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David Luke, Phil Rourke: Canada, Africa and the inclusive trade agenda (Canadian Foreign Policy Journal)
Canada's inclusive trade agenda has been put forward as part of the solution to ensuring more and better jobs for more people in both developed and developing countries. The agenda, however, remains a work in progress. Discussions have too narrowly focused on process outcomes through the promotion of a trade policy making process that is more consultative, inclusive, participatory and transparent. Canada's support for an inclusive trade agenda can have a real and meaningful influence globally if it is more clearly defined based on a common understanding on what elements are essential for trade and trade policy to yield real change and substantive benefits for all. Formal structures for consultations to take place alongside and to feed into and influence the trade policy making process are required. Africa is the best starting point for Canada to put such a policy into practice with real impact on the ground.
UNCTAD's Trade and Development Report 2019: Financing a Global Green New Deal
Extract: Making development wag the debt tail . A brief overview of essential features of the current trading positions for three main developing country trade areas - MERCOSUR, ASEAN and SADC - provides some preliminary insights into the feasibility and potential benefits the use of internal clearing mechanisms might provide. This, first, looks at the share of intraregional commercial trade in member states’ overall commercial trade. The higher the share of intraregional trade, the higher the scope for intraregional monetary arrangements to help expand this. As figure 4.12 shows for three developing country groupings with a history of economic integration in Latin America, Asia and Africa, while this share remains relatively low overall, it has been rising steadily in both ASEAN and SADC, but less so in the case of MERCOSUR. Second, the net commercial trade balances within country groupings also matter, since the idea of a regional clearing union is precisely to use the extension of trade credits to participant deficit countries to replace covering trade imbalances through compensating external capital inflows. As figure 4.13 highlights, these intraregional dynamics are diverse.
By contrast, SADC presents a more difficult case: While SADC, with the exception of oil-exporting Angola, is a deficit region with the rest of the world, and intraregional clearing to reduce the need to cover trade imbalances through external capital flows and substitute these for the extension of intraregional trade credits would, in principle, be beneficial, the current intraregional trade dynamics are not favourable. Other than South Africa, most member countries are in surplus with the region, limiting the scope to which a wider number of member countries could benefit from internal clearing at present.
Thus, core features of current trading patterns provide a varied picture in regard to the benefits that could be derived from the use of regional clearing. While some regions (MERCOSUR, ASEAN) could benefit immediately, if to differing degrees, others (SADC) face more formidable obstacles. However, the purpose of such clearing arrangements is of course also to increase intraregional relative to extraregional trade, such that current trade patterns change. This, in turn, also requires political will. For regional clearing unions to function properly in the interest of freeing up own financial resources and policy space to pursue national development strategies, regional interests have to be prioritized, sometimes over immediate national interests, in the understanding that reverse priorities will, ultimately, undermine collective as well as national developmental goals.
Press releases: Forget securitization, backing public banks is best for sustainable development; UN ecalls for bold action to finance a global green new deal and meet the SDGs; Managing capital could provide a $680bn annual windfall for financing 2030 agenda
Downloads by chapter (pdf): Overview; Chapter I: Trends and challenges in the global economy; Chapter II: Issues at stake; Chapter III: A road map for global growth and sustainable development; Chapter IV: Making debt work for development; Chapter V: Making private capital work for development; Chapter VI: Making banks work better for development
The inaugural UN summit on the progress of the 2030 Agenda for Sustainable Development has closed. Download country statements here, and/or the report of the Secretary-General on SDG Progress 2019 (Special Edition)
The AU's Legacy Project on Diaspora Investment, Innovative Finance and Social Enterprise in Africa (AU)
In 2012 at the Global African Diaspora Summit in South Africa, the AU Heads of State and Government agreed to the creation of a diaspora investment fund, as a legacy project. In September 2018, the AUC and GIZ commissioned GK Partners ‘to establish the design and implementation framework for the African Diaspora Investment Fund in accordance with the Action Plan of the Global African Diaspora Summit’. This ‘Strategic, Business and Operational Framework for an African Diaspora Finance Corporation’ is the result of the consultancy assignment. Extract (pdf):
It has not been possible to find any credible case study of a regulated diaspora mutual fund or similar products, run and subscribed by the diaspora, investing in debt and equity portfolio investment products in Africa. There is evidence that a range of different groups, organisations and institutions are discussing, designing or developing Diaspora Portfolio Investment (DPI) products, but there are hardly any products trading in the regulated African and international capital markets. In practice, DPI to Africa occurs at a relatively low level, through: remittance savings deposited in portfolio products; diaspora investment clubs investing in Treasury Bills; and specialist Diaspora Investment Accounts run by African banks. The great potential of using diaspora bonds to finance development in Africa has been argued by diverse studies and advocated by the World Bank, IMF, African Development Bank, diaspora organisations and a wide range of other reputable institutions. However, only four African countries have ever issued bonds package and targeted specifically for the African diaspora. Of the Diaspora Bonds issued by Ghana, Ethiopia, Kenya and Nigeria, only the 2017 Nigeria Diaspora Bond was fully subscribed. There is a big gap between the potentiality, declared enthusiasm and general rhetoric about diaspora bonds, and the actual reality in the marketplace.
For the purpose of business simplicity, operational feasibility, and commercial viability, it is recommended that an AU-backed African Diaspora Finance Corporation (ADFC) should focus on the delivery of a core diaspora investment programme comprising a small number of product classes, namely Bonds, Mutual and Endowment/Trust Funds. The DPI products go beyond remittances, and target diaspora savings and Innovative Finance contributions. The key elements of the investment strategy help define the framework for business implementation and operations, covering the essential topics of products, services, operational systems, processes, structures, governance, compliance and management. The proposed ADFC is not an opportunistic corporate venture; it is a continental social enterprise which will use business and market mechanisms to pursue public benefit and African development. As such, it lends itself to practical Diaspora Public Private Partnership (DPPP), Blended Finance and cross-sectoral collaboration with diverse strategic, institutional and operational partners. Together with policy advocacy partners, ADFC can be a ‘development activist’ investor and market marker, working to reduce market failure and sectoral dysfunction. ADFC shall work with a wide range of relevant African institutions, international development partners, multigenerational Diaspora, and Friends of Africa.
The AfDB has updated its 2008 report: Revisiting reforms in the power sector in Africa
This report updates previous AfDB and Association of Power Utilities of Africa (APUA) assessments of power sector reforms in Africa. APUA conducted a study in 2008 on reforms in the African power sector, focusing on 19 countries. The 2008 study examined the reasons, drivers, and triggers underlying reforms; actors promoting the reforms; the design and implementation of reforms; the impacts on utility performance; and the key success and failure factors of reforms. The 2008 study was complemented by a Compendium of best practices (2009), drawn from nine country case studies. With this report, the AfDB and APUA examine African experiences to provide valuable lessons on the implementation and success factors of reforms. These lessons should guide the design of policies, programs, and regulatory frameworks to adapt to new challenges. Understanding the policy implications is essential to support efforts to catalyze Africa’s progress, or to facilitate a ‘leapfrog’ development with respect to other regions. This report also sharpens the focus on mapping and answering new needs and concerns that derive from recent technological trends, innovations, and transformations affecting the economy, politics, and power sector. Extract:
Managing the complex political economy of power sector governance remains a challenge for many African countries. The sector is economically central and therefore highly politicized, which creates a contested discussion around reforms. Opening up capital investment flows in the African power sector is often at the forefront of reform goals. The fastest-growing sources of private sector investment in the sector are IPPs, alongside Chinese-funded projects. IPPs are now present in over 30 countries, with 270 operating or in construction totaling over 27 GW of capacity. These represent about $51.7bn in investments. Transmission investments have not benefited from the same influx of private investment as generation. Only a handful of countries have some form of private participation in transmission. Private management has been introduced in the form of concessions, affermage, and full privatization programs in different segments of the power sector in several countries. Occasionally, this has caused controversy and even contract reversal. The quality of governance—including corruption levels, rule of law, and regulatory environment—is a key factor to support transparency and stability for private investment in the sector.
Mini-grids and off-grid electricity supply models - especially those that harness small modular renewable generation technologies - are increasingly attractive and cost-competitive for remote communities. Over half of study respondents (all in sub-Saharan Africa) report the existence of a mini-grid industry in the country. These industries are rapidly growing, especially with support from development institutions, notably the AfDB.
Trapped in illicit finance (Christian Aid)
Our estimates show that IFFs cause tax losses of $416bn in the global South. This is money that could enable governments to deliver much-needed public services, and bring us closer to a world where all experience dignity, equality and justice. As eminent economist Professor Jayati Ghosh stated in the report foreword: ‘Illicit financial flows – both illegal and legal – may be the major constraint to development and achieving human rights today’. World leaders have previously committed to fight IFFs. At the Third International Conference on Financing for Development (FfD) in 2015, participants agreed to ‘substantially reduce illicit financial flows by 2030, with a view to eventually eliminating them’. A similar commitment was made when the UN 2030 Agenda was agreed. However – and this is the crucial point – what has been missing until now has been a robust definition of IFFs. Governments of the global North insist on a legalistic definition that would only capture flows of money universally accepted as being illegal, eg, money laundering or corruption. However, we and many of our partners in the global South believe what matters is not whether flows of money or tax practices are legal, but whether they are abusive, harmful or limit governments’ ability to deliver on their human rights obligations. For instance, this report (pdf) documents abusive practices that have harmed Nepal – a country that is still recovering from a major earthquake in 2015. The events outlined below shine a light on our broken economy and underscore the urgent need to stem the bleeding caused by IFFs. That’s why Christian Aid is calling for the debate around IFFs to shift towards a rights-based one. We want the definition of IFFs broadened to refer to ‘crossborder flows of money that are either illegal or abusive of laws in their origin, or during their movement or use’. It is not about whether it’s illegal, but immoral.
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Tributes continue to pour in following the death of Nigeria's chief trade negotiator and one of the AfCFTA's architects, Ambassador Chiedu Osakwe. A selection:
(i) David Luke: Chiedu was a great African. A man who believed trade is a sustainable road out of poverty in Africa; a man who chaired final stages of AfCFTA negotiations with wit, humor and skill; a man who worked hard to secure Nigeria’s signing deal; and I’ve lost a friend of over 20 yrs.
(ii) Ambassador Albert Muchanga: Heard with sadness, passing away of brother and giant of AfCFTA, Ambassador Chiedu Osakwe. He contributed immensely to what AfCFTA is and will be. Condolences to family, people and the Government of Nigeria.
(iii) President Buhari: "President Buhari commiserates with all friends, relations and professional associates of the deceased, who served the country for many years as Foreign Service Officer, before joining the WTO, and later accepting to return to the country as a trade adviser to the Ministry of Industry, Trade and Investment, and Director-General of NOTN. The President affirms that the intellectual depth, fervour and sense of patriotism that Amb. Osakwe handled will be sorely missed, especially the front-line and historical role of chairing the Negotiating Forum of the African Union from June 2017 to March 2018, during which time the negotiations were concluded on the Agreement Establishing the African Continental Free Trade Area."
(iv) Olu Fasan: The African Union should honour this great African. The AfCFTA negotiations were going nowhere until he was asked by the AU to lead them in 2017 and he turned the negotiations around. He should be honoured posthumously - perhaps naming the AfCFTA Secretariat building after him!
(v) Sand Mba: My role model Ambassador Chiedu Osakwe, DG, Nigerian office for Trade Negotiation has passed on. He was the finest trade negotiator in the world that originated from Nigeria. A trade negotiator personified and a strong pan Africanist that was dedicated to Africa development.
(vi) Paul Okolo: Even as his health was failing, Osakwe soldiered on passionately, strenuously canvassing Nigeria's position on the AfCFTA. One can safely say he finished well when he saw President Buhari sign the trade deal in July in Niamey. He'll be greatly missed.
(vii) The Africa Report: Chiedu Osakwe’s passing may hit free trade ambitions. One of the band of tireless and exceptionally qualified Nigerians who pushed the country forward beyond the glare of the limelight, Ambassador Osakwe was one of the strongest advocates for the creation of the AfCFTA.
(viii) CNBC multimedia: Nigeria remembers trade icon, Chiedu Osakwe who passed on at 64.
Selected trade policy events now underway: Gaborone, Lusaka
(i) The 53rd meeting of the SACU Commission began yesterday in Gaborone and will conclude today. The 54th meeting of the SACU Commission is scheduled for 3-4 December 2019, in Windhoek. The schedule of associated prepatory meetings can be accessed here.
(ii) A workshop to validate Zambia’s strategy for the implementation of AfCFTA Agreement starts today in Lusaka and will conclude tomorrow. The workshop will also review the proposed Terms of Reference for the National AfCFTA Committee on the AfCFTA to ensure the terms provide a solid foundation for the required leadership in the implementation of the AfCFTA Agreement in Zambia.
Outcomes of selected recent trade policy events:
(i) African Multidimensional Regional Integration Index training workshop (Lusaka). The AMRII, therefore, in part, responds to the Union’s quest for monitoring and evaluation tools. The new index is composed of 7 dimensions and 39 indicators, which are both qualitative and quantitative. It consists of thresholds for assessing the RECs and identify those lagging behind in the implementation of integration plans and programmes such as the Abuja Treaty and Agenda 2063. This new index was approved by the 3rd STC of Finance, Monetary Affairs, Economic Planning and Integration, in March 2019 as the main tool for evaluating African regional integration. The AU’s Department of Economic Affairs has since rolled out training workshops for member states to facilitate better understanding of the methodology and tool and to also obtain technical inputs from experts, before its final utilization as the sole technical tool for assessing, monitoring and evaluating Africa’s integration process.
(ii) Malawi's recent AfCFTA sensitization workshop. The workshop mapped out specific benefits of the AfCFTA for Malawi, such as access of Malawi's products and services to 1.2 billion people; creation of business opportunities for Malawians; promoting industrialization for the country due to increased market; infrastructure development; amongst others.
(iii) 35th session of the ICE of Senior Officials and Experts for Central Africa (Malabo). A motion was made for upgraded laws and regulations to cushion the smooth take-off of the digital economy accompanied by appropriate institutions to peddle progress, as well as for shared cross-country visions for the digital age. Mr Norberto Bartolomé Monsuy, Adviser at the Presidency of Equatorial Guinea on digitization: “Our subregion is one of the smallest in the world, so it is time to break our silos and work together as a team,” he said in a candid vote for regional integration in all spheres but more so in the digital ecosystem."
EAC locks out duty-free car imports from South Africa (The EastAfrican)
Players in the automobile sectors from the EAC and SACU are developing a joint policy to encourage motor vehicle manufacturing that is beneficial to both blocs. This development comes at a time when the TFTA tariff negotiations launched more than four years ago are near conclusion. The two economic blocs have had a prolonged battle over whether to abolish the contentious 25% import duty under the Tripartite Free Trade Area. The two blocs have agreed that import duty on some motor vehicle parts will be abolished within the first five years of the TFTA, and others will enter duty free as provided under the EAC CET. The move ostensibly curbs a massive influx of motor vehicles from South Africa into the EAC region once the more than 700 million-people TFTA comes into force. It is estimated that the number of vehicles imported into East Africa each year has grown to over 250,000 and is expected to reach 500,000 by 2030. “We have agreed to discuss the sector in terms of the regional value chain and not liberalisation of motor vehicles coming from SACU,” Kenya’s Principal Secretary in the Department of Trade Chris Kiptoo told The EastAfrican. The EastAfrican has also established that EAC and SACU have agreed to retain the more than 25% duty as provided for under the existing EAC Common External Tariff to all imports of sensitive dairy products such as milk, yoghurt, cheese and butter into the EAC bloc. Those classified as not sensitive will be liberalised through a five-year duty phase down after the TFTA enters into force.
Linking Southern Africa into South Africa’s global value chains (UNU-WIDER)
The objectives of the study are two-fold: First, it identifies the existing lead products of South Africa, in which South Africa forms its own GVCs, and estimates the potential market share that Southern African countries could capture in South Africa’s markets by supplying intermediate inputs for these lead products. This provides a basis for selecting products for potential investment to increase regional integration in Southern Africa. Secondly, narrowing the analysis to the agricultural sector—a key regional priority sector with immense potential for industrial growth and large-scale employment—the study identifies existing agricultural lead products in South Africa, and the ‘new markets’ to which South Africa can export. This is intended to highlight products in which South Africa can expand its existing GVCs to new markets and potentially increase regional integration. [The authors: Karishma Banga, Neil Balchin]
An evaluation of the single currency agenda in the ECOWAS region (Brookings)
The Eco will clearly not be the panacea for West Africa’s myriad problems, including high levels of unemployment, especially among the burgeoning population of youth and the increasing numbers of the poor. The lessons from the eurozone highlight continuing challenges among a group of highly developed countries with very strong institutions. ECOWAS will do well to heed these lessons. Second, efforts by member states to strengthen domestic macroeconomic frameworks are important. Third, concerted efforts must be made to reduce the inordinate bureaucratic delays that severely constrain exports and imports at the border. Launching the single regional currency, the “Eco,” by January 2020 is, at best, an expensive distraction that the people of West Africa can ill afford at this particular moment. [The author: Aloysius Uche Ordu; Peter Kristensen: What is happening on West Africa’s coast?]
US-Africa trade and investment relations: Responses to EXIM Competitiveness Report (2018) (pdf)
(i) EXIM 2019 Sub-Saharan Africa Advisory Committee Statement: Africa is richer, freer, and offers more opportunities to the United States than the continent did a few decades ago. If the American business community does not engage there, Africa will take its business to China and other countries. By any number of metrics, Africa is going to be one of the world’s greatest business opportunities of the next 50 years. EXIM has a critical role in helping American business take advantage of these opportunities, and, in so doing, create and sustain jobs in the United States. Africa does not receive the attention that it deserves in terms of its countless entrepreneurs, spectacular growth, and the amazing progress that has taken place in recent years. Today Africa’s middle class encompasses approximately 350 million persons. Forty percent of Africans now live in cities, and 50% will live in cities in ten years. Widespread advancements in technology have greatly expanded communications across the continent. For example, there are now more than 650 million mobile-phone users in sub-Saharan Africa. According to many estimates, sub-Saharan Africa will have a larger working-age population than China and India combined in 30 years. This “demographic dividend” can be expected to lead to accelerated economic growth. The United States would do well to find ways now to share in that growth potential, especially considering that Africans in business throughout the continent continue to tell us that they want to buy from Americans.
Today, China is the number one exporter of goods to 19 of 48 sub-Saharan African countries and has become Africa’s largest trading partner. Forty countries on the continent have signed bilateral trade agreements with Beijing. If Africans view the United States only as a provider of foreign aid, at some point they are going to question the US commitment to the continent. It is important that the United States offers a viable and more favorable alternative. EXIM Bank is a critical instrument of engagement to reframe the relationship between the United States and Africa as a mutually beneficial economic partnership. If the United States does not have a strong EXIM, that will make it much harder for American businesses to engage in Africa and to realize the opportunities on the continent. In summary, Africa offers tremendous business opportunities for the United States.
(ii) EXIM 2019 Advisory Committee statement: Based on a review of the overall landscape, it is clear that the export credit environment has undergone a fundamental change in a short period of time. There are significant new state actors multiplying the range of financing options being offered to exporters and buyers. In particular, the Advisory Committee concurs with and would draw attention to the report’s findings regarding the aggressive growth of Chinese export credit agencies activities. In 2018 alone, it is estimated that China provided more than $500bn of export credit—in just one year approaching the $610bn that EXIM has financed in its entire 85-year history, in nominal value. In fact, China’s export finance activity is larger than all the other export credit agencies in the G7 combined. And in the larger picture, China today is the world’s largest official creditor, possessing a portfolio more than twice the size of the World Bank and IMF combined.
The Advisory Committee was struck by the changes occurring in Chinese export credit activity that have fundamentally transformed the nature of official export credits, stimulating other export credit providers to broaden their offerings of unregulated and other, more opaque forms of support. EXIM’s Competitiveness Report accurately documents how extensively foreign ECAs have expanded programs aimed at embedding their small- and medium-sized exporters into the global supply chain to the detriment of US exporters, particularly small businesses. Indeed, the world economy is four times the size of the US economy. To ignore this development is to resign ourselves to a reduced presence in world geopolitical affairs and accept a lower standard of living for Americans in the long-term future. Export promotion now also has become a critical lever for macroeconomic growth for many governments. Other governments are strategically using ECAs to influence procurement decisions in ways that hinder the participation of US firms.
Witney Schneidman: AGOA 2.0 must embrace Africa’s new common market (The Africa Report)
Most specifically, reciprocity needs to replace the non-reciprocal structure of the current trade relationship. AGOA 2.0 also needs to be developed in a manner consistent with the implementation of the AfCFTA. AGOA’s benefits should be extended past 2025 as long as agreement has been reached on the phase-in of mutually reciprocal trade benefits. The phase-in periods should be different for Africa’s low-income, lower-middle-income and upper-middle-income countries. Revising the AGOA framework should be a priority in the US-Africa relationship as US goods and services are being increasingly discriminated against in Africa – at a time when the commercial relationship should be deepening. Given the EPAs, for example, a refrigerator or tractor being exported from an EU country will enter the South African market with a 4.5% tariff. That same refrigerator or tractor coming from the US will face an 18.4% tariff. Not only does this stifle the US-Africa commercial relationship, but it also discriminates against African consumers and companies, who will automatically find American products to be more expensive.
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Featured tweet, Yinka Adeyemi: Chiedu Osakwe, Nigeria's chief trade negotiator, who chaired the Africa process that yielded the AfCFTA in Rwanda is dead. Was a global authority on trade negotiation and former WTO director.
Selected trade and development event listings for the week ahead:
(i) Profiled EAC events: Regional meeting to review the Draft EAC Common Market Protocol evaluation report (22-23 September, Nairobi); EAC High Level Conference on Trade Integration (25-27 September, Nairobi); Sectoral Council on Agriculture and Food Security (23-27 September, Arusha)
(ii) The 35th Session of the ICE for Central Africa starts today in Malabo on the theme Digital transformations and economic diversification in Central Africa
(iii) The WEF's Sustainable Development Impact Summit starts tomorrow in New York
(iv) A reminder: UNCTAD's Trade and Development Report 2019 will be launched on Wednesday
(v) The high-level Dialogue on Financing for Development takes place on Thursday in New York
(vi) The programme for the WTO's Public Forum (8-11 October, Geneva) on the theme Trading Forward: Adapting to a Changing World, is now available.
Updating South Africa trade policy: comments by BUSA in response to the National Treasury's economic strategy document (pdf, Agbiz)
The Policy Paper’s focus on trade and trade policy is important. The promotion of exports and increasing export capacity is critical, as is a smart import strategy. Appraising South Africa’s current trade strategy (last updated in 2012), both in terms of its substantive scope and our strategic partnerships, should be a key priority for government. Although the links between trade and industrial policy are recognised, important gaps seemingly remain. An example of this is that South Africa does not yet have a trade in services strategy. This is alarming given that services are not only important as tradeable (evidenced by the commercial presence established by many South African services suppliers across the African continent) but are also integral to the export of goods. The role of South Africa’s logistics, wholesale and retail distribution suppliers across the continent in taking agricultural and industrial exports to these markets provides ample evidence of these linkages. Services are therefore essential to trade facilitation. Given that more than two-thirds of South Africa’s GDP is accounted for by services, the lack of a trade in services strategy is incomprehensible. Furthermore, the services sectors in the domestic context offers significant opportunities for innovation, diversification and transformation, especially for youth. Services sector development and regulatory reform should therefore be correspondingly high on the agenda. [Wesgro: Cape Town companies sign export deals worth over R1.8bn; Government to ban foreign business from 'certain sectors']
Kenya: Mombasa port records decline in transit cargo (The East African)
The port of Mombasa recorded a sharp decline in transit cargo destined to Ethiopia, Tanzania and Burundi in the first seven months of the year even as Uganda, Rwanda and DR Congo raised their usage of the Kenyan port, official data has revealed. Goods on transit to Tanzania from Mombasa dropped by 9.4% to 141,000 tonnes in seven months to July this year, with tonnage expected to drop much further with increased usage of the $345m World Bank-funded Dar es Salaam Maritime Gateway Project. Kenya Ports Authority data also shows that Ethiopia, expected to be a key player in the Lamu Port South Sudan Ethiopia Transport (Lapsset) Corridor project, did not use the Kenyan port of Mombasa in the seven months to July, even as next month’s unveiling of the Lamu ports’ first berth draws closer. KPA data showed transit goods to Ethiopia dropped to zero from 1,000 tonnes. Ethiopia’s drop could be attributed to its investment in two of Djibouti’s ports and also usage of Somaliland’s ports. The KPA data shows that Burundi, also a client of the Dar port, is dumping Mombasa as its cargo volumes in the seven months dropped by more than 90% compared with the volumes traded over a similar period last year. Imports to Burundi through Kenya plummeted to 1,000 tonnes compared with a total 21,000 tonnes during the same period last year. Partly helped by friendly relations and continued investments in the Northern Corridor infrastructural development, Uganda, Rwanda, South Sudan and the Democratic Republic of Congo remained bright spots for the Mombasa port.
