Night organised by the Government of Nigeria to mark the 59th anniversary of the country’s independence, Prof Benedict Oramah said such an agency should be the arrow-head for achieving Nigeria’s strategic objectives for its membership of the AfCFTA. According to him, Nigeria’s goal should be set out in a carefully developed strategy and entrusted to an accountable set of people to implement. Prof Oramah described the AfCFTA as a platform for Africa’s collective self-reliance and said that Nigeria had a great opportunity to benefit immensely from it if certain actions were taken at the federal, state and corporate levels in a coordinated manner.
He noted that while the promise of the AfCFTA in terms of development outcomes was not in question, the road ahead was likely to be rough and turbulent, saying that Nigeria should consider triggering an adjustment process for operators in sectors likely to be negatively impacted and putting in place arrangements to support those that could become competitive by simple re-tooling and transforming from import substitution to export orientation. He also urged the government to make credible trade information available to Nigerian businesses interested in international trade, especially intra-African trade, arguing that while the AfCFTA creates the legal basis for a potential pan-African market in goods and services, the creation of that market was the job of economic agents whose operations were usually driven by information.
Zimbabwe and the AfCFTA. ECA's Batanai Chikwene: “Zimbabwe’s national AfCFTA implementation strategy, like another policy documents will not implement itself. We have to invest heavily in execution and implementation. The government will have to provide an environment in which exporters and importers can do business and set up firms that can compete globally. The importance of ensuring coherence among fiscal policies, monetary policies, industrial policies and trade promotion initiatives is critical and cannot be over-emphasised. Ongoing efforts to implement key economic reforms are a step in the right direction and should be commended. And, results from such efforts are beginning show.”
South Africa, Nigeria bilateral relations
(i) Trade and development issues in the joint communique. Both Presidents noted with great satisfaction the economic cooperation between the two Republics and welcomed the steps to increase trade volumes as well as private sector investments. They welcomed the important role of the Business Forum, which took place on the margins of the State Visit. The two leaders further welcomed the decision to establish a Joint Ministerial Advisory Council on Industry, Trade and Investment. The inaugural meeting of the Council would be held not later than April 2020, in Abuja. The Council is expected to serve as a critical vehicle in facilitating and promoting private sector participation in the economies of both countries.
Both leaders took note of the significant footprint of South African businesses operating in Nigeria in sectors such as telecommunications, mining, aviation, banking and finance, retail, property, entertainment and fast foods industries. They also noted and welcomed the business activities of Nigeria’s small, micro and medium enterprises, as well as the investment of Dangote Sephaku Cement in South Africa. The two Presidents further endorsed the reestablishment of the Republic of South Africa and the Federal Republic of Nigeria consular Forum to meet twice a year. Both leaders reaffirmed their commitment to working together in pursuit of sustainable peace and economic development on the continent in the context of AU Agenda 2063 and the AfCFTA.
(ii) Media briefing: remarks by President Cyril Ramaphosa. Nigeria accounts for 64% of South Africa’s total trade with the West African Region and is one of our largest trading partners on the continent. We noted with appreciation the increasing presence of South African companies in Nigeria, and agreed on the need to promote greater investment by Nigerian companies in South Africa. As part of our efforts to increase economic cooperation, a Nigeria South Africa Business Forum is meeting today comprising business delegations from both countries. We will urge our business people to take advantage of the great opportunities in our respective countries for trade, investment and collaboration. As governments, we have committed ourselves to creating an enabling environment to for doing business in our respective countries. We have identified key sectors for investment to boost economic growth and development. These sectors include roads and rail infrastructure, mining, manufacturing and agro-processing.
Launch of 100,000 SME’s for 1 Million Jobs by 2021 campaign (NEPAD)
The AU Development Agency-NEPAD, on the margins of the 74th session of the UN General Assembly launched the ‘100,000 SME’s for 1 million Jobs by 2021’ campaign at the AU Permanent Observer Mission. As part of its integrated approach to development in Africa, the AU Development Agency-NEPAD places special emphasis on harnessing Africa’s youthful demographic dividend in line with the AUC Chairperson’s ‘1 million by 2021 Initiative’ (pdf). The initiative aims to provide concrete opportunities for 1 million young people by the year 2021, in the areas of education, employment, entrepreneurship and engagement. The campaign aims to leverage strategic partnerships, build ecosystems of efficiencies and test new ideas to move the needle on youth development, especially for young women. AUDA-NEPAD will also ensure that regional partnerships are developed amongst young SME’s for regional trade, based on the opportunities that will be unlocked by the AfCFTA.
Women’s Entrepreneurship Accelerator launched (ITC)
Mary Kay Inc., a leading advocate of women’s empowerment and entrepreneurship, has announced the Women’s Entrepreneurship Accelerator, a multi-partner initiative designed to inspire, educate, and empower women entrepreneurs around the world. With no qualifying barriers to participate, the ground-breaking initiative is a strategic collaboration developed in consultation with six UN agencies: UN Women, UNOP, ILO, ITC, UNGC, and the UNDP. The Accelerator will offer a guided digital curriculum supplemented by on-the-ground training and mentorship. In addition, it will serve as an advocacy platform to eliminate entrepreneurial roadblocks for women, ranging from digital literacy to legal reform - enabling women to fully participate in the growth of their local and national economies.
Exporting financial services in Latin America and the Caribbean (World Bank)
According to the WTO, trade in services has become the most dynamic segment of world trade, growing more quickly than trade in goods. While travel remains the most exported service both worldwide and in Latin America and the Caribbean (LAC), other services are becoming relevant for both developed and developing economies. Among them, financial services is one of the most important categories in terms of value. Worldwide, the value of financial services exports rose in real terms between 2008 and 2017. Nevertheless, this global trend of rising exports of financial services was not reflected in LAC, where they contracted between 2008 and 2016. The economies of Latin America and the Caribbean have significant potential to export financial services. To take advantage of this opportunity, governments in the region can work on a variety of fronts to raise their economies’ competitiveness in this area. Two specific challenges are the availability of human capital and electronic infrastructure.
Today's Quick Links:
Tanzania: Investment Act review targeting natural gas sector
African Grain Trade Summit 2019: Africa urged to remove trade barriers in food value chain
Inaugural West Africa Fertilizer Financing Forum: update
The WEF's India Economic Summit began today in New Delhi
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WTO lowers trade forecast as tensions unsettle global economy
Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020. World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April. The projected increase in 2020 is now 2.7%, down from 3.0% previously. The economists caution that downside risks remain high and that the 2020 projection depends on a return to more normal trade relations.
