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Accelerating Economic Diplomacy towards a better South Africa, Africa and world: DIRCO Budget Vote Speech 2019
Address by Minister Naledi Pandor, Department of International Relations and Cooperation Budget Vote Speech, 11 July 2019 at the National Assembly, Parliament
I am pleased to have the opportunity to report to this House on our progress and activities in the 2018/19 financial year and to indicate our plans for 2019/20.
Last year DIRCO was allocated R6 552.7 billion to be utilised to advance our agenda for global co-operation. The development of our region and our continent. This year we are allocated R6 508.5 billion and as with all departments we are confronted by the limitations of budget reductions, currency fluctuations and the inadequacy of our compensation budget. Given these challenges we have to use our resources wisely and strategically. The reduced budget severely impacts on our ability to support government in reaching our national priorities. Fortunately, we have an excellent team in DIRCO and we shall do our best.
Debates on the international relations budget and programme are incomplete if they are not associated with the tremendous role the international community played in supporting us to achieve freedom. We have in many ways sought to honour these solidarity based contributions through reciprocating in creating a just world order that has a humane face – a face of empowered women and girls, of men and boys, free from war, living with human security. I have been pleased that our statements and voting pattern in Geneva and New York reflect our support for a more just world.
Our work must always reflect this commitment to return the privilege of international solidarity with attention to the plight of those who seek refuge, democracy, freedom and peace.
The world has improved vastly from the world in which racial domination could thrive, yet Palestine is still occupied and not free, South Sudan has internal conflict, Western Sahara is still occupied and not free, Cuba remains blockaded and extremism and terrorism destabilise the world. Powerful forces of economic bullying seek to alter the established multi-lateral world order. Africa too continues to have many development challenges. We have to promote our relations in this challenging context. We have to use our extensive network and limited resources to support the emergence of a world where all enjoy freedom and democracy, increased human security and peace. Our relationships with the world must be centred on achieving these outcomes.
This year we celebrate 25 years of freedom. Even though we are young adults in democracy, we can as President Ramaphosa said in SONA “move forward together towards achieving a stronger, greater, more compassionate, more united and harmonious South Africa” and we add Africa.
We recall too that Rwanda is commemorating 25 years since the genocide of 1994. We reaffirm our friendship and solidarity with the people and government of Rwanda and salute them for their determined efforts to achieve reconciliation and a nation at peace with itself. The search for social cohesion and reconciliation have been put to good effect in both our countries and we should use this common experience to forge greater links.
The work we do will advance such links and also actively contribute to the seven priorities announced by the President:
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Economic transformation and job creation;
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Education, skills and health;
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Consolidating the social wage through reliable and quality basic services;
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Spatial Integration, human settlements and local government;
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Social cohesion and safe communities;
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A capable, ethical and developmental state; and
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A better Africa and World.
These priorities are global, they are in the NDP, the SDGs (Agenda 2030), and in our Africa Agenda 2063. We will promote action to realise them for our country and our continent.
We pursue the priorities in a period in which Africa has entered a phase that holds much promise for genuine sustainable development. We plan to use our diplomacy to build stronger links with Nigeria, Egypt and Kenya as anchor countries that should advance these goals.
Many African countries are achieving positive economic growth and developing social and economic infrastructure that expands the likelihood of national development, higher growth levels and social development for all. It is noteworthy that democracy has also taken root in much of the continent with free, fair and regular elections on the rise.
We are very encouraged by the launch of the African Continental Free Trade Area Agreement. Now that the ACFTA has come into force, immense opportunity for trade within Africa has come into being. South Africa must ensure it is ready to take advantage of the potential offered by this expanded market access. Once the agreement is fully operationalised Africa will be one of the world’s largest single markets encompassing 55 countries, a population of 1,2 billion people and a combined GDP of 3,2 trillion U.S. dollars. The development of the necessary infrastructure is going to gather speed and we must be ready to play a key role.
In addition honourable members, our capacity for research and innovation could play a critical role in enhancing our industrial development ambitions.
Minerals beneficiation, advanced manufacturing and wider use of digital technologies could place us at the leading edge of economic innovation support in Africa.
South Africa has excellent research universities, trains a large number of African post-graduate students and absorbs only a small number of them. We also have very competent research councils, imagine the contributions we could make to Africa if we multiply this capacity. The development in potential of a vibrant Africa based knowledge economy would become a genuine reality. Our capacity for innovation must become part of our diplomatic interactions and be utilised to advance our continent’s interests.
We should promote the creation of hundreds of research institutes all over Africa and support them to be innovative, productive and responsive. We have the capacity, let us use it strategically.
One of our major co-operation successes is our regional economic community that has established a strong platform for greater integration and growth. We must consolidate and expand trade and investment in SADC and give effect to the President’s assertion that:
“Within the SADC region, we should prioritise development of cross-border value chains in key sectors such as energy, mining and mineral beneficiation, industrialisation and enhancing manufacturing capacity, infrastructure development as well as agro-processing”.
We will, therefore, intensify several related SADC initiatives.
I am pleased with the progress that was achieved during South Africa’s tenure as SADC chair.
Progress on regional trade has been increased by the operationalisation of the Integrated Real Time Gross Settlement System (SADC-RTGS), which is hosted by the South African Reserve Bank. A total of 81 banks (central banks and commercial banks) are participating in the system. The system aims at establishing a firm platform for increased intra-SADC trade and investment to further strengthen regional financial integration. The SADC-RTGS has performed impressively since July 2013 when the system went live, with a total of 1,275,591 transactions settled as at end 2018, representing ZAR5.21 Trillion. The benefits of the cross-border payment system are its efficiency and the reduction in transaction costs. This experience is going to be a valuable contribution to the development of the payment system announced at the AU Summit in Niger three days ago.
A second example is the completion and adoption of the SADC Energy Foresight and Assessment Study for Renewable Energy Value Chains.
Member States are going to use the recommendations to develop SADC renewable energy capacities. The Council for Scientific and Industrial Research (CSIR) was tasked to conduct a mapping exercise of potential renewable energy value chains for use by Member States. A progress report will be presented to Ministers in June 2020.
Third, the SADC Engineering Needs and Numbers Study has been concluded. It will assist Member States to implement programmes for developing enhanced engineering training at national or regional platforms to enable career development through sharing of experience and expertise. Furthermore, Member States were also urged to introduce Science, Technology, Engineering and Mathematics subjects at early stages in the education systems to increase the number of students able to take up studies in engineering fields.
Tripartite Free Trade Area
The Common Market for East Africa (COMESA) – East African Community (EAC) – Southern African Development Community (SADC) Tripartite Summit agreed in October 2008 to accelerate the programme to harmonise trade arrangements among the three Regional Economic Communities (RECs), with a view to establishing a single free trade area (TFTA) encompassing all Member States of the three RECs.
Our country appended her signature on the Agreement establishing the TFTA on 7 July 2017 in Kampala, Uganda. To date, the Agreement has been signed by 23 member countries and requires 14 ratifications to enter into force. To date, only Kenya, Egypt, Uganda, and South Africa have signed and ratified the agreement.
South Africa will intensify its diplomatic efforts aimed at urging other TFTA members to sign and ratify this important trade facilitation instrument in order for it to become operational. To this end, a TFTA Summit is scheduled to take place in January 2020 in Rwanda, we hope that the ratification threshold would have been achieved by that date.
The recent report of Africa’s regional bodies at the AU’s extra-ordinary summit confirmed the critical role regional bodies are playing in our development programmes.
Our commitment to Agenda 2063 remains steadfast. We are honoured to have been selected as the 2020 AU Africa Chair. We are cognisant of the huge responsibility, this places on South Africa, particularly, the pursuit of the ambitious goal of silencing the guns by the end of 2020 in the continent.
We have a rare opportunity to place this goal on top of the Agenda of the United Nations Security Council (UNSC) when we assume the Presidency of the Council in October 2019. The theme for our Council Presidency is “Continuing the Legacy: Working for a Just and Peaceful World”. It is important to use our tenures at the UNSC and as chair of AU to implement the Enhanced Co-operation Agreement on Peace and Security as it foregrounds commitment to conflict prevention and to addressing the root causes of conflict.
This is the embodiment of the legacy of Nelson Mandela who, during his tenure as President of our country, worked tirelessly to advance peace and stability on the continent and globally, through mediation, and preventative diplomacy.
The continued existence of conflicts in Africa diverts us away from our goal of peace and development. In this regard, we repeat our call for a total ceasefire in Libya and the pursuit of an inclusive national dialogue led by the AU. On Sudan, we deplore the recent violence and deaths in that country and welcome the agreement reached by the Transitional Military Council and the Forces For Freedom and Change. This is an opportunity for the people of Sudan to begin entrenching peace and stability. We applaud the mediation efforts of the AU and IGAD. As South Africa we stand ready to assist where we can. Our experience in conflict resolution and in drafting a progressive constitution, make us a partner genuinely able to resolve complex national problems.
Our President has done much to assist the Kingdom of Lesotho to achieve political stability. While appreciating progress reported recently, we implore all the people of the Kingdom of Lesotho to work diligently on the finalisation of the necessary constitutional and security sector reforms. We thank former Deputy Chief Justice Moseneke for his work as the presidential envoy.