Tanzania sees 2019/20 cashew nut output up 33% - agriculture minister (Reuters)
Tanzania expects to raise cashew nuts production by 33.5% in the year to September 2020, helped by favourable weather conditions and increased plantings, its agriculture minister said on Saturday. Output in 2019/2020(October-September) is seen reaching 300,000 tonnes, up from the 225,000 tonnes produced in the 2018/2019 season.
African banana producers urge EU to maintain tariffs on Latin American imports (Reuters)
Struggling African banana producers called on the EU on Friday not to cut tariffs on imports from Latin America any further. Exporters in Africa, the Caribbean and Pacific have been losing market share since 2009, when the EU agreed to progressively cut tariffs on bananas from bigger growers in Latin America. That reduced the advantage previously enjoyed by ACP growers in mostly former European colonies, who have tax-free access to European markets, although the EU agreed to provide them around 200 million euros in compensation. At a convention in Abidjan, banana industry representatives from Cameroon, Ivory Coast and Ghana urged the EU not to cut tariffs on Latin American producers below 75 euros/tonne, the rate which will come into effect on Jan. 1, 2020. They cited recent trade discussions between the EU and Colombia, Ecuador and Peru that they fear could lead to even lower tariffs.
Egypt, Switzerland step up partnership to boost textile and clothing exports (ITC)
Egypt’s Ministry of Trade and Industry and the Swiss Confederation have announced the scaling up of collaboration to strengthen the competitiveness of textiles and clothing producers in Egypt. The new initiative – Egypt: Improving the International Competitiveness of the Textile and Clothing Sector – forms part of the three-year Global Textiles and Clothing programme, funded by the Swiss State Secretariat for Economic Affairs, which is being implemented by the ITC. The new project aims to support Egypt to build a sustainable export-oriented sector with increased sales to traditional and new markets, with a focus on creating long-term and sustainable employment, particularly for women and young people.
Nigeria EPC: 30% of Nigerian exports don’t meet packaging standard (ThisDay)
As stakeholders in the manufacturing sector intensify efforts to push more Nigerian products beyond the shore of the country, the Nigeria Export Promotion Council, has identified poor packaging and labelling as major stumbling blocks to Nigeria’s products exported overseas, especially to the United States. The director, business development at NEPC, Mr Wiliam Eze, who delivered a keynote address at the 2019 Packaging, Plastics, Food Processing, Labelling and Print Exhibition in West Africa in Lagos, said some Made-in-Nigeria products are faced with poor packaging which results in rejection. According to him, a recent report revealed that 30% of Nigeria’s exports to the US are rejected as a result of poor packaging and labelling, not quality of the products.
Nigeria: No going back on aggressive tax drive, FG insists (ThisDay)
The Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, has said there is no going back on the federal government’s determination to increase public revenue through intensified tax collection. This is coming as the Tax Leader, PwC, Mr. Taiwo Oyedele, has raised the alarm that Nigeria’s tax system contains 354 different taxes, stressing that these multiple taxations do not allow businesses to thrive. Speaking during the Lagos Chamber of Commerce 2019 Presidential Policy Dialogue on the Economy, held in Lagos at the weekend, Adebayo, said those expecting the government to reduce taxes and at the same time increase revenue to meet its responsibilities to the country should come and show the government how to perform the magic. [The challenge before the new Advisory Council]
SADC Ministers responsible for ICT, Public Information, Transport & Meteorology: statement from Dar es Salaam meeting (19-20 September)
The High Level Ministerial Round, on the theme, “Emerging Technologies to Support SADC Regional Integration and Sustainable Industrial Development”, provided a platform for an interactive discussion on high impact infrastructure projects and technology-related-priority issues that the region need to immediately address. In the ICT and Information Sectors, the Ministers approved the Multi-Stakeholder Intra-regional and Trade Facilitation Project which is aimed at promoting and facilitating the participation of SMMEs in the regional e-commerce ecosystem. In the transport sector, the Ministers reviewed progress on the implementation of SADC Regional Infrastructure Development Master Plan and noted the completion of critical infrastructure such as the opening of the new Walvis Bay Container Terminal in Namibia, and associated Dry Ports, rehabilitation and upgrading of critical sections of the Regional Trunk Road Networks in most regional corridors and the One Stop Border Posts at Kazungula which links Botswana and Zambia, the Nakonde/Tunduma which links the United Republic of Tanzania and Zambia and the Mwami/Mchinji which links Zambia and Malawi. The Ministers further noted:
Communiqué of the second IGAD Inter-Ministerial stocktaking meeting on the Nairobi Declaration and Action Plan
UNECA partners ECOWAS towards the development of post-2020 Vision
1000 Chinese companies to attend Lagos International Trade Fair in November
UNCTAD Research Paper: Fish and fisheries products - from subsidies to non-tariff measures
Ahead of UN summit: Leading scientists warn climate change ‘hitting harder and sooner’ than forecast
UN Climate Action Summit: Banks worth $47 trillion adopt new UN-backed climate, sustainability principles
UNCTAD's Deputy Secretary-General Isabelle Durant: World needs fairer and more sustainable trade, not less trade
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Keynote African trade policy discussions yesterday in Kampala:
(i) African Union Sub-Committee of Directors General of Customs: The entry into force of the Agreement establishing the AfCFTA - implications for African Customs Administrations
(ii) Mid-term review of Afreximbank's Fifth Strategic Plan, IMPACT 2021: Africa Transformed. @AmbMuchanga discussed the status of AfCFTA implementation and the role Afreximbank could further play in supporting AU member states in implementing the AfCFTA.
(iii) @AmbMuchanga also met the leadership of the East African Business Council. Discussions covered an enhanced role for the private sector in the implementation of the AfCFTA and BIAT Action Plan and the establishment of the African Business Council.
(iv) Afreximbank President visits Uganda finance minister. President Oramah is in Kampala for a series of activities by Afreximbank, including a three-day retreat for the mid-term review of its Fifth Strategic Plan; the quarterly meeting of the Bank’s Board of Directors (18 September); and the signing of the hosting agreement for the East Africa Regional Office (scheduled for 20 September).
Next week, in Malabo: Programme for Infrastructure Development in Africa: second policy dialogue (24-26 September)
The main objective of this second policy dialogue is to provide a platform for member states to create synergies between the different implementing institutions, regional and continental stakeholders. More specifically, the dialogue aims to sensitize stakeholders on the state of PIDA implementation, on the development process of the next phase of PIDA PAP (2021-2030, more particularly on how to formulate a continental strategy for resource mobilisation for the preparation and implementation of priority projects.
Expected outcomes include: Establishment of national coordination teams of PIDA at national and regional levels; Definition of a roadmap for the implementation of PIDA projects at national level; Definition of modalities for financial contributions from Member States to the Special Fund of NEPAD IPPF and the PIDA Service Delivery Mechanism; Promotion of the revised 2010 African Charter on Maritime Transport; Valorisation of the maritime sector in the implementation of the PIDA PAP 2; Validation of the strategy for unlocking access to rural and remote areas with basic integrated infrastructure; First recommendations for the Selection Criteria for PIDA PAP 2 and the PIDA Corridor Approach. [Downloads: Concept note, Draft agenda]
Diarise: African Private Sector Forum (6-8 November 2019, Antananarivo)
The main objective of the African Union's 11th Private Sector Forum is to strengthen the role of the private sector in Africa as an engine of growth while capitalizing on the experiences and lessons learned from other parts of the world for the transformation of African economies and achievement of the aspirations of Agenda 2063 and Agenda 2030. [Download the concept note (pdf)]
SADC Regional Gas Master Planning RFP (SADC)
During the 38th SADC Summit of Heads of State and Government held in Windhoek in August 2018, the SADC Secretariat was directed to operationalise the Regional Gas Committee and to develop the Regional Gas Master Plan. The SADC Secretariat has secured funding from the Development Bank of Southern Africa to secure the services of a reputable and well experienced service provider to undertake a study over a five-month period (November 2019 to April 2020). Given the complexities of the natural gas sector and the imperative to build consensus at national and regional level with regards to the role and future of natural gas in the region, we have resolved to develop the Regional Gas Master Plan in two phases: Defining the Conceptual and Policy Framework (focused on investigating natural gas supply and demand dynamics), Master Planning (Visioning and Mapping the Strategic Location of Natural Gas Based Industries/Projects) and Final Master Plan and Investment Blueprint. This study aims to equip public and private sector decision-makers/executives with independent and objective information about the comparative social and economic impacts of the various possible uses of natural gas. [Note: Closing date for the RFP is 8 October 2019 (pdf)]
Promoting SME Competitiveness in Kenya (Intracen)
Small and medium-sized enterprises in Kenya are an underexploited resource with significant potential to boost inclusive growth. Drawing on data from the SME Competitiveness Survey, this report finds that even though Kenyan companies organize their production processes professionally and have a supportive business ecosystem, targeted solutions could help address shortcomings in specific areas of competitiveness. Certification and finance institutions need innovative ways to reach out to small companies, as well as women- and youth-led firms. There are acute shortages of skilled labour in the southern part of Kenya. Costly logistics services are of particular concern to agri-food companies. The Kenyan SMECS was a national firm-level survey. To facilitate the collection of data across the country, 125 to 250 companies were to be surveyed from each region of Kenya. Data on firms operating in the primary (i.e. agriculture and mining), manufacturing and services sectors were to be collected in roughly equal proportions for each region. To the extent possible, each subsector was to be composed of exporting and non-exporting firms. KNCCI conducted the SME Competitiveness Survey, gathering data from 893 enterprises in 23 counties in Kenya between 2017 and 2018.
South Africa: Ramaphosa wants to clamp down on fake goods – here's why that may be nearly impossible (Business Insider)
President Cyril Ramaphosa has acknowledged that illegal counterfeit goods are strangling the local economy – and pledged that government will do more to clamp down on illegal imports of these products. But that may be nearly impossible, best-guess expert estimates of the scale of the problem suggest. Perhaps 2% of the thousands of containers that arrive in Durban's harbour every day are scanned for illegal items, estimates Amanda Lotheringen, senior manager of copyright and intellectual-property enforcement for the Companies and Intellectual Property Commission. [Ramaphosa: Government dealing with illegal immigration; Tove van Lennep: The state of SA's borders; Policy recommendations for the South African migration regime]
Nigeria: CBN's Emefiele says border closure positive for economy (ThisDay)
The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele yesterday expressed appreciation to the federal government for the recent border closure, noting that it had yielded positive results for the economy, particularly agriculture. Speaking at a crucial meeting with state governors on how to collaborate towards making their respective states economically viable through agriculture, at the CBN headquarters in Abuja, he said though the apex bank had tried its best to curtail smuggling of rice by blocking bank accounts, the closure of the borders had proved to be a game-changer. He said: “Our story in rice production has yielded positive results. At this point it really fit to thank and commend the federal government for the border closure. Whereas at the CBN we have been doing everything possible through blocking of accounts and all that to restrict smuggling of rice into the country, but we think the border closure has resulted in very good result for all of us and I will give you an example.”
According to Emefiele, prior to the closure, about two rice millers had approached him “and said they had about 30,000 metric tonnes each. All of these had large quantities of processed rice in their warehouses that they needed to be purchased but they were not being purchased because of the incidence of smuggling. One week after the border was closed, these millers came back and said that all the rice in their warehouses had all been purchased and that in fact, they were even stopping people from paying monies into their accounts because they can’t meet demand again. That is a good example. What are we doing through this – it is creating jobs for our people. We need to support any efforts that would create jobs and avoid exporting jobs to other countries.” [Related: Border Communities Development Agency strategizes on tackling Nigeria’s security challenges; NIS unveils National Border Management Strategy 2019-2023]
No commercial shipping on Zambezi, insists Mozambique (Club of Mozambique)
The Mozambican government has once again rejected calls from Malawi to allow commercial shipping along the Zambezi River. Last Sunday, Malawian President Peter Mutharika told reporters that he is awaiting the go-ahead from the Mozambican authorities to begin use of the Nsanje inland port which Malawi built on its side of the Shire River, the main tributary of the Zambezi. Speaking at Nsanje, Mutharika claimed that his government is in discussions with the Mozambican authorities, and as soon as it receives the expected authorisation from Mozambique, it would push ahead with building those facilities which are still lacking at the port. But the Mozambican Transport Ministry has denied that there are any talks with Malawi. Cited in Thursday’s issue of the Maputo daily “Noticias”, Horacio Parquinio, head of the Bilateral Cooperation Department in the Transport Ministry, said: “In a recent meeting on the Nacala Corridor, they wanted to bring the question of Nsanje port to the negotiating table. We, the Mozambican delegation, made them understand that this was not a matter up for discussion, and the question was withdrawn from the agenda”.
Second International Convention on Sustainable Trade and Standards (UNCTAD)
Sustainability standards can support trade and spur economic growth, while promoting environmental protection and inclusive social development, said UNCTAD’s Santiago Fernández-de-Córdoba, coordinator of the UN Forum on Sustainability Standards. It co-hosted the convention, 16-18 in Rio de Janeiro, in conjunction with the Brazilian National Institute of Metrology, Quality and Technology and the Federation of Industries of the State of Rio de Janeiro. “Consumer demand for sustainable products continues to increase,” Mr. Fernández-de-Córdoba said, underscoring the significance of sustainability standards as a tool for sustainable development and market access. He said world markets currently boast about 500 sustainability standards, excluding those considered to be traditional, and added that certified sustainable production of crops such as coffee and cocoa has grown year after year to 26% and 23% of world production respectively. [Download the concept note, pdf)
The keynote presentations for the Asia-Pacific Trade Facilitation Forum 2019 (17-18 September, New Delhi) are available for download. Downloads from the following profiled side events are also available:
(i) Making trade facilitation happen through Public-Private Partnerships: role of national trade facilitation committees
(ii) OECD-ESCAP workshop: Helping SMEs internationalise through trade facilitation
(iii) APTFF capacity building workshop: Cross-border paperless trade facilitation
Djibouti: ITFC signs $600m agreement for trade financing
Malawi needs to ratify the AfCFTA as soon as possible says Ministry of Industry, Trade and Tourism
Ethiopia made $183.57m in two months from coffee exports
India to launch National Logistics Policy
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PwC's The Africa Business Agenda 2019: Kenya is top destination for companies seeking expansion in Africa
The study by global audit firm PwC, conducted among chief executives around Africa also shows that the business leaders are doubtful of making growth plans outside the continent. Kenya ranked above China, UK, France and India. The US topped this list, beating Kenya by only one per cent. Dubbed the Africa Business Agenda Playing It Safe 2019, the survey ranked South Africa as the least important territory with confidence by African CEOs on the country falling sharply from 16% in 2017 to 5% in 2018. The report projects optimism on increased intra-Africa trade, boosted especially by the AfCFTA recently signed by almost all states. This is even as the CEOs’ confidence about the growth of their own companies dipped from 79% in 2018 to 77% this year.
The Gambia and the AfCFTA: "Barriers to trade continue to limit growth". The Minister of Trade, Industry, Regional Integration and Employment, Lamin Jobe, has disclosed that barriers to trade will continue to limit the growth of trade throughout regional groupings by imposing unnecessary cost on exporters. He added that these barriers raise prices for consumers. Minister Jobe made these remarks at a two-day workshop on the ACFTA organised by the Ministry of Trade Industry, Regional Integration and Employment in collaboration with the Division for Sustainable Development Goals of UNDESA and UNDP. Speaking at the event, Edrissa Mass Jobe, the president of GCCI, said that for The Gambia, the ACFTA, like ECOWAS before, “is purely a Senegambia problem as we have only one neighbour in Africa”.
Nigeria's internal consultations towards the ratification of the AfCFTA continued this week. The third stakeholders meeting on the Nigerian Draft Schedule of Specific Commitment on Trade in Services for the AfCFTA was held earlier this week. The meeting was hosted by the Nigerian Coalition of Services Industry (NCSI), in collaboration with the Nigerian Office for Trade Negotiations and chaired by Mrs Irene Robinson-Ayanwale, NSCI co-chair NCSI. The main objective of NCSI is to serve as a lobby group for Nigeria's services industry.
Mozambican employers' association urges SADC to act against xenophobia in South Africa (Xinhua)
The Confederation of Mozambican Economic Associations (CTA) has urged SADC to step in and play its role in defense of the region's free circulation of people and goods from the xenophobic violence in South Africa. Eduardo Sengo, Executive Director of CTA, the country's largest employers' organization, told reporters that it was SADC that had approved the free circulation of people and goods, "so it's important for SADC to act and not leave member states to react individually as we saw." The CTA representative said that cargo transportation between Mozambique and South Africa is resuming but there is still fear among the vendors. He said that there is some uncertainty in terms of business relations and the private sector demands safety guarantees from the government.
Great Lakes Region Private Sector Forum has new leadership (Business Daily)
Kenya National Chamber of Commerce and Industry President Richard Ngatia was Wednesday elected to chair the 12-nation trade body with a focus on easing restrictions on cross-border trade. He takes over from Laurent Yogo of the DRC who headed the lobby group on an interim basis. Mr Ngatia, who will head the Great Lakes Region Private Sector Forum for two years, said he is keen to lobby governments to ease cross-border movement of goods. “My priority, first of all, is markets, to instil corporate governance within the 12 countries in the region to provide a conducive environment and to make sure we increase the stability within our borders so that we can conduct businesses,” said Mr Ngatia who was in May confirmed unopposed as KNCCI President. The 12-nation regional lobby group comprises Kenya, Tanzania, Uganda, DRC, Burundi, Central African Republic, Angola, Sudan, Zambia, South Sudan, Rwanda and Congo Brazzaville.
Kenya calls on African labour organizations to champion continental integration
Kenya’s President Uhuru Kenyatta yesterday challenged African labour organizations to play a leading role in the ongoing efforts towards the full integration of the continent. Kenyatta asked the leadership of the labour organizations to help build bridges of unity and pan-Africanism, saying that is the surest path to national and continental peace and prosperity. “As we usher in the AfCFTA under the auspices of the African Union, we must begin laying the groundwork for even closer cooperation and integration in Africa,” Kenyatta said. Kenyatta spoke in Nairobi when he presided over the official opening of the 42nd General Council of the Organization of Africa Trade Union Unity meeting attended by 73 affiliate unions representing all the 54 African countries. He asked African labour organizations to be at the forefront in advocating for the free movement of goods, persons, labour and capital across the entire African continent saying, “this free movement within Africa was a large part of the dream that informed the formation of Organization of African Trade Union Unity in the year 1973; and it should not be forgotten.”
Aviation holds the key to unlock Kenya’s economy, says IATA (International Airport Review)
IATA has presented its latest study on the economic value of air transport and tourism to Kenya at the IATA Regional Aviation Forum in Nairobi and identified opportunities for significant expansion over the next 20 years if key investments in infrastructure and policy reforms are made. In 2017, over 4.7 million passenger journeys were made to Kenya, with aviation and tourism representing $3.2n in GDP. It accounts for 4.6% of Kenya’s GDP and supports 410,000 jobs. Over the next 20 years the Kenyan market could more than double in size, resulting in an additional 11.3 million passenger journeys, over 449,000 more jobs and a $11.3bn boost to GDP by 2037. IATA identified four areas where government action can promote aviation’s growth and bring even more value to Kenya:
Tanzania: August Monthly Economic Review (pdf, BoT)
The overall balance of payments was a deficit of $1,158.4 million in the year ending July 2019 compared to a surplus of $343.3 million in the corresponding period in 2018. This was on account of widening of current account to a deficit of $2,316.5 million from a deficit of $1,849.1 million, owing to increase in imports of goods and a decline in official current transfers (Table 5.1). Nonetheless, the current account deficit remained favourable at around 3.8% of GDP. Exports of goods and services improved to $8,594.5 million in the year ending July 2019 from $8,534.6 million in the year ending July 2018, driven by services and non-traditional goods. Imports of goods and services increased to $10,473.5 million from $9,896.5 million in the year ending July 2018 on account of goods imports. [Tanzania exports and imports rise]
NTBs derail Uganda-Tanzania trade. Speaking during the first Uganda-Tanzania Business Forum held in Tanzania earlier this month, Tanzania’s President John Pombe Magufuli, wondered why trade between the two countries is disturbingly regressing irrespective of what he describes as the “common bond” and history of the two countries. “But how come we have more than 500 companies from Kenya that are operating here and only about 22 companies are from Uganda?”
Selected commentaries on President Muhammadu Buhari's Economic Advisory Council, constituted earlier this week
(i) The President's Economic Men: understanding the next phase of economic management. So far, the best likely outcome of the Presidency's move to institute an economic advisory council is to rebuild confidence in the economic decision making process, but whether this is enough to turn the economic fortunes of the country around is as certain as asking whether Brexit will lead Britain to an economic tailspin. The answer, to the best of anybody's knowledge, is blowing in the wind. As members of the President's economic team the erstwhile economic outsiders will now have a view from the inside, giving them a better nuanced appreciation of the economic challenges and the delicate political balance that constrain policy actions. The deeper understanding of the present difficulties in policy formulation and execution will give team members the opportunity to be creative and assertive in a new, hopefully, different policy direction. The economic experts will need to evolve tactics and strategies to do the following:
(ii) BusinessDay: New economic council must be more than a political chess game. Which brings us to the next question: what, practically, will the Economic Advisory Council do? It would also appear that the creation of this advisory council puts an end to the existence of the Economic Management Team. For clarity, the Economic Management Team, chaired by Vice President Yemi Osinbajo, has membership from across government and comprises the ministers of finance, budget, industry and trade and includes core economic parastatals like the Central Bank of Nigeria, Budget Office of the Federation, the Debt Management Office and the Investment Promotion Council. It also has representation from the Office of the Chief of Staff. The EMT holds weekly technical sessions to ventilate economic issues, develop policy which is then referred to the Federal Executive Council. Policy issues discussed and addressed by the EMT include tax policy, developing the National Trading Platform to improve revenue at the ports, trade policy and the establishment of the Nigerian Office for Trade Negotiations.
(iii) The Africa Report: The politics behind Buhari’s new economic team. With such a superstar team being assembled, there are fears that an ideological clash between the president and his economic team may not be too far off. “The bulk of Buhari’s economic advisory council are free-market capitalists”, says Cheta Nwanze, head of research at sociopolitical risk advisory firm, SBM Intelligence. “But will he listen to their advice, which is definitely going to go against his instincts?”
(iv) Manufacturers Association of Nigeria Director General, Mr Segun Ajayi-Kadir: “The beauty of this team, apart from the members’ pedigree, is its composition of private sector citizens who we believe will operate independently and effectively. The team we believe will not be shackled with the bureaucracy of government and hopefully the political interference and correctness of our clime. They are more likely to be receptive to a wide range of opinions and innovations, even if deferring from the norm.” [Premium Times: Emir of Kano lauds Buhari’s Economic Advisory Council]
Dr Nonso Ibikili: Shut the borders! There is too much rice in the land (BusinessDay)
Since the Lagos ports turned into the stuff of nightmares, the port at Cotonou has served as a viable alternative for people to import or export legally and easily. Let us also not forget that trade with Togo and Ghana and large swathes of West Africa also pass through those borders. What are the costs of effectively shutting down cross-border economic activity? Are those costs higher than the perceived benefits from trying to stop rice imports? I say “trying” because the border between Niger and Benin Republic is over 700 kilometres, and hundreds of border posts along the way; some official and some unofficial. As long as the rest of the world is able to produce rice, ship it halfway around the world and have it arrive at the Benin borders at half the price the same rice sells in Nigeria, there will be smuggling.