All geographical regions recorded positive year-on-year export growth in the first half of 2019 despite a substantial weakening of global demand. North America had the fastest export growth of any region at 1.4%, followed by South America at 1.3%, Europe at 0.7%, Asia at 0.7%, and Other regions (comprising Africa, the Middle East and the Commonwealth of Independent States, including associate and former member States) at 0.1%. North America recorded the fastest import growth of any single region at 1.8%, followed by Europe at 0.2%. Two regions registered declines (South America at -0.7% and Asia at -0.4%). Collectively, the imports of Other regions grew faster than those of North America, at 2.4%. Import demand has been particularly weak in Asia, weighing heavily on exporters of manufactured goods (e.g. Japan, Korea, and Germany). Exporters of natural resources have also seen demand for their products weaken, as evidenced by the 12% year-on-year decline in commodity prices in August.
East Africa bloc mulls regional tax treaty framework to boost integration (Xinhua)
The EAC plans to develop a regional tax treaty framework to boost regional integration, an official said on Tuesday. Doris Akol, commissioner general, Uganda Revenue Authority told Xinhua in Nairobi that once the treaty is in place the trading bloc will negotiate double taxation agreements jointly with other non-EAC countries. “Currently each of the partner states negotiates with other countries on a bilateral basis. The regional taxation framework will help to reduce the harmful effects of tax competition in the EAC as each country seeks to attract foreign investors,” said Akol on the sidelines of the 7th Pan Africa Conference on illicit financial flows and taxation. Akol said that so far a draft EAC treaty has been developed which will receive inputs from all relevant stakeholders.
Underway, in Nairobi: The 7th Pan African Conference on Illicit Financial Flows and Tax
(i) Updates: @TaxJusticeAfric, #PACIFF2019
(ii) Presentations available for download (pdf): Lyla A Latif: Do digital economies facilitate illicit financial flows?; Varsha Singh: Tax challenges arising from the digitalisation of the economy; Alick M Mutandiro: Trade facilitation under customs and excise efficiency gains and effectiveness of tax administrations in the era of technological advancements
Observatory to be set up at SME Mauritius for data collection (GoM)
An Observatory serving as the main repository of qualitative and quantitative small and medium enterprise data, will be soon set up at the SME Mauritius in line with the recommendations of the 10-Year Master Plan for the sector. The key objectives of the SME Observatory include building data collection capabilities and mechanisms for SMEs and entrepreneurship information, including developing a National Entrepreneurship Index; identify markets in emerging industries with growth potential and network for its effective realisation; and assess regulatory and legal frameworks and propose improvements based on good governance principles and international best practices. [World Bank in Mauritius: briefing note]
SSA renewables: South Africa, Kenya outperforming region (Fitch Solutions)
We expect that non-hydropower renewables capacity will grow from a low base of just over 6GW at almost 7% y-o-y, making up just over 8% of the region's total power generating capacity by 2027. While South Africa will remain SSA's biggest renewables market, the sector will play a relatively small role in the country's power mix due to its large thermal power sector. Due to the continued investments into its non-intermittent geothermal capacity, Kenya will source over 50% of total generation from renewables. We forecast that South Africa will be the region's biggest non-hydropower renewables market with a renewables capacity of over 8GW by 2027 and just under 14 terawatt hours (TWh) of generation. Kenya is second with 1.8GW of capacity and 7.8TWh of generation. Kenya's higher level of output relative to its capacity is due to the non-intermittent nature of geothermal electricity. [Note: The report can be downloaded after registration]
Trade policies for combating inequality: equal opportunities to firms, workers and countries (UNCTAD)
Chapter 3 summarizes what has been learnt over the last two decades about the relationship between trade and income inequality. Firstly, trade has indeed led to sizeable increases in income inequality in many countries, but it is far from being the main driver of it. Secondly, to reduce within country inequality what is needed is not necessarily less but more trade, in order to give a larger number of workers access to the benefits offered by global markets. Third, inequality can be better addressed if trade reforms are accompanied by non-trade adjustment and redistributive measures that address the unintended, negative consequences of greater integration into world markets. Chapter 4 examines the impact that different trade policy instruments and institutions have had on between- and within-country income inequality. The discussion covers tariffs and non-tariff measures as well as private standards. A key message from this chapter is that non-tariff measures, even if set in a non-discriminating manner, tend to discriminate against countries, especially developing countries with weaker production and trade capacities. Non-tariff measures also act as formidable barriers for small firms to enter global markets, which in turn tends to increase within-country income inequality. Extract (pdf):
The fifth avenue for equal opportunities for firms is to foster competition in national and regional markets. This requires effective competition law enforcement. National and regional competition authorities may investigate and sanction anti-competitive conduct by dominant firms. Considering the challenges faced by competition agencies of developing countries and LDCs in competition law enforcement, there is a need for promoting international and regional cooperation in competition law enforcement. For example, COMESA Competition Commission is the regional entity in the COMESA region, which has the authority to review mergers having an effect within the common market.
Another way of promoting competition is by introducing clauses, which may facilitate cooperation and exchange of information for law enforcement between relevant authorities, in competition chapters of bilateral and regional trade agreements. National competition authorities may not have the right incentives to restrict the abusive behaviour of their large exporters or importers in international markets. Moreover, many low-income countries do not have well-functioning competition authorities. Technical assistance and cooperation among trading partners can help internalize these types of externalities in order to ensure that large firms from high-income countries are not the only ones benefiting from international trade.