A peaceful and stable as well as economically integrated Africa will contribute towards transforming the world to ensure that people of the global South are not marginalised. We have partnered with like-minded countries to improve our condition and that of our partners. Work in Africa’s partnership with China in the Forum for China Africa Co-operation and with Japan in The International Conference for Africa’s Development can make a significant contribution to our development.
The BRICS is also a formation which has the potential to change the global political and economic outlook. The work of the New Development Bank (NDB), its Africa Regional Centre (ARC) and the Contingency Reserve Arrangement (CRA), are concrete examples of the effectiveness of BRICS.
The ARC is focussed on providing financial and project preparation support and funding for infrastructure and sustainable development in South Africa, Africa and in future to developing countries at the global level.
In April this year, the NDB approved around $790 million of loans for three projects in South Africa. Over half the funding is for Eskom to stabilise our national electricity grid. The NDB and Eskom signed a separate agreement for a $180 million loan to implement an integrated renewable energy project. This is evidence of the use of diplomacy to address national imperatives.
The NDB will also provide infrastructure and sustainable development project funding to countries that are not members of the BRICS. It has confirmed that part of the $790 million will fund the Lesotho Highlands water project. The implementation of the Second Phase of this project is important for both South Africa and Lesotho as it provides water to the Gauteng Province and hydro-energy for Lesotho’s electricity needs.
We continue to enhance our cooperation with institutions and countries of the North. Our partners continue to play a constructive role in bridging the global development divide.
President Ramaphosa has been consistent in using platforms like the G20 and the G7 to argue for support for Africa and for a fair, inclusive and balanced world trade environment. We believe in multilateralism and reject attempts at unipolarity and neglect of the poor and marginalised. We believe much more must be done for shared growth, for the empowerment of women and the eradication of poverty and reduction of inequality.
Success in pursuing these objectives means leadership, hard work, consistency and commitment. We as Africans must rise and act in our interest, must execute our own agenda.
The United States of America is our strategic partner in the fight against HIV and Aids. They have been instrumental in supporting our national and HIV interventions and American businesses continue to invest in South Africa to create employment and reverse the frontiers of poverty. We have excellent trade relationships and are determined to expand them for increased growth and job creation.
We will affirm these links while also working to support measures for peace in South Sudan, freedom and justice for the people of Saharawi and freedom, security and democracy for the people of Palestine. We will also continue to strive for the end of the unilateral economic blockade against Cuba and continue to strengthen our collaboration.
We have been closely monitoring developments regarding the UK’s planned exit from the EU. South Africa remains strongly committed to our Strategic Partnership with the European Union, which has created a platform for engagement at various levels, not only on bilateral matters, but also on matters pertaining to regional, continental and global challenges. The European Union (as a bloc) is South Africa’s largest trading partner with total trade having increased from R497 billion in 2014 to R620 billion in 2018. While there remains a significant trade deficit, South African exports to the EU have increased from R197 billion in 2014 to R268 billion in 2018. The R1.4 trillion in foreign investment from Europe (representing approximately 77% of total FDI in the country) has made a significant contribution towards job creation and industrialisation in South Africa.
We will work with greater energy to increase our cooperation with India, Russia and Brazil. Our partnership with the People’s Republic of China continues to grow. The recent conclusion of 90 trade and export contracts will enhance our partnership even further.
In the recent SONA the President referred to the need for us to increase tourist arrivals to support our economy. Europe and Africa are among leading continents in terms of tourist arrivals in South Africa.
I have tasked all our Missions abroad with the responsibility to help manage and brand South Africa to attract more tourists. Similarly they have the huge task of assisting us in securing more Foreign Direct Investment (FDI), whilst identifying and leveraging trade and cultural diplomacy opportunities in their host countries.
Our foreign policy principles remains centred on promoting peace, human rights and dignity for all people in all countries of the world. We continue to be guided our apex mandate, our Constitution. I am studying the report of the Ministerial Review Panel on our Foreign policy and hope to report on our response to the portfolio committee soon.
We also hope that Parliament will conclude its processing of the Foreign Service Bill.
I wish to thank the two Deputy Ministers for their guidance and support in preparing for the Budget Vote. Deputy Minister Botes will outline further details of our work in his contribution.
The Director-General and the management of the Department, my special advisors, ministry staff and family contributed immensely to this budget vote and their efforts are most appreciated. Let me thank the DIRCO Team for their role in ensuring that a detailed overview of our work is presented in this debate.
I thank you.
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Rwanda ratifies Tripartite Free Trade Area agreement (New Times)
Members of the Lower House yesterday approved the draft law for the ratification of the agreement establishing a Tripartite Free Trade Area among COMESA, the EAC and SADC. The Minister for Trade and Industry, Soraya Hakuziyaremye, told lawmakers that though the TFTA was officially launched by the heads of state in Egypt in June 2015, the ratification process had taken long, due to prolonged negotiations on rules of origin and tariff offers by the regional blocs. MP Frank Habineza tasked Hakuziyaremye to explain the value of joining the TFTA is when the nation is already a signatory of almost similar agreements binding wider blocs: “You have told us the benefits of joining TFTA but we are already part of the AfCTA, which in my opinion is not very different. What I see here is a duplication and I wonder if, in the end, we are going to reap or simply make losses.” Minister Hakuziyaremye explained that the two agreements complement each other and signing the TFTA would help the country to benefit faster since negotiations had been finalised as compared to AfCTA which is still work in progress.
Ethiopia to reinstate WTO negotiations: fourth round of negotiations to start soon (Addis Fortune)
Prime Minister Abiy Ahmed has formed a 10-member national committee to resume the process of WTO accession, which was paused for the past six years. Formed on 10 June, following the framework that was approved by the Council of Ministers to provide a legal framework for the accession, both the national and technical committees held their first meeting on 22 June. The committee, chaired by Mamo Mihretu, the chief trade negotiator and senior adviser to the Prime Minister, is composed of delegates from the Office of the Prime Minister, ministries of Foreign Affairs, Revenues, Finance and Trade and Industry; the National Bank of Ethiopia; the National Planning & Development Commission; the Attorney General’s Office and the Policy Study Institute. A long-standing 40-member technical committee composed of representatives from government offices, the private sector, non-governmental organisations and the academic community, will be submitting its findings and suggestions to the national committee. In the fourth round of negotiations, Ethiopia is expected to submit goods and service price offers to WTO members. The country will also answer 168 questions that have been forwarded from the previous negotiation round. “After analysing the recommendation of the technical committee, we’ll be holding the fourth round of negotiations in the next few months. But we can’t set a deadline for the entry of Ethiopia to the WTO,” said Mamo.
Why South Africa should revert to greater protection for some of its industries (The Conversation)
South Africa’s manufacturing sector has been significantly affected by trade liberalisation policies dating back to the nineties. At the time, these were widely adopted as a means of stimulating national economies in developed countries that were characterised as being hamstrung by high input costs and stagnant local markets. It was argued that open markets would help create jobs, raise levels of productivity and competitiveness, and ultimately increase economic output. Our study, has shown that, relative to our peer group and stage of industrial development, South Africa’s industrial policy is too focused on supply-side instruments. These include tax allowances for research and development, and direct financial support for human resource development or capital investment. The study began with two initial propositions: that the transition had been overdone; and that the country’s more traditional manufacturing sectors, such as leather goods and footwear, metal products and clothing, had been slow to respond to the new policy framework. The study confirms both. We conclude that the policy changes of the nineties were too extensive and South Africa’s industrial policy regime should be rebalanced as a means of growing employment and GDP. A combined approach of selective tariffs and better marketing to potential beneficiaries could rebuild the important contribution of manufacturing to the economy. [The author, David Richard Walwyn, is Professor of Technology Management, University of Pretoria]
Zimbabwe can’t pay for imports, narrows trade deficit (Fin24)
Zimbabwe’s trade deficit has narrowed to $332m for the five months to May as it battles to pay for key imports such as electricity and fuel. According to the latest figures released by the Zimbabwe National Statistics Agency, Zimbabwe has significantly cut its electricity import bill amid foreign currency shortages and a heavy debt burden. ZIMSTAT said Zimbabwe’s trade deficit narrowed to $93.6m in May, bringing the cumulative year-to-date total deficit to $332m. The trade deficit was $1.3bn in the comparable 2018 period. Imports from South Africa dropped from an average $230.6m per month in 2018 to $136.6m in 2019. Exports also fell from an average $188m per month in 2018 to $141.7m in 2019. Zimbabwe further exported more than it imported from South Africa. Exports for the five months to May stood at $708.9m against imports of $683.2m for the same period.
Paulo Gomes: Why investors should go beyond African GDP (Project Syndicate)
Already, some multinationals are using city-based models to guide their African investment strategies. They know that dismal national GDP averages can obscure pockets of increasingly prosperous consumers who are eager to purchase high-quality goods and services from abroad. So, when determining a market’s viability, they often focus on cities, considering diverse indicators like mobile-phone penetration, electricity usage, and Internet bandwidth. One global packaged-food manufacturer, for example, has focused its Africa strategy on 15 cities that collectively represent about 25% of the total growth in packaged-food sales expected across Africa in the next five years. More broadly, foreign direct investment has been flowing primarily toward Africa’s four main megacities: Cairo, Johannesburg, Nairobi, and Lagos. Of course, whether at the city or country level, comprehensive and reliable data are needed to provide a strong foundation for investment strategies. Private companies – including African tech startups – can take advantage of new technologies to help deliver this. For example, Terragon, a Nigerian data analytics firm, pulls data on mobile-phone usage and matches it against data provided by its business clients to produce insights about African consumers. Investors who seize such opportunities to gain an accurate and nuanced picture of Africa’s economic performance and prospects could reap vast rewards. Those who write off the entire continent based on simplistic and incomplete GDP data will lose out.