Somalia: IMF staff complete first review under the staff-monitored programme
Economic growth is projected to remain broadly stable at 2.9% in 2019. Inflation is projected to increase temporarily to 4.0% in 2019 due to higher food prices as a result of poor rainfall earlier in the year. Key risks to the outlook continue to reflect the difficult security situation and vulnerability to climate shocks. IMF staff welcomes the authorities’ ongoing commitment to reform under SMPIV. All the structural benchmarks for the first review - that is the reform measures critical for achieving the goals of SMP IV - have been met, and, although risks remain, progress is being made towards meeting those set for the second review. The fiscal policy framework continues to strengthen, with domestic revenue mobilization in the year to July 2019 exceeding the target set in the program.
UNDESA: International Migrant Stock 2019
The number of international migrants globally reached an estimated 272 million in 2019, an increase of 51 million since 2010. Currently, international migrants comprise 3.5 of the global population, compared to 2.8% in the year 2000, according to new estimates released by the UN today. The International Migrant Stock 2019, a dataset released by the Population Division of the UN Department of Economic and Social Affairs, provides the latest estimates of the number of international migrants by age, sex and origin for all countries and areas of the world. At the country level, about half of all international migrants reside in just 10 countries, with the USA hosting the largest number of international migrants (51 million), equal to about 19% of the world’s total. Germany and Saudi Arabia host the second and third largest numbers of migrants (13 million each), followed by the Russian Federation (12 million), the United Kingdom (10 million), the United Arab Emirates (9 million), France, Canada and Australia (around 8 million each) and Italy (6 million). Concerning their place of birth, one-third of all international migrants originate from only ten countries, with India as the lead country of origin, accounting for about 18 million persons living abroad. A majority of international migrants in sub-Saharan Africa (89%), Eastern and South-Eastern Asia (83%), Latin America and the Caribbean (73%), and Central and Southern Asia (63 %) originated from the region in which they reside. By contrast, most of the international migrants that lived in Northern America (98%), Oceania (88%) and Northern Africa and Western Asia (59%) were born outside their region of residence. [OECD International Migration Outlook 2019: Humanitarian migration falls while labour and family migration rises]
Uganda’s tourist arrivals grew by 7.4% in 2018, foreign exchange earnings by 10.1%
Rwanda steps into Africa's apparel sourcing mix
EAC keeps Europe guessing two months to crucial meeting on EPA
Minister orders Nigerian agencies to begin ISO standard certification to improve cybersecurity
BloombergQuint: Attacks in South Africa slow region's free-trade pursuits
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ESAAMLG from Arusha to Ezulwini: Looking back and looking ahead (ESAAMLG)
The report, ESAAMLG from Arusha to Ezulwini (1999-2019): Looking back and looking ahead (pdf), appropriately describes the long journey our Group, as well as the region covered by the Eastern and Southern Africa AntiMoney Laundering Group (ESAAMLG), have travelled over past 20 years. With 18 member countries and growing, this is quite a leap from the initial nine signatories at the launch in Arusha, Tanzania, in August 1999. Current member countries of ESAAMLG are: Angola, Botswana, Eswatini, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. Mention should also be made of the State of Eritrea, which will have an observer status in the Group at the September 2019 meeting and likely to join ESAAMLG as a full member after wards. By signing the ESAAMLG Memorandum of Understanding, member countries endorsed the 40 Recommendations of the Financial Action Task Force (FATF) and affirmed the commitment to implement the international standards to combat money laundering and the financing of terrorism and proliferation at a national level.
Neal Rijkenberg, Eswatini's Minister for Finance: The Kingdom of Eswatini is most delighted to host the 38th ESAAMLG Task Force of Senior Officials and the 19th Council of Ministers meetings in Ezulwini (1-6 September 2019). The participation of distinguished delegations from all the 18 member countries will reaffirm the commitment of the Group to fight money laundering and terrorist and proliferation financing in the Eastern and Southern African Region. This was a loud and clear political statement in support of the ESAAMLG and what it stands for. The Kingdom of Eswatini is honored to take over the Presidency of ESAAMLG at this point in time.
ESAAMLG's mutual evaluation reports: Zambia (June 2019), Zimbabwe (April 2019), Mauritius (April 2019), Botswana (April 2019). Other ESAAMLG reports can be accessed here. [Mauritius compliant to FATF recommendations, states Minister Sesungkur]
The pharmaceutical industry in Sub-Saharan Africa: A guide for promoting pharmaceutical production in Africa (UNIDO)
There is now a wide-ranging consensus that local pharmaceutical production in sub-Saharan Africa in close proximity to where medicines are needed can reduce dependence and improve health outcomes for the population. Many African governments, regional economic communities and the African Union have recognized the need for active support to the development of the sector if these benefits are to be realized. However, concrete action on the ground has remained hesitant and piecemeal to date. This document contains advice for government policy makers, the private sector especially pharmaceutical manufacturers in sub-Saharan African countries, development partners and (development) finance institutions on how to promote pharmaceutical production. The guide focuses on the key areas competitiveness, market access, technology and access to finance. It further proposes a path of how governments could embark on and steer a policy development process as well as giving guidance on policy interventions. The document especially emphasizes the interconnectedness of key intervention areas and recommends that promotional measures from key areas should be combined to increase impact.
Lesotho: How a foreign investor rattled a tiny African kingdom’s economy (BloombergQuint)
Communications Minister Thesele Maseribane, who also leads a party in Lesotho’s ruling coalition, says Shi is one of the few foreign investors in the country and needs to be “protected.” He also says that having the wool sold by a company based in Lesotho is “good policy” because it would lead to more tax revenue and greater employment. Shi’s Lesotho Wool Centre, a few miles from Seqhee’s farm, consists of a 108,000-square-foot warehouse eerily empty but for a few bales of wool in one corner and a pile of mohair bales in another. There’s little visible equipment and few workers.
Malawi: IMF statement following Staff visit (IMF)
Malawi’s recent economic performance has been favorable despite the impact of Cyclone Idai. Economic growth is expected to strengthen to about 4.5% in 2019 supported by a rebound in agriculture in most of the country and reconstruction of infrastructure that was damaged by the cyclone in the southern region. Over the medium-term, growth could rise further to 6-7%, backed by greater access to finance, crop diversification, an improved business climate, and more resilient infrastructure, including improved electricity generation. Inflation is expected to remain in single digits and gradually converge to 5% over the medium term. Performance under the program has been good. All but one of the quantitative performance criteria (QPC) for end-June were met.
A suite of recent IFC, World Bank reports in their Creating Markets Country Private Sector Diagnostics series:
Creating Markets in Burkina Faso
Global trade protection and the role of non‑tariff barriers (Vox)
Since the inauguration of Donald Trump as the president of the US, the world has observed an unprecedented rise in border tariffs. This column shows that trade protection had in fact started much earlier, in the form of non-tariff barriers. An empirical analysis reveals that the average trade dampening effect of such barriers is comparable to that of trade defence instruments such as anti-dumping duties. However, this negative effect can be mitigated by free trade agreements. [The authors: Luisa Kinzius, Alexander Sandkamp, Erdal Yalcin]
Reinstate preferential trade treatment for India: 44 US lawmakers tell Trump administration (Scroll)
A group of 44 US lawmakers on Tuesday urged the Donald Trump administration to reinstate preferential trade treatment for India under the Generalized System of Preferences programme. The United States government had terminated the designation of India as a beneficiary developing country under the programme in June, claiming that India had not assured the US that it will “provide equitable and reasonable access to its markets”. Members of the US Congress, in a letter to US Trade Representative Robert Lighthizer, said the costs of the GSP termination were real for their constituents and only growing every day.
How India fares against other emerging markets (Mint)
As India’s economic momentum continues to slow, one key investor concern relates to India’s attractiveness vis-a-vis other emerging markets. Given India’s relatively high dependence on volatile portfolio flows to fund its chronic balance-of-payments deficit, this is also a big macro-economic concern. If foreign investors view other markets more favourably, this could trigger outflows from Asia’s third largest economy. If India is better placed compared to other emerging markets, this could attract more investments. Starting this month, Mint will track seven high-frequency indicators across ten large emerging markets to make sense of India’s relative position in the emerging markets league tables. The selection of the emerging markets is based on the International Monetary Fund (IMF) classification of emerging and developing economies. The ten emerging markets selected were the largest economies in this group for which consistent and comparable time series data were available.
India: Export promotion councils chalk out strategy to meet targets (The Hindu)
In line with the Union Commerce Ministry’s target to triple India’s exports from $331 billion to $1 trillion in five years, export promotion councils have chalked out plans to achieve the same. “This means almost doubling exports of the sector in the next five years,” said R. Veeramani, president, Capexil. Capexil promotes the shipments of chemical and alliedproducts that contribute more than 7% of India’s total merchandise exports. “The export target fixed for Capexil products is $25.57 billion for the year 2019-20, which marks a substantial growth compared to $ 22.24 billion in 2017-18,” he said.
World manufacturing production statistics for Quarter II, 2019 (pdf, UNIDO)
World manufacturing production growth is expected to slow down in 2019 as a result of continued conflict over trade and tariffs between the world’s two largest manufacturers: China and the United States. Manufactured goods account for more than 80.0% of the total merchandise exports of both countries. Against the backdrop of falling global merchandise trade, the growth of world manufacturing value added is — according to the latest estimates — expected to drop to 2.7% in 2019, following 3.2% in 2018. The pace of MVA growth has been slowing down both in the United States and China. While annual growth in the United States is likely to drop to 1.9% in 2019, following a rate of 3.0% in 2018, China’s manufacturing growth is also expected to fall to 5.6% from 6.1% in 2018. Trade and tariff frictions between the United States and Europe are also taking its toll. US restrictions on the import of several manufactured goods, compounded by uncertainties over Brexit, are contributing to a downturn in European manufacturing, which is expected to grow at slightly less than 1.0% in 2019. Growth in East Asia is expected to be moderate, at a rate of 1.6%. The overall growth of industrialized economies for 2019 is expected to drop to 1.3% from 2.1%in 2018.
Developing and emerging industrial economies (excl. China) are expected to achieve a slightly higher growth in 2019 at around 3.0% compared to 2.7 in 2018. This can be to some extent attributed to the improving situation in Latin America where negative growth is expected to ease to -0.9% in 2019 from -2.8% in 2018. The fast growing economies of Asia account for most of the developing countries’ growth. MVA is expected to rise by 8.2% in India and 5.6% in Indonesia. Least developed countries are expected to improve their production performance with a growth at 7.1% compared to 5.9%in 2018. Compared to the second quarter of the previous year, growth estimates based on limited data for African countries generally indicated a rise in manufacturing output of 2.0%. Among others, Egypt’s and South Africa’s manufacturing output expanded by 2.2 and 0.9%respectively.
Harvesting prosperity: Technology and productivity growth in agriculture (World Bank)
Developing countries need to dramatically increase agricultural innovation and the use of technology by farmers, to eliminate poverty, meet the rising demand for food, and cope with the adverse effects of climate change, says a new World Bank report released this week. The report (pdf) examines the drivers and constraints to agricultural productivity and provides pragmatic policy advice. It notes that while in East Asia, crop yields have increased six-fold in the past four decades, contributing to the dramatic reduction in poverty in China and other East Asian countries, it has only doubled in Sub-Saharan Africa and parts of South Asia, with corresponding disappointing reductions in poverty. However, the world is facing a widening research and development (R&D) spending gap, even as government funding for agriculture is reaching new heights. In developed countries, investment in agricultural R&D was equivalent to 3.25% of agricultural GDP in 2011, compared with 0.52% in developing counties. Among the latter group, Brazil and China invested relatively high amounts into agricultural R&D, while Africa and South Asia had the lowest spending relative to agricultural GDP. In fact, in half of African countries, R&D spending is actually declining.
Innovative China: New drivers of growth (World Bank)
China needs to foster new drivers of growth to address productivity challenges, intensify reforms and promote greater innovation in the economy, according to a new report jointly released by China’s Development Research Center of the State Council, China’s Ministry of Finance and the World Bank Group. The new report proposes that China address its productivity challenges by promoting the “three Ds” – removing distortions in the allocation of resources in the economy, accelerating diffusion of existing advanced technologies and innovations, and fostering discovery of new technologies, products, and processes so as to expand China’s productivity frontier. The report develops recommendations in seven areas to promote the “three Ds”.
Vietnam: New study offers pathways to climate-smart transport (World Bank)
A two-volume study laying out a pathway to a low-carbon and climate-resilient transport sector in Vietnam was released at a workshop on Addressing Climate Change in Transport, held in Hanoi yesterday. This analytical work comes at a critical time when the Government of Vietnam is updating its Nationally Determined Contribution on reducing carbon emissions and set out its next medium-term public investment plan for 2021-2025. The first volume demonstrates that by employing a mix of diverse policies and investments, Vietnam can reduce its carbon emissions in the transport sector up to 9 percent with only domestic resources by 2030, and 15-20% by mobilizing international support and private sector participation. The second volume provides a methodological framework to analyze critical and vulnerable points of the transport network, and presents a strong economic case for investing in building the climate resilience of Vietnam’s transport networks.
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Underway, in Moscow: VI BRICS International Competition Conference
Diarise: The JSE SA Trade Connect (22-23 October, Johannesburg)
AfCFTA updates
from Cape Town, Nairobi, Kinshasa, Lagos
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AfCFTA under the spotlight at ISO assembly. Support for the AfCFTA agreement formed part of discussions at the 42nd General Assembly of the International Organization for Standardization (ISO), currently underway in Cape Town. “It is expected that with the reduced barriers to trade, the growth in intra-Africa trade, of an estimated $2 trillion, will be traded internally within the next year,” said the South African Bureau of Standards. Speaking on the first day of the gathering, SABS acting CEO, Garth Strachan, said standards bodies across the region should develop common systems and standards that sustainably support social, economic, trade and industrial integration. “For South Africa, the benefits of enhanced access to regional markets could significantly boost our economy, ignite industrialisation and foster regional harmony. The opportunities for capacity building, job creation, sharing of resources and technologies could be the elixir for our economic challenges.”
SABS statement: African standards for Africa – regional harmonisation. This was first meeting of African standards bodies outside of an ARSO engagement. Hermogène Nsengimana, secretary general of ARSO: “The development and harmonisation of African standards and best practices must serve the needs of African member countries and that of the region. The harmonisation of technical regulations, standards, conformity assessment procedures, enforcement protocols and a dispute settlement process need to support the African free trade agreement. African standards bodies have an important role to play in developing their nations to become active and inclusive members of this new regional market, through the promotion of standards to ensure that maximum benefits can be derived.”
ECOWAS WAQSP update: The EU says it has provided development assistance of over €1bn to support the standardisation of goods and services produced in ECOWAS countries to ensure that goods produced within the sub-region met the global market standard, particularly for Europe and the Americas. The EU Project Manager for the West Africa Quality Systems programme, Mr Frank Okafor, gave the amount at the extended meeting of the steering committee of the WAQSP. The objective of the meeting was to assess the progress of countries for certification purposes.
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Kenya’s AfCFTA strategy. Andrew Mold, Acting Director of ECA in Eastern Africa, explained the ambitious nature of the AfCFTA, saying that AfCFTA is not, as its name denotes, simply a ‘free trade area’: “It encompasses ambitions to proceed to a single unified continental market, with a lot of implications for business – whether that is on investment, on competition, on intellectual property, or free movement.” Gladys Kinyuah, the Deputy Director for International Trade in the Kenya Ministry of Industry, Trade and Cooperatives, clarified that in 2018 Kenyan trade with the rest of the continent accounted for 38% of exports and just 11.6% of imports. Ahmed Farah, the Kenya Country Director of TradeMark East Africa, stressed the need to look at the bigger picture, including the handling of existing regional agreements, like the Tripartite between COMESA, SADC and EAC, as fundamental building blocks towards the completion of the AfCFTA.
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DRC conducts national consultation on the AfCFTA. The two-day forum, starting today in Kinshasa, will provide information to representatives of government agencies, the private sector, civil society and academia about the expected effects of the AfCFTA, and will shed light on the strategic orientations envisaged by the Congolese government in its implementation. [Note: The DRC signed the Agreement establishing the AfCFTA in March 2018 but has not yet deposited its instruments of ratification with the African Union]
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Nigeria and the AfCFTA: Thriving in a new Africa. This article is the second part (pdf) of a three-part series from PwC. In the first part (pdf), we discussed the current state of intra-African trade, the AfCFTA and its importance, and highlighted businesses that have successfully leveraged regional integration in ASEAN. Since the publication of the first part of this article, Nigeria has joined the CFTA. With Nigeria in the CFTA, Nigerian businesses have direct access to a market of over one billion people. Therefore, they must prepare to take advantage of the new markets that the AfCFTA grants access to. However, the Nigerian market is now directly open to intra-African competition from businesses in countries with comparative advantage. In this part, we discuss the current state of trade in Nigeria, and highlight African countries with businesses with the capacity to compete with Nigerian businesses in the Processed Agriculture, Retail and Trade, and FMCG sectors.
ECOWAS Parliament appeals to Nigeria to reopen borders (The Punch)
The ECOWAS Parliament on Monday appealed to the Nigerian government to reopen its closed borders as it hampers on the implementation of free trade movement within the ECOWAS region. Speaker of the Parliament, Moustapha Cisse Lo, made the call in a statement at the opening of the 2nd Extra Ordinary Session of the ECOWAS Parliament in Monrovia. He added that the border closure poses a threat to the implementation of the Protocol on the Free Movement of Persons at a time when Africa need to intensify efforts for effective abolition of barriers within the Community. Cisse Lo, however, urged the government to find a permanent solution to the challenge of smuggling, rather than closing the borders, which was not a lasting solution. “In the same vein, the closure of the Nigerian borders with Benin more than a month ago and Niger more recently is a hindrance to the achievement of the Community’s main objective, which is to achieve the creation of a prosperous, borderless West African region where peace and harmony prevail. The ECOWAS Parliament calls for compliance with Community provisions and thus calls for the reopening of borders and a coordinated fight against smuggling in the region. The root causes of this recurrent situation must be studied with a view to finding a permanent solution.”
East Africa Business Council engages President Paul Kagame (The Standard)
Rwanda: 2Q updates
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GDP National Accounts (Q2, 219). In the second quarter of 2019, GDP at current market prices was estimated to be Frw 2,255 billion, up from Frw 2,001 billion in Q2 2018. In this quarter, services sector contributed 47% of GDP, agriculture sector contributed 28% of the GDP, Industry sector contributed 17% of the GDP and 8% was attributed to adjustment for taxes and subsidies on products. In this quarter, estimates calculated in 2014 prices show that GDP was 12.2% higher compared to the same quarter of 2018. Agriculture growth was 5% and contributed 1.5 percentage points to overall GDP growth. Industry growth was 21% and contributed 3.6 percentage points to GDP growth. The service sector grew by 12% and contributed 5.7 percentage points to overall GDP growth. The growth in Services sector is due to an increase of 23% in wholesale and retail trade activities of locally made and imported products, 17% in transport services, 13% in financial services, 13% in hotel and restaurant services, 12% in Public Administration, 13% in professional, scientific and technical activities, 11% in administrative and support service activities, and 1% in telecommunication services. [Rwanda records double-digit growth]
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Formal external trade in goods statistics report (Q2, 2019). In the second quarter of 2019, Rwanda’s total trade was $1,073.6 million, an increase of 13.31% over the second quarter of 2018. Exports were $149.26m, imports were $822.6m and re-exports were $101.73m. In this quarter, total domestic exports decreased by 21% when compared to the second quarter of 2018 ($149.26m and $188.93m respectively) but increased by 25.73% when compared to the first quarter of 2019. Total imports of Rwanda increased by 21.09% in the second quarter of 2019 when compared to the same quarter of 2018 ($822.60m and $679.31m respectively) and by 11.17% over the first quarter of 2019. Re-exports, increased by 28.41% in the second quarter of 2019 over the same quarter of 2018 ($101.73m and $79.22m respectively) and also by 28.41% compared to the first quarter of 2019. The top five export destinations were: UAE, Uganda, the DRC, Kenya and Switzerland. They accounted for 64.51% of total value of domestic exports ($96.29m).
Tanzania: Pushing beyond the trade walls to unite nations (The Citizen)
Although some cross border traders are successful, most women who dominate this business are struggling with low education and low value of goods if what was presented at the UN meeting in collaboration with TradeMark East Africa and TWCC on “prospects and challenges for women cross-border traders” on the sideline of last week’s Uganda Tanzania business forum is anything to go by. According to the USAID, some 30-50% of sub-Saharan trade involves cross-border traders who are mostly women. And according to Tanzania Women Chamber of Commerce, 75% of cross-border traders are women. They keep goods and foodstuff moving from one country to the other despite complex obstacles and tough conditions at the border posts they face in the course of their work across the 11 border points in nine regions of Tanzania. Paying heavy customs, being at the mercy of customs officials, sexual harassment, poor basic infrastructure and facilities and weak trade associations are some of the obstacles standing in their way to success. A few Tanzanian women who navigate the borders share their experiences and how they overcome these challenges and calls for removal of these obstacles to facilitate trade while promoting regional integration and reducing marginalization of women.
Tanzania Ports Authority car handling capacity to rise 270% (The Citizen)
The number of vehicles handled by the Tanzania Ports Authority (TPA) annually is set to rise by 268% following completion of the expansion of Berth Two at Dar es Salaam Port. The TPA director general, Mr Deusdedith Kakoko, said in Dar es Salaam yesterday that TPA’s area now has the capacity to handle 600,000 vehicles per year, up from 163,000 vehicles that were handled last year. He was briefing journalists on the ship ‘Grand Duke of Panama’ which docked at Berth Two in Dar es Salaam harbour for the first time since expansion of the berth was completed recently. The Grand Duke of Panama is carrying 1,347 assorted vehicles from Japan and China. Berth Two is one of the eight landing points at Dar es Salaam port. Its expansion was financed by the World Bank through the Dar es Salaam Maritime Gateway Project.
New WTO indicator finds services trade weakening into second half of 2019
World trade in commercial services lost momentum through the second quarter of 2019 according to the WTO’s new Services Trade Barometer (pdf), launched on 16 September. The index’s reading of 98.4 is below the baseline value of 100, suggesting that services trade continued to face strong headwinds leading into the second half of the year. Despite the overall loss of momentum since the start of 2019, services trade has generally held up better than goods trade since the latter is more directly affected by recent trade tensions. The importance of services trade to the global economy will be explored in greater depth in the forthcoming World Trade Report, slated for release on 9 October.
India: Digital platform launched to give single point access to exporters (Herald Globe)
Minister of Commerce and Industry Piyush Goyal and his junior colleague Hardeep Singh Puri on Monday launched a common digital platform for the issuance of electronic certificates of origin (CoOs). “The platform will be a single access point for all FTAs and PTAs. The CoO will be issued electronically, which can be in the paperless format if agreed to by the partner countries,” said Goyal. “We are scheduled to start with the India-Chile PTA,” said Goyal. “Once the partner countries agree to electronic data exchange, the CoOs will be electronically sent to the customs of the partner countries. After this, there will not be any need for physical CoO copy, saving transaction cost and time for the Indian exporters.” India has 15 FTAs and PTAs with various partner countries under which Indian exporters avail reduced import tariffs in the destination country.
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AfCFTA sensitisation workshops: Malawi, Kenya
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Malawi to host AfCFTA sensitization workshops. The Ministry of Trade and Tourism, in partnership with the ECA and the AUC, is organizing AfCFTA Awareness Workshop in Lilongwe and Blantyre, (17, 19 September, respectively). They aim to engage relevant stakeholders on AfCFTA issues, to secure a consensus for Malawi to ratify the AfCFTA Agreement. Each workshop is expected to bring together about 150 participants from private sectors, civil society organizations, parliamentarians, academia, and government.
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Kenya’s National Forum on the National Strategy for Implementation of the AfCFTA, organized by the ECA, commenced today. Tweeted highlights by @ECA_SRO_EA: Intra-regional trade within the EAC is high. Exports peaked in 2013 at $3.5bn, and by 2017 had declined to just $2.4bn. The AFCFTA will boost trade and development in Eastern Africa. East African firms are generally quite small: only 34 of them feature in the top 500 in the rankings of Africa’s top companies by turnover. Kenya and Ethiopia barely trade with each other: their annual bilateral trade is worth less than $100m.
A special feature on Namibia’s export competitiveness and regional integration: an extract from Annex VI in the pdf 2019 Article IV Consultation report (2.79 MB) , released on Friday by the IMF
Export competitiveness has been deteriorating recently, and efforts to diversify exports beyond traditional resource-intensive products have had little impact. Relatively high and fast-growing wages, elevated input and trade costs, as well as bottlenecks in the business environment have been associated with these trends. In addition, limited integration in the regional value chain, mostly due to weak trade complementarity and lack of harmonization of policies and regulations in SADC, have resulted in low backward linkages and productivity gains.