Is 3D printing a threat to global trade? The trade effects you didn't hear about (World Bank)
In the mid-2000s, the production of hearing aids shifted almost entirely to 3D printing. Using difference-in-differences and synthetic control methods, this paper examines the effects of this shift on trade flows. The analysis finds that trade increased roughly 60% following the introduction of 3D printing. Revealed comparative advantage was reinforced, with exports growing most rapidly for middle- and high-income countries. The analysis also finds that developing countries increased their imports of hearing aids as a result of the innovation, benefitting consumers. As a robustness check, the paper examines 35 products that are partially 3D printed and finds positive and significant effects on trade. The results counter widespread views that 3D printing will shorten supply chains and reduce trade. [The authors: Caroline Freund, Alen Mulabdic, Michele Ruta]
Structural transformation in Sub-Saharan Africa (World Bank)
Table 1 compares modeled estimates from the ILO with estimates computed from the SSAPOV, a set of harmonized indicators curated from nationally representative household surveys in Sub-Saharan Africa. The ILO estimates mainly rely on GDP growth to project changes in sectoral employment patterns since the most recent survey. SSAPOV, in contrast, is based solely on surveys and is rigorously updated because it is the source of the World Bank’s official poverty estimates for SSA countries. For all countries, we compare ILO estimates in the change of agricultural employment with household-level survey estimates from SSAPOV in the same years. We restrict attention to countries with more than 15 million people, for which there are two separate SSAPOV surveys that ask about the sector of primary employment over the previous seven days, the same recall period on which the ILO estimates are based. The interval between surveys ranges from 2 to 7 years. [Note: This report was prepared by the Sub-Saharan Africa Team for Statistical Development Poverty and Equity Global Practice]
Companion analysis: Stocktaking Note for Data Harmonization - Sub-Saharan Africa Team for Statistical Development FY 2019
From the period of October 2018 to May 2019, the SSATSD harmonized and improved the quality of 30 surveys. For 13 of these surveys, the team obtained data from the country teams and fully harmonized and checked all four modules from scratch. For 13 other surveys, the team upgraded the surveys to the revised dictionary, which is described below. Finally, the remaining four surveys were labor force surveys for which team harmonized the labor module. Of the 30 surveys that were harmonized, 6 were included for the first time in Povcalnet in the Spring 2019 poverty update. This note presents a list of surveys harmonized during this period, and discusses challenges faced, factors of success, as well as areas of improvement for future. [World Bank: A socioeconomic disaggregation of the World Bank Human Capital Index]
Activities undertaken by UNCTAD in support of Africa: report by the Secretary-General of UNCTAD (pdf)
This report covers the activities undertaken by UNCTAD in support of Africa from May 2018 to April 2019. The report documents the impact of the work of UNCTAD on development in Africa in the following areas: transforming economies, tackling vulnerabilities and building resilience, improving competitiveness, enriching multilateralism, and empowering people and investing in their future. Extract (pdf): With regard to the financial resources earmarked for Africa in 2018, it is estimated that total expenditure on national, regional and interregional projects in support of Africa was $17,505,936, representing 40 per cent of total expenditure. [Note: Prepared for the Trade and Development Board, 68th executive session, now underway in Geneva]
UNIDO’s recent UNGA side event: Promoting innovation and infrastructure development within the Third Industrial Development Decade for Africa (IDDA III)
SA’s UNSC October Presidency: work programme. Peace and security in Africa, as well as ongoing situations of concern elsewhere, will top the agenda of the Security Council in October, Jerry Matthews Matjila (South Africa), Council President for the month, told correspondents at a press conference yesterday. “Africa is the core of the Council’s work every week this month,” he noted. Between 22 and 25 October, a Council visiting mission is planned for the annual consultative meeting with the African Union Peace and Security Council in Addis Ababa. The visit will include a one‑day trip to South Sudan and will be the subject of a briefing in the Council Chamber scheduled for 30 October. Priorities in talks with the African Union include the situations in the Central African Republic and the Sahel. He also anticipated an intense discussion on Libya towards a coordinated policy, he said in response to a question, because the African Union feels sidelined on the issue.
Diarise:
(i) Abidjan will host the West Africa Securities Regulators Association conference (28-29 October). Sessions include: sessions on financing infrastructure deficit in the region through the capital market, sustainable financing, Capital Market Integration and Fintech, Investor Protection in an Era of Integration and the Contribution of Investment Funds to Financing the Regions needs.
(ii) Cape Town is set to host a record-breaking 29 global ministers at the 26th Africa Oil Week summit (4-8 November). The event will act as a platform for governments to lay-out national strategies, issue licences, finalise tenders and find new partners
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Diarise: AmCham Business Summit 2019 (4-5 November, Nairobi)
Peter Draper: How should Africans respond to the investment, technology, security, and trade wars? (Brookings)
The modern world economy is now characterized by a rapidly shifting technological frontier within which several previously distinct realms are now converging. Sub-Saharan Africa could benefit from the increasingly interconnected global economy. At the same time, the United States’ tough response to China’s growing economic heft, as well as increased worldwide backlash to globalization, is incentivizing some economies to look inward. Trade policy and strategy is back in focus with a vengeance, and increasingly contested. How might an Africa caught in the middle of these opposing forces navigate this new global trade environment while maintaining its growth momentum of the last two decades?
Africans should also up their game in the high-stakes WTO reform negotiations currently unfolding in Geneva, with a view to securing the institution’s future. Currently, Africans participate primarily to carve out exceptions and leverage aid flows. Supporting reasonable US demands, notably with respect to countries graduating from special and differential treatment status once objectively verifiable development thresholds have been passed, will be essential. Not to do so will drive the US and some developed countries further from the institution, hasten its demise, and sharpen the shocks set out above.
The Trade for Her conference: Empowering women through international trade (EU)
The conference (held on Monday in Brussels) looked into the results of the first ever study on barriers for women in the EU, who are engaged in international trade. High-level representatives from international organisations, governments, businesses and civil society shared their experiences, views and ideas on women in trade in four thematic panels (pdf): Empowering women through international trade – challenges and solutions; Barriers for women to trade in Europe and beyond; Enhancing opportunities for women in trade – what role for business?; Looking for synergies – The role of other policy areas in empowering women. Female participation in EU exporting activities - jobs and wages (pdf): This analysis sheds new insights on the gender-balance of the employment opportunities supported by extra-EU exports. It shows that in 2017 more than 13 million female workers in the EU had jobs thanks to the exports of goods and services to the rest of the world. However, there is a gender gap when it comes to the employment prospects offered by extra-EU exports: only 38% of the jobs dependent on exports to the world are taken up by women. The analysis suggests that such gender gap is largely due to the concentration of female employment in the less export-oriented sectors, notably in services. Furthermore, the current note makes clear that labour compensation for female workers in exports-supported jobs stagnated in comparison to total employment over the time period considered. Although all exports-supported jobs benefit from a wage premium, there is a gender wage gap of 4 p.p.
Remarks by Roberto Azevêdo (WTO Director General): Inclusive growth means closing gender gaps. Women face disproportionate barriers to using trade for job opportunities and higher incomes, the Director-General noted. While some of the barriers are well identified, from discriminatory laws to difficulties accessing credit, others spring from the way nominally gender-neutral policies affect men and women differently and need to be better understood. DG Azevêdo described how some WTO members were working to do just that, including under the framework of the Buenos Aires Declaration on Trade and Women’s Economic Empowerment. He cited several initiatives undertaken on this front, including workshops to better understand the links between trade and gender in areas like government procurement, global value chains, regional trade agreements and e-commerce.