Africa50 General Shareholders Meeting: Rwanda, Africa50 infrastructure financing talks take shape (New Times)
The government of Rwanda and Africa50, a pan-African infrastructure investment firm, are exploring avenues of infrastructure financing and investments that could see Rwanda become a beneficiary as well as an investor. Rwanda is a shareholder in Africa50 Infrastructure Fund having joined and committed $10m to the fund, and then released 25% of the amount as of June 2018. Africa 50 has already committed to invest in the Kigali Innovation City’s Digital Innovation Precinct, an emerging tech hub which features 11 components with investment opportunities valued at about $420m. The Africa50 general shareholders’ meeting brought together ministers of finance from the 27 shareholder countries and representatives of the AfDB, the Central Bank of West African States, and Bank Al-Maghrib.
Africa Investment Forum 2019: Nigeria expected to be major player (AfDB)
Three new World Bank research papers
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Effects of trade liberalization on textile and apparel exports from Sub-Sahara Africa. This paper estimates the impact of market access liberalization in high-income countries on sub-Saharan African exports. The methodology exploits the large reduction in trade barriers that was induced by three unilateral trade liberalization initiatives: (1) the dismantling of the Multi-Fiber Arrangement, (2) the African Growth and Opportunity Act in the United States, and (3) the extension of EU trade preferences for developed countries through its Everything-but-Arms program and the General System of Preferences. Using detailed product-level information at the 6-digit level of the Harmonized System and a triple-difference empirical specification, the usual endogeneity-of-policy critique is flexibly controlled for. The results indicate strongly positive export effects, which are especially large for textile, apparel, and leather products, and tend to be realized fully within five years. Each percentage point reduction in import tariffs raises exports to the EU by 0.73% and to the US by 0.30%; effects are two to three times as large for textiles. The presence of strong Chinese imports has ambiguous effects on countries’ ability to take advantage of trade liberalization as the impact on the export effects to the EU and the United States show an opposite sign. [The authors: Johannes Van Biesebroeck, Elena Zaurino]
Related: African Cotton, Textiles & Apparel Monitor #15/2019
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The extent of GVC engagement in Sub-Saharan Africa. This paper exploits information from two different datasets to provide a novel and multi-dimensional picture of the engagement of all sub-Saharan African countries in global value chains. It documents in detail the nature of the underlying data and the way it is used to construct several indicators of GVC engagement. As a companion to the paper, the data files are made available to interested researchers. While it is impossible to summarize the broad range of experiences that we document, two patterns stand out. First, the level of GVC engagement of most countries in sub-Saharan Africa is rather low, especially for their manufacturing sectors. Second, while there is increased GVC engagement over time in some countries, this pattern is by no means universal. The average engagement for the region over the time period studied (1995-2018) is not even positive on average across countries for several indicators.
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Women at Work: How can investment incentives be used to enhance economic opportunities for women? In a context of growing global competition for private investment, policymakers face the timely challenge of ensuring that women are not left behind in the development agenda. This working paper identifies and analyzes investment incentives that governments can provide to businesses with the aim of promoting gender equality. Barriers to gender equality in the workplace include supply-side barriers that make it difficult for women to find jobs or investment financing, and demand-side barriers that make it more costly for firms or investors to hire or fund women. The paper discusses three main types of investment incentives that governments may use to address these barriers: (i) subsidies and grants, (ii) tax incentives, and (iii) public procurement incentives.
Gender and Trade: selected updates
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tralac’s Women in Trade Governance (WiTG) Development Programme: tralac’s inaugural Women in Trade Governance development programme residential took place in Cape Town during the week of 8 July 2019. Twelve future leaders in trade governance gathered to network, learn and reflect. Over the course of the week, participants acquired new technical knowledge, shared experiences on trade, worked on honing their communication skills and connected with like-minded women from their own and other countries. The 12 women from across the Continent will form the core of tralac’s Women in Trade Governance (WiTG) network.
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The International Finance Corporation and Goldman Sachs Foundation launch first-of-its-kind gender-focused trade finance program. Called the Banking on Women-Global Trade Finance Program (pdf) the initiative will incentivize IFC’s Global Trade Finance Program participating banks to increase trade finance for women importers and exporters and encourage those financial institutions to track their business with female entrepreneurs. “Just one in five exporting companies is owned by a woman, and research suggests that they have less access to finance than their male counterparts,” said Philippe Le Houérou, Chief Executive Officer of the International Finance Corporation. “The BOW-GTFP will help us to understand the finance gaps faced by women entrepreneurs and to better tailor our financial programs and tools to fill those gaps.”
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Global Trade Review interview with Jessica Schnabel, global head of IFC’s banking on women business: “We are working with these 285 banks and any more that may subscribe to the programme to first identify trade with women-owned SMEs, and then provide information to IFC about that trade, such as company names, and the specifics of the trade. We are asking those banks to begin to seek out and then to track and monitor business with those women-owned companies. IFC will begin to collect data from those participating banks which will then help IFC establish a baseline. We are also providing advisory services through the GTFP to the participating banks on how to identify, measure, and track business with women-owned companies. And that is a really important component, because as each of those banks begins to seek out and monitor business with women-owned companies, they then begin to understand their own flows and transactions with women-owned companies.”
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WCO’s session on gender and trade during the 2019 Global Review of Aid for Trade. The WCO presented its various tools and initiatives to promote gender equality and diversity in Customs, including the recent updates of the Gender Equality Organizational Assessment Tool (GEOAT), the WCO Virtual Working Group on Gender Equality and Diversity as well as a Blended Training Package composed of a one-week workshop and an e-learning module. The WCO also informed the participants about the recently launched WCO survey on Gender Equality and Diversity which received 95 replies.
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35th Ordinary Session of the Executive Council: pdf speech by AU Commission chairperson, Moussa Faki Mahamat (89 KB) . “As you are aware, the 22 instruments of ratification required for the entry into force of the Protocol establishing the Free Trade Area have been deposited by Member States in a relatively short period of one year. This unusual promptness is part of the dynamics initiated in Kigali, where a strong desire to accelerate the pace of continental integration was shown with the adoption of the ACFTA. We should, therefore, deal with all the outstanding issues, whether of a technical or political nature, with the necessary urgency. In fact, at the technical level, many operational tools are still to be developed. At the political level, the ratification of the Protocol to the Abuja Treaty on the Free Movement of Persons and Goods and many others for Regional integration, remains an urgent challenge for all of us. I, therefore, call upon all the Member States to ratify the Protocol on the Free Movement of Persons, which is an indispensable supplement to the economic and social integration to which we aspire. Furthermore, I would like to recall, in conformity with the new multidimensional index of African integration, that eight dimensions have been chosen to follow up and evaluate the level of Regional integration, namely trade integration, free movement of persons, political and institutional integration, monetary integration, financial integration, social integration and management of the environment.”
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Nigeria’s Sahara Power Group backs AfCFTA to transform Africa’s power sector. Managing director Kola Adesina says the AfCFTA has the potential to transform the continent’s power sector through alignment of policies, tariffs, cross-border manpower collaboration and fresh injection of capital. “The energy sector has several components along the value chain that require interconnectivity of all stakeholders to make uninterrupted power available. With the AfCFTA, Africa now has a platform to critically reconsider harmonized major infrastructure developments as well as the aggregate contribution and enabling legislation, policies and tariffs required to shore up power supply across the continent.” Adesina however highlighted the need for the continent’s political leadership to approach the implementation of AfCFTA “with one voice and a vision that is not driven by nationalistic considerations,” adding that the civil society should play a “balancing role” to ensure the agreement serves the interest of all Africans.”