The decline in exports growth has been accompanied by a generalized reduction in market shares across products and partners, suggesting some loss of competitiveness. Despite being based on fast growing products (e.g., fish, beverages), since 2015 Namibia’s non-mineral world exports market shares have been falling, partly reflecting weaker demand in Namibia’s main partners, in particular African neighbors (South Africa and Angola). However, Namibia lost market shares across partners, signaling that the geographic distribution of exports does not fully explain exports underperformance. A constant market share analysis (see Box 1) suggests that after accounting for market distribution effects and commodity composition, the Namibia’s adjusted market share analysis has been declining.
The performance of exports of services has been more mixed, with some positive developments. In US dollar terms, since 2014 exports have declined by about 40% (2.3% of GDP), erasing gains accumulated during 2009–14. The decline has particularly affected travel, transport and other services to firms (partly linked to a lower demand from the oil and gas industry in Angola). Nonetheless, based on the number of tourists, Namibia is gradually imposing itself as a key destination in the region, gaining market shares from countries like Botswana, probably helped by a more competitive exchange rate. In addition, the government ambition to position the country as a gateway to the southern African market will likely increase the share of services in total exports.
Despite authorities’ efforts to diversify exports, the export structure has remained broadly unchanged and concentrated on resource-intensive and low added-value products. While exports are less concentrated than in other resource-rich countries, Namibian exports remain dominated by mineral products (around 60% of total exports) including diamond, uranium, gold, as well as processed metals such as copper blisters and refined zinc. Non-mineral exports include mostly food products (fish, live animals and meat, beverages and grapes). The strategy of the government to add value to the raw materials has so far had limited impact on developing general capabilities and more sophisticated industries. Namibia’s positioning in the product space offers little opportunities for diversification.
Namibia’s trade integration within the region has increased, but “productive integration” remains limited, partly reflecting the lack of trade complementarity. The implementation of the SADC Free Trade Agreement early in the 2000s in tandem with the gradual improvement in regional infrastructure has given some impetus to Namibia’s presence in regional trade. Namibia’s share in total intra-African exports increased to 2.9% in 2017 from 2.2% in 2010. Yet, this has been mostly driven by mineral products (e.g. diamond with Botswana since 2012) and re-exports. Exports to South Africa, the biggest market in the region and the main trading partner, have been limited to primary commodities and end-sales products, with very little intra-industry trade in manufacturing.
A plethora of non-tariff barriers hinder trade integration
Widespread non-tariff barriers and domestic market protective policies in Namibia stymie deeper regional integration and the development of regional value chains. Like other countries in the region, Namibia uses several non-tariff measures to protect its “infant” industries and to give preferential treatment to local suppliers (Table 2). In general, these measures tend to support import-substitution, target traditional products rather than modern export sectors, and lack monitorable indicators and sunset clauses. While boosting demand in the short-term, local content requirements distort factors allocation in the economy toward the non-tradable sector, ultimately hindering exports competitiveness on the long-term. On the other hand, efforts to promote exports were dispersed and at times setting limits (e.g., the export-processing zones regime does not allow to export more than 30 percent to SADC countries).
Similarly, South Africa’s industrial and domestic market protective policies have a significant impact on Namibia’s (and other BLNE’s) export opportunities to the largest market in the region. For example, extensive industrial rebates on intermediate inputs and capital goods are used in South Africa to lower input costs for specific industries in the country. Similarly, high local content requirements and complex rules of origins in the SACU region are in general very difficult to comply with particularly for new industries in Namibia and the rest of SACU countries, limiting export-led development. Overall, the absence of a regional body to set rebates, exceptions and export-import related regulations appears to hinder the opportunities of the smaller countries in the region, including Namibia, to rely on developing regional exports to power their countries’ development.
SA farmers concerned about live cattle exports from Botswana (Farmers Weekly)
The South African Red Meat Producers’ Organisation (RPO) has expressed serious concern about the announcement by the Ministry of Agriculture in Botswana that the country will be opening its borders to live cattle exports with immediate effect. This trade directive, issued by the Botswana government, would be in effect until 31 March 2020, and included exports to South Africa, according to Gerhard Schutte, CEO of the RPO. He said that while this was permitted in terms of the free trade agreement between members of SADC, it could result in a drop in local prices, putting further financial pressure on local commercial and developing cattle farmers. “South Africa’s beef producers are already under tremendous pressure because of issues such as ongoing drought and ever decreasing profit margins. This unilateral decision by Botswana is, therefore, extremely disappointing,” Schutte said. [Botswana farmers want permanent ban of vegetable imports: A group of vegetable producers from across Botswana are calling for a permanent ban on imports of tomatoes, potatoes, cabbages, carrots, beetroot and green peppers from South Africa and other vegetable exporting countries.]
How technology and e-logistics services can spur trade across Africa (The Standard)
All these notwithstanding, the higher cost of goods made in Africa has still rendered them uncompetitive on the global marketplace. This has largely been driven by logistical costs, due to systemic inefficiencies. It is estimated that the cost of logistics accounts for up to 40-60% of the final price of goods in African nations, whereas it only takes up 6% of the prices in the US. This is how a mango that goes for only KSh5 at the farm gate ends up with a KSh70 price tag at the supermarket shelf in Nairobi. With these kinds of prices, how could this produce from Kenya compete effectively in the marketplace?
Durban Aerotropolis to turn King Shaka international airport into a smart city
The Department of Trade and Industry has announced plans for a major new smart city in KZN. Speaking on Sunday, DTI deputy minister Nomalungelo Gina said that the 50-year Durban Aerotropolis master plan will turn the entire surface area around King Shaka International Airport into a smart city with diversified economic activities that will boost the province’s economy. Gina said that the plan will cover 2,000 hectares of land as well as 10,000 hectares of green space for expansion. She added that the plan is expected to create over 750,000 jobs. “The Durban Aerotropolis is the only greenfield aerotropolis in Africa and provides a unique opportunity for investors in various sectors including property, manufacturing, aviation and pharmaceuticals,” she said.
New SEZ for the Vaal Region in the pipeline (dti)
The Deputy Minister of Trade and Industry, Mr Fikile Majola has told community members in Evaton in the Vaal region, Gauteng that government is taking major steps towards the designation of the Vaal Special Economic Zone. Emfuleni Executive Mayor, Councillor Gift Moerane, urged the locals to ensure they set up their businesses, cooperatives and consortiums and skill themselves appropriately, to prepare for opportunities that will come with the establishment of the new mega city, Vaal 21 River City. This project was unveiled by the Gauteng Premier, Mr David Makhura, and described as South Africa’s “first post-apartheid” city. The development will house 400 000 square metres of commercial office space; 60 000 square metres of retail and leisure component; and 20 hectares of park areas with 5000 residential units. [Public Works and Infrastructure Minister Patricia de Lille: De Lille said her dream was to solve this problem by building a smart city as mentioned by Ramaphosa during his State of the Nation Address. “You still need an airport, and I was thinking of Lanseria Airport and find a space and build a new city there. So that is what is on my mind, it is not something that is official but I think it’s one of the ways to solve this problem.”]
Pan African Forum on Migration: Cairo meeting update (AU)
In her keynote address, the Director of Social Affairs Department Mrs Cisse Mariama emphasized the need for the forum to be synchronized with political decision-making structures of the African Union. For the first time in the history of the PAFOM, Ministers have been invited to participate in the meeting. She said that the AU Commission believes that through the Ministerial participation, the recommendations of this and future meetings will have the relevant support by the highest political decision makers. The outcome report will also be submitted to the upcoming Specialized Technical Committee of Migration, Refugees and IDPs which is the AU Statutory Ministerial meeting for their validation. Mrs. Cisse underlined the need to invest in evidence-based continental migration trends and updates through improvement and investment in the collection, analysis and dissemination of accurate information and research on migration issues in the continent. During the three-day meeting participants will be discussing the following sessions:
Southeast Asia ministers laud UNCTAD’s database on non-tariff measures (UNCTAD)
Economic ministers from countries in the Association of Southeast Asian Nations (ASEAN) commended UNCTAD for its work on a database of non-tariff measures (NTMs) in the region during their latest ministerial meeting held on 6 September in Bangkok. UNCTAD developed the database in cooperation with the Economic Research Institute for ASEAN and East Asia as a resource to assist ASEAN countries in populating and developing the NTMs section of their national trade repositories. “As room to liberalize tariffs further is limited, addressing NTMs is fundamental to fully realize the ASEAN economic community,” Hidetoshi Nishimura, ERIA president, said while handing over the joint UNCTAD-ERIA database to ASEAN Secretary-General, Dato Lim Jock Hoi, in Bangkok on 10 September on the sidelines of the 51st ASEAN Economic Ministers’ Meeting. Over the past 15 years, tariffs have declined worldwide, however the number of NTMs has increased dramatically – 15% in ASEAN countries over the past three years.
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The Third Ordinary Session of the AU’s STC on Communication and ICT starts in Addis Ababa on Monday. Profiled event document: pdf The draft digital transformation strategy for Africa (2020-2030) (1.80 MB)
Africa presents a sea of economic opportunities in virtually every sector, and the continent’s youthful population structure is an enormous opportunity in this digital era and hence the need for Africa to make digitally enabled socio-economic development a high priority. Digital Transformation is a driving force for innovative, inclusive and sustainable growth. From innovations such as for mobile money platforms to large-scale business process outsourcing developments, digitalization is creating jobs, addressing poverty, reducing inequality, facilitating the delivery of goods and services, and contributing to the achievement of Agenda 2063 and the Sustainable Development Goals. The Digital Transformation Strategy for Africa will build on the existing initiatives and frameworks such as the Policy and Regulatory Initiative for Digital Africa (PRIDA), the Programme for Infrastructure Development in Africa, the African Continental Free Trade Area, the African Union Financial Institutions, the Single African Air Transport Market, and the Free Movement of Persons to support the development of a Digital Single Market for Africa, as part of the integration priorities of the African Union. The Smart Africa Initiative has set the creation of a Digital Single Market in Africa as its strategic vision.
With the launch of the AfCFTA, the importance and relevance of digital financial services becomes primordial as it would facilitate greater intra-African trade and put in place the needed cross border payment systems in the operationalization phase of the AfCFTA. It would also facilitate the transactions involved in other financial products and services (e.g., to deposit savings or make a loan payment). Transaction data produced by digital payments can also reduce informational asymmetries between borrowers and lenders, and serve as a useful input into credit decisions. Digitalization offers new opportunities to boost the economy (through e-commerce and digital Financing), cut red tape and reduce trade costs (through e-payments, e-government and the digitalization of public services), leap frog and participate in the 4th industrialization revolution. This potential is even greater for Landlocked Developing Countries.
Specific objectives: extracts
By 2030 all our people should be digitally empowered and able to access safely and securely to at least (6 mb/s) all the time where ever they live in the continent at an affordable price of no more than (1cts usd per mb) through a smart device manufactured in the continent at the price of no more than (100 usd) to benefit from all basic e-services and content of which at least 30% is developed and hosted in Africa;
Establish and improve digital networks and services with a view to strengthening intra-Africa trade, intra-investment and capital flows and the socio-economic integration of the continent, while maintaining a relational balance with other continents in the context of networked economies (Digital economy, collaborative economy)
Entry into force of the African Union convention on Cyber Security and Personal Data Protection by 2020 and for all Members States to adopt a complete set of legislation covering e-Transactions, Data Protection and Privacy, Cybercrime and Consumer Protection;
Promote open standards and interoperability for cross-border trust framework, personal data protection and privacy;
Deliver a Massive Online Digital Skills for All program that provides basic online knowledge and security and privacy skills for 100 million African a year by 2021 and 300 million a year by 2025;
PwC’s Africa Private Business Survey 2019: the key to private business growth in Africa is digitalisation
Between February and April 2019, PwC conducted interviews with key decision makers from 2,993 private businesses with a turnover of at least €10m in 53 countries in Europe, the Middle East and Africa. Of these, 200 private businesses from nine sub-Saharan African countries were surveyed, the results of which form the basis of this report. Entrepreneurs in Africa say they are keen to digitise their businesses and plan to invest at somewhat higher levels compared to results across EMEA (see Exhibit 4). One in four leaders plans to allocate more than 5% of overall investments in digitalisation in the next five years. In the EU, only 22% say the same, and in the Middle East that number is less than 18%.
81% of respondents in our survey of private businesses (across nine key economies on the continent, pdf) said they see digitalisation as “highly relevant” to their future, compared with 65% in the European Union. And a greater proportion in Africa say they want to allocate more than 5% of their overall planned investment into digital, compared with peers elsewhere. Further encouragement comes from our finding that, in spite of official downgrades for growth in key sub-Saharan African economies this year, private businesses are nonetheless relatively optimistic about their prospects. 83% of African private business leaders predict revenues overall will grow over the 12 months following our survey, while only 7% expect declines. [Visa’s Aida Diarra: Digital payments may hold key to African SME prosperity; The Gartner IT Symposium/Xpo takes place next week in Cape Town: a preview]
Capacity Africa 2019: Increase investments in data centres, experts tell African governments (New Times)
African countries have to invest heavily in connectivity and energy if they are to realise the full potential of the continent’s data market. That was observed Wednesday by tech entrepreneurs at the two-day Capacity Africa meeting in Kigali. Experts observed that as the continent was embracing the ever-growing digital economy, it was becoming inevitable for countries to scale up their investment if they are to benefit from the opportunities the industry was creating. Demos Kyriacou, Chief Operation Officer, Djibouti Data Centre SARL, said that if they were to make it more affordable, more investments have to go into scaling up terrestrial connectivity. He added that increasing the internal terrestrial connectivity will enable African countries to bring down the digital divide.
Basic business models for banks providing digital financial services in Africa (World Bank)
Selected country digital policy, dynamics:
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Rwanda: Inside Alibaba’s undergraduate e-commerce programme for African students. China’s e-commerce giant Alibaba, on Wednesday, launched its first undergraduate cross-border e-commerce program for African students. The 22 students from Rwanda arrived in the eastern Chinese city of Hangzhou, where Alibaba is headquartered, Tuesday, the 20th anniversary of the tech giant. “You came at the right time and to the right place,” said Zeng Ming, president of Alibaba Business School with the Hangzhou Normal University, at the opening ceremony. The school is not a traditional business school, but one that focuses on the internet economy said
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Kenya: Mobile money payments rise on digital banking. The value of mobile money payments rose by 11.1% to hit Sh2.5 trillion in the first seven months of this year, new data from the Central Bank of Kenya shows. The increase happened even though the actual figures from month- to- month fluctuated between Sh328.2 billion and Sh368.4 billion. The total value for the seven months was Sh2.5 trillion compared to Sh2.25 trillion in July last year. In July, the value stood at Sh366.4 billion, about Sh20 billion up from June’s Sh346.8 billion. Compared to July last year, the upward change was higher at Sh34 billion, or 10.2%. [Huawei announces Kenya-focused digital skills initiative, DigiTruck, to sponsor Namibia’s 2020 annual ICT summit]
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South Africa’s BusinessTech FinTech conference. South Africa’s TymeBank is now one of the three fastest-growing digital banks in the world, with the bank seeing significant uptake since its official launch at the end of February 2019. This is according to Tauriq Keraan, chief executive officer at TymeBank, who was speaking at the BusinessTech FinTech conference on Wednesday. Keraan said that the bank has 735,000 customers and 325,000 active customers as of September 2019 – a significant jump from the 500,000 customers in July. He said that most of these customers signed up in either Gauteng or KZN and are over the age of 35, with a growing number (10%) depositing their salaries directly into their TymeBank accounts. [FNB’s Christoph Nieuwoudt: There’s a huge showdown happening in South Africa’s banking landscape]
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On financial development and economic growth in Egypt: This World Bank paper examines empirically the relationship between the development of the financial sector and economic growth in Egypt between 1980 and 2016. It draws comparisons based on critical financial indicators between Egypt and selected emerging markets and developing economies, using a new data set of financial development indexes released by the International Monetary Fund. [Mohammed Amin (senior VP Middle East, Russia, Africa, and Turkey, Dell Technologies): Why national progress is not immune to digital transformation]
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African Leapfrog Index: Getting Lions to Leapfrog
With financial support from the Mastercard Impact Fund, the African Leapfrog Index – which was launched during the World Economic Forum on Africa – uses Egypt, Ethiopia, Kenya, Nigeria, Rwanda, and South Africa as examples to provide insights on key drivers that could accelerate digital inclusion across the continent. The six countries were examined against three primary variables for harnessing digital technologies to facilitate development and inclusive growth. These variables are “Ease of Creating Digital Jobs,” “Resilience of Governance and Infrastructure” and “Foundational Digital Potential.” Extract from the executive summary:
The regional leaders represent different areas of strength and opportunities to grow. To get to the benchmark and develop a more balanced, well-rounded leapfrog profile, Kenya’s priority would be to improve its Ease of Creating Digital Jobs – i.e., nurturing jobs in the digital economy, such as online freelance, ridesharing, and in e-commerce – while South Africa’s priority needs to be to improve on Foundational Digital Potential – i.e., expanding the integration and use of digital technologies across society. While Kenya has the seen the greatest amount of digital change over the past decade of all African countries studied and has over 80% Internet penetration, it can, for example, improve its education and skill-building capacity to enhance its ability to grow higher-skilled digital services jobs. South Africa, on the other hand, can improve its payments capabilities; it made 65% of payments in cash, as compared to 40% in Rwanda – and this is despite the fact that Rwanda has only 30% of its population on the Internet compared to South Africa’s 54%. South Africa’s strength in creating high skilled digital jobs – through a balanced repertoire of strengths in available human capital, market sophistication and facilitating institutions – is impressive when compared to similar baskets of developing world nations from ASEAN and Latin America; it is competitive in a global marketplace for such high-skilled jobs, such as digital freelancing.
Rwanda has several core strengths in Governance (providing digital government services), Digital Evolution (its overall state of digital development) and Mobile Money (use of mobile money accounts, and other forms of digital money). These are solid foundations to build upon to facilitate digital leapfrogging. It needs to invest in the other capabilities – such as infrastructure, Internet penetration and online freedoms to fully leverage its core strengths. Nigeria’s route to capturing more digital opportunities runs through improving the reliability of basic infrastructure. While Nigeria is strong in internet affordability, investments in reducing power outages and other unintentional disruptions to the internet will be key to enhancing its digital potential. Of the six countries studied, Nigeria has the biggest gap to close in this area.
5th Investing in Africa Forum: updates
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Africa’s development dependent on citizens’ input – Kagame. Among the areas that hold game-changing potential for the continent is the AfCFTA, which he said holds a win-win scenario for all countries. “While the more industrialised countries are better placed to take advantage of the opportunities for manufactured goods, the less industrialised can benefit from linking into regional value chains. For example, countries that are mainly agricultural can gain from meeting Africa’s growing food security needs,” he said. President Kgame said that by embracing e-commerce to trade with the rest of the world, Rwandan producers and service providers are starting to sell directly to more customers through the Alibaba Electronic World Trade Platform. He called for more collaboration in using technology and overcoming digital barriers through initiatives such as Smart Africa Alliance. President Kagame also made a case for free movement of people across the continent, saying that citizens cannot trade or invest if they cannot move.
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Angola reassures private investors. The President of the Republic, João Lourenço, announced on Tuesday, in Brazzaville, that Angola has created the necessary conditions for foreign investors to do their business in the country, transparently and safely., According to the Angolan Head of State, who was speaking at the 5th “Investing in Africa” Forum (FIA5), the new scenario is the result of reforms undertaken by the Government in all sectors of the national economy and at all levels. He explained that his government has decided to “take practical and coherent action” to adopt measures aimed at creating conditions of macroeconomic stability that are essential for improving the business environment. To this end, he said, Angola is implementing an economic stabilization program “with very encouraging results” in fiscal consolidation, the reduction of the inflation rate and the gradual normalization of the foreign exchange market, among other indicators, which contribute to improving the performance of the national economy.
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World Bank urges African countries to make bold decisions for digital transformation. As Africa sits on the precipice of digital transformation, governments will need to make some bold choices, said a World Bank policy brief, which was revealed during the ongoing Fifth Investing in Africa Forum in Brazzaville. “In Africa, faster Internet helps create jobs across education levels. Urgent investment in digital infrastructure is necessary to reach the African Union’s goal of universal and affordable internet for all,” the document, based on the report The Future of Work in Africa: Harnessing the potential of digital Digital Technologies for All, said.
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The fifth IAF will examine how best to support economic diversification and jobs creation in African countries, take stock of progress and achievements, and chart a path forward. The IAF was established in 2015 as a global platform to promote multilateral cooperation and investment opportunities in Africa.
Africa – EU relations and the von der Leyen Commission:
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Phil Hogan: Commissioner-designate for Trade (pdf). Over the next five years, I (Ursula von der Leyen, President-elect of the European Commission) want you to lead the work to strengthen Europe’s global leadership in trade: You will work towards a positive, balanced and mutually beneficial trading partnership with the United States; You will step up negotiations with China on a Comprehensive Agreement on Investment, with the aim of reaching an agreement by the end of 2020; I want you to prioritise our trade and investment partnership with Africa. The implementation of the AfCFTA should be seen as a step towards our long-term objective of a continent-to-continent free trade area between Africa and the EU; You will take forward the finalisation of trade agreements already negotiated. You will lead the work on concluding ongoing negotiations, notably with Australia and New Zealand. Where conditions are met you will propose to open negotiations on new bilateral or multilateral agreements. Where relevant, you will work closely with the Commissioner for Agriculture. [Phil Hogan’s official biography; BloombergQuint: Meet the Irishman the EU just picked to battle Trump; Phil Hogan on twitter: @PhilHoganEU]
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Jutta Urpilainen, Commissioner-designate for International Partnerships (pdf). Over the next five years, your main objective will be to ensure the European model of development evolves in line with new global realities. It should be strategic and effective, should create value for money and should contribute to our wider political priorities. We must make the most of the political, economic and investment opportunities that Africa, with its growing economies, populations and digital innovations, presents. Building on the current EU–Africa Sustainable Alliance, I want you to work with the High Representative/Vice-President on a new comprehensive strategy for Africa. This should create a partnership of equals and mutual interest. I want you to focus on concluding the negotiations for an ambitious post-Cotonou agreement with the countries from the African, Caribbean and Pacific Group of States. [“An Africa-specific portfolio was discussed, but it was considered discriminatory. In that case, we would’ve had to have separate commissioners also for Latin America, Asia and the Middle East.”; Jutta Urpilainen’s official biography, Twitter account: @JuttaUrpilainen]
Ethiopia unveils ‘blueprint’ to drive economic growth (UNECA)
The government of Ethiopia has unveiled what it describes as a “Homegrown Economic Reform” agenda aimed at unlocking the country’s development potential. “Several months in the making and spearheaded by some of Ethiopia’s finest minds, our initiative aims to propel Ethiopia into becoming the African icon of prosperity by 2030,” said Prime Minister Abiy Ahmed. He made the remarks on 9 September during an event to unveil the Reform Agenda at the UN Conference Centre in Addis Ababa. The PM said “in just over one year,” his government has taken a series of measures to shift the economic landscape of Ethiopia, such as reforms in investment laws and business climate, which have helped remove regulatory obstacles that hamper investment. Mr Ahmed stated that the private sector was crucial for the next chapter of Ethiopia’s growth and development. Consequently, he said, we have “opened up key economic activities to private investments,” adding that these measures will “surely be reflected in Ethiopia’s ease of doing business ranking.” The PM pointed out that to ensure the success of the Agenda, “we are tightening our fiscal belts, strengthening our public sector finances, shedding our debts, and increasing domestic resource mobilization.”