Remarks by Arancha González (ITC Executive Director): Before I conclude, let me share with you five key takeaways from the study: First, we need to do more to get women to participate in international trade in the first place. Second, some of the policy interventions required do not need to be targeting women specifically. Third, sometimes gender-specific interventions are called for, such as in access to finance. Fourth, where is the voice of women entrepreneurs in Brussels? Women entrepreneurs may be well organised at the level of individual Member States but they need to ensure they are visible at the EU level. This is a call for action for many of the dynamic, ingenious women entrepreneurs I see between the public. DG Trade needs to hear your voice loud and clear. Fifth and final take away, this study opens up new questions for future surveys. Why are so few women entering trade in the first place? How are women participating in trade in services? Women are, after all, mostly found in the services sector. [Rwanda to bridge gender gap in private companies; World Bank: Toward better economic opportunities for women in Malaysia]
G20 contribution to the 2030 agenda: progress and way forward (OECD)
This report looks at how the G20 has collectively contributed to Sustainable Development Sectors (SDS) defined in the Action Plan and at the G20’s current priorities across the three dimensions of sustainable development – economic, social and environmental while also examining how the G20’s work on cross-cutting issues such as gender equality is helping to deliver results. Cross-cutting issues and partnerships (extract): Further analysis on macroeconomic, trade and investment policies from a gender perspective could help to develop integrated policy solutions, and to direct greater investments to women-led business and to services and activities that would free up women’s time and favour their economic empowerment and greater participation in the labour force. Additionally, reducing gender inequalities in unpaid care work and breaking down gender bias, gender-discriminating norms and institutions and other invisible barriers to women’s access to finance, land and formal sector employment are priorities to be addressed, including through legislative and regulatory measures, capacity building and other dedicated measures.
Nigeria: FG sees 8% export expansion under AfCFTA (Vanguard)
Vice President, Prof Yemi Osinbajo, disclosed this at the Institute of Directors 2019 Annual Directors’ Conference in Abuja, adding that with an intra-African trade surplus at $3.8bn for goods and $13.2bn trade deficit for services, AfCFTA presents both opportunities and threats for the Nigerian market. “AfCFTA can transform Nigeria from a ‘target economy’ to the ‘Africa Gateway Economy’, boosting job creation through increased intra-African trade, and spurring growth through enhanced economic welfare; with an estimated 8% increase in Nigeria’s total exports.” He stated: “Nigeria is not protectionist and defensive, rather, we are actively confidently, blazing the trail towards an open, modern and integrationist economy. With our internal market size, Nigeria is well placed to tap into the natural gravitational pull for investment attraction, to promote retention and consolidate Nigeria’s participation in regional and global value chains.”
Pointers from the AfCFTA sensitisation workshop in Harare:
(i) Ambassador James Manzou (Permanent Secretary in the Ministry of Foreign Affairs and International Trade): “In line with the Transitional Stabilization Programme and Vision 2030, government is undertaking various economic reforms to address supply side constraints and enhance firm level competitiveness to take advantage of opportunities presented by the AfCFTA among other trade agreements." The Zimbabwe government recently established a Trade Remedies Unit within its Competition and Tariff Commission to deal with unfair trade practices in preparation for the opening up under the AfCFTA. He added Zimbabwe was negotiating for a longer liberalisation period of 15 years for its 90 percent tariff offer under the AfCFTA by which time they envisage better performance from the country’s industry and an improvement on their macroeconomic environment.
(ii) Batanai Chikwene (ECA Economic Affairs Officer): “Key reforms are required to ensure that industrialization, trade and investment generate optimum benefits for Zimbabwe. These include reforms in the areas of trade facilitation, infrastructure development, doing business reforms to create a better conducive environment for the private sector, product quality and standards and the general policy environment, its consistency, clarity and stability to facilitate the evolution of a competitive industrial sector able to capture opportunities arising from the AfCFTA.”
Namibia: Truck port in the Zambezi Region looks promising (Namibian Economist)
In the quest to respond to the provisions of NDP 5’s Master Plan for Development of an International Logistics Hub for SADC countries in the Republic of Namibia, the study was commissioned to ascertain the investment needs and financial feasibility for a truck/dry port along the Trans Caprivi Highway. The aim being to service truckers on their way to and from the borders of Botswana, the DRC, South Africa, Zambia, Zimbabwe and Botswana with the wider aspiration of serving landlocked countries in SADC. Our analyses shows, that based on the average daily traffic of approximately 1400 vehicles a day (2019 figure) which includes a 14.5% heavy vehicles component, the entire project is feasible. The development would include a fuel station, truck parking area, bed and breakfast facility and warehousing facilities. The addition to the GDP of the Zambezi Region is estimated at a minimum N$5,000,000 per year over a 20 year analysis period. Over the same period, the proposed development shows an Internal Rate of Return of 29.43%, a B/C Ratio of 3.32 and Net Present Value of N$51,000,000. The total investment need is approximately N$38,000,000. [The author: John Saunderson, principal transport economist at Amir Consulting]
Fifth Conference of African Ministers Responsible for Civil Registration (14-18 October, Lusaka): concept note (pdf, AU)
Advances in technology present an important opportunity for the digitalization of civil registration and vital statistics (CRVS) systems, through which the strategic benefits of legal identity for all to Africa’s development can be harnessed. Digital technology, including the extensive use of mobile devices in Africa, provides an incomparable opportunity for interoperability and real-time data sharing through interconnected systems across public and private sectors. Inclusive and trustworthy civil registration and digital identity systems are also crucial components for accelerating progress towards many of the SDG targets relating to poverty, good governance, social protection, financial inclusion, gender equality, migration and universal health coverage. Furthermore, digital identity integrated with civil registration systems can be instrumental in protecting statelessness, managing forced displacement and enhancing the efficiency of delivering humanitarian assistance. This combination helps to improve the lives of millions of people while also boosting national capacities to register vital events and produce vital statistics. When digital identity systems are recognized across borders and used online, they can be a powerful platform for innovation and for fast-tracking the implementation of the African Continental Free Trade Area.