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Business backs Tanzania government on AfCFTA. ”As the private sector, we expect to be involved in every step that our government takes towards the ratification of the agreement,” said Mr Frank Dafa, a trade policy specialist at the Confederation of Tanzania Industries. ”The one big challenge, competition, needs to be considered too. If we are to enter into this agreement we have to effectively compete with the likes of Nigeria and Egypt, which are more industrialised. The government needs to consult all the stakeholders concerned to make it easy for speeding up the processes.” Mr Ali Mufuruki, chairman and chief executive officer of Infotech Investment Group Ltd, is optimistic about the prospects of the free trade zone. Speaking during the AU Heads of States Summit in Niger on Sunday, in his capacity as vice chairman of the East African chapter of the AfroChampions Initiative, Mr Mufuruki said: ”I would like to appeal to the Government of Eritrea to get onboard the AfCFTA ship because it is the right thing to do and the time in now. I would also like to encourage the states that have signed but are yet to ratify the treaty to do so without further delay, so that we can begin this exciting journey together for the benefit of all our people.” [Egypt-Tanzania Business Forum: Tanzanian PM calls on Egypt’s business community to invest in Tanzania]
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Statement of Mr Mohamed Salem Uld Salek (Minister for Foreign Affairs of the Saharawi Republic): “The Moroccan Foreign Affairs Minister gave statements to the media after the end of the Extraordinary Summit of the African Union in which he tried to cover the great disappointment Morocco is facing at the political and legal levels. We wish to remind the Minister of Foreign Affairs of the Kingdom of Morocco, a State party alongside with the Saharawi State in the OAU/AU conventions and agreements, including the Continental African Free Trade Agreement, that Morocco is legally bound by the following:”
Three new working papers from the UNU-WIDER SA-TIED project
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Prospects and policies for the development of regional value chains in Southern Africa. This paper draws on a combination of trade data analysis and industry case studies to better understand the links and synergies between regional value chains and regional integration. The trade data and case studies of three diverse sectors (apparel, food retailing, automotive) demonstrate the expansion and diversity of regional trade and regional value chains in Southern Africa. This diverse composition of regional exports is suggestive of an opportunity to further enhance industrial development through intra-regional trade. Extract from Section 2.1: Intra- and extra-Southern African trade in goods (pdf):
Substantial asymmetries in intra-regional trade flows are also present. As the dominant economy in the region, South Africa is the major source of intra-regional exports as well as the primary regional market for other SADC country exports. On aggregate, South Africa as a destination accounts for a gradually rising share (65 to 70%) of the other SADC members’ exports to the region (Table 1). South Africa is an even more dominant supplier of goods in the region, making up 88% of other SADC members’ regional imports in 2000 (Table 2). This share fell to 71% in 2017 as SADC countries diversified their imports to other SADC member countries and the rest of the world.
Two further insights emerge from the asymmetry in economic size and trade flows of South Africa. First, although South Africa is a major market for goods from the region, it still only sources a relatively low share of its total imports from the region (7% in 2017). In contrast, a relatively high proportion of its total exports (23% in 2017) are sold to the region. Consequently, South Africa runs a large trade surplus with the region, although this has stabilized at around $14bn over the post-2010 period as SSA countries have increased exports to South Africa and diverted imports from South Africa to other SADC sources.
Second, levels of integration into the region are relatively low once South Africa is excluded as a destination or source market. Only 6% of the rest of SADC exports are destined for SADC countries outside South Africa. Looking at imports, 11% of the value of imports by the rest of SADC countries is sourced from the SADC region outside South Africa (38% if imports from South Africa are included). The moderate levels of regional integration found thus primarily reflect patterns of SADC country trade with South Africa. [Download the policy brief version. The authors: Anthony Black, Lawrence Edwards, Faizel Ismail, Brian Makundi, Mike Morris]
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Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. Departing from contemporary FDI and productivity studies and scholarship on Africa, this paper focuses on FDI linkages and spillovers by examining country-specific cases, using primary data to investigate qualitative implications. In line with to the aims of previous studies, this paper (pdf) helps to enrich the South African FDI discourse in Africa by providing evidence from Botswana and Kenya. Specifically, the following research questions are pursued: What are the linkages forged by South African firms in Botswana and Kenya? What spillover effects emerge from linkages between South African firms and local firms in the host countries?
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Moving up the copper value chain in Southern Africa. Southern African countries - mainly Zambia and the DRC - account for around a seventh of global production of copper. In the 2010s, they imported over a third of the associated capital goods and components from South Africa. Given this strength (pdf), some observers suggest that the South African capital goods industry could do more to support copper fabrication in the region. Theoretically, investing in production of semi-manufactures (principally wire, cable, tubing) would promote industrialization and enhance value-add. In practice, however, unit prices have only been slightly higher for semis than for refined copper, limiting scope for fabrication—especially as local manufacturers obtain copper essentially at international prices. In any case, the South African capital goods industry is centred on mining, not metalworking machinery. It can only compete with overseas suppliers if it obtains increased financial support for exports and for research and development. [The authors: Neva Makgetla, Saul Levin, Sithembiso Mtanga]
The West Africa inequality crisis (Oxfam)
The Commitment to Reducing Inequality Index, devised by Development Finance International and Oxfam, has analysed data from 157 countries around the world, and ranked them according to three major policy areas that are recognized as being key to tackling inequality. For this review (pdf), CRI data have been used to assess the performance of all 15 member countries of the Economic Community of West African States, along with Mauritania. Government action in these areas has been rated to give countries a combined score and a CRI Index ranking in comparison with the other 15 countries in this region and with other African countries. The review also assesses policies relating to land and agricultural investment in West Africa. Analysis based on the CRI Index shows that, of the five major economic blocs in Africa, West Africa is trailing behind all the others in tackling inequality. In fact, West African citizens are living under governments that are only half as committed to reducing inequality as their counterparts in Eastern and Southern Africa. Oxfam’s assessment clearly indicates that governments in West Africa are, on average, the least committed to reducing inequality across all regions of Africa, and that most of them are choosing to ignore the inequality crisis rather than address it. The assessment does offer glimmers of hope, with some West African countries doing well on addressing inequality in certain areas, even if they are failing in others. Burkina Faso and Senegal, which have seen modest investments in progressive social spending policies, are notable exceptions, and Burkina Faso is one of the 10 countries most committed to social spending in sub-Saharan Africa. However, no other West African government appears among the top 10, and Nigeria, Sierra Leone and Guinea-Bissau are among the least committed to social spending on the African continent.
Sierra Leone: pdf National Development Plan, 2019-23 (4.79 MB) (IMF)
As a small open economy, Sierra Leone is highly dependent on the international price of its major commodity exports, particularly iron ore, for revenue and foreign exchange. Iron ore exports account for over 50% of total exports. At the same time, the country does not have any control over the price of its major imported goods, such as rice and fuel, which account for over 50% of total import value. Therefore, a drop in the international price of iron ore and or rise in the price of rice/fuel (adverse terms of trade) will adversely affect the macroeconomy. Consequently, lower levels of exports reduce the supply of foreign exchange and trigger inflationary pressures, which in turn increase the cost of goods and services purchased by government and reduce real household income. A recent Debt Sustainability Analysis conducted by the Ministry of Finance reveals that Sierra Leone’s debt situation is categorized as high-risk debt distress due to the fall in exports, low revenue generation, and slow economic growth. The high domestic debt service payments increase government expenditure and weaken fiscal stability. [A related IMF report,released yesterday]
Development of a SADC Guideline on cross-border tourism products in TFCAs (SADC)
The report was compiled through a combination of literature review, stakeholder consultation, and review of the draft analysis. Information presented (pdf) includes the status of existing cross-border tourism products in SADC TFCAs. This includes the prevailing enabling environment, governance arrangements, financial elements, and issues relating to their quality, marketing and sustainability. An overview on the processes used to establish cross-border tourism products is provided, in addition to a review of what has worked well, and what could have been improved. The analysis has led to a series of recommendations that are relevant for different stakeholders including the SADC Technical Committees on Wildlife and Tourism, TFCA managers and TFCA Joint Management Boards, cross-border tourism product operators and the SADC TFCA Network Tourism Community of Practice.
Customs authorities and traders are now able to track and monitor goods from Mombasa up to the DRC: this after the DRC was (yesterday) connected to the Regional Electronic Cargo Tracking system. A lengthy twitter thread, by @djnicknicholas.
Today’s Quick Links: Kenyan avocado exports to China to increase 10% annually, export council projects Zimbabwe: Local currency introduced earlier than planned due to market pressure says finance minister Mauritius: Government to bring public sector debt to GDP ratio to 60% by end of June 2021 Angola to sign Lusophone country-specific Compact Ethiopia commences feasibility study on Ethio-Sudan railway ECOWAS, The Netherlands to step up development cooperation |
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Diarise: 35th ICE for Central Africa on the theme Digital transformations and economic diversification in Central Africa (23-27 September, Malabo, tbc)
Afreximbank’s support of the AfCFTA’s implementation:
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AfCFTA Adjustment Facility: Following the official launch of the AfCFTA, the region’s largest trade bank – Afreximbank - has unveiled a $1bn financing facility. Afreximbank President, Prof Benedict Oramah, reiterated that the facility will enable countries to adjust in an orderly manner to sudden significant tariff revenue losses as a result of the implementation of the agreement.”This facility will help countries to accelerate the ratification of the AfCFTA. You have started a movement. You must not look back. This movement is now unstoppable.”
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Pan-African Payment and Settlement System: “Today we will launch the Africa-wide digital payment infrastructure that we developed in collaboration with the African Union. It is a platform that will domesticate intra-regional payments, save the continent more than $5bn in payment transaction costs per annum, formalise a significant proportion of the estimated $50bn of informal intra-African trade, and, above all, contribute in boosting intra-African trade. The digital platform will deal a fatal blow to the underdevelopment of Africa caused by defragmentation of its economies. Our goal is to reduce, significantly, the foreign currency content of intra-African trade payments.”
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UNECA pilot project on informal cross-border trade along the Abidjan-Lagos corridor: The grant, part of Afreximbank’s effort to promote intra-African trade and support the implementation of the AfCFTA, was announced during a ceremony on the sidelines of the AfCFTA Business Forum. David Luke, coordinator of UNECA’s African Trade Policy Centre, said the project would build on the East African ICBT methodology which currently served as the best practice on the continent. That would help to ensure harmonization and comparability across Africa. The data collection exercise is scheduled to commence in September and to last four-months to take account for seasonal trends and fluctuations. The final outputs of the project will be launched in early 2020 and will include a comprehensive report detailing the scale, characteristics and challenges of ICBT along the corridor and a harmonized manual for ICBT data collection for the ECOWAS region to feed into the ECOWAS Regional Informal Trade Regulatory Support Programme.