Plug $10bn hole and prosper, UN economists tell Ethiopia (Bloomberg)
Ethiopia must attract new investment and reduce its debt if it’s to achieve the government’s economic growth and job creation targets, according to the UNECA. The Horn of Africa nation has a $10bn gap -- $6bn in new investment and $4bn of debt reduction per year -- that must be bridged to achieve its reform aspirations, UNECA Executive Secretary Vera Songwe said in an emailed statement. “If you continue to accumulate debt the way you’re doing now, you will likely fall into debt distress in the next two years,” Songwe said about Ethiopia. “A lot of the structural reforms you’ve put in place will not bring in the private sector because you will not be a creditworthy country.” [More funds needed to counter ‘persistent and multi-faceted humanitarian problems’ in Ethiopia]
Madagascar Economic Update (World Bank)
Favorable weather conditions in 2018 paved the way for a productive rice harvesting season, with domestic production rising from 3.1 million tons in 2017 to about 4 million tons in 2018. This excellent performance gave a boost to the agricultural sector and significantly helped slow down inflation in 2018, from an average rate of 8.3% to 7.3% in the same period. The current account recorded a surplus equivalent to 0.8% of GDP, owing largely to the good performance of exports. Export earnings and higher external financing helped maintain official foreign exchange reserves at a level equivalent to four months of imports. In addition to a collection rate that met 97% of the annual target, tax revenues also rose in 2018, aided by the revision of the tax on petroleum products. Nonetheless, this performance is still weaker than that of the other sub-Saharan African countries, although the ratio of tax revenue to GDP has increased in the past five years.
Somalia Economic Update (World Bank)
The Somali economy is highly dollarized, including the mobile money services that are used by about 73%. The CBS has not issued any official Somali shilling banknotes since 1991. Much of the remaining stock, which is used primarily by the poor, is counterfeit or of very poor quality. This undermines the financial access of the substantial proportion of the Somali population who are mainly poor and nomadic and have no access to US dollars or other foreign currencies. It also inhibits any form of monetary policy since the CBS has no control of the money supply. Cash-based humanitarian interventions are also dollarized. These cash and mobile money transfers operate in an environment where regulation is minimal.
Somalia typically runs large trade deficits, which are financed by remittance and grant inflows (Table 1.1, pdf). In 2018, exports of goods and services accounted for just 26 percent of GDP, with goods exports consisting mostly of livestock exports to Gulf Cooperation Council countries. Imports of goods and services, on the other hand, remained high, accounting for about 100% of GDP, and consisting mostly of food and industrial goods. While exports are estimated to have modestly rebounded from the effects of the 2016/17 drought, they remain small and narrow-based. Somalia’s exports have been severely afflicted by conflict and climatic shocks and by subsequent GCC livestock import bans imposed to contain trans-boundary livestock diseases. The high imports have been covered by remittances, estimated at about 29% of GDP, and official grants, estimated at about 37%.
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Rethinking the International Trade Architecture: address by WTO’s DDG Alan Wolff at the Institute for International Trade, Adelaide
The topic of our conference is “Rethinking the International Trade Architecture”. I can report to you at the outset that there is no re-thinking of the architecture for international trade that is currently in evidence in Geneva, not at the WTO. There is of course much activity outside of the WTO that has an architectural aspect. Increasing nationalism is prevalent in many countries. Perceived self-interest is not resulting in building new multilateral institutions. Regional and bilateral agreements are much in vogue. These more limited arrangements are more in keeping with the temper of these times. These arrangements alter the appearance of the basic global trade architecture. All rest on the foundation of the multilateral system. They connect various national nodes but are, I believe, transitory. Like the Victorian additions of porticos to Greek revival buildings, I believe that a future generation will sweep them away, in the interests of purity of design and improved functionality.
In the near future, it is more likely than not that the forces of global disintegration (not meaning collapse, but an emphasis on regional and bilateral arrangements, and unilateral measures) will be greater than those of global integration. There will likely be hard economic times ahead, especially as automation due to artificial intelligence causes disruptions. This is not a context in which trade liberalization is likely to be a dominant policy. But the long-term trend line, extending from British mid-19th century policy to the present and into the future, is and will be toward global openness. Just as the Enlightenment did not govern all succeeding human activity that followed but has ultimately been the driving intellectual force of human progress, the multilateral approach will ultimately prevail. That time, come what may in the intervening years, will arrive. This is what my remarks today are about.
This does not mean that we cannot here and now address the question the sponsors of this conference have chosen and examine what the future holds for the international trade architecture. To do this, I propose that we try it is best to visualize what the world trading system will be in the year 2050. Once that vision is defined, we can think about what, if any, changes will be necessary in the existing institutional structures on the way. Although the pace of technological and other changes is continuing to accelerate, in the field of trade we can be reasonably sure about some of the basic conditions that will shape trade three decades from now:
Rules of origin in trade arrangements: Largely unnecessary, simply protectionist (Vox)
Rules of origin exist to avoid trade deflection, but they distort global value chains and are costly to abide by. This column shows empirically that in preferential trade agreements, trade deflection is unlikely to be profitable because tariffs are generally low, that countries in a common free trade agreement tend to have similar external tariff levels, and that when tariff levels differ, deflection is profitable at most for one country in the pair. Moreover, transportation costs create a natural counterforce. It appears that rules of origin are primarily used to limit trade, and hence represent an instrument for trade protection. [The authors: Gabriel Felbermayr, Feodora Teti, Erdal Yalcin]
Angola to reform business climate to boost investment in agribusiness (UNCTAD)
The Ministry of Trade, the Ministry of Economy and Planning and UNCTAD discussed reforms to boost FDI for economic diversification during the presentation of the Investment Policy Review. The national workshop was organized in the context of the presentation of UNCTAD’s Investment Policy Review of Angola. After reaching significant volumes in the years following the end of the civil conflict, FDI inflows have been low in recent years, volatile and concentrated in the extractive sector. A more diversified FDI portfolio and the targeting of the FDI projects better aligned with Angola’s needs could go a long way in supporting the achievement of the national development objectives. The Government has put in place an ambitious programme to reform the business and investment environment. The IPR identified remaining gaps and bottlenecks, including the complex system for FDI entry and establishment, burdensome operational regulations, the persistence of restrictive business practices and a lack of institutional capacity and coordination. These gaps and bottlenecks affect the country’s ability to fully take advantage of its strategic location, abundant natural resources and preferential access to external markets. The IPR also devoted special attention to investment in agribusiness and its contribution to sustainable development.
Sierra Leone: Update of the AfDB’s 2013-2017 country strategy paper to end 2019; 2017 country portfolio performance review
Sierra Leone’s economic growth in the past two years point to its resilience in the face of significant shocks. Real GDP growth that had peaked in 2013 was disrupted and contracted by 20.5% in 2015 mainly due to the twin-shocks: decline in international iron-ore prices starting in late 2013; and the outbreak of Ebola Virus Disease in 2014. The country was declared Ebola free on March 17, 2016, prompting economic activity to start normalizing gradually towards its pre-crisis level. The recovery started earlier in the primary sector that showed some signs of resilience followed by the service sector which benefited from fewer restrictions on mobility. The external sector is weighed down by low commodity prices and the scaling down of Ebola-related aid. The current account deficit is estimated to have widened to 19.9 % in 2016, up from 17.5 % in 2015. The decline in current transfers, including Ebola related foreign aid, offset the gains from restarted iron ore exports, and lower factor income payments in the mining sector. The resumption of iron ore exports to China is expected to boost foreign exchange earnings, though persisting low world prices could keep the value of shipments below 2013 levels. The widening current account deficit will be financed mainly by increasing FDI inflows to agriculture and food processing sectors and portfolio investment to cover incurred losses in the mining sector. Remittances, which are becoming increasingly important, will also help in reducing the widening deficit.
A set of reports on the interface between commodity dependence, climate change, adaption options and trade policy issues
(i) Commodity prices plunge in August: World Bank’s Pink Sheet
Energy commodity prices plunged 6% in August, led by Australian coal prices (-9%), the World Bank’s Pink Sheet (pdf) reported. Crude oil and US natural gas prices each declined 6%. Non-energy prices dropped almost 4%, led by beverages and metals. Agricultural prices declined nearly 3%, with losses in beverages (-6.4%), food (-2.3%), and raw materials (-2.9%). Fertilizer prices declined nearly 2%, led by phosphate rock (-20%). Metals prices plunged 6%, led by iron ore (-22%); tin and zinc fell around 7%. Precious metals prices gained 6.5%, led by a 9% increase in silver.
(ii) Commodities and Development Report 2019: Commodity dependence, climate change and the Paris Agreement (UNCTAD)
Although commodity-dependent developing countries (CDDCs) have contributed only modestly to greenhouse gas emissions, they will be strongly affected by the implementation of the Paris Agreement. Moreover, for most of these countries, rising to the challenge of climate change will be difficult as they lack the financial and technical capacities to design and implement adaptation measures, which highlights their need for assistance. While climate change and the implementation of the Paris Agreement pose many challenges to CDDCs, they also create localized opportunities in some countries. In particular, the global push towards renewable energy creates opportunities in countries with large reserves of materials used in clean technologies, such as solar photovoltaic cells, wind turbines and electric vehicle batteries. Extract (pdf):
CDDCs are a group of 88 developing countries where the commodity sector accounted for at least 60% of their total merchandise exports, on average and in value terms, over the period 2013–2017. Most CDDCs depend on one or more commodities within three major commodity groups: agriculture; forestry; minerals, ores and metals; and fossil fuel-based energy. The focus on these economies stems from their vulnerability to climate change. Most of them are also among the world’s poorest, with limited capacity to adapt to climate change. And because of their dependence on commodities, climate change mitigation and adaptation add to the challenges they already face. However, there is heterogeneity within the group of CDDCs
Mitigation and adaptation measures by other economies are likely to have negative implications for CDDCs, especially through the expected reduction in global demand for carbon-intensive commodities. Therefore, unless attenuating solutions are found, some CDDCs may be worse off economically with the implementation of the Paris Agreement. For example, China, the world’s largest importer of commodities, has pledged to increase the share of non-fossil fuels in its primary energy consumption. As a result, exporters of traditional energy products to China may lose an important share of their export markets. Angola, for instance, the largest African exporter of oil to China, might be hit hard following the implementation of China’s decarbonization policies: its oil exports to China alone accounted for 47% of total merchandise export revenues in 2017. Mongolia would also likely come under pressure, as its coal exports to China accounted for 20% of total merchandise export revenues in 2017. Other CDDCs could be similarly affected by other trading partners. For example, Algeria’s oil and natural gas exports to the European Union accounted for 56% of its total merchandise export revenues in 2017, while the Bolivarian Republic of Venezuela’s oil and natural gas exports to the United States accounted for 32% of its total merchandise export revenues.
Now more than ever before, CDDCs need to assess their diversification potential and depart from their high degree of dependence on one or a narrow range of commodities, which for decades has kept them exposed to the vagaries of international markets and climate change. Horizontal diversification – venturing into new export-oriented goods and sectors – may be pursued by some CDDCs. Others may pursue vertical diversification – moving up the commodity value chain – to enable them not only to increase the value of the goods they export, but also to produce goods that are less vulnerable to climate change (e.g. cocoa production is vulnerable to climate change, but chocolate is less so). This form of diversification will generate benefits such as better employment opportunities and higher incomes. An optimal diversification strategy is likely to combine both horizontal and vertical diversification. [Mitigating climate change in Asia-Pacific could give region an economic boost]
(iii) Global Commission on Adaptation: World must invest $1.8 trillion to take on climate change
The report puts forward a bold vision for how to transform key systems to be more resilient and productive. The Commission finds that adaptation can produce significant economic returns. The overall rate of return on investments in improved resilience is high, with benefit-cost ratios ranging from 2:1 to 10:1, and in some cases even higher. Specifically, the analysis finds that investing $1.8 trillion globally in five areas from 2020 to 2030 could generate $7.1 trillion in total net benefits. The five areas the report considers are early warning systems, climate-resilient infrastructure, improved dryland agriculture, mangrove protection, and investments in making water resources more resilient. These areas represent only a portion of the total investments needed and total benefits available.
(iv) UN Trade Forum: No exit plan for small islands on climate crisis frontlines (UNCTAD)
The situation is a matter of survival. “For a long time, we’ve been talking about climate change mitigation and resilience. We’re now at a point where we’re talking about survival,” UNCTAD Secretary-General, Mukhisa Kituyi, told the over 200 attendees gathered to discuss how trade can play a greater role as part of the climate solution. Part of this solution is to introduce trade more prominently into the climate discussion. But the role of trade, which does not feature the Paris Agreement, is still not central despite its impacts on carbon emissions and mitigation. “To face the climate crisis, we need all of us, all our tools and means. Trade cannot be a bystander,” said Pamela Coke-Hamilton, director of UNCTAD’s division on international trade and commodities. “The omnipresence of trade means that it cannot be left out of any climate policy. And it also means that sustainability cannot be an afterthought of trade policy but must be an inherent part of it,” she added.
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Profiled EAC trade and regional integration policy events starting today:
EAC experts meeting on the AfCFTA
Extraordinary meeting of the Sectoral Council on Trade, Investment, Finance and Industry
Scoping mission to the Republic of South Sudan
Mauritius-China Free Trade Agreement: update (GoM)
Cabinet has agreed to Mauritius signing the Mauritius-China Free Trade Agreement. The Agreement comprises 17 Chapters encompassing Trade in Goods, Sanitary and Phyto-sanitary Measures, Technical Barriers to Trade, Competition, Intellectual Property, Electronic Commerce, Trade in Services, Investment, Economic Cooperation, among others. Mauritius would benefit from duty free access on the Chinese market on some 8,547 products, representing 96% of the Chinese tariff lines. 88% would be eliminated with immediate effect and the remaining tariffs over a 5 to 7 year period. Mauritius has been granted a Tariff Rate Quota of 50,000 tons of special sugar at an in-quota rate of 15% to be phased in over a period of 8 years.
As regards Trade in Services, Mauritius service providers would have access to more than 40 service sectors, including financial services, telecommunications, ICT, professional services, construction and health services. Mauritius would also be able to establish businesses in China as wholly owned entities or in joint partnership with Chinese operators. As regards the Economic Cooperation Chapter of the Agreement, Mauritius and China have agreed to collaborate in ten areas, including industrial development aimed at improving competitiveness, manufacturing based on innovation and research, exchange of specialists and researchers to disseminate know how and for support in technology and innovation and the setting up of a Renminbi Clearing Centre in Mauritius. Extract from the GoM’s Trade News Digest, June-July (pdf):
In the Mauritius-China FTA, all products considered to be sensitive for Mauritius have been excluded. Mauritius will therefore eliminate tariffs on 148 tariff lines only, representing 2.5% of our tariff lines over a period of five years. The impact on the domestic industry is expected to be marginal. Regarding the impact on finances, it is estimated that tariff elimination on the 2.5% tariff lines on which we have taken commitments would be to the tune of $3m after the transitional period of five years. As regards trade in Services, Mauritius service providers would have access to more than 40 service sectors, including amongst others financial services, telecommunications, ICT, professional services, construction and health services. Mauritius would also be able to establish businesses in China as wholly owned entities or in joint partnership with Chinese operators. We expect to have more investment in the services sector from China in view of the predictability and legal security which the agreement will provide to investors.
AfCFTA updates:
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Cabinet has agreed to Mauritius ratifying the Agreement establishing the AfCFTA. The AfCFTA would enable Mauritian operators to have preferential market access opportunities in the Western, Northern and Central African regions and further provide an incentive for foreign investors to use Mauritius as a manufacturing hub to target the African market.
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Ethiopia needs 15 years to implement Africa free trade deal. Minister of Trade and Industry Fetlework Gebregziabher: “Lifting the trade tariff at once will not be useful for our country. Therefore, we have taken a stand to negotiate at least 15 years before lifting the tariff gradually. We are working with other countries, which have similar interests to extend the period of lifting the tariff.” [Ethiopia to host the 2020 World Economic Forum on Africa]
Kenya launches bid to host 2021 UNWTO General Assembly (Kenya Broadcasting Corporation)
Kenya will this week submit a bid to host the 24th edition of the United Nations World Tourism Organization General Assembly slated for the year 2021. Tourism and Wildlife Cabinet Secretary, Najib Balala, says Kenya would be leveraging on successes in hosting other global meetings in pitching for the five-day bi-annual meeting. Morocco and Philippines are the other countries that have expressed interest in hosting the conference. [Japanese multinational Ishida picks Kenya as hub]
Tanzanian Minister orders hotline at border posts to report mistreatment (The Citizen)
Cross border traders in Uganda and Tanzania will now be able to report any mistreatment to the Tanzania Trade Development Authority or directly to the Minister of Industry and Trade, through a hotline to be placed at all border posts. The new development was revealed yesterday by the Minister of Trade and Industry Innocent Bashungwa during the climax of the Tanzania-Uganda Business Forum that brought together over 1,400 participants from both countries. The move comes just two days after President John Magufuli and his Ugandan counterpart Yoweri Museveni faulted public servants for drawing back business between the two countries, pointing out same challenges at border posts. In case a trader is mishandled or mistreated by government officers at the borders between Uganda and Tanzania, he or she will have a chance to raise the matter for further action. “I will be the coordinator of the hotline,” said Mr Bashungwa during the event, which involved 312 participants from Uganda. “Soon I will disclose the service number,” he said in a direct effort to confront negative bureacracy.
Chair of ECOWAS Heads of State and Government reviews integration projects with ECOWAS Commission and Institutions
African Green Revolution Forum: updates
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Rwanda wins bid to host continental agriculture body. Rwanda will host the African Green Revolution Forum next year and also serve as the seat of the organization going forward, a statement from AGRF Partners Group says. The group made the announcement on 6 September in Accra, Ghana during the 2019 AGRF. The statement revealed that the move followed a competitive bidding process.
AGRF has taken place in eight different countries over the last decade, ensuring that awareness, models, lessons, and the political will required to drive an inclusive agricultural transformation in Africa grow steadily across the continent. At the end of its first decade, the statement said, the AGRF will now adjust its approach and adopt a “home and away” model where the Forum will alternate between hosting the event in Rwanda in even years and different host countries across the continent in alternate years. The move will add the Republic of Rwanda to the AGRF Partners Group to help shape and drive the AGRF’s long-term vision, deepen relationships with service providers to streamline organizational logistics and unlock partnerships with several new institutions looking to grow with the forum.
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pdf African Green Revolution Forum: Declaration (772 KB) . Climate change is the defining issue of our time, threatening to wipe out the hard-worn development gains across the continent. With the population projected to double to 2.4 billion by 2050, Africa needs to feed a rapidly growing population in the face of climate variability and extreme weather events. Adaptation and resilience are key accelerators and enablers to achieving development results and are a core part of the foundations on which development gains stand. The current commitment and actions in support of adaptation and resilience are insufficient. An urgent, massive and coordinated push is urgently needed – across the continent – to increase the resilience of livelihoods among smallholder farmers and rural communities.
We, the participants of the African Green Revolution Forum – 2019 in Accra, Ghana, including African Heads of State, ministers, and representatives of farmer organizations, private agribusinesses, financial institutions, academics, development partners, NGOs, and civil society…
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AGRF secures $500m for young ‘agripreneurs’. A $500m commitment to developing agriculture opportunities for young Africans, a “Deal Room” that delivered some $200m in new investments, billions to support digital infrastructure crucial for powering innovative farmer services, significant actions on climate change adaptation, and the launch of a major food trade coalition: These are among the highlights of the 2019 African Green Revolution Forum which attracted some 2800 participants from across Africa and around the world last week for three days of intensive consultations in Accra. This year’s AGRF featured a vibrant Agribusiness Deal Room that was a hub of activity, securing the Forum as a prime venue for connecting innovators with critically needed capital. Private and public sector stakeholders executed commitments worth over $200m to develop and strengthen several value chains in Malawi, Mozambique, Nigeria, Uganda and Eswatini. Companies involved included Dangote Farms Ltd. of Nigeria, Press Agriculture Ltd of Malawi, Pearl Dairies Ltd. of Uganda, and Fresh Ltd. of Mozambique and Eswatini. In addition, a Unilever-IDH partnership committed $28.6m towards investments in SMEs working in variety of food-related endeavors. Some 17 country delegations presented investment opportunities worth in excess of $2bn. The proposed investments, coupled with support from various stakeholders, is anticipated to impact more than 15,000 smallholder farmers and create seven million jobs.
The IMF’s World Trade Uncertainty Index: new index tracks trade uncertainty across the globe
We construct the World Trade Uncertainty Index for 143 countries starting in 1996. To the best of our knowledge, this is the first effort to create a trade uncertainty index for a large set of advanced and developing economies. Existing measures of trade uncertainty focus either on the United States (the trade component of Economic Policy Uncertainty index by Scott Baker, Nicholas Bloom, and Steven Davis), or on the global economy as a whole (the index of BlackRock), or on a set of 44 countries (indexes by Sandile Hlatshwayo). Our new index is based on the Economist Intelligence Unit (EIU) country reports. These reports follow a standardized process and structure, which helps to mitigate concerns about accuracy, ideological bias, and consistency. Moreover, this single, highly reputable source has a specific topical focus for coverage—economic and political developments. These factors make our index comparable across countries.
To construct the index, we tally the number of times “uncertainty” is mentioned in the reports in proximity to a word related to trade. Specifically, for each country and quarter, we search EIU reports for the words “uncertain,” “uncertainty,” and “uncertainties” appearing near the following words: protectionism, North American Free Trade Agreement, tariff, trade, United Nations Conference on Trade and Development, and World Trade Organization. To make the WTU index comparable across countries, we scale the raw counts by the total number of words in each report. An increase in the index indicates that trade uncertainty is rising, and vice versa.
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pdf Domestic resource mobilization: fighting against corruption and illicit financial flows (3.51 MB) (African Union)
IFFs are widespread and secretive by nature. No one quite knows how to quantify losses in Africa due to IFFs. Estimates of these amounts hover between $50bn and $80bn annually and seem to be on an upward trajectory. Shockingly, this amount is higher than the annual Official Development Assistance that the continent receives. But how does this take place and who perpetuates these processes, which continue to stymie growth and development and is effectively impoverishing Africa? Do all African countries suffer from this malaise? From the evidence in the recent past, East and Central Africa have the lowest levels of IFFs, while the southern and West African region have the highest amounts of IFFs. Oil-exporting countries have a prominent share of IFFs, while higher levels of IFFs are linked to the size of economic activity in countries and regions. There is even a ‘top ten’ of countries in Africa, all of which are implicated in approximately 75% of total IFFs. Dominant on this list are several resource-rich countries. This book sets out in great detail both the problem of corruption and IFFs and the remedies and actions needed to eliminate these problems. It includes case studies of various countries where Government, State Institutions, the judiciary, the private sector and civil society have rallied to the call to eliminate corruption and IFFs. Case studies cover Mauritius, Uganda, Algeria, Cameroon, Burkina Faso, Morocco, Benin. [Download the accompanying Advocacy Brief (pdf)]
Uganda National Bureau of Standards: Annual Performance Highlights for FY 2018/19
During the FY 2018/19, UNBS undertook Product Certification and Management Systems Certification to improve the quality of locally manufactured products so that they are able to access regional and international markets. As you are aware, the EAC has become a major destination for Ugandan exports. Uganda in June exported more of her goods to the EAC than any other region in the world, according to the latest Performance of the Economy Monthly Report released. The report released by the Ministry of Finance shows that exports to the EAC region grew by 51.8% from $89.40m in May 2016 to $135.74m in May 2017. Exports to Tanzania and Kenya registered the largest increases of 114.5% and 111.2% respectively. Most of these exports are manufactured products that require UNBS Distinctive Mark, thus emphasizing the UNBS Distinctive Mark as a passport to regional markets and the need for manufacturers to invest in quality and certification of their products.
On July 1st 2018, a new regulation came into force on use of UNBS Distinctive Mark, 2018. The new regulation made it mandatory for products covered by compulsory standards to be certified and issued with a distinctive mark before they are allowed on the market. As a result, we witnessed an exponential increase in the number of MSMEs seeking certification. We registered 1,339 MSMEs seeking certification. We also trained 847 and visited 619 MSMEs to build their capacity to apply standards and produce products that conform to standards thus contributing to the government’s export promotion strategy. We certified 1,350 products against a target of 3,000 permits. All certified products were able to access the wider EAC market. We issued 28 management systems certification permits against a target of 35.