The IMF has launched the 2019 Financial Access Survey
The FAS is a unique supply-side dataset that enables policymakers to measure and monitor financial inclusion and benchmark progress against peers. The dataset covers 189 jurisdictions with more than 150 indicators on financial access and use with historical data from 2004. The FAS was launched in 2009 and has evolved over time to adapt to the changing landscape of financial services, including the rise of fintech and growing demand for more granular data. The FAS data suggests that there are major disparities in the use of financial services between men and women, especially in low- and lower middle-income countries. In countries such as Pakistan, Uganda, and South Sudan, less than 30% of borrowers at commercial banks are women. In contrast, the high-income countries in Europe, including Denmark and Poland fare better, with close to 50% of borrowers being women (Table 1). The latest FAS data tell a familiar story for SMEs—in low- and middle-income countries. SMEs have limited access to borrowing despite the fact that SMEs contribute up to 40% of national income, creating 70–95% of new jobs. Bank lending to SMEs in has remained stagnant at around 6 percent of GDP over the past five years in low- and middle-income countries.
Companion analysis: Mobile Money Note 2019
While mobile money growth shows no sign of ebbing in Sub-Saharan Africa, other regions of the world are not far behind. South Asia showed the highest growth in mobile money accounts in 2017 and constitutes 34% of all registered accounts globally. Bangladesh, Indonesia, Pakistan, and Philippines are some examples of countries experiencing high mobile money growth in Asia. In fragile states, from 2015 to 2017, while the number of commercial bank branches per square kilometer remained less than 2, the number of mobile money agents per square kilometer increased from 18 to 27. This increase in fragile states corresponds to a growth rate of 50%, compared to 16%in non-fragile states. In addition, between 2015 and 2017, mobile money accounts in these states almost doubled while the value of money transactions carried out on these accounts have grown by more than three times (see Figure 3).
India’s RCEP reticence (The Interpreter)
RCEP is a proposed free trade agreement between the 10 members of the Association of Southeast Asian Nations countries and its six existing FTA partners, namely Australia, China, India, Japan, Korea, and New Zealand. The countries covered by RCEP account for 25% of global GDP, 30% of global trade, 26% of foreign direct investment flows, and 45% of the world’s population. For India, the potential is significant. RCEP countries account for almost 27% of India’s total trade, about 15% of India’s exports, and 35% of imports. India’s trade deficit with RCEP has risen from $9 billion in 2005 to $83 billion in 2017, of which, China alone accounts for over 60% of the deficit.
To dispel India’s reticence on RCEP, deeper analysis is needed on whether the deal will lead to cheaper goods, both for intermediate and final stages. So far, the rise in Indian trade deficit with its FTA partners has occurred due to cheap imports of final products, which may have pleased consumers but added to the angst of domestic producers. Cheaper intermediate goods can help in making Indian exports competitive. But the ultimate decision whether or not to be a part of RCEP should not just be driven by goods prices alone. It must consider other areas, such as services, investment, and employment potential. RCEP is a tightrope walk. India with its scale and domestic market opportunity has a lot to offer, but it can also afford to be strategic in evaluating trade deals. The focus needs to be on where India can promote its exports, while conscious that it should not act in a fashion detrimental to its emergence as a global player. [The author: Natasha Jha Bhaskar]
Today’s Quick Links:
Dubai’s e-commerce strategy: update
Lauren Johnston: What fast-ageing countries such as China tell us about our economic future
Reinventing the wheel: Phase One of the US-Japan trade pact
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Olu Fasan: Farewell Chiedu Osakwe, Africa’s consummate trade diplomat (BusinessDay)
Hardly has any other African, achieved anything close to what Osakwe did to develop international trade negotiations, including through support for policy reform and capacity building. In his 19 years’ spell at the WTO, from 1998 to 2017, Osakwe held, at the most senior level, all the major development-oriented roles. For example, he was: special coordinator for the LDCs, heading the inter-agency working group for the integrated framework for LDCs; director of the Technical Cooperation Division; director of the Textile Division; director of the Doha Development Agenda, leading the DDA negotiation process; and director of the WTO Accession Division, helping several developing countries through the difficult accession process to become WTO members. Osakwe oversaw the accession of several former communist countries, such as Estonia, to the WTO, actively supporting their domestic reform processes. In 2005, Osakwe was on the verge of becoming a Deputy Director-General at the WTO but apparently paid a price for Nigeria’s negative image.
Later this week, in Harare: A workshop to validate Zimbabwe's strategy on the implementation of the AfCFTA. The ECA, AUC, GoZ workshop (2-3 October) under the theme Expanding Industrial and Trade Growth through the AfCFTA, will be preceded by a day-long meeting to sensitise the country’s private sector on the AfCFTA. The workshop will also review the proposed TOR for Zimbabwe’s AfCFTA Committee to ensure they provide a solid foundation for the required leadership that will lead the implementation of the AfCFTA in the country.
Diarise: (i) 23rd Conference of the ICE of Senior Officials and Experts for Eastern Africa (5-7 November, Asmara). The theme: Leveraging new opportunities for regional integration in Eastern Africa; (ii) Global Gender Summit (25-27 November, Kigali). Under the theme Unpacking constraints to gender equality, the summit will dig deep into three dimensions in which gender equality and women’s empowerment can be achieved.
Report of the EAC High Level Conference on Trade Integration (EAC)
The conference was held to commemorate 20 years of the EAC and 15 years of the East African Customs Union. The overarching goal of the conference was to have an open, honest and critical self-examination as a region, with regard to what has been achieved, what has worked and what needs to be done to move the regional integration forward as well as improving the EAC trade policy and other instruments. To enhance competitiveness, the EAC needs to reduce the cost of production, and stop relying on duty exemption arrangements like AGOA. Cost of production can be lowered by managing labour, energy, logistics and cost of inputs, like raw material. Partner states should play complementary roles in ensuring that the region does not continue being the market of finished goods from other regions, but also a producer of goods for export. Profiled conference recommendations:
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Promotion of intra regional/continental trade should remain the core objective of integration. In light of this the EAC Common External Tariff should be reviewed to enhance internal trading environment and promote value chains for regional industrial development.
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Operationalize the Trade Remedies Committee as a regional mechanism for dispute resolution.
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Key determinants of negotiating new agreements should focus on value chains, export diversification and addressing supply chain. In addition EAC should undertake comprehensive assessments of future impact on domestic economies, including industrial and tax implications, resulting from implementation of new agreements.