Selected official, academic and civil society perspectives on the AfCFTA:
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Dr Hage Geingob’s remarks during the closing session of the 12th extraordinary session of the AU Assembly: “With the entry into force of the AfCFTA , the onus is on us to ensure the value addition and the beneficiation of our primary and raw products, in order to realise our dream of a single African market. It is time to wean ourselves from historical economic ties that are characterised by the export of raw and unprocessed products just to import final products and material back into the African market for consumption. We must therefore identify the value chains that will leapfrog our industries towards industrialisation, and remove administrative and structural bottlenecks that prevent us from building our industries. Africa must industrialise, and the time is now. The AfCFTA will lead to regional value chains, increased productivity, efficiencies, diversification, and competitiveness of our industries. This can only be done if our economic development is underpinned by the requisite knowledge-based capabilities, with a sufficiently enabling environment for public and private participation. Similarly, strong institutions, systems and processes will further advance industrialisation. Vocational education and institutions of higher education in Africa play a crucial role in providing the necessary skills-base and knowledge to the labour market for the Fourth Industrial Revolution.”
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South Africa’s President Cyril Ramaphosa says South Africa stands to significantly benefit from being part of the world’s largest single market, encompassing 55 countries with a combined population of 1,2 billion people and a combined GDP of $3,2 trillion. One of the key spin-offs is expected to be greater focus and urgency for infrastructure development across the continent to support economic activities.
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Morocco’s foreign minister, Nasser Bourita says joining the AfCFTA does not entail Polisario’s recognition. “Morocco has strongly adhered to the exercise of establishing the AfCFTA, but its signature and ratification of this agreement cannot be interpreted as an acknowledgement of a situation, fact or entity that does not recognize and threatens its territorial integrity and national unity.”
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Third World Network Africa Coordinator, Dr Yao Graham: “If we (Ghana) are going to benefit from the AfCFTA, it will take a lot of work, a lot of consultation, a lot of research and so on and so forth. Having the secretariat does not take away the need to do those things. Otherwise, the country could very well simply end up hosting the secretariat of an agreement, which other countries have better prepared themselves to benefit from rather than the country hosting the secretariat.”
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NACCIMA DG, Ambassador Ayo Olukanni: “The core issue here is how does (Nigeria’s) private sector take advantage of the AfCFTA. There is need for stakeholders to study the Agreement with a fine comb for a proper understanding of its nitty gritty. This will be part of the activities to start preparation for implementation. Nigerian banks which are already operating in West Africa and the rest of Africa, as well as operators in key sectors of the economy must be invited to stakeholders meetings to deliberate also work with the National Implementation Committee to be set up by government. Now is the time to act. We can no longer delay.”
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Former Indian ambassador to Nigeria and Algeria, Mahesh Sachdev: “India needs to anticipate the AfCFTA’s likely impact on its interests and try to influence and leverage it to enhance India-African economic ties. In principle, African economies becoming more formalised and transparent would be in India’s interest. While local manufactured items and services may ultimately compete with Indian exports, Indian firms can co-produce them in Africa. If handled in a proactive manner, the AfCFTA is likely to open new opportunities for Indian stakeholders in fast-moving consumer goods manufacturing, connectivity projects and the creation of a financial backbone. India donated $15m to Niger to fund the Niamey AU Summit. As the next step, New Delhi can help the AU Commission prepare the requisite architecture, such as common external tariffs, competition policy, intellectual property rights, and natural persons’ movement. It can also identify various African transnational corporations which are destined to play a greater role in a future continental common market and engage with them strategically. The cross-linkages of a three million strong Indian diaspora spread across Africa can also be very valuable. Finally, once the AfCFTA is accepted as beneficial game changer, the African elite could perhaps contemplate crossing another Rubicon: an India-African FTA.”
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Michael Ehis Odijie (Centre of African Studies, Cambridge): “Much of the potential of the free trade agreement rests on the assumption that this agenda will be comprehensively implemented. Yet there is nothing in the history of trade commitments in Africa to suggest that this is likely. The trade agreement will follow the existing model of regional integration in Africa and may therefore face in even greater measure some of the implementation and coordination challenges that have obstructed regional trade. The EAC, the most successful region in recent years, has encountered several obstacles, such as instability in the application of tariff and trade rules and trade disputes between countries. Following these disputes, some member states have ignored the rulings of the EAC Secretariat. This raises the question of whether the AU and institutions created to administer the African Continental Free Trade Area will have enough disciplinary power to make countries comply. It’s unlikely. Other matters of coordination have not been properly considered, such as aligning the trade agreement with industrial policy in the form of providing a continental framework to avoid predatory behaviour at the national level, which is one of the causes of dispute among countries of East African community. There is also the difficulty of aligning the new trade agreement with other commitments: for example, the recently launched post-Cotonou trade negotiations.”
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UN Deputy Secretary-General Amina Mohammed: “We will be working with you to coordinate and leverage complementary funding sources, from the African Development Bank’s Africa50 Fund to the African Union’s Program for Infrastructure Development in Africa, and China’s Belt and Road Initiative.”
Status of integration in the SADC region: report by SADC Chairperson, Namibia’s President Hage G. Geingob
The SADC Cross-Border Real Time Gross Settlement System has improved efficiency and reduced transaction costs. The system has performed impressively with 81 banks participating, and over 1.2 million transactions settled by end of 2018, representing ZAR5.21 trillion worth of SADC’s intra-regional trade. Despite these achievements, our efforts towards attaining regional integration have also encountered some challenges including:
Multiple and overlapping membership of our member states to various regional bodies, a challenge which SADC hopes will be addressed through the operationalisation of the COMESA-EAC-SADC Free Trade Area, and the establishment of the AfCFTA whose operational phase was officially launched yesterday. We, therefore, need to expedite the operationalisation of these initiatives while recognising that the Tripartite COMESA-EAC-SADC Free Trade Area is inevitable, if we are to expedite the continental Free Trade Area.
Some plans and commitments are either unrealistic or are not fully owned by Member States. This negatively affects implementation of the plans and the ultimate realisation of the set milestones. We, therefore, need to ensure that the Plans are realistic, and all Member States are fully consulted and subscribe to them.
Inadequate participation of the private sector in regional integration: we need to effectively bring on board the private sector as a critical partner to regional integration. Lack of prioritisation and implementation of plans and activities that promote regional integration. [Note: This report was presented at the inaugural Mid-Year Coordination Meeting of the AU and the RECs] [ pdf Statement by H.E. Geingob on the status of integration in SADC (380 KB) ]
Lauren A Johnston: A timely economic demography lesson from China for the G20 (pdf, IGD)
The 2019 Japanese Presidency of the G20 has added demographics, population ageing in particular, to the list of global risks for discussion. The G20 timing could not be more pertinent: 2018 marked the first time in history that persons aged over 64 out-number children under-five; some 85% of global GDP now generated in countries that are home to newly rapidly ageing populations. The majority of countries in South Asia and sub-Saharan Africa, meantime, confront rapidly rising working-age population shares for whom jobs do not appear in the pipeline. This policy brief is structured as follows: Part 1 explains China’s contemporary experience of demographic dividend and development. Part 2 outlines the Chinese concept of ‘getting old before rich’ and its extrapolation into the Economic Demography Transition. Part 3 discusses the logic of China’s fears of ‘getting old before getting rich’. Part 4 draws lessons from China’s experience of the economic demography transition thus far for today’s “poor-young” countries. Part 5 offers concluding thoughts and calls for enhanced global dialogue and demographics-related experience sharing.
Today’s Quick Links: Policy makers meet in Kigali over protocols to protect vulnerable groups in Africa AU high-level Ad Hoc Committee for South Sudan: communiqué Greater regional trade in South Asia can empower women China’s experience with high speed rail offers lessons for other countries |
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A comprehensive set of AfCFTA updates:
The operational phase of the African Continental Free Trade Area was launched yesterday after a day-long summit of Heads of State and Government of the AU in the Nigerien capital. The AfCFTA will be governed by five operational instruments, i.e. the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory. [Related: Africa free trade zone to be operational in July 2020; Algeria announces decision to ratify AfCFTA deal] [Allocution de S.E. Issoufou Mahamadou, Président de la République du Niger, lors du 12ème Sommet Extraordinaire sur ZLECAf]
Ghana to host AfCFTA Secretariat. President Nana Addo Dankwa Akufo-Addo in his acceptance speech during the closing session of the Summit, thanked the Assembly for the decision, stating that “it is a privilege that, for the first time in our nation’s history, we have the responsibility of hosting an important pan-African institution”. He expressed his gratitude to President Macky Sall for stepping down Senegal’s candidature in favour of Ghana, and acknowledged also similar gestures of solidarity from the leaders of Egypt and Ethiopia. The President urged the Assembly to direct the AU Commission to prepare and execute a host-country agreement in accordance with the revised Executive Council Decision of July 2005 on hosting AU Organs; and hold consultations with Ghana and key stakeholders to prepare the statutes of the AfCFTA Secretariat with a view toward providing a report for the consideration of the Council of Ministers of Trade. He said Ghana is ready to donate $10m to the African Union to support the operationalisation of the Secretariat, adding that an inter-Ministerial Committee of his government had been set up to work with the AU Commission towards that end.