South Africa’s export performance looking bleak (IOL)
South Africa’s export performance faced bleaker prospects yesterday after data from the SA Reserve Bank showed that the country’s current account deficit widened beyond market expectations as global factors weighed in trade. Sarb said the deficit escalated to R204.1bn from a revised deficit of R143.5bn in the first quarter as the value of merchandise imports increased more than exports. It said trade balance switched from a surplus of R41.9bn in the first quarter of 2019 to a deficit of R27.2bn in the second quarter as the value of merchandise imports increased more than exports. Investec economist Lara Hodes said that South Africa’s export performance was likely to remain constrained on the back of a deterioration in international trade flows. Hodes said international trade volumes had contracted for the eleventh month in a row in July. “While import growth will likely be restricted by the moderation in the international oil price and subdued rates of domestic consumption, we could see the trade account recording a deficit position in the near term. The most recent trade figures for July saw the trade balance make a move into deficit territory, with a reading of -R2.9bn, after recording a surplus of R5.4bn in June and R1.7bn in May. This could in turn keep the current account deficit entrenched between -3 and -4percent in the third quarter.” [SARB: Current account of the balance of payments; India: Government likely to announce measures to boost exports soon]
South Africa: Protection tariffs for the sugar industry are on their way out (IOL)
Signs that import protection tariffs for the sugar industry might be phased out indicated a turnaround in government thinking on this issue, SA Sugar Importers Association chief executive Chris Engelbrecht said on Thursday. The Portfolio Committee on Trade and Industry said it had heard that the protectionist strategy for the sugar industry needed to be phased out in favour of one based on competitiveness. This followed engagements between the industry and the Minister of Trade and Industry, Ebrahim Patel, and Minister of Agriculture, Land Reform and Rural Development Thoko Didiza. Stakeholders agreed to an export-led approach targeting the African market through the implementation of the African Continental Free Trade Agreement to support industry competitiveness. This represents a refusal to agree to pleas from the local industry to tighten controls on sugar entering the South African market from other African countries. [Presentations to the Portfolio Committee on Trade and Industry: Status on matters relating to the sugar industry (pdf); Briefing Note: Engagements with the sugar industry (pdf); Supplementary information on sugar matters (pdf): The CSIR has been requested to undertake a detailed modelling on the different technologies/options and indicate possible new technologies to diversify the sugar industry]
African continental free-trade deal has a long way to go (Business Day)
Julia Choate, senior associate in Bowmans’ tax practice, said the Southern African Customs Union presents a “regional snapshot” of the opportunities and challenges that an African continental free-trade area might face. Any common market area has to deal effectively with contraventions of the agreement, Choate said. In the SACU agreement, the revenue-sharing formula seems to present “challenges” in this regard. Caroline Rheeder, senior manager in Cova Advisory’s customs and excise team, said during the discussion that SACU members are seemingly bypassing the revenue-sharing formula by imposing duties on goods. “The idea behind such an agreement is to reduce duties, and practices such as this must be avoided. If these practices are not stopped it would clearly present a barrier to trade.” Choate said that the revenue-sharing formula is calculated regarding the value of intra-Sacu trade. “What we tend to see in practice is that some members impose local levies on imported goods that are not manufactured in their country, and that effectively take the place of customs and excise duties.” The SACU agreement provides a specific carveout for certain restrictions on imports in which it is in the national interest to protect aspects such as public health, intellectual property or exhaustible natural resources, but this does not provide a blanket right to tax, Choate said.
Christian Abadioko Sambou: The African free trade zone can’t ignore continent’s security issues (The Conversation)
Entering the African free trade zone requires nations to relinquish an important part of their sovereignty at a time when widespread violence is posing unprecedented challenges to state sovereignty. States are facing opposition from rebel movements, terrorist groups, jihadis, vigilante organisations, transnational criminals, and so on. These groups are known for their mobility. They defy borders and national territorial sovereignty. Given that some states are being asked to increase their presence in border and remote areas, free trade and free movement of goods and people could become a real cause for concern. The thousands of kilometres of borders within the continent are theatres of violence. States experiencing armed conflict, among them Libya, Mali, Niger, Nigeria, Burkina Faso, the Central African Republic, Sudan and the DRC, share thousands of kilometres of borders with other nations. This explains why conflicts in Mali and the DRC impact the entire region, resulting in millions of displaced people and refugees. The Sahel-Sarahan strip, the Gulf of Guinea, the Great Lakes, and the Horn of Africa are all conflict zones. Therefore, problems with the movement of goods and people within these zones have less to do with infrastructural issues than with governance, peace and security. Such frontier and remote zones are vulnerable, due to a lack of state presence. They are also used for all kinds of traffic and transit and so remain highly prone to conflict. These security issues also apply online. [WEF panel: Free trade in Africa will need more than an agreement]
East and Horn of African countries discuss advantages of migration data harmonization (IOM)
From 27-29 August, IGAD and IOM convened a meeting of senior representatives from institutions working on migration and national bureaus of statistics from the seven IGAD countries, and Tanzania, to begin a process of migration data harmonization. During the workshop, the seven IGAD member states, which are, Djibouti, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda, agreed to form an IGAD regional working group on migration data. The group will support peer exchanges, capacity building, and develop a set of guidelines to harmonize and standardize migration indicators and statistics to achieve comparability. In addition, to the IGAD member states, Tanzania is also going to reap benefits from this initiative. “It is essential that we can access reliable, timely data on migration in East Africa to ensure economic, social and political inclusion of migrant groups; to ensure that our economies can capitalize on the free movement of skills across the region; and to address migrant groups’ critical needs,” said Ali Abdi, Chief of Mission of IOM Uganda. An IGAD official on his part emphasized the importance of migration data in bringing to life their Regional Migration Policy Framework and its accompanying Action Plan. [Migration data in Eastern Africa; Sierra Leone has announced new Visa on Arrival policy: visa is free for ECOWAS member states; $25 for AU member states; $80 for others]
Chinese companies commit $1.4 bn for African energy projects (Logistics Update Africa)
The African Energy Chamber has recently concluded a visit in Beijing where it met with senior officials from the Chinese government, heads of state-owned energy companies, executives and entrepreneurs from the private sector. Throughout its meetings, the African Energy Chamber secured over $1.4bn with an intention to invest in Africa’s bankable projects in mining, oil and gas, power, and renewables. As LNG demand is growing by the day in China, Africa stands to play a role. In 2018, China consumed 276.6 billion cubic metres of natural gas, an increase of 16.6$ over 2017. In light of strong Chinese interest for Africa, and following demands from its Chinese partners, the Chamber will be hosting the first China-Africa Energy Investment Forum in 2020 in Beijing. [SA’s SEZs embark on roadshow to China]
Xenophobic attacks threaten $60bn Nigeria-South African trade (ThisDay)
Experts, who spoke to ThisDay, however, called for an earnest resolution of the diplomatic crisis between Nigerian and South Africa, given the huge bilateral trade between them. They stressed the need to seek diplomatic solution to the current spat between both countries, which appears to be degenerating. A reprisal against South Africa’s business interests in Nigeria, according to the experts, is not the way to go as it might lead to further job losses in the country. There are over 120 South Africa-owned businesses in Nigeria operating in different sectors. Speaking in an interview with THISDAY on the issue, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said South African investments were quite huge and significant to Nigeria. “So, I think they should be able to resolve this matter amicably. We have about 14 flights between South Africa and Lagos weekly and that is a lot of business. It is in the interest of Nigeria and South Africa to resolve this issue so that it doesn’t deteriorate.”
Oshiomhole advises Nigerians to boycott MTN, other South African businesses (Premium Times)
The National Chairman of Nigeria’s ruling party, APC, Adams Oshiomhole, has urged Nigerians to boycott South African goods and services to protest the killings of Nigerians and other nationals living in that country. Mr Oshiomhole gave the advice at a news conference in Abuja on Thursday. “This is the time to show commitment to our citizens and show sympathy to our loved ones. This can be done by boycotting South African goods and services beginning with Nigerians refusing to use MTN mobile network. Happily, we have indigenous network such as Glo, Airtel and I believe 9mobile is still standing by. If Nigerians boycott the goods and services at least for 30 days; first, to stop using MTN network services, it will send a clear message. We have to review all of those things that give South African companies monopoly in which it makes money with very little value addition. We think that these steps will be appropriate message to South African government to offer satisfactory explanation. It should also pay compensations to those innocent Nigerians whose properties have been looted. South African Airways should be stopped, its landing right should be withdrawn and should not have the right to fly any part of Nigeria until these issues are resolved. We must protect Nigeria’s image its citizens and businesses wherever they are.” [Azu Ishiekwene: The tail wags South Africa-Nigeria dog; Why Fayemi, El-Rufai, Emir Sanusi were in South Africa]
The DRC and the IMF: 2019 Article IV Consultation report
This is the first Article IV mission to DRC since June 2015. The inauguration of President Tshisekedi in January 2019 marks the first peaceful transfer of power since independence. He has pledged to improve governance and scale up public investment. This Article IV consultation provided a welcome opportunity to re-engage with the DRC authorities after a long hiatus (the last consultation took place in July 2015). The authorities had cited political uncertainty as reasons for delaying the overdue consultation. Provision of economic data has remained broadly adequate for surveillance. Some recommendations from the previous consultation remain outstanding (Annex IV). These include: (i) stepping up domestic revenue mobilization; (ii) removing bottlenecks to private sector activity; (iii) strengthening governance and enhancing transparency, particularly in the management of natural resources; and (iv) recapitalizing the central bank to strengthen its financial and operational autonomy. The authorities have also expressed interest in a Fund-supported program to accompany their economic development agenda. [The accompanying Selected Issues report]
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African trade and regional integration events:
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25th Session of the Intergovernmental Committee of Senior Officials and Experts of Southern Africa: Strategies and policies for the integration of micro, small and medium scale enterprises in the industrialization process in Southern Africa (10-13 September, Ezulwini)
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Expert group meeting: Harmonization of Industrialization Strategies and Policies in Southern Africa (12 September, Ezulwini)
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The AfroChampions Green Industrialisation Boma (9-10 October, Kigali)
The African Union has published an pdf African Integration Booklet (3.25 MB) (English)
World Economic Forum Africa 2019: selected updates
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The future of work in South Africa: Digitisation, productivity, and job creation. The advance of technologies such as machine learning, artificial intelligence, and advanced robotics will have a far-reaching impact on South Africa’s workplaces. Although digitisation will be disruptive, it has the potential to raise productivity and operational efficiency in businesses across sectors, to deliver better outcomes for both customers and citizens, and to create millions of high-quality jobs. These are the findings of a new McKinsey paper, The future of work in South Africa: Digitisation, productivity, and job creation, which shows that the accelerated adoption of digital technologies could triple South Africa’s productivity growth, more than double growth in per capita income, and add more than a percentage point to South Africa’s real GDP growth rate over the next decade. It could also result in a net gain of 1.2 million jobs by 2030 (see exhibit). A large proportion of those jobs would go to women, and digitisation could trigger a breakthrough in women’s empowerment. Extract (pdf):
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Our research, including analysis by the McKinsey Global Institute and a survey of about 70 South African leaders, finds that technology could reverse these trends by unlocking greater productivity across many sectors of the economy. In metal beneficiation and fabrication, for example, robot-assisted production can reduce human error and greatly increase efficiency. In mining, underground mine automation can improve safety and reduce costs. In financial services, digitisation can improve customer experience and drive greater efficiency. Such productivity gains from digitisation and machine learning have the potential to drive substantial improvements of individual businesses – and the entire South African economy. We estimate that these technology-related gains could triple South Africa’s productivity growth, more than double growth in per capita income, and add more than a percentage point to South Africa’s real GDP growth rate over the next decade (Exhibit 2). [The authors: Nomfanelo Magwentshu, Agesan Rajagopaul, Michael Chui, Alok Singh]
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Digitizing entrepreneurship for impact. There are many dimensions to empowering digital entrepreneurship for impact. This paper focuses on three (pdf): Effective entrepreneurial education – going beyond skills to include both an internal mindset and external ecosystems; Responsible and resourceful data use - leveraging the importance of data to serve as both a motivator and catalyst of new solutions; Inclusive digital platforms - filling gaps in budding physical hubs, whose entrepreneurs gain value from sharing insights and resources. Within each of these dimensions, this paper aims to clarify the changing role of the entrepreneur, identify the resources needed for success, and provide practical case studies, recommendations and metrics that serve as food for thought to anyone whose objective is fomenting entrepreneurial activity with impact.
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Lwazi Bam (Deloitte’s CEO): South Africa’s SMEs should be first in line for a digital upgrade. According to the Banking Association of South Africa, SMEs make up 91% of formalized businesses, provide employment to about 60% of the labour force, and account for roughly 34% of GDP in South Africa. As we debate the “jobs” theme in South Africa, emphasis needs to be placed on supporting small businesses and entrepreneurs, enabling collective and inclusive growth. Undoubtedly, the 4IR context of automation and cognitive technologies will eliminate jobs; mostly in search of improved efficiencies and productivity, and to some extent to reduce reliance on expensive, rare and specialized skills. It is futile and economically reckless to think otherwise. The same technologies will, however, create demand for new skills and new jobs. The World Economic Forum (WEF) conducted an extensive study, leveraging insights from business leaders cumulatively responsible for 15 million people across a variety of sectors, skills and seniority levels globally. The study concluded that for every job that is lost to 4IR popularised technologies, 1.74 jobs will be created. This is a net gain in employment!
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The Travel and Tourism Competitiveness Report 2019: travel and tourism at a tipping point. Sub-Saharan Africa outpaces the global average for growth in tourism receipts and arrivals, with the island nation of Mauritius (54th) outscoring last year’s top performer South Africa (61st) to rank as top scorer in the region. Due to historically lower levels of economic development, the region continues to face difficulties in health and hygiene, overall infrastructure and the effective selling of cultural and business travel. In the face of this, however, Sub-Sharan Africa shows great untapped potential for natural tourism, which can be better utilized with more development and investment. Some of the region’s greatest improvements came from areas where it traditionally has trailed, including ICT readiness, international openness and price competitiveness. Lesotho (128th to 124th) had the greatest growth in score since 2017; however, it was the average growth in the economies of Western Africa that generated the most subregional improvement (pdf).
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Botswana tells the world it wants to reduce dependence on diamonds. Botswana’s President Mokgweetsi Masisi told an audience at the World Economic Forum on Africa in Cape Town his country would embrace the 4th Industrial Revolution to reduce its dependence on diamonds. “Through our vision, we aspire to transform Botswana from a resource-based to a knowledge-based economy through digitisation and embracing the 4IR. We are committed to a modern Botswana that is not only open to but is also able to compete with the rest of the world.” He said this focus on quality above quantity also applied to the tourism sector, where Botswana had positioned itself as a premium destination for exclusive wildlife viewing, rather than attract a large number of tourists, who would have an impact on the environment. Turning to the geographical challenges, Masisi said the Kazungula Bridge over the Zambezi that would link Botswana to Zambia was being built and would be ready next year. “I cannot give you a specific month when the bridge will be completed, but it will be next year. With regards to the heavy haulage rail links to Namibia and South Africa, that is dependent on the economic viability. As coal is currently out of favour, those projects will not proceed, but the road to Walvis Bay in Namibia is operational and our exporters are making use of the port there.”
The WEF Africa ends tomorrow. The final day’s sessions:
Africa’s Economic Update [Speakers: Christopher Bishop, Albert G. Zeufack, Olusola David-Borha, Lesetja Kganyago]
Regional Strategy: Infrastructure [Speakers: Lois Auta, Vijay Iyer, Sabine Ulrike Dall’Omo, Ghida Fakhry, Popo Molefe]
Fighting Ebola [Speakers: John Nkengasong, Brian Chirombo, Oliver Cann, Neema Kaseje]
Banking the Unbanked [Speakers: Eraj Shirvani, Natalie Payida Jabangwe, Yinager Dessie, Shamina Singh, Gugulethu Mfuphi]
Nigeria: MAN receives $500m boost ahead of AfCFTA
A $500m facility has been granted by Afreximbank to the Manufacturers Association of Nigeria to promote intra-African trade in the continent under the AfCFTA. This was disclosed at a luncheon organised by MAN, where Prof Benedict Oramah, President of the bank, announced his decision to support Nigerian manufacturers. The $500 facility is expected to support the manufacturers and improve their product offerings. It will also enable them to compete against other products that will benefit from the agreement and global brands. The implementation will begin in 2020.
CPA members urged to exploit AfCFTA
African parliamentarians have been implored to take full advantage of the recently launched AfCFTA, in order to realize effective integration of the continent. “As legislators, we have to play our rightful and expected role to harness our continent through this historic milestone,” he told participants to the CPA Africa region conference. I am confident that together we will steer our various regions and the continent to the much-cherished unity and prosperity,” the EALA Speaker added.
The UN Conference on Trade and Development has released its first-ever Digital Economy Report that maps the flow, data and funds in the world’s digital economy. It outlines the enormous potential gains and possible development costs as more of the world moves, connects and buys online. Wealth creation in the digital economy is highly concentrated in the United States and China, with the rest of the world, especially countries in Africa and Latin America, trailing considerably far behind, according to the report. The United States and China account for 75% of all patents related to blockchain technologies, 50% of global spending on the Internet of Things (IoT), more than 75% of the cloud computing market and as much as 90% per cent of the market capitalization value of the world’s 70 largest digital platform companies. Global internet protocol (IP) traffic, a proxy for data flows, has seen dramatic growth. In 1992, there was about 100 gigabytes (GB) of traffic per day. By 2017 such traffic had surged to more than 45,000 GB per second. Yet the world is only in the early days of the data-driven economy. By 2022 global IP traffic is projected to reach 150,700 GB per second.
The report notes that 40% of the world’s 20 largest companies by market capitalization have a platform-based business model. Seven “super platforms” – Microsoft, followed by Apple, Amazon, Google, Facebook, Tencent and Alibaba − account for two thirds of the total market value of the top 70 platforms. The combined value of the platform companies with a market capitalization of more than US$100 million was estimated at more than $7 trillion in 2017 – 67% higher than in 2015, according to the report.
Strategies for digital enterprises in Africa (pdf): an extract from Chapter V – Assessing the scope for value creation and capture in developing countries. However, almost no African digital enterprises are creating digital infrastructure that is in wide use and becomes embedded. While software production for business customers and users is common, the enterprises seldom, if ever, create digital building blocks for innovators elsewhere in Africa or beyond. While the international expansion of some payment services (such as Paga and M-Pesa) and integrative platforms (such as Flutterwave) is encouraging, greater homogenization and integration of digital infrastructure are needed across African and other developing countries to set them on regionally suitable digital innovation paths. [Digital Economy Report 2019: overview (pdf)]
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Launched today in Accra: The 2019 Africa Agriculture Trade Monitor
The 2019 Africa Agriculture Trade Monitor is being published at a critical moment for both international trade relations and African trade integration. There is a particular need today to mobilize the most detailed statistical knowledge and technically robust tools and methods to study Africa’s trade integration and identify the most important barriers to further integration, to identify which African regional trade agreements have worked and which have failed, and to determine which sectors in Africa are most competitive and examine the characteristics of its specialization. It is also necessary to assess the possible consequences of a more protectionist global economy for Africa. Finally, clear policy recommendations are needed for current trade integration efforts on the continent. It is in this spirit that this report was designed. The report makes it clear that the AfCFTA is central to addressing many of the policy challenges associated with economic integration and agricultural trade that African countries face today. The authors argue consistently that the new agreement creates an important opportunity for African countries to design regulatory frameworks that will provide an adequate response to these challenges. To do so, however, policy-makers will require a clear picture of farm trade on the continent, as well as the trends and drivers shaping economic outcomes: this report seeks to make a concrete, timely, and policy-relevant contribution in this respect.
The report comprises six chapters, with Chapter 1 providing a general overview of the report. Chapter 2 is devoted to Africa’s trade performance in world markets, Chapter 3 focuses on measuring regional trade integration, and Chapter 4 looks at the competitiveness of African agricultural value chains. Chapter 5 focuses on the featured topic of the 2019 report, namely the potential effects on African economies of ongoing disruption to the global trading system, and Chapter 6 examines trade integration in the featured region of Eastern and Southern Africa.
AfCFTA Country Business Index: Expert group meeting update (UNECA)
Mr David Luke, coordinator of the African Trade Policy Centre, said “the Index will not only further contribute to better understanding of the challenges that private sector operators and traders at various levels face but also provide a tool for articulating their challenges to policy makers”. Mr Prudence Sebahizi, chief technical advisor and head of the AUC’s AfCFTA Unit, noted that the ACBI should be designed in a way that it complements other initiatives and tools including the African Trade Observatory and Pan-African Payment and Settlement System that aim at supporting the implementation of the AfCFTA. During the meeting, the proposed dimensions and indicators of the ACBI were critically reviewed and improvements have been suggested. A proposed survey instrument for collecting data from private and public businesses that produce/trade across borders in Africa was evaluated. The ACBI methodology will be refined and piloted in selected countries, Cameroun and Zambia, and be validated in the month of November 2019.
Africa’s Tripartite Free Trade Area to be operational in early 2020 (Xinhua)
World Economic Forum Africa: updates
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Remarks by President Cyril Ramaphosa during the Ease of doing Business seminar. We have moved to clear up uncertainty in the policy space with the finalisation of the Mining Charter and the release of the policy directive for the release of high demand spectrum. Work on a draft Oil and Gas Bill to guide the development of these burgeoning economic sectors is at an advanced stage and the Integrated Resource Plan that outlines the trajectory of our energy planning is close to finalisation. In support of accelerated industrialisation, we are refining our industrial strategy to focus on a number of key growth sectors including renewable energy, agriculture, and oil and gas.
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AngloGold Ashanti’s Sipho M Pityana: How Africa can secure its long-term economic growth. There is little doubt our policy responses ought to consider the current headwinds pulsing through the global economy. For example, we cannot at this stage disproportionately focus our resources on the manufacturing sector, which is currently in a slump amid frail global demand, dented by protectionism. While the sector may recover in the future, our policy fix has to ensure we also include other sectors including agriculture, services and mining. The challenge is three-fold: design data-dependent policies that boost productivity and long-term growth, cut debt and reduce Africa’s vulnerability to economic downturns.
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PwC’s Dion Shango: Why the skills gap remains wider in Africa. The current lack of skills is having real consequences. Of the CEOs who were extremely concerned about the availability of key skills, 65% of African CEOs (global: 55%) said the skills shortage was preventing them from innovating effectively, while 59% (global: 47%) conceded that their quality standards and customer experience were being undermined. In addition, 54% (global: 44%) confirmed that they were missing their growth targets because of inadequate skills. Only 3% of African CEOs (global: 4%) we surveyed said skills availability was not impacting on their organisations’ growth and profitability. The message business leaders are sending is clear. We need to act. Now. They also appear to be heeding their own advice, with 47% of African respondents (global: 46%) recognising significant retraining and upskilling as the most significant interventions needed to close skills gaps in their organisations. Twenty-two percent of CEOs in Africa (global: 17%) also identified establishing a strong pipeline of skills direct from educational institutions as an important step.
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WEF’s Maksim Soshkin: Sub-Saharan Africa has all the natural capital it needs to grow its tourism industry. Given sub-Saharan Africa’s potential for travel and tourism and the broad range of factors that need consideration, the industry can be used as a rallying point around which policy-makers and other travel and tourism stakeholders push for improvements in areas ranging from structural reform to infrastructure development. This could serve as a stimulant for broader economic development. Based on the results of the 2019 TTCR, sub-Saharan Africa showed the greatest improvement in international openness relative to the world, especially in regard to visa policy. Eight of the top 20 countries that showed the biggest reduction on visa requirements in the ranking came from the region. Moreover, 10 regional economies are among the top 20 scorers for more favourable visa requirements. For many economies, increased visa openness is strongly linked to tourism policy. For instance, Benin had the greatest percentage improvement in international openness (133rd to 92nd) in the ranking thanks to reduced visa requirements (122nd to 7th). The country recently announced visa-free access to all African countries, with visa reductions directly tied to its tourism action programme – a programme which is part of a broader integrated development plan.
WEF Africa sessions to take place tomorrow, Thursday
The Power of Digital Identities [Speakers: Bineta Diop, Paula Ingabire, Margaret Franco, Magdi Amin, Lacina Koné]
Shaping Inclusive Growth and Shared Futures in the Fourth Industrial Revolution [Klaus Schwab, Cyril M. Ramaphosa, Amina Mohammed]
Is Africa Ready for the Fourth Industrial Revolution? [Speakers: Iyinoluwa Aboyeji, Anne Githuku-Shongwe, Oliver Cann]
The Retail Revolution [Speakers: Arancha Gonzalez Laya, Ann Linde, Mukhisa Kituyi, Sihlesenkosi Majola, Brian A. Wong, Viliam Trska]
Education In The Age of the 21st Century [Speaker: Maxwell Hall]
Investing in the SDGs [Speakers: Frannie Léautier, Edward Ndopu, Hans-Paul Bürkner, André Hoffmann, Mark Suzman]
Today’s Quick Links: TICAD 7: WCO highlights Customs’ role in the development of Africa China initiates WTO dispute against additional US duties on Chinese imports ITC issues call for women entrepreneurs to join second phase of SheTrades Invest IMF: Illuminating dark corners of the global economy Zanzibar President opens African region Commonwealth Parliamentarians’ Association Conference |
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WEF Africa 2019 starts tomorrow in Cape Town: more than 50 head of states set to attend. Access the programme here.