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The EAC should re-visit EAC integration process to establish what is working and what is not working; Additionally, there is need for improved and more strategic engagement between the public and private sectors to enable the private sector to contribute effectively to the integration process. [Note: The EAC One Stop Border Post Performance Measurement Tool was launched during the conference]
South Africa: Trade Statistics for August 2019 show a R6.84bn surplus (SARS)
The South African Revenue Service has released trade statistics for August 2019 recording a trade surplus of R6.84bn. The trade surplus is attributable to exports of R122.02bn and imports of R115.17bn. Exports increased from July 2019 to August 2019 by R9.46bn (8.4%) while imports decreased by R1.11bn (1.0%). The year-to-date (1 January to 31 August) trade deficit of R0.85bn is a deterioration from the R4.67bn surplus for the comparable period in 2018. Exports increased by 6.9% year-on-year whilst imports for the same period showed an increase of 7.6%. Top 5 countries for exports: China (11.0%), Germany (10.5%), US (6.9%), Botswana (5.7%), UK (4.7%). Top 5 countries for imports: China (17.3%), Germany (11.3%), US (6.9%), India (5.3%), Saudi Arabia (3.5%).
Western Cape trade profile: Provincial Economic Review and Outlook 2019
Western Cape exports expanded by an average of 8.8% per year over the last 10 years. Over the same period, import growth was slower at 4.6% per year. In 2018, exports rose by 3.9% following a 0.3% decline in 2017. Import growth surged by 19.5% in 2018 after contracting for the three years prior. The increase in overall imports was driven by a 42.5% rise in imports of the oil and related products category, i.e. mineral fuels, mineral oils and products of their distillation; bituminous substances; and mineral waxes, while exports of this category rose by just 10%. This was the province’s biggest import category and constituted about half of total imports in 2018. As a result of the sharper increase in import growth compared to exports, the Western Cape’s trade deficit rose to R90.0bn in 2018 from R59.1bn in the previous year. This compares to an average deficit of R80.1bn recorded over the last 10 years with imports outstripping exports in all of these years. However, excluding oil imports, the Western Cape recorded a trade surplus of R20.6bn in 2018. Extract (pdf):
The Western Cape and South African export profiles are very different. The Western Cape export picture is dominated by agricultural and agri-processed goods, which made up 36.1% of exports in 2018. In contrast, the agriculture value chain makes up just 7.7% of national exports. The national export picture is dominated by mining (27.1% of exports), wholesale and retail trade (12.7%) and metals, metal products, machinery and equipment (12.2%). The fastest growing export sectors in the Western Cape were Agriculture (26.9% growth), Metals, metal products, machinery and equipment (17.5%) and Communication (17.2%). In contrast, Radio, TV, instruments, watches and clocks saw the biggest decline (-43.3%), followed by Textiles, clothing and leather goods (-19.7%). Given the volatility of trade data, it is also insightful to look at a longer-term picture. Over the last five years, the other Non-metal mineral products sector saw the fastest growth (9.4% on average per year), followed by agriculture (8.3%).
In 2018, 45.7% of South Africa’s agriculture and agri-processing exports originated from the Western Cape. This means that the Western Cape has a significant revealed comparative trade advantage (RTCA) in agriculture and agri-processing (captured in the Agriculture, forestry and fishing, and Food, beverages and tobacco subsectors in Table 3.4). Subsectors with an RTCA above one have a larger share of exports in the Western Cape compared to the rest of South Africa, and are thus relatively more important for the Province in terms of overall export performance. In addition to the agriculture value chain, many of the services subsectors also show a comparative advantage. The Communication subsector stands out as one where the RTCA has improved considerably during recent years – although its share of Western Cape exports remains relatively small at 2.6% in 2018. [Companion report:Municipal Economic Review & Outlook 2019 (pdf); CNBC multimedia: Tshwane Trade and Investment Summit]
Mozambique: New logistics corridor in north to ‘revolutionise’ trade, travel (Club of Mozambique)
The overland journey between Quelimane, on the Indian coast, to Tete, in the interior, takes more than two days and, if the schedule for implementing the new corridor (railroad and deep-water port) is met, by 2024 the journey time should be reduced to 10 hours. In addition to cargo transport, which is at the heart of the investment, projects are planned with immediate social impact on the daily lives of the population, said Orlando Marques, CEO of Thai Mozambique Logistics (TML). One of these is the creation of a passenger rail link. The $3.2bn investment will transport minerals, agricultural and other products from Mozambique, Zambia and Malawi to the deepwater port to be built in Macuze, Quelimane, on the Indian Ocean coast. The same line will have two passenger trains, one in the morning and the other at the end of the day, a service that will revolutionise traffic, the CEO said. There will be 22 stations along the line whose location is being studied to connect with local development projects. At the peak of the construction work, 12,500 workers should be employed, most of them Mozambicans. The construction of the corridor should start in 2020 and is the responsibility of a consortium of the Portuguese Mota-Engil and the Chinese CCEC.
Hospitality Report Africa 2019: selected highlights (Jumia)
Africa’s travel and tourism remains one of the key growth drivers of the continent’s economy, contributing 8.5% (or $194.2bn) of the GDP in 2018; from 8.1% and 7.8% in 2017 and 2016 respectively. This growth record placed Africa as the second-fastest growing tourism region in the world, with a growth rate of 5.6% in 2018 after Asia Pacific and against a 3.9% global average growth rate. In 2018, the continent received 67 million international tourist arrivals (+7% increase), as compared to 63 million in 2017 and 58 million in 2016. Africa received only 5% share of international arrivals in 2017. Morocco and South Africa were the top tourism destinations, with approximately 11 and 10 million arrivals per annum respectively. Ethiopia’s visa relaxation policies combined with improved connectivity as a regional transport hub placed the country as Africa’s fastest growing travel country, growing by 48.6% in 2018 to be worth $7.4bn. The travel and tourism sector directly and indirectly provided employment for about 24.3 million people in 2018, accounting for approximately (6.7%) of total employment. In terms of room revenue, it is expected that in the next five years, Nigeria will be the fastest-growing market with a projected 12% compound annual increase. It will be followed by Tanzania and Kenya, with a projection of 8.2% and 7.4% compound annual increases respectively. [Visualizing the importance of services in the world's economy]
New ACP-EU Partnership: Chief negotiators agree on economic priorities for future agreement (EU)
Meeting in New York (last week) in the margins of the UN General Assembly, the chief negotiators Commissioner Mimica and Togolese Minister Robert Dussey further specified the economic framework of future relations between African, Caribbean and Pacific countries with the European Union after 2020. Negotiations will continue on the remaining parts of the agreement in the coming weeks. Discussions on the so-called “common foundation” for all countries cover the general provisions, international cooperation, the means of cooperation, the institutional framework and the final provisions. At the same time, talks on the three partnerships with each region will intensify. The chief negotiators are expected to discuss progress on the three regional pillars at their next meeting, scheduled for October.