President Kagame said Rwanda was in full agreement with the report by Niger’s President Mahamadou Issoufou on the way forward on the AfCFTA agreement. Among the proposals in the report include catering for the interest of small-to-medium cross-border traders by simplifying trade regimes applicable to them. “We particularly concur on two points. One, the need to cater for small-to-medium cross-border traders, by simplifying trade regimes applicable to them. I (also) agree with the proposal of the Executive Council designating Ghana as our choice to host the AfCFTA Secretariat. I congratulate them as well.”
UNCTAD’s Secretary-General Mukhisa Kituyi: “Tariff cuts through the AfCFTA will have a twofold effect: Intensifying existing trade relations within Africa (the intensive margin), and paving the way for the establishment of trade relationships among new country pairs or for new products (the extensive margin). In the short term, businesses that are already supplying ‘Made in Africa’ products to the regional markets are better placed to take advantage of the opportunities unlocked by the AfCFTA, as it is easier to expand existing trade relations on the intensive margin than it is to discover and test new export opportunities. In the longer term, however, a broader array of enterprises will be able to fully harness the extensive margin…Some policymakers are calling for implementation of the AfCFTA to start in 2020. But it’s impossible to say with a high degree of accuracy, until the negotiation of key elements of the AfCFTA such as tariff schedules and rules of origin are completed. Also, Phase II Protocols on Investment, Competition and Intellectual Property Rights still need to be negotiated.”
President Buhari: “We fully understand the potential of the AfCFTA to transform trade in Africa and contribute towards solving some of the continent’s challenges, whether security, economic or corruption. But it is also clear to us that for AfCFTA to succeed, we need the full support and buy-in of our private sector and civil society stakeholders and the public in general.”
UNECA’s flagship publication: Assessing Regional Integration in Africa – Next steps for the African Continental Free Trade Area
In answering, the report recognizes that it is not enough for the AfCFTA to be merely negotiated, concluded and ratified. It must also change lives, reduce poverty and contribute to economic development. For this, the AfCFTA must be effectively operationalized, but also supported with complementary measures that leverage it as a vehicle for economic development. Among the most important of the next steps is the phase II negotiations scheduled to commence on intellectual property rights, investment and competition policy in late 2019. These policy areas are the core focus of this report, which takes stock of the current situation across the continent in each of these areas and identifies recommendations for substantive provisions in the AfCFTA. In looking ahead, the report also considers e-commerce and integration in a digitizing Africa, and how the digital economy can interact with the AfCFTA and trade in Africa. Extracts:
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The RECs and Africa’s internal trade coherence. Only 12 African countries belong to a single REC; 33 belong to 2 RECs, 8 to 3 RECs and 1 to 4 RECs. Four RECs operate free trade areas. Some have islets of deeper integration, including customs and monetary unions. Others have free trade arrangements entirely alongside and above the REC groupings. Figure 2.11 demonstrates the results of this by showing the share of intra-African imports in 2017 that flowed into each country through existing intra-African FTAs (grey bars), the share that could have been covered by the TFTA (orange bars) and the share that could have been covered by the AfCFTA (blue bars). The multiple and overlapping membership of countries across RECs and trading arrangements means that more than half of intra-African trade in 39 African countries is already covered by existing FTA arrangements. Still, the AfCFTA has an important role in bringing forward in intra-African trade liberalization those countries, particularly in northern, central and western Africa, that lag behind. The agreement, were it in force, could have covered 21% of the intra-African imports in 2017 that were not covered by existing intra-African FTAs or would have been covered by the TFTA. But the AfCFTA is likely to have a far smaller impact in several countries, particularly in eastern and southern Africa, that currently import only a small share of their imports from African countries that do not share FTA arrangements with them.
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The AfCFTA must now take six steps to establish a continental customs union and evolve into a unified single African market, consolidating the REC FTAs (Table 2.1). This roadmap mirrors the six stages proposed in the Abuja Treaty but addresses the delay in achieving customs unions in several RECs. Instead of waiting for each REC to achieve a customs union—the approach of the Abuja Treaty—the roadmap divides the continental customs union into its two constituent parts—a free trade area and a common external tariff. In step 2, the liberalization achieved by the AfCFTA deepens through successive rounds until it reaches the level of the most liberal preferential trade schemes in Africa. In step 3, the AfCFTA is used to consolidate a unified free trade area in Africa. Only then, in step 4, is a common external tariff cast around the continent to form the African continental customs union (residual tariffs remain—see Box 2.4). As freedom of capital, labour and services are achieved (processes that started with the AfCFTA), an African common market is created, and with further harmonization of economic policies, the African single market arrives. [Downloads: pdf Assessing Regional Integration in Africa IX (4.43 MB) ; pdf Visual Summary (8.41 MB) ]
Jump-starting the African Monetary Fund (Boston University, University of Pretoria)
In a new policy brief, Jumpstarting the African Monetary Fund (pdf), the authors call on African Union leaders to use their Niamey meeting to reinvigorate their efforts to create an African Monetary Fund. An operational African Monetary Fund would encourage African states to engage more actively in regional trade by offering them financial support for managing the risks associated with closer regional integration and expanded intraregional trade. The African leaders signed a treaty to establish this fund in 2014. Unfortunately, progress towards its entry into force has stalled. The treaty has been signed, but not ratified, by 11 AU member countries to date. Fifteen member countries must ratify the statutes for the African Monetary Fund to become operational. Once operational, the African Monetary Fund will have a capital subscription of up to $22.64bn and the ability to provide member countries with loans equivalent to two times their contributions to the Fund’s capital. The AfCFTA offers states new growth and employment opportunities. But by increasing economic linkages between African states, it may also increase the risk that economic problems in one country will have a strong negative effect on growth, trade, investment and employment in other African states. In their policy brief, the researchers argue that the African Monetary Fund could provide a much needed regional buffer. [The authors: Hadiza Gagara Dagah, William N Kring, Daniel Bradlow]
ECOWAS has posted the final communiqué from its 55th Summit (29 June, Abuja). Extract (pdf): “The Authority takes note of the 2018 macroeconomic convergence report. It notes the worsening of macro-economic convergence and urges member states to do more to improve on their performance, in view of the imminent deadline for the establishment of a monetary union.”
SACU, EFTA move closer to update of free trade agreement (EFTA). Delegations from the Southern African Customs Union and the EFTA Member States convened in Geneva (1-4 July) to continue their talks on the update and modernisation of their free trade agreement. The SACU delegation was headed by Niki Krüger, Chief-Director at the Ministry of Trade and Industry, South Africa, while Lars Erik Nordgaard, Senior Adviser at the Norwegian Ministry of Trade, Industry and Fisheries acted as the EFTA spokesperson. In the fifth review meeting, discussions continued on all the topics under review, namely market access for goods, rules of origin and customs issues, trade facilitation as well as trade and sustainable development. Detailed follow-ups for all the areas covered by the update will be carried out before the sides meet again for the sixth review meeting foreseen for autumn 2019. [ pdf SACU-EFTA Free Trade Agreement - 26 June 2006 (66 KB) ]
Abdul Tejan-Cole: One small step for fair trade (Politico)
The announcement last week by the governments of Côte d’Ivoire and Ghana to suspend forward sales of cocoa beans for 2020/21 until further notice and to demand the implementation of a floor price of $2,600 per metric tonne of cocoa beans is revolutionary and must be welcomed by all those interested in fair and greater equity in international trade.
Tanzania sisal glut steeply cuts price for Kenyan exporters (Business Daily)
The price of Kenyan sisal has dropped since April as cheap commodity offered by Tanzania in the world market continues to take a toll on local producers. Data by the Directorate of Fibre Crops show earnings dropped from Sh177 per kilogramme in April to Sh156 for the same quantity last month. In comparison to the same period last year, the value has dropped from Sh163 in June 2016 to Sh157 in the period under review. Interim head of the directorate Naomi Kamau said Tanzania, which is the second leading producer of the fibre after Brazil, offered relatively low prices for the commodity to the world market, leading to depressed cost globally.
IATA’s May updates: African airlines. Air freight volumes: African carriers posted the fastest growth of any region in May 2019, with an increase in demand of 8.0% compared to the same period a year earlier. This continues the upwards trend in FTKs that has been evident since mid-2018 and makes Africa the strongest performer for the third consecutive month. Capacity grew 13.4% year-on-year. Strengthening trade and investment linkages with Asia have underpinned a double-digit increase in air freight volumes between the two regions over the past year. Passenger demand: African airlines posted a 2.1% traffic rise in May compared to the year-ago period, which was up from just 1.1% growth in April. Capacity climbed 0.1% and load factor increased 1.3 percentage points to 67.0%. Traffic between Africa and Europe continues to expand strongly, but economic growth in South Africa – a key regional economy and air transport market– contracted sharply in the first quarter and this is adversely impacting air passenger demand.
Today’s Quick Links: SADC releases, tomorrow, the regional synthesis report on the State of Food and Nutrition Security and Vulnerability in Southern Africa Later this week: COMESA regional training workshop on IPR and combating counterfeiting products (10-11 July, Lusaka) Stears Business: The Nigerian economy revolves around Lagos ports UNDP partners with Elumelu Foundation to empower 100,000 entrepreneurs in Africa WCO: Ethiopia moves to overhaul its national tariff classification work model Top American varsities are doubling down on their presence across Africa BRI’s trade promises bode well for Chinese-Gulf relations |
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Operational phase of the African Continental Free Trade Area launched at Niger Summit of the African Union
The operational phase of the African Continental Free Trade Area (AfCFTA) has been launched, after a day-long summit of Heads of State and Government of the African Union (AU) in the Nigerien capital.