A: Profiled WEF Africa commentaries
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Oxfam’s Winnie Byanyima and Peter Kamalingin: Africa can rise – if our leaders end extreme inequality. Africa is ready to rise. This is what we will keep repeating as Africa’s government and business leaders meet in Cape Town this week at the World Economic Forum Africa Meeting. Rarely have we felt such fiery potential on Africa’s horizon. Consider how Africa’s best-educated generation ever is coming of age – by 2025, half of our continent’s population will be under 25. These young women and men are by far Africa’s best natural resource, more valuable than all the gold, copper, oil and gas that lies under African soil – though we have a lot of that too! Consider how Africa is readily seizing renewable energy – the speed at which off-grid solar is expanding is exhilarating, for example. Consider how our people are pioneering technologies to solve problems. Or indeed the opportunity of the new Africa continental free trade are, set to be the world’s largest. This is reason to hope. And yet we must sound caution. There is no avoiding one inescapable truth: that Africa is not really rising yet. Oxfam arrives in Cape Town with new data that tells a story of: [Download: A tale of two continents]
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ISS’s Jakkie Cilliers, Anton du Plessis: Private sector must play its part in fragile, developmental states. A developmentally orientated governing elite can compensate for its lack of capacity through unity in purpose, improved government effectiveness and control of corruption. These are, however, exceptions rather than the rule and typical of authoritarian states such as Rwanda and Ethiopia rather than of many of Africa’s nominal democracies. Actually, at low levels of development, democracy is more likely to constrain development but remains the only means to hold poor leadership to account. So what role can the private sector play in such conditions? Generally, the private sector in poor and/or conflict-affected countries is small as markets are limited and business confidence thin or absent. Both the government and the private sector is generally weak and lacking in modern systems and capacity, and the opportunity for expanding the latter largely depends on the quality and effectiveness of the former. Furthermore, the domestic private and informal sectors are often indistinguishable from one another with the result that the domestic private sector is often associated with foreign companies — often multinationals active in resource extraction which is generally the main export characteristic of poor countries. That is about to change:
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McKinsey analysts Acha Leke, Tawanda Sibanda: Why Africa’s digital boom is only just getting started. There is room for many more such digitally driven innovations in Africa. Consider higher education, where Africa’s rate of enrollment is half that of India’s. One tech-enabled innovation to close that gap is the African Leadership University (ALU), whose campuses in Kenya, Mauritius and Rwanda empower students to manage their own education using technology – so bringing costs down to less than 10% of traditional universities. The ALU was recently named one of the 50 most innovative companies in the world. To scale and replicate such innovations, much greater investment will be required in the African technology sector. Although investment in African tech start-ups reached a record $1.2bn in 2018, it still lags other regions such as south-east Asia, where tech start-ups attracted more than $10bn in financing in 2018.
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Alibaba analysts Brian A Wong and Roger Yong Zhang: From Hangzhou to Rwanda – how Jack Ma brought Chinese e-commerce to Africa. Leveraging 20 years of collective Alibaba Group knowledge and resources, at Alibaba Business School we have developed a new empowerment model to help governments, entrepreneurs, youth and women to reap the benefits of the digital economy. The new empowerment model aims to promote greater understanding of and alignment around the digital economy and what is needed to encourage digital transformation across the public and private sectors. For this model to work, dedicated training is needed, using targeted curriculum for governments, ecosystem builders (entrepreneurs, SMEs) and students. A wide range of partnerships with venture capitalists and incubators, multilateral organizations, government agencies, universities, industry associations are necessary to create a true ecosystem that can support the development of a digital economy. And through these initiatives, we help align and connect different sectors so that they can work together towards a common goal guided by a shared vision. Here’s how we are applying the model at a country level in Rwanda:
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Utopia analysts Jonathan Hursh, Emmanuel Adegboye: These 5 start-ups are shaping the future of Africa’s cities. While it is clear that Africa’s future is urban, much more needs to be done to shape the evolution of its cities, foster collaboration among stakeholders and fund its urban infrastructure. Globally, urban start-ups like Uber and Airbnb are drawing in billions of dollars in venture capital while organisations like Sidewalk Labs, URBAN-X and Urban Us are changing cities and helping to scale urban innovations across North America. Africa also needs urban innovation groups actively reminagining its emerging cities and their slums. We aim to establish urban venture studios - CITYLabs - in Lagos and Nairobi, and to launch a 2020 Africa Megacity Prize to catalyse the African urban innovation ecosystem. Here are some of the start-ups shaping the future of cities across the continent: Sendy is a parcel delivery service that operates across Kenya, Uganda and Tanzania, and links more than 1,000 delivery drivers to customers. The service is used by over 5,000 businesses and 50,000 individuals to make deliveries which are insured and can be tracked in real-time from a mobile app. This leads to greater efficiency and reduced costs as it leverages a network of otherwise informally employed motorcycle, pickup, van and truck drivers. It also recently launched a freight service for domestic cargo transport.
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Royal DSM’s Mauricio Adade: A for-profit project has improved nutrition in Rwanda – is it a model that can eliminate hunger across Africa? Royal DSM, together with our partners in Africa Improved Foods (AIF), has shown that investments in agriculture and local food manufacturing work. AIF is a new multi-sectoral, public-private partnership that is feeding the people of Rwanda and delivering economic growth at the same time. This is the first big public-private partnership dedicated to addressing hunger and malnutrition. However, AIF is not a charity; it is a for-profit joint-venture with shareholders from the public and private sector. With an investment of $70m, AIF is now reaching over 2 million children in Rwanda with improved nutrition, thanks to the co-operation of smallholder farmers, governments, donors and private partners. AIF purchases locally grown staple crops from more than 24,000 smallholder farmers, mostly women, at prices that guarantee a predictable income. The crops are processed at AIF’s factory in Kigali and distributed to the entire country. An independent study conducted by the University of Chicago estimates that from 2016 to 2031, AIF will generate $756m for the people of Rwanda. After two years of successful operation, this is the time to replicate this model across the continent.
B: Profiled WEF Africa sessions taking place on Wednesday
View the Programme here. A live feed for each session will be available.
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Doing business in Africa: PwC’s survey of CEOs [Speakers: Dion Shango, Maxwell Hall, Shirley Machaba]
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Africa’s Innovators of the Year [Speakers: Fatoumata Ba, Chika Uwazie, Yinka Adegoke, Bright Simons]
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Africa Growth Platform [Speaker: Oliver Cann]
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From start-ups to scale-ups [Speakers: Fatoumata Ba, Iyinoluwa Aboyeji, Stella Ndabeni-Abrahams, Mark Elliott, Gabriele Steinhauser, Vukani Mngxati]
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Delivering the promise of Megaprojects [Speakers: Amani Abou-Zeid, Emmerson Mnangagwa, Thandeka Gqubule-Mbeki, Wong Ai Ai, Daniela Stoffel Delprete, Geoffrey White]
C: WEF Africa reports
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Africa E-commerce Agenda: roadmap for action. E-commerce in Africa is well underway, but it has potential to grow, creating new jobs and driving sustainable development. E-commerce stakeholders from within and beyond the continent have put together an action agenda to overcome the challenges to future e-commerce growth in the region. Goals and recommended next steps are identified in eight areas (pdf): Refresh policies, Expand connectivity, Upgrade logistics, Enable e-payments, Manage data, Grow tech, Coach small business, Join forces.
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The Sub-Saharan Africa risks landscape. This paper comes as dynamic global and regional factors are affecting countries across sub-Saharan Africa. In addition to rising geopolitical and geo-economic frictions, the effects of climate change are becoming dangerously pronounced. These risks have manifested amid significant and ongoing political transition on the continent. The analysis draws on data from the World Economic Forum’s Global Risks Perception Survey 2018-2019, which polled experts and decision-makers around the world. The analysis also uses responses (pdf) from the Forum’s Executive Opinion Survey 2018, which polled business leaders in 34 sub-Saharan countries. The combined insights are necessary in a time of immense complexity when risks – particularly environmental and macroeconomic – are spanning national and regional boundaries.
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The following African trade policy events began today:
The African Union’s AfCFTA trade in services signalling conference (Cape Town)
The UNECA’s ad-hoc expert group meeting to review the methodological approach to produce the AfCFTA Country Business Index (Addis Ababa)
The 6th COMESA Research Forum, on the theme Promoting intra-COMESA trade through innovation (Nairobi). Download the programme here (pdf)
The African Continental Qualifications Framework inaugural workshop (Addis Ababa)
Updates from the Global Logistics Convention held last week in Kigali
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Abhishek Sharma, TMEA’s Senior Director for Transport, highlights consequences of unsolved logistic challenges in the EAC. The biggest impact on trade logistics is on the poor. And I will explain how. Consider that there are two containers moving from the port of Dar es Salaam. One has electronics and another has rice. Two containers coming from Dar es Salaam to Kigali. The value of goods inside the container carrying electronics will be somewhere around $150,000 to $200,000 while the value in the rice container will be around $30,000 to $40,000. Now, if there are delays or the cost of container transport increases, the total logistics cost of sending a container to Kigali is about $3,000 and if you look at the percentage of price that logistic cost will be in the final price of the commodity you find that your rice will be 10% while for electronics it will be 1% or 2%. So, for high value goods consumed by the rich part of the population the cost of logistics does not make much difference but every time there is an increase in the cost of logistics you will find that the price of the basic commodities will increase significantly. That is why it is very important that we work very hard to reduce the cost of logistics.
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Freight forwarders commend removal of cash deposit on containers. Regional freight forwarders on Friday penned two vital agreements with foreign associations including one removing the longstanding burden where companies were compelled to pay a cash deposit fee of $2,000, per container, before leaving the port. This came after a Memorandum of Understanding was signed between the Federation of East African Freight Forwarders Associations and the Dubai-based National Association of Freight and Logistics. Fed Seka, Chairperson of FEAFFA, who signed the deal with Alexis Perinet-Marquet, Director of Product and Business Development at Switzerland-based Viaservice SA, at the end of the third Global Logistics Convention, told Sunday Times that it is a big relief to Rwandan and regional businesses. The longstanding issue of container guarantees charges at the port, Seka said, was impeding business as the amount charged per container was too much. Now that it has been removed, he said, the cost of doing business will also reduce. The second MoU signed on Friday was between FEAFFA and the Ethiopian Freight Forwarders and Shipping Agents (EFFSAA), to provide a framework of cooperation so as to, among others, lobby for a favorable business environment within the two regions.
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TradeMark East Africa, FEAFFA sign $3.5m deal. The four-year EAC Logistics Sector Skills Enhancement Program funded by the United States Agency for International Development (USAID) through TradeMark East Africa, and implemented by FEAFFA; will address existing skills gaps in the region. FEAFFA president Fred Seka said the funding will facilitate introduction of a higher-level qualification that will build on the success of the certificate program, such as exposing practitioners to global practices and position them as global logisticians.
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CNBC Africa interview with Dieudonne Dukundane (Executive Secretary of the Central Corridor Transit Transport Facilitation Agency)
South Africa: Imperial Logistics seeks partner for African freight growth (Bloomberg)
Imperial Logistics Ltd. is looking to expand into air and sea transportation as the Africa-focused logistics group offers more services to multinationals with sales on the continent. The Johannesburg-based company delivers goods for the likes of U.K. drugmaker GlaxoSmithKline Plc and Dutch brewer Heineken NV mainly via land routes to countries in sub-Saharan Africa. Now, it wants to add the ability to pick up products from manufacturing sites in Asia to complete the supply chain. The lack of freight operations is “leaving that margin on the table,” Chief Executive Officer Mohammed Akoojee said in a phone interview on Tuesday. Options include an acquisition, a joint venture or integrating with a third party, he said.
South Africa’s Naspers may lead $55m round in Indian logistics startup, ElasticRun (Economic Times)
Logistics and distribution startup ElasticRun is in talks to raise $50-55m, led by South African internet and media group Naspers, valuing the company at $250m, multiple people aware of the matter told ET. Pune-based ElasticRun is an asset-light transportation network that caters to industries including consumer goods, online retail, manufacturing, automotive and hospitality. The company, which is based on the shared economy concept, aggregates spare logistics infrastructure capacity from businesses like kirana (corner) stores, local couriers, and small and medium businesses to fulfill customer orders. “Naspers believes that this model is the most capital efficient way to build a scalable technology logistics network in India. The intent for Naspers is to double down on the investment in the next eight to twelve months,” said one person directly aware of the deal.
Leading vehicle tracking and telematics provider, Ctrack, has joined forces with economists.co.za to create the Ctrack Logistics Barometer, an economic indicator and performance gauge of the South African logistics and supply chain industries. An industry first, the monthly Ctrack Logistics Barometer is an accurate co-incident indicator of the state of the South African economy, particularly in terms of the goods economy. The number of heavy trucks that passed through the Tugela toll gate increased 3,6% in July compared to the same month a year ago. Heavy truck volumes on the N4 and N1 freeways recorded 6% comparative growth during the month. Rail freight volumes, which were primarily comprised of bulk commodities, recorded 3,9% growth in July. The country’s pipeline volumes grew 2,8% for the quarter to July 2019, compared to the same period in 2018. Sea freight saw a decline of -1,1% in volumes for the three months to July 2019 compared to a year ago, while air freight slipped -0.6% over the same period. In Ctrack’s view, both transport modes are feeling the impact of a slowing world economy. Incidentally, exported container traffic is down -11,8% in the last three months versus the same period a year ago.
New-vehicle sales continue to decline; exports set new record. South Africa’s top exporters in August: Volkswagen Group South Africa (15 659), Mercedes-Benz South Africa (8 869), Ford Motor Company of Southern Africa (7 032).
South Africa: Joint ministerial statement on the ongoing spate of violence in the road, freight and logistic sector (GCIS)
The Ministers of Employment and Labour, Police, Transport and Home Affairs condemned the ongoing violence and agreed that it is nothing but economic sabotage threatening the economic viability of the SADC region. The meeting emphasised that the acts of sabotage are spearheaded by criminal elements that are responsible for the blockages, burning of trucks and assets, as well as the intimidation and killing of truck drivers in the sector. The outcome of these discussions are as follows: Law enforcement will ensure that the authority of the state is not undermined and increase visibility in violent hotspots; The Ministers agreed that through the Department of International Relations and Cooperation, regional counterparts should be engaged to address this matter; There will be continuous joint inspections taking place in all provinces to ensure compliance in the sector; The task team has agreed to develop a clear action plan and to provide regular updates on the progress made to the joint inter-ministerial task team.
Africa has it all! OSBP as an instrument to trade facilitation (AU-PIDA)
To strengthen the development and operations of One Stop Border Post (OSBP), in each REC, ‘‘training of trainers (ToT) and data collection seminar for RECs’’ took place in Kigali from 29-31 July 2019. The objective of the seminar was for the REC participants to share knowledge and experiences in the development and operations of OSBPs. The seminar was co-sponsored by AUDA-NEPAD and JICA, and hosted by the EAC. REC participants were trained on the use of the African Infrastructure Database (AID) as a monitoring tool for infrastructure development in the continent. Hence in order to keep the database up to date, the delegates were requested to populate the data base with updates. This also acted as, a practical training in the use the facilities, ‘Virtual PIDA information Centre’ and AID.
Tanzania: Multi-sector taskforce set to spur ease of doing business (IPPMedia)
The government is to establish a multi-sector taskforce to address new businesses challenges and facilitate the ease of doing business in the country. Minister for Trade and Industry Innocent Bashungwa revealed this over the weekend at a breakfast meeting organized by the Confederation of Tanzania Industries. The taskforce will be dealing with handling on-the-spot challenges as well as offer advice on various issues related to doing business in the country. The taskforce according to the minister will include officials from key institutions involved in day to day facilitation of ease of doing business namely the Tanzania Revenue Authority, Tanzania Bureau of Standards, and umbrella bodies of the private sector such as CTI and the Tanzania Private Sector Foundation. “Our aim is create strong operational systems which will help us reach the goal of industrialization we are pursuing, and specifically for government institutions we want to see them facilitating business rather than frustrating it,” he said. During the meeting, participants lamented the presence of counterfeit goods in the market which hurts competition, insisting on the need for immediate solutions. CTI First Vice President Paul Makanza said the manufacturing sector was ready to work with the government in combating counterfeits as they have a massive impact on business. This shall also help to ensure the dream of making Tanzania an industrialized economy becomes a reality, he said. The manufacturing sector which contributes about 8.1% of the GDP, is growing at a rate of 8.3% and is major target of the campaign for ease of doing business in the country, he said.
@Trade_Kenya: Kenya Trade Remedies Agency has identified textile industry, building and construction, poultry and paper industry as sectors which need countervailing and safeguard measures in accordance with WTO regulations to save them from imminent collapse.
Peter Fabricius: Southern African states strategise over post-Brexit deals (Daily Maverick)
Trade officials from South Africa, five other Southern African countries and the UK are due to meet this week in Botswana to try to finalise a free trade agreement before Britain’s expected departure from the European Union on 31 October 2019. If they fail to reach a deal, some exporters from this region, including car manufacturers, will suffer when the UK drops out of the EU, either with or without its own Brexit deal with Brussels. South Africa’s chief trade negotiator, Ambassador Xavier Carim, is however optimistic that South Africa, Botswana, Namibia, eSwatini, Lesotho and Mozambique will secure a deal with the UK this week. At most he suggests there might be a few loose ends left to be tied up later at a higher level.
New UNCTAD publications:
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A special issue on Special Economic Zones (Transnational Corporations, Volume 26, 2019, Number 2). Using special economic zones to facilitate development - policy implications; SEZs and economic transformation: towards a developmental approach; Change and continuity in special economic zones: a reassessment and lessons from China; Are special economic zones in emerging countries a catalyst for the growth of surrounding areas?; Structural transformation through free trade zones: the case of Shanghai; The success and failure of Russian SEZs: some policy lessons; Special economic zones: methodological issues and definition by François Bost
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International classification of Non-tariff Measures – 2019 version. To address the growing complexities of international trade, the MAST group, other experts and government officials refined the 2012 version from 2015–2018. The group revised existing chapters A to I and chapter P and worked on the definition and taxonomy of the classification for chapters J to O, which lacked a disaggregated taxonomy. The MAST group created six open working groups to address the following areas:
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TICAD7: outcome documents
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pdf Yokohama Declaration 2019 (524 KB) : Advancing Africa’s Development through People, Technology and Innovation
We underscore the importance of private sector development, digital transformation, and youth and women entrepreneurship as strategies for implementing the priority areas of TICAD 7. In this context, we welcome the active participation of private companies from both Japan and Africa in TICAD 7. We consider the continued involvement of the private sector to be an essential element of the TICAD process going forward, and commit to strengthening the enabling environment for doing business and further encouraging impact investment that creates wealth.
We welcome the AfCFTA and the prospects it offers for deepening regional integration and enlarging markets, promoting trade facilitation, transforming agriculture and developing value chains. We commit to supporting the full implementation of the AfCFTA through measures that concretely link the African private sector with its counterparts in Japan, in order to achieve these objectives.
We recognize the role of the private sector in Africa’s development, and the linkages between the private sector, connectivity, technology and innovation. We welcome the Japan Business Council for Africa established by the Government of Japan and the private sector to encourage and facilitate business interaction between Japan and African Union Member States, including through private sector from other countries. We encourage initiatives such as the G20 Compact with Africa. We appreciate the business training provided through the African Business Education Initiative for Youth (ABE Initiative), and commit to strengthening job training as well as micro, small and medium sized enterprises on the continent, recognizing they are the primary vehicle for job creation and entrepreneurship, including of youth and women. We welcome efforts to support women entrepreneurship through financial and technical assistance. We also welcome efforts by the international community to de-risk private investment, particularly for infrastructure and productive sectors. We commit to working together to promote a conducive business environment, accelerate inclusive industrialization, enhance domestic resource mobilization, and strengthen public finance and macroeconomic stability. We further commit to strengthening capacities in the field of trade negotiation and responsible and sustainable business practices, including the development of an AU corporate social responsibility strategy, and to support impact investments to widen business opportunities and decent jobs including for youth and women in line with the aspirations and goals of the AU Agenda 2063 and Agenda 2030.
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pdf Yokohama Plan of Actions 2019 (218 KB) : Actions for implementation of the Yokohama Declaration 2019
The Yokohama Plan of Actions 2019 which accompanies the Declaration, lists actions expected to be implemented by the TICAD partners in order to promote focus areas of the three main pillars of the Yokohama Declaration 2019 adopted at TICAD 7. The Yokohama Plan of Action 2019 is an evolving document which will be updated at any time after TICAD 7 by each TICAD partner.
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pdf Japan’s contributions for Africa (120 KB) : selected extracts from the economy section
Launch bilateral committee on improvement of business environment in 7 countries to discuss improvement in institutions; improve the investment environment through Enhanced Private Sector Assistance for Africa with AfDB (EPSA4: Joint target with AfDB of $3.5bn in 3 years)
Support financing for Japanese private sector to expand business in Africa through Facility for African Investment and Trade Enhancement of JBIC ($4.5bn in 3 years)
Enhance risk money supply for Japanese private sector by JOGMEC; Launch NEXI’s new trade insurance scheme covering 100% of import costs and project financing in cooperation with African Trade Insurance Agency and Islam Development Bank Group
Promote quality infrastructure investment in line with the G20 Principles for Quality Infrastructure Investment particularly in three priority areas (East Africa Northern Corridor, Nacala Corridor and West Africa Growth Ring) where master plans were are completed
Blue Economy: Train 1,000 people in 3 years in the areas of maritime security, port enhancement and marine resource management; support port facilities improvement, ports management and operations; provide ships and equipments; participate in the Indian Ocean Commission (IOC) as an observer
Agriculture: Double rice production (from 28 million to 56 million ton) by 2030 through Coalition for African Rice Development (CARD); support agriculture transformation to increase farmers’ income through Smallholder Horticulture Empowerment & Promotion (SHEP); dispatch agriculture experts; support development of global food value chain; develop and expand agriculture technologies; promote innovation in agriculture by the public and private sectors
Energy for manufacturing and service industries: Develop renewable energy including geothermal; promote off grid energy; revise MoC on Japan-US energy cooperation in Africa
TICAD7 news updates:
Prime Minister Abe’s remarks at the Public-Private Business Dialogue Session (pdf). A country that is deeply indebted is a country difficult for you to penetrate into. We will choose ten priority countries each year for the next three years, for a total of thirty countries, and provide their officials with training in sovereign debt and risk management. To Ghana and Zambia, we will send advisers on debt management and macroeconomic management.
The World Bank and the Government of Japan have announced a new Africa-focused initiative aimed at advancing the goals of the Human Capital Project, a global effort to accelerate more and better investments in people for greater equity and economic growth. The multi-year initiative, announced during the seventh Tokyo International Conference on African Development, will support two key initiatives of relevance to African countries: (a) The Global Education Policy Dashboard. Together with the Bill & Melinda Gates Foundation and the United Kingdom Department for International Development, the World Bank is developing a policy dashboard focused on giving governments in low- and middle- income countries a better understanding of what’s going on in their education systems at the school and system level in basic education, so they can make, and track the impact of, real-time policy decisions at the national level; (b) A Japan-Africa higher education partnership aimed at increasing collaboration between Japanese universities and industries and African universities to address urgent developmental challenges in sub-Saharan Africa.