Today’s Quick Links:
Bloomberg: Zimbabwe clamps down on mobile money in new currency directive
Zimbabwe: IMF staff concludes Article IV Consultation visit
Victor Bhoroma: Can an undervalued currency boost Zimbabwe's exports
UNIDO, EU move to boost Ghana’s export competitiveness
Digital connectivity in sub-Saharan Africa: a comparative perspective
The Platform for Collaboration on Tax: draft toolkit on implementation of effective transfer-pricing documentation requirements
UNCTAD’s latest Transport and Trade Facilitation Newsletter is posted
Economic and distributional impacts of Free Trade Agreements: the case of Indonesia
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Reporting African trade and industrialization trends, dynamics: media workshops in Johannesburg, Cape Town, Addis Ababa
(i) Next week in Johannesburg: ECA's AfCFTA Media Hub Workshop (2-3 October). “The workshop will bring together journalists from all corners of the continent and expose them to the essentials of trade economics; national and regional trade policy analysis, and global political economy. It will also focus on new strategies to gather and report African trade news and economic issues. As well as support participants in tackling news assignments that involve economics and business data with an emphasis on how to ensure media content is exciting and relevant to their audiences.”
(ii) Reporting on the AfCFTA: a tralac training course for journalists (3-4 October, Cape Town). "We’ll discuss the state of the negotiations, providing an update on the ratification and entry into force of the Agreement, the ongoing negotiations on tariff concessions and rules of origin, as well as services sector commitments. We will also consider the second phase of the negotiations – on investment, competition and intellectual property rights. We’ll interrogate the potential of the AfCFTA to contribute to Africa’s development. An introduction to trade data analysis to assess intra-Africa trade – with trade data visualisation techniques will also be included in the programme."
(iii) Earlier this week: An AU Department of Trade and Industry media orientation workshop in Addis Ababa on the reporting of Africa's industrialization. Mrs Esther Azaa Yambou Tankou (AU’s Department of Information and Communication): “In the media sector, it is arguably more difficult to report on economic and financial issues than ribbon cutting ceremonies. A lack of understanding and expertise can hamper economic, political and social issues reporting. Journalists, should therefore, have an aptitude to be research and analytics-oriented.”
South Africa’s Department of Trade and Industry convenes a workshop on Monday, in Johannesburg, to discuss the AfCFTA and Doing Business in Africa. The workshop will provide an opportunity for South Africa’s private sector to engage senior policy makers on aligning the agreement with the needs of business.
A special feature on East African trade and regional integration, anchored on this wee’s EAC High Level Trade Integration Conference:
(i) Mr Steven Mlote, EAC Deputy Secretary General in charge of planning and infrastructure, said the conference was a precursor to the commemoration of the EAC’s 20th Anniversary and the 15th anniversary of the Customs Union Protocol.
(ii) EAC Secretary-General urges partner states to ratify the TFTA. The Secretary-General of the EAC has lauded the EAC’s Customs Union which, he says, has registered a number of successes including application of a common customs law, operationalization of the Single Customs Territory, the establishment of One-Stop Border Posts, the Authorized Economic Operator Programme and interconnectivity of the customs business systems. Amb. Liberat Mfumukeko says the SCT has reduced the turnaround time and tremendously cut down the cost of moving goods in the region. At the continental level, Mfumukeko opines that progress has been recorded towards realization of the Tripartite Free Trade Area. Three EAC partner states have ratified the Agreement, which was launched in June 2015. He urged the remaining partner states to also ratify the Agreement in accordance with the timelines that have been agreed upon so as to enable all the EAC partner states maximize on the opportunities offered by the TFTA.
(iii) East African bloc urges removal of hurdles to cross-border trade (Xinhua)
Dr Richard Sezibera, chairperson of the EAC Council of Ministers, said in Nairobi that there are a number of impediments to trade, including tariff and non-tariff barriers, excessive regulation and inadequate infrastructure in border towns. "The need to address aspects related to trade costs, harassment and corruption, infrastructure efficiency, excessive regulation, and excessive requirements at borders and formalize the informal sector are important policy directions required to support informal cross-border trade and enhance regional integration," Sezibera said during the official opening of the high level conference on EAC trade integration. According to Sezibera, who is also Rwanda's Minister of Foreign Affairs and International Cooperation, the trading bloc has a lot of potential in informal cross-border trade. "Informal cross-border trade is estimated to be as high as 50% of formal trade in Africa and is a diverse source of livelihood for millions of people," he added. He noted that the EAC has considerable unexploited potential in trade, but intra-regional trade is far below its potential.
(iv) EAC has made tremendous progress says Kenya Cabinet Secretary (East African Business Week)
Tremendous progress has been made in pursuing the EAC integration agenda notwithstanding any challenges on the path as any ambitious project will not be without challenges. This is according to the Cabinet Secretary in the Ministry of East African Community and Northern Corridor Development in Kenya Adan Mohamed who was the Chief Guest during the official opening of the high-level conference on EAC Trade integration in Nairobi. “I am aware of the progress made in the realm of trade facilitation including the transformation of the Customs processes, the introduction of technology in driving regional business, re-orienting the border operations under the coordinated border management concept, and the re-engineering of the immigration procedures. I am proud as an East African that today fellow citizens of East Africa can move around without any hindrances. The one network and one tourist visa for some Partner States is another bold step we have taken and I am hopeful that all the Partner States will soon be on board,” said Mohamed.
(v) Kenneth Bagamuhunda, EAC's director general of customs and trade: "A single currency regime is expected to lower the cost of trading transactions among partner states and hence boost level of imports and exports within the region."
(vi) EAC seeks to spur demand for local textiles (Anadolu)
An East African bloc’s decision to promote the wearing of locally made attire and annual exhibits in the member states will help the garments gain popularity, said experts. The optimism follows the EAC’s recent declarations of Fridays as Afrika Mashariki (East) Fashion Day, during which the people in East Africa will wear attires manufactured in the region. Afrika Mashariki Fashion Week would also be held annually in the first week of September for trade fair and exhibition of locally designed textiles and garments. The declarations are expected to get effected in all EAC member states - Rwanda, Uganda, Kenya, Tanzania, Burundi and South Sudan. According to Simon Peter Owaka, senior public relations officer at the EAC Secretariat, the declarations are part of strategies adopted by the region to stimulate demand for locally made textiles and garments, and to build brand identity. “The declarations would enhance local consumption of East Africa-made products and enhance our productive capacity in the textile sector. Imagine a foreigner moving in EAC countries on a particular Friday and finding people donning similar attire -- a strong message of an intact community,” Owaka told Anadolu Agency.