The AfCFTA will be governed by five operational instruments, i.e. the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory. Each one was launched by different Heads of State and Government that included President Cyril Ramaphosa of South Africa, President Abdel Fattah El Sisi of Egypt who is current Chairperson of the AU; Mr. Moussa Faki Makamat, the Chairperson of the African Union Commission; and President Mahamadou Issoufou of Niger, who is the Champion of the AfCFTA.
The launch ceremony included “a roll call of honour”, at which the 27 countries that have ratified the instruments of the AfCFTA were announced, and those that have signed but not yet ratified were mentioned. A commemorative plaque of the signing was also unveiled.
The pdf AfCFTA Agreement (4.67 MB) was adopted and opened for signature on 21 March 2018 in Kigali. The AfCFTA entered into force on 30 May 2019, thirty days after having received the twenty-second instrument of ratification on 29 April, 2019 in conformity with legal provisions.
“The speedy entry into force of the AfCFTA is a source of pride for all of us,” said AU Commission Chairperson Mr. Moussa Faki Mahamat. He described the free trade agreement as one of the instruments for continental integration in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063.
The Chairperson also highlighted the importance of peace building and security on the continent, adding that “it would be a delusion to talk of trade and development without peace and security”. He also stressed that, for the AfCFTA to be effective, there is need to open borders to other Africans. In this light, host President Mr. Mahamadou Issoufou, said the free trade area will tear down borders inherited from Africa’s colonial past and ensure full continental integration.
Egyptian President Abdel Fattah El Sisi stressed the need for the establishment of linkages with the private sector and the business and investment communities, while also calling for the involvement of the youth who will “continue the march” towards development.
The United Nations Deputy Secretary General Ms Amina Mohammed noted that the AfCFTA is a tool to drive growth and innovation for Africa, and to create opportunities for sustainable development and realizing Agenda 2063.
The AfCFTA will be one of the largest free trade areas since the formation of the World Trade Organisation, given Africa’s current population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050.
Meanwhile Ghana has been confirmed by the Heads of State and Government as the host of the secretariat of the AfCFTA, having prevailed over six other countries that had also expressed interest in hosting it.
Statement by H.E. Moussa Faki Mahamat, AU Commission Chairperson
At the 12th Extra-Ordinary Summit for the launch of the operational phase of the AfCFTA
A dream, an old dream which is becoming a reality. Envisaged as the inaugural summit of the Organisation of African Unity (OAU) in May 1963, the African Continental Free Trade Area which we are launching today is one of the most emblematic projects of the African Agenda. The Founding Fathers must be certainly feeling proud. Kwame Nkrumah, Jamal Abdel Nasser, Haile Selassie, Hamani Diori and others must finally be saying – At long last!
May I, Excellencies, Heads of State and Government, express my grateful thanks to you for your continued support and personal commitment which enabled this invaluable achievement.
A special mention for H.E Issoufou Mahamadou, President of the Republic of Niger and Champion of the AfCFTA, for his leadership and commitment to successfully carry out the exalting mission you have entrusted to him.
Indeed, he has masterfully driven, with faith, passion and determination, the whole process that led to this historic meeting today.
It is also an opportunity to commend the remarkable work accomplished by the Commission, particularly the Department of Trade and Industry under the leadership of Commissioner Albert Muchanga, the African Ministers and Experts for their contribution.
Adopted and opened for signature on 21 March 2018 in Kigali, the AfCFTA Agreement recorded 44 signatures at its birth, a record number in the annals of the legal architecture of our Union. And hardly a year lapsed, the number of signatures increased to 52 and with the signature by Nigeria and Benin we have now reached 54, with 27 ratifications deposited.
With its entry into force on 30 May 2019, the AfCFTA thus becomes the largest commercial space in the world. Africa, with population of 1.27 billion people, should reach 1.7 billion by 2030 and 2.5 billion by 2050, that is 26% of the world's working-age population and nearly 70% of this population is under 30 years and more than half are women.
The growth of the African economy should be twice as fast as that of the developed world. Africa is the second largest Continent and second largest population in the world.
These scales bear evidence to the huge potential of Africa. Let us reap the advantage, the dividends for our peoples whose majority are youths.
Thanks to the remarkable work of our Ministers and Experts, the AfCFTA will be supported, from the outset of its launch, by well-defined Rules of Origin, schedules of tariff concessions in the Trade in goods, an online Continental non-tariff barriers monitoring and elimination mechanism, a Pan-African digital payments and settlement platform, a web-based and mobile application for business, as well as an African Trade Observatory portal.
The Reports submitted to your Assembly contain several legal instruments, in support of the Agreement, including 3 Protocols, mechanisms and modalities for its implementation which, undoubtedly, will enable us overcome all obstacles to trade.
The vision of the African Continental integration dates back to the inaugural OAU summit of May 1963, which had requested a preparatory Economic Committee to study the possibility of establishing a free trade area between the various African countries, a common external tariff to protect the emerging industries and the establishment of a Raw Materials Price Stabilization Fund.
This Niamey Summit is all the more important as it sets the tone and renews the political commitment to work towards the realisation of the vision of the Agenda 2063. The negotiations to make the AfCFTA effective still depend on many risks of all kind.
The relatively fast entry into force is a source of pride for all of us. One of the characteristics of the AfCFTA is the diversity of economic, geographical, demographic situations ranging from the smallest (less than $ 1 billion) to the biggest ($ 350 billion).
More than a free trade area, the AfCFTA is a tool by excellence, that will make possible more advanced forms of integration in Africa, in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063.
It is obvious that the operationalisation of the AfCFTA will encourage entrepreneurship, job creation and the emancipation of women, this African youth, now falling prey to all the temptations (rural exodus, migration, trafficking, cross border crime).
We are in Niger, country of transit. We are at the border of Libya where hundreds of thousands of African migrants live in the horror of death and humiliation. We are challenged. We must act and act now.
The AfCFTA can only be effective if we open our borders to Africans. I want to stress the imperative need to ratify the Protocol on Free Movement which is a condition for free trade.
It is indeed paradoxical and inexplicable that Africans feel, even today, as foreigners at home, subjected to visa requirement less favourable compared to other citizens of the world, as it appears in some of our States. Similarly, Member States must begin to popularise the distribution of the PanAfrican passport, which is a wonderful tool for the promotion of African identity.
The other prerequisite for trade integration is the execution of infrastructures which will enable interconnection between countries and regions (roads, rail roads, bridges, airports, energy, telecommunication).
I cannot conclude my remarks without highlighting the central role of peacebuilding and security on our Continent.
It will be a delusion to talk about trade or development without peace and security. Niger (as we are here), Chad, Cameroon, an agro pastoral country whose market is Nigeria, live it on a daily basis since many years. The cattle dimension, for example, is practically cut off because of Boko Haram. Furthermore, the Sahel countries devote a third of their budget to security to the detriment of the social sectors, real engienes of development. The same situation is observed in the Horn of Africa and the Great Lakes Region.
Within this framework, our major challenge is to concretely execute the other flagship project of Agenda 2063, that of "Silencing the Guns by 2020", chosen as the theme for the year 2020.
I am convinced that Niamey will forever mark the contemporary history of Africa by ushering in a new era.
I thank you for your kind attention.
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Recipe for AfCFTA: New report looks at ‘what’s next’ for the Continental Agreement
The ninth edition of the flagship Assessing Regional Integration in Africa report (ARIA IX), titled ‘Next Steps for the African Continental Free Trade Area (AfCFTA)’, was launched on 6 July 2019 during the African Business Forum in Niamey, Niger.
The report argues that AfCFTA’s success will be measured largely by its ability to actually change lives, reduce poverty and contribute to economic development in Africa.
The launch took place in the presence of Niger’s president, the chairperson of the African Union Commission (AUC), heads of UN Agencies, and top business persons from across the continent. ARIA IX is jointly published by the ECA, UNCTAD, AU and AfDB.
The executive secretary of the Economic Commission for Africa (ECA), Vera Songwe, emphasized that: “For us to make the AfCFTA work, we need to make competition, industrial policies and property rights work well.” That is what the report is saying, she noted, adding “and I really urge you to read it.”
The secretary-general of UNCTAD, Mukhisa Kituyi, also spoke at the launch and highlighted “competition, investment and intellectual property rights” as crucial requirements in the next phase of the AfCFTA, as expounded in the report.
Mr. Kituyi expressed his “solidarity and partnership with ECA and AUC” and urged the African business community to “take ownership of the integration effort” on the continent.
ARIA IX notes that traditional investment treaties predominate on the continent, with major repercussions for the policy and regulatory space available to policy makers. It holds, however, that the AfCFTA investment protocol represents an unparalleled opportunity for AU member states to revamp the investment policy landscape.
The report recommends that ratification of the AfCTA, which went into force on 30 May 2019, must be followed by effective implementation and that implementation will be more effective if national AfCFTA committees are created by country trade ministries.
Looking ahead, the report considers e-commerce and integration in a digitizing Africa, and how the digital economy can interact with the AfCFTA and trade in Africa.