Gavi sets ambitious goal to immunise 300 million people by 2025. Gavi, the Vaccine Alliance has called on donors to back plans to immunise an additional 300 million children, saving up to eight million lives, in developing countries between 2021 and 2025, launching a fundraising drive of at least $7.4bn. A total of $3.6bn will be invested by developing country governments in their own vaccine programmes over the period, up from $1.6n in 2016-2020. The 2021-25 Investment Opportunitywas launched at a special event at the Seventh Tokyo International Conference on African Development (TICAD) in Yokohama co-hosted by the Japanese government, which has supported Gavi with around $150m since 2011. [New Gavi impact figures released]
South Africa’s July trade figures record a R2.88bn deficit (SARS)
The R2.88bn trade deficit is attributable to exports of R112.94n and imports of R115.82n. Exports increased from June 2019 to July 2019 by R3.74bn (3.4%) while imports increased by R12.17bn (11.7%). The June 2019 trade surplus was revised upwards by R1.12bn from the previous month’s preliminary surplus of R4.42bn, to a revised surplus of R5.54bn as a result of ongoing Vouchers of Correction. The main month-on-month export movements are: vehicles and transport equipment (+R3 187bn, +22%), vegetable products (+R1 846bn, +28%), chemical products (+R1 366bn, +23%). The main month-on-month import movements are: machinery and electronics (+R4 825bn, +22%), vehicles and transport equipment (+R2 959bn, +32%), wood pulp and paper (+R 654m, +25%). The Africa zone figures (pdf): Exports of R30 585 million (an increase of R3 134 million from June 2019’s revised figures); Imports of R11 572 million (a decrease of R2 730 million). The Africa zone trade surplus of R19 013 million is an improvement of R5 863 million in comparison to the R13 150 million surplus recorded in June 2019.
Uganda: Toward scaled-up and sustainable agriculture finance and insurance (World Bank)
Diarise:
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Launch of The Digital Economy Report 2019 (4 September, Geneva). The report examines the development implications of the growing role of digital platforms, particularly in the big data sphere andc will assess what countries need to do to capture a fair share of the value created in the digital economy for their own development. The scope of this new analysis will include the market impact of new technologies, the consequences for small businesses in developing countries and the implications in terms of infrastructure, skills, respect for competition, data protection, and taxation, among other issues.
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Mining for change: natural resources and industry in Africa. The book, authored by John Page and Finn Tarp, will be available in January 2020. The book presents research results for Ghana, Mozambique, Uganda, Tanzania, and Zambia: each country study covers managing the boom, the construction sector, and linking industry to the resource.
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Madagascar has notified the WTO’s Committee on Safeguards that it has initiated three safeguard investigations: on soaps, lubricating oils and on vegetable oils and margarines
The East Africa Community will host a High Level Conference on Trade and Regional Integration (25-27 September, Nairobi) on the theme: Paradigm shifts in manufacturing value chains
Two EAC events presently underway, concluding tomorrow: 6th Meeting of the Ad Hoc EAC Competition Authority, Regional Technical Group on the East African Development Bank
Results and performance of the World Bank Group 2018: an independent evaluation (World Bank)
2018 was an ambitious year for the World Bank Group. At the Spring Meetings, the shareholders approved major capital increases for the International Bank for Reconstruction and Development and the International Finance Corporation, building on the “Forward Look,” IFC’s new strategy, “IFC 3.0,” and the commitments made as part of the 18th Replenishment of the International Development Association. The Bank Group has emphasized its ambition to achieve greater results and impact in all client segments as well as leading on global issues. IDA18 and the capital increase also bring with them a push to provide more financing, including for fragile and conflict-affected situations. This report provides a retrospective assessment of the Bank Group’s results and performance across its project and program portfolio. This is relevant for understanding the stock of achievements to date and the foundations on which the Bank Group is delivering on the Forward Look and its ambitious capital package. The report synthesizes trends in Independent Evaluation Group (IEG) ratings and identifies explanatory factors behind portfolio performance. Each of the three Bank Group institutions assesses results differently because of their differing reporting periods, operating models, and clients. Extract: Beyond the project level, ratings for country strategy outcomes for FY14–18 increased to 69 percent MS+, just below the FY17 corporate target of 70 percent. Country strategy outcomes in FCS were rated far lower, however, at 46 percent MS+. Ratings for Bank Group performance in country strategies were 62 percent good or above for all country strategies reviewed in FY14–18. This rating was particularly low in Africa and in FCS countries at 42 percent and 54 percent good or above, respectively.
Somali Poverty and Vulnerability Assessment: findings from Wave 2 of the Somali High Frequency Survey (World Bank)
The #AF19 opens next week in Cape Town: previews
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What to expect from the World Economic Forum on Africa 2019. While young Africans are 13% more entrepreneurial than the global average, start-ups on the continent are 14% more likely to fail than elsewhere in the world. That’s why the World Economic Forum (4-6 September) will launch the Africa Growth Programme, a new platform to bring enterprises together with investors and institutions, helping them secure smarter funding. Among the 29 entrepreneurs heading to the meeting are fintech start-up Flutterwave and Evergreen, a Tanzanian company recycling waste plastic into furniture.
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Africa Growth Platform. A new World Economic Forum initiative, the Africa Growth Platform, will help Africa’s community of start-up enterprises grow and compete in international markets. The Africa Growth Platform will do this in three ways: firstly, by securing commitments from governments to implement policy reforms aimed at stimulating and accelerating business growth. Secondly, it aims to build a community of investors, whether private investors, foundations, multilateral institutions or corporate intrapreneurs to enable better coordination and pooling of resources that could facilitate larger subsequent rounds of funding. Third, the platform will create and sustain a community of start-up businesses themselves, promoting collaboration and sharing best practices. The need for an innovative approach to helping Africa’s start-ups reach the scale where they become sustainable is backed up by data. The founding members of the Africa Growth Platform: Alibaba Group, A. T. Kearney, Dalberg Group, Export Trading Group, US African Development Foundation, Zenith Bank
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WEF Africa backgrounders: 5 things to know about African migration, Why Africa must be ready to take the quantum leap, How to start a digital healthcare revolution in Africa in 6 steps, Mark Elliott (Mastercard Southern Africa): 3 ways to get Africa’s informal economy on the books
TICAD7 Updates:
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Keynote address by Prime Minister Shinzo Abe at the opening session. And so I will say it again: the Japanese government -- New TICAD -- will do its utmost to support Japanese enterprises that are betting on the future of Africa. We are in an era in which the challenges Africa faces will be resolved through S, T, and I -- science, technology, and innovation. At the Egypt-Japan University of Science and Technology and at Kenya’s Jomo Kenyatta University of Agriculture and Technology, we will foster 5,000 young people who will advance STI into the future. We want to cultivate seamlessly the generations that will come after them. Doing this means making science and mathematics subjects they understand. That’s what is included in the collaboration between Japan and Africa, and it is now significantly changing the classrooms of African primary education. The Japanese way, which values pupils’ involvement in such activities as cleaning classrooms and serving lunch, has just started to spread in Egypt in its elementary schools.
A project to improve school management through community participation, or the “school for all” project, was launched by JICA in Niger and has now spread to more than 40,000 schools, including in Burkina Faso and Senegal. Our target for the near term is to have the number of children benefitting from reforms to primary education reach three million. This kind of human resource building is where Japan has invested the greatest amount of effort in Africa over the years. The ABE Initiative, which nurtures industry leaders, has grown as many as 2700 young people over the past five years. We now have twenty applicants vying for every opening. The number of Japanese companies welcoming them as interns is now 358, 5.4 times the number when the initiative was first launched.
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Japan-South Africa summit meeting. Prime Minister Abe added that the Japan-South Africa Business Council (tentative name) should be established to support Japanese companies entering the South African market in order to further enhance trade and investment relations between the two countries. He also mentioned the holding of the Special Conference on Promoting Cooperation in the Western Indian Ocean and stated that Japan intended to cooperate with South Africa to ensure that the Indian Ocean develops as a free and open ocean. Prime Minister Abe further called for South Africa’s participation in the “Osaka Track” that promotes international rule making for data distribution and electronic commerce and its support for WTO reform. In response, President Ramaphosa welcomed the establishment of the Japan-South Africa Business Council and appreciated Japan’s supports related to the establishments of a universal health insurance system as well as the Universal Health Coverage, to measures against marine plastic litter, to industrial human resources development, and to some other areas.
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Japan-Egypt summit meeting. Prime Minister Abe stated that he was pleased that both countries announced enhanced cooperation for the African development under the Japan-Egypt Triangular Cooperation Program at TICAD 7 co-chaired by Egypt, and stressed his intention to expand the scholarship program at Egypt-Japan University of Science and Technology (E-JUST) to include 150 African postgraduate students under the collaboration between Japan and Egypt. PM Abe also stated that we would newly establish “Japan-Egypt Business and Investment Promotion Committee, in addition to the existing Japan-Egypt Business Council which aims at business networking, and we would like to seek further support from Egyptian Government in improving the investment environment, which will further promote Japanese companies’ investment to Egypt. Furthermore, he stated that we would like to ask your continuous support towards removal of all the import restrictions on Japanese food products imposed after the Great East Japan Earthquake. In response, President El-Sisi stated that we would like to make efforts in this matter. [Short notes of other bilateral meetings (by Prime Minister Abe, Foreign Minister Kono) can be accessed here]
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Japanese and African business leaders hold first investment dialogue at TICAD. Top African and Japanese business leaders held the first business-focused meeting of the Tokyo International Conference on African Development on Thursday in Yokohama, underlining Japan’s strategic policy shift from government aid to promotion of investment as international competition on the continent grows. Akinwumi Adesina, president of the African Development Bank, said several influential countries now organize African summit conferences similar to TICAD. “Just think about it. TICAD by Japan. China-Africa forum. India-Africa forum. U.S.-Africa forum. And now, soon to be, the Russia-Africa forum. Africa should no longer be seen through the development lens. Africa should be seen from an investment lens. Japanese companies should not only be at the table, they should be on the ground in Africa. I encourage the Japanese private sector to form joint ventures in Africa for a win-win investment partnership.”
Duane Newman, Catherine Grant Makokera: The questions your company needs to ask as Africa frees up trade (Business Day)
As is the case with so much in life, the devil will be in the detail, and companies need to keep a close eye on these negotiations to see exactly where the opportunities will lie and where they will need to press for better access. The big questions any company needs to be asking are:
Anthony Asiwaju: Back again at draconic border closure policy (Punch)
But now, in August 2019, the country appears to be drifting back towards the draconic traditions of arbitrary border closure against our regional neighbours, beginning with the Nigeria-Benin to the west, especially in the South-West, our nation’s main gateway into ECOWAS, and the Nigeria-Niger to the north. I hear the closure, which took effect on August 20, is, as was done on 24 April 1984, temporary, a month for now, in the first instance. In 1984, which affected all our borders, remained officially in force till 1 March 1986, even in spite of the change in the military baton in August 1985 when the Buhari regime was booted out by a coup that brought in Babangida. Within the three days of the ongoing 2019 border closure, the sufferings of the local populations, at least here, in Imeko/Afon Local Government Area of Ogun State, where I live, the strains and stresses have been incalculable and economic losses colossal for predominantly rural and agrarian communities:
South Africa’s untapped rare earths mine plans for success amid US-China feud (Japan News)
The Steenkampskraal Mine may be about to become piping hot mining property thanks to some of the world’s highest-grade deposits of rare earth metals. “Steenkampskraal will become a very important source of rare earths for the global industry,” Trevor Blench, chairman of Steenkampskraal Holdings Ltd., said during a recent tour. The mine, located about 350 kilometers north of Cape Town, used to produce thorium, a component of nuclear fuel, in the 1950s and 60s. But now it’s been found to also have monazite ore which contains extremely high grade rare earth minerals including neodymium and praseodymium — elements vital to cutting-edge industries. Steenkampskraal has secured all the licences required to start mining. It plans an initial production of 2,700 tonnes a year once funding of $50 million has been secured, with further plans to expand.
The drivers, implications and outlook for China’s shrinking current account surplus: the individual country perspective (IMF)
Some Asian economies have benefitted from China’s current account decline. In line with China’s rapid increase in imports of computers, electronics, and electrical equipment, the trade balance vis-à-vis China - in both gross and value-added terms - has improved the most for Asian economies exporting those items to China (Taiwan Province of China, Singapore, and Korea). The rise in Korea’s trade balance - supported by the depreciation of the currency vis-à-vis renminbi towards end of 2007 - has been predominantly due to electronics exports, which constituted 41% of total exports to China in 2017, up from 28% in 2008.
The trade balance of others (e.g. Japan, India, Indonesia) deteriorated. Notably, Japan’s trade balance with China, though improving in recent years, deteriorated by around $33bn in the period 2008-2015—equivalent to a decline of 0.7 percentage points, when expressed as a share of Japan’s GDP. Japan’s imports from China, owing to items like electronics and textiles, outpaced exports, where the sales of electronics—the country’s top exports to China—slowed down possibly due to China’s own increase in high-tech electronics production. Outside Asia, Germany’s trade balance with China improved markedly, predominantly due to the rise in exports of motor vehicles and machinery. The share of vehicles - Germany’s top exports to China in 2017 - increased to 24% of Germany’s total exports to China from 15% in 2008. In addition, the commodity exporters (Brazil, Australia) witnessed higher trade balances with China. For the US and Canada, gross trade balance with China improved marginally while the value-added trade balance deteriorated moderately. [Note: Being the IMF’s new Selected Issues report]
Related News
tralac’s Daily News Selection
The Seventh Tokyo International Conference on African Development began today in Yokohama on the theme Advancing Africa’s development through people, technology and innovation. The summit is being attended by over 20 African presidents.
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Abe pledges to push Japanese investment in Africa but steers clear of target at TICAD. in his opening speech Prime Minister Shinzo Abe pledged to aggressively promote private-sector investment in Africa but failed to set a new numerical target on funds to be funneled to the continent. Facing dozens of top African leaders at the Tokyo International Conference on African Development, Abe claimed the Japanese private sector invested $20bn in Africa over the past three years. “I make this pledge to you. The government of Japan will put forth every possible effort so that the power of Japanese private investment of $20bn in three years should, in the years to come, be surpassed anew from one day to the next,” Abe said, although he did not mention any specific investment goal. In the previous TICAD meeting in 2016, Abe pledged that the Japanese government and private businesses combined would invest a total of $30bn in Africa over the following three years. Now Japanese Foreign Ministry officials claim that Tokyo has met the $30bn target, as the government extended official development assistance totaling $10bn and the Japanese private sector invested $25.6bn in Africa during that period. But the goal was met only after the Foreign Ministry recently changed how it measured the investment, from using a net basis to a gross basis, which considerably boosted the total figure. Ministry officials claimed the gross total is more appropriate, because net investment does not include certain funds such as dividends paid by African subsidiaries to the parent company in Japan.
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Japan to drive Africa investment with enhanced trade insurance – Abe. Japan will offer enhanced trade insurance to boost private sector investment in Africa, Prime Minister Shinzo Abe said on Wednesday as his country competes with rival China for influence in the resource-rich continent. The enhanced insurance would fully cover loans to African governments, their affiliated institutions or private companies buying Japanese goods for infrastructure projects in Africa, according to government briefing materials and a state-run firm offering trade insurance. “For example, our cooperation with local financial institutions will create a new trade insurance that could cover 100% of your transactions,” Abe said in his speech.
African perspectives and TICAD7
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@AUC_MoussaFaki: The @_AfricanUnion team held a productive meeting with Japanese PM @AbeShinzo on how to further deepen the strategic partnership with Japan through high-level consultations, including regional and continental priority areas of work through AUDA -@NEPAD_Agency
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Kagame emphasises private sector role in development. President Paul Kagame on Wednesday told global leaders gathering in Japan’s capital, Tokyo to put the private sector at the heart of strategy for prosperity. He was speaking at the Tokyo International Conference on African Development, which he described as a valuable process that represents a spirit of optimism and partnership. Today, he said, many of TICAD’s innovations have become standard and the forum has continued to evolve in tandem with Africa’s priorities. “The key change is the importance given to the private sector in this TICAD,” he said. The Head of State cited Rwanda as a critical example for success when private sector development is put at the heart of strategy for prosperity. This, he said, was done using three types of investment:
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Sisi calls for boosting Japanese-African cooperation, invites private sector for investments. Sisi also urged regional, African and international financing institutions to play a role in funding development projects in Africa and providing financial guarantees for the capacity-building of the continent with the view to beefing up trade exchange and investments. He also stressed the dire need of backing the African Union’s Post-Conflict Reconstruction and Development policy, along with building the capacity of state institutions to undertake their duties in protecting their countries and shoring up peace and stability. [Japan-Egypt Summit Meeting]
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President Cyril Ramaphosa’s address to the South Africa-Japan Business Forum. The coming infrastructure revolution, combined with the Continental Free Trade Area, means that manufacturing in Africa is the best way to sell in Africa. African’s GDP is already $3 trillion and is projected to be $5 trillion by the end of 2030, and a new generation of consumers will be looking to purchase automobiles, televisions, cell phones, food products and so much more. This consumer market gives manufacturers in South Africa and on the African continent an incredible base from which to develop. It offers a source of growth and development that, when combined with a competitive and low-cost environment for production, can be used to then extend the reach of manufacturing to the rest of the world. As the most advanced industrial economy on the continent, South Africa is well positioned to serve as the launch pad into Africa and the global market. We are taking steps to support investment and local manufacturing in our country. To that end, we have embarked on a number of initiatives aimed at creating what we call an Entrepreneurial State. This is a state that can work with the private sector to promote competitiveness and assure the success of our business partners.
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@StateHouseKenya: The ongoing roll out of the UHC programme and the development of a Special Economic Zone in Dongo Kundu, dominated bilateral talks between President Uhuru Kenyatta and Prime Minister Abe Shinzo on the sidelines of the ongoing TICAD7 conference in Yokohama. During the talks, the PM said Japan will continue supporting Kenya’s ambition to achieve UHC through PPP arrangements. The two leaders also agreed that with the support of the Japanese government, Kenya will fast track commencement of Dongo Kundu SEZ & construction of Likoni Gate bridge.
Japan’s private sector and TICAD7
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Africa beckons as land of deals for Japan’s top banks. Japan’s trio of leading banks will form collaboration agreements this week with various African financial services providers, paving the way for greater Japanese corporate investment on the continent. Africa’s potential beckons Japanese companies, not only for resource and infrastructure projects but also its growing consumer markets. Yet Japan’s banks have made few inroads into the continent, until recently. Sumitomo Mitsui Banking Corp. looks to sign five memorandums of understanding during TICAD7. The Sumitomo Mitsui Financial Group unit’s partners will include Kenya Commercial Bank. Mizuho Bank plans to partner with South Africa’s Standard Bank Group, Africa’s largest private-sector financial institution, to form a team catering to Japanese corporate clients. Mizuho will sign a memorandum with Morocco’s Attijariwafa Bank as well.
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Corporate expansion in spotlight at Africa conference. TICAD 7 will also be more business-oriented than previous iterations as the Japanese private sector is “finally becoming serious” about the African economy, said Shigeru Ushio, director-general of the African Affairs Department of Japan’s Foreign Ministry in a recent interview. “The (Japanese) private-sector businesses have requested (the Japanese government) to let them take the driver’s seat and speak during a plenary meeting of TICAD for the first time,” he said. As a result, TICAD 7 will have a business dialogue session by representatives of the private and government sectors on 29 August. In the past, such a session was organized as a side event, but this time it will be upgraded to a plenary meeting for the first time. There are clear reasons for Japanese firms to be more serious about business in Africa:
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Japan’s foreign direct investment stocks in Africa stood at just $8.7bn at the end of 2017: meanwhile, France made the largest direct investment in Africa with $64bn the same year, followed by the Netherlands with $63bn, the US with $50bn, Britain with $46bn and China with $43bn.
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Keidanren’s proposals for TICAD VII. Keidanren, Japan’s most powerful business lobby: “Africa has realized high economic growth thanks to its rich natural resources and other factors. The gross domestic product surged from $632bn in 2001 to $2.1 trillion in 2016, as the economy expanded 3.4 times.”
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TICAD7 Public-Private Roundtable Meeting: recommendations by the Japanese private sector (pdf). With a view to strengthening the “TICAD brand”, we would like to propose a “model change” to the TICAD process incorporating voices of Japanese companies which operate in Africa and understand the problems and issues of Africa from experience while leveraging its characteristic as an open multiple-stakeholder forum. This process should be the vital element of TICAD. Moreover, we propose the “Japan Business Council for Africa” be established as a permanent platform with participation of Japanese private companies doing business in Africa in a manner that reorganizes and develops the existing Public-Private Round Table Meeting.
In the Council, it is expected to identify issues and challenges to be dealt with in the TICAD process (mainly issues to call on the African side to reform or improve) and priority areas in the strategy on Africa through public-private partnership. Proposing policy recommendations to the Japanese government and conduct a policy dialogue with African government leaders, ministers, and others along with the TICAD process are also envisioned. Furthermore, Working Groups on the specific themes and fields should be set up under the “Japan Business Council for Africa” with participation of private companies, ministries and agencies concerned to improve the effectiveness of recommendations by the Council.
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JETRO to utilize TICAD to recover ‘lost opportunities’ in Africa. “Africa is far away from Japan, but we want to let Japanese companies know that there are business opportunities there,” JETRO Chairman Nobuhiko Sasaki said at a press conference in Tokyo. “JETRO’s role is to make a path for Japanese companies at the initiative of the private sector.” However, Japan’s presence in Africa remains notably low with exports to the continent at about $10.8 billion in 2018, down 27.3 percent over a decade, while the world’s exports to the region rose 17.2 percent in the same period, according to data provided by JETRO, which views this as “lost opportunities” for Japan. Under the theme of “Tsumugu: Intertwining Japan and Africa’s Future,” JETRO has focused on four areas: encouraging small and midsize companies to make inroads into the African market, boosting cooperation with entities in third-party countries, connecting African start-ups with Japanese companies and improving business environments.
Selected TICAD7 Side Events:
Science and Technology in Society Forum: address by President Ramaphosa. South Africa endorses the focus on science, technology and innovation as a priority theme for TICAD 7, given its great potential to accelerate African development through mutually beneficial partnerships with Japan. We seek more initiatives of this kind [the Square Kilometre Array project] and we wish to encourage global pharmaceutical companies to locate at least one of their innovation laboratories in an African country and to invest in young full time African researchers.
AUC, OECD Development Centre High-Level Policy Dialogue: Achieving productive transformation in Africa
Selected G7 Summit outcomes
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G7 Leaders’ Declaration: Trade issues. The G7 is committed to open and fair world trade and to the stability of the global economy. The G7 requests that the Finance Ministers closely monitor the state of the global economy. Therefore, the G7 wishes to overhaul the WTO to improve effectiveness with regard to intellectual property protection, to settle disputes more swiftly and to eliminate unfair trade practices. The G7 commits to reaching in 2020 an agreement to simplify regulatory barriers and modernize international taxation within the framework of the OECD. [DG Azevêdo tells G7 leaders: WTO reform is opportunity to tackle inequalities]
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The Business for Inclusive Growth (B4IG) coalition launched. A group of major international companies has pledged to tackle inequality and promote diversity in their workplaces and supply chains as part of an initiative sponsored by the French Presidency of the G7 and overseen by the OECD. Spearheaded by Emmanuel Faber, Danone Chairman and CEO, the coalition brings together 34 leading multinationals with more than 3 million employees worldwide and global revenues topping $1 trillion. Members have agreed to sign a pledge to take concrete actions to ensure that the benefits of economic growth are more widely shared. The platform, chaired by Danone, consists of a three-year, OECD-managed programme.
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Affirmative Finance Action for Women in Africa: G7 leaders provide AfDB’s AFAWA initiative with $251m. “I am particularly proud, as the current G7 president, that the programme we are supporting today, the AFAWA initiative, comes from an African organisation, the African Development Bank, which works with African guarantee funds and a network of African banks,” Macron stated at a press conference at the G7 Summit in Biarritz. AfDB president Akinwumi Adesina: “Currently, women operate over 40% of SMEs in Africa, but there is a financing gap of $42bn between male and female entrepreneurs. This gap must be closed, and quickly,” he added. AFAWA aims to raise up to $5bn for African women entrepreneurs and the African Development Bank will provide $1bn financing. [UK backing for AFAWA]
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G7 and Africa Partnership: remarks by President Cyril Ramaphosa. Our focus at this Summit on the digital economy is equally important. Through the cooperation we have envisaged here, we can work together to ensure digitisation reduces inequality and supports inclusive economic growth. The African Union Commission is currently developing a comprehensive Digital Transformation Strategy for Africa that will provide a common, coordinated response to realise the digitisation of the continent. This will lay the basis for the development of infrastructure and the institutions we need to maximize the opportunities presented by the fourth industrial revolution. It will also unleash the African spirit of enterprise and creativity and will generate more homegrown digital solutions and content. [G7 Summit’s Session on Climate, Biodiversity and Oceans: Environmental challenges greatly concern Egypt]