(vii) Kenya: Declining quality of tea blamed on factory rivalry (Business Daily)
Stakeholders in the tea industry say the rapid growth in capacity of factories is compromising the quality of the beverage in the market, leading to falling prices of the commodity in the international market. The declining quality, say tea buyers, has negatively impacted the competitiveness of Kenya’s tea, hence reducing demand. “Factories are now competing for volumes and not quality. As such, the quality of our Kenyan tea that we used to enjoy some five or 10 years ago has been going down, affecting the price of the commodity,” said Peter Kimanga, a tea exporter with Global Tea Commodities. “Kenyan tea is of such a high premium in some consuming markets that the importers keep track of the auction trends on a weekly basis and will make purchase orders for a specific plantations or garden marks,” said East African Tea Trade Association managing director Edward Mudibo. The Tea Directorate says about five factories have been registered in the last three years while the existing ones have been expanding their production lines. Agriculture and Food Authority (AFA) director general, Anthony Muriithi said they have been addressing the issue of quality by carrying out of quarterly checks in factories.
(viii) Uganda trade minister addresses UIOGS on local content and diversification (Oil Review Africa)
Looking at the broader economic picture, Ms Amelia Kyambadde, said regional cooperation was important if the oil and gas industry was going to succeed in Uganda. She said it was vital that there is “harmonisation of framework in the region”, such as standards for oil and gas production. In particular, Ms Kyambadde said she was keen to collaborate with Kenya and Tanzania. “We need regional consensus, we need to normalise methods and policies for the management of industry and ensure certification, recognition of our oil and gas, and think outside the borders,” she said. “We need to ensure benchmarks with other oil-producing countries to share knowledge, to share information, to share expertise.” She called for more “aggressive infrastructure development” such as the 1,440km pipeline between Uganda and Tanzania, called for rail projects to be fast-tracked with standard gauge tracks across neighbouring countries, and pointed out the opportunities in the marine transport sector because “we have a lake between us”. As well as regional harmonisation of relevant regulations, Ms Kyambadde said meeting international standards was important.
(ix) Eritrea and the AfCFTA (The East African)
While African customs officials say AU officials are working on persuading Eritrea to sign the agreement, chances of realising a breakthrough remain low. Eritrean government officials could not be reached for comment by press time. “Eritrea does not produce much, which could explain why it is not bothered about the AfCFTA. However, despite economic and financial sanctions imposed on some African countries, member states are still able to trade fairly well with each other. I visited Eritrea the other day and I noticed quite significant volumes of imports,” said Peter Malinga, a trade expert who attended the Kampala meeting of director-generals of customs, revenue authority officials and trade experts from AU member states.
ACTFA seeks to improve intra-Africa trade (World-Grain)
Although sub-Saharan Africa has potential key drivers for the growth in demand in cereal grains, such as being home to 13% of the world’s working age population, a rapid urban population growth at 3.5% annually and increasing consumer spending that surpassed the $1.4 trillion mark in 2015, the economic blocs in the region still face the challenges of completely eliminating import bans, protective tariffs and trade-distorting subsidies. Uganda and Rwanda, for example, have imposed a 75% import duty and value-added tax on all rice imports from Tanzania. This is because Tanzania, which produces 80% of East Africa’s rice, receives duty free importation of rice from Asia, which then is re-exported to other EAC countries
Rwanda: Volkswagen gambles on ride-hailing to break through African roadblocks (The East African)
When Volkswagen’s Africa boss Thomas Schaefer set out to conquer the continent, he quickly realized he needed more than a flashy new product. He needed a new business model. Study after study showed the same thing: there was no demand for new cars. Low purchasing power and a lack of financing put them out of the reach of most Africans, while competition from used imports gave buyers a cheaper alternative. So Schaefer is placing a $50m bet on a new business built around ride-hailing and car-sharing. And VW is using Rwanda as its laboratory. While VW sees Kigali is an ideal test ground, offering a data sample that’s statistically significant at a reasonable cost, critics say the city - where Uber and Bolt are absent - is not an accurate gauge of conditions in bigger markets. Schaefer cautioned that the experiment was still in its early stages, adding he’d like to give the business model a two-year test run before assessing it.
Africa dreams of free trade as red tape rules on the ground (Reuters)
The speed limit is 110 km per hour on the new highway that Abadalla Chande uses to haul his truckload of animal feed from Tanzania to Kenya, two nations that share a common market often hailed as a model for the continent. But Chande is parked on the tarmac, caught up in a snarl of red tape. He is in a long line of trucks waiting for cargo to be scanned or for documents to be checked by officials. One of the most successful of Africa’s many trade blocs, it should be superseded by a continent-wide free trade area that will begin trading in July next year. But businessmen say the delays plaguing the East African union bode ill for the future of the unified market. “Sometimes we get to the border crossing and spend five, six days or even a week,” said Chande, who said he’d been waiting there more than a day. Behind him, police pried apart shouting drivers as hundreds of trucks slowly belched and groaned towards the Kenya-Tanzania border in Namanga town. Kenyan and Tanzanian officials say that even in a free trade area, goods crossing borders must be checked by multiple agencies including the tax authorities, plant health inspectorate, departments of human health, livestock control and forestry. This takes time.
Africa Risk-Reward Index 2019: reforms and resistance (Control Risks)
In the fourth Africa Risk-Reward Index, Control Risks and Oxford Economics analyse the impact of ambitious reform agendas in Angola, Ethiopia and South Africa. We also focus on relationships and rivalries in the East African Community, and the impact of geopolitical competition in a post-Bashir Sudan. The Africa Risk-Reward Index plots each country’s performance relative to its African peers, by comparing some of the continent’s largest and emerging markets, offering investors a comparative snapshot of market opportunities and risks across Africa. [Note: The report can be downloaded after registration]
Standard Chartered’s Trade20 index: Mapping the rising stars of trade. Côte d'Ivoire, Kenya and Ireland join India and China in the top five markets with the greatest potential for future trade growth.