The Implementing the AfCFTA is about dispelling the crisis of implementation of AU decisions and initiatives and validating the AU and its Agenda2063.
It is a litmus test of African countries’ commitment to economic integration.
Assessing Regional Integration in Africa (ARIA IX)
Next Steps for the African Continental Free Trade Area (AfCFTA)
Signed by 52 African countries, the African Continental Free Trade Area (AfCFTA) is, by the number of participating countries, the largest trade agreement since the formation of the WTO. By 1 April 2019, only one year and 10 days after the signature, the threshold of ratification by 22 countries required for the agreement’s entry into force had been reached. The speed of this ratification is unprecedented in African Union history.
With so much achieved in so impressive an amount of time, it is time to think ahead to where the momentum of the AfCFTA can be taken. That is the inspiration for this ninth edition of the flagship Assessing Regional Integration in Africa report (ARIA IX), which asks: “What’s next for the AfCFTA?”
In answering, the report recognizes that it is not enough for the AfCFTA to be merely negotiated, concluded and ratified. It must also change lives, reduce poverty and contribute to economic development. For this, the AfCFTA must be effectively operationalized, but also supported with complementary measures that leverage it as a vehicle for economic development.
Among the most important of the next steps is the phase II negotiations scheduled to commence on intellectual property rights, investment and competition policy in late 2019. These policy areas are the core focus of this report, which takes stock of the current situation across the continent in each of these areas and identifies recommendations for substantive provisions in the AfCFTA. In looking ahead, the report also considers e-commerce and integration in a digitizing Africa, and how the digital economy can interact with the AfCFTA and trade in Africa.
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Today’s featured commentary, David Pilling (Financial Times Africa Editor): Are tech companies Africa’s new colonialists?
Ghana appears to have won the bid to host the AfCFTA Secretariat. A Reuters preview of the decision: African leaders will decide on Sunday which nation will host the headquarters for a continental free-trade zone that aims to eventually unite the continent’s 1.27-billion people and its $3.4-trillion nominal GDP. Under the Addis Ababa-based AU’s rules, all of its 55 members may bid to host the headquarters. Kenya, Ghana, eSwatini, Madagascar and Egypt are all in the race. Ethiopia and Senegal have pulled out.
The 35th Ordinary Session of the Executive Council concludes today. It will consider and adopt the AU’s budget for 2020 and the legal instruments pertaining to the AU Development Agency (formerly known as NEPAD), as well as reviewed the proposed new organisational structure of the AU Commission which is to be finalised by February 2020. The Council will elect four board members of the AU Advisory Board on Corruption and prepare the draft agenda and decisions for the 12th Extraordinary Assembly (Sunday) that will launch the AfCFTA. Additionally, it will discuss the scale of contributions to the AU Peace Fund. The Chairperson of the Commission announced that $120m out of the expected 400m for the Peace Fund has so far been received, and he expressed the Commission’s appreciation to member states for their contributions. The Executive Council will also review the preparations for the 1st mid-year coordination meeting (Monday) between the AU and the RECs.
Tweeted highlights, by @AU_Economy, from the official opening of the RECs and African Central Banks Consultative Meeting on the establishment of the African Central Bank to support the AFCFTA: The AU reaffirmed to RECs and African Central Banks its commitment to establish the African Monetary Institute by 2021. The AMI will serve as a transitional organ responsible for the creation of a common currency to facilitate trade under the AfCFTA. The outcome report will be sent to RECs for final validation on the convergence criteria of the African Monetary Cooperation Programme. [Context to this meeting]
Reactions to President Buhari’s decision that Nigeria would sign the AfCFTA agreement:
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Andrew Mold (Acting Director of UNECA’s Eastern Africa Sub-regional office): “Without them [Nigeria] on board it wouldn’t have worked. Benin will sign up now too. The only issue is going to be Eritrea – and we are holding our annual meeting in Asmara in a few months’ time.”
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CNBC interviews: Muda Yusuf (Director General of the Lagos Chamber of Commerce and Industry) and Mansur Ahmed (President of the Manufacturers Association of Nigeria)
ECOWAS Summit: commentaries and updates
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Quartz: West Africa’s “Eco” single currency ambition has a slim chance of success
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Another ECOWAS summit ignores Morocco’s bid to join the trade bloc
Cape Town and the Western Cape: Trade and Investment into Africa 2019 (Wesgro)
Out of the top 15 Western Cape destination markets (pdf), almost half of them (7) are African markets. The African market with the highest growth in 2017 was Swaziland with 28% growth, followed by Kenya (24.1%) and Zambia (15.1%). The largest increase in USD value terms out of the African countries was Kenya, with a growth of $42.8m from 2017, followed by Swaziland with a growth of $40.6m. The top African destination countries for Western Cape exports were Namibia ($864m), Botswana ($518m) and Kenya ($225m). Top source African countries were Angola ($1.07bn), Nigeria ($678m) and Namibia ($204m). The services sector attracts 53% of FDI projects: The best performing sectors in terms of inward FDI into the Western Cape by projects between 2008 and September 2018 were: business services accounting for a 20% share of projects; software and IT services accounting for 18% of projects and communications accounting for 8.6% share of projects.
Africa is the Western Cape’s largest global destination region for outward FDI both in terms of projects (54%) and capex (54%) between 2008 and September 2018. This was followed by Western Europe accounting for 17% of projects and 17% capex. Over the past 10 years, outward FDI from the Western Cape had an annual average growth of 95% in terms of capex and 54% in terms of projects. Most outward FDI from the Western Cape into Africa in terms of projects were in the food and beverages sector; followed by the software and IT sector; financial and business services sector; and consumer products together accounting for 79% of all investments.
East Africa regional private sector consultative workshop (24-25 June, Nairobi) on AfCFTA tariff offers and engagement on trade in services negotiations: pdf Key recommendations (372 KB)
EAC Partner States should adequately involve the private sector in the negotiating process of AfCFTA instruments to ensure regional private sector interests are taken on board. The private sector should accompany government delegations during negotiating rounds; EABC to seek for ITC’s support in the forthcoming AfCFTA negotiation preparations, roundtables and consultative meetings;Implementation of AFCFTA programme for the elimination of NTBs to include a sanctions regime within the AfCFTA NTB framework that addresses failure by member States to resolve NTBs in a timely manner; EABC to advocate for harmonized regulatory frameworks as regards trade in services (sectoral directives and regulations, protocols, trade-related regulatory principles and reference papers); Need for EABC to undertake evidence-based and to develop position papers that have the capacity to influence policy; EABC to present private sector positions on the AfCFTA and how the private sector should be organized to benefit from the AfCFTA during the Niger African Business Forum due in July 2019;EABC to mobilize resources for capacity building to address legal, institutional and regulatory capacity gaps at the national and regional level in order to facilitate the implementation of AfCFTA
EAC trade policy events to note. (i) Concluding today, in Arusha: EAC’s 8th Sectoral Committee of Industrialization; (ii) Ongoing, until 15 July: EAC trade mission to selected borders to assess the elimination of customs and standards related NTBs
Uganda, Rwanda sued in East Africa court over trade spat (Daily Monitor)
A coalition of East African citizen groups announced they were suing Uganda and Rwanda in a regional court for financial losses resulting from a border dispute between the feuding nations. Sheila Kawamara-Mishambi, executive director of the East African Sub-regional Support Initiative for the Advancement of Women, one of the complainants, told AFP the attorney generals of both countries had been served with court papers “over the continued arbitrary border closure”. In a statement, the coalition said the blockade contravened the treaty terms of the EAC concerning freedom of trade and movement over the border. “The court should declare that this impunity must not be allowed to happen anywhere else within the EAC,” the statement read. The closure has “far reaching effects on the lives and livelihoods of the business community, and has caused social and emotional distress among the local people, anguish and dislocation of families, deaths among others”,
Industrial development, construction and employment in Africa: SOAS research challenges perceptions of Chinese firms’ labour practices
The project led by SOAS University of London’s Dr Carlos Oya, Reader in the Political Economy of Development, shows that national, sector and economic context are more important in understanding labour conditions in Africa than the country origin of the firm itself. The findings are based on 4 years of fieldwork-intensive research on employment patterns and outcomes in the infrastructure construction and manufacturing sectors in Angola and Ethiopia, where large-scale surveys of workers and extensive qualitative research were conducted between 2016 and 2018. In terms of job creation the project found that the proportion of national (Ethiopian and Angolan) workers in the labour force is substantially higher than usually assumed in media perceptions. In Ethiopia these rates were 90% of all workers (and 100% for low-skilled workers) and in Angola, where rates are usually much lower due to skill shortages, estimated rates were 74%. In Angola the project found that localisation had grown significantly in the previous 10 years as Chinese firms settled in that market context. [Various downloads, including the country reports, are available here]
Chinese contractors to complete Kenya-South Sudan highway in 2020 (Xinhua)
Julius Korir, principal secretary in Kenya’s Ministry of Transport, Infrastructure, Housing and Urban Development said three Chinese contractors won the tender to upgrade about 248km of road to bitumen standards on the Kenyan section of the road that links to South Sudan. “So far the project is about 30% complete and we expect the road to be commissioned in 2020,” said Korir. “Kenyan traders are forced to travel through Uganda in order reach South Sudan, a process that could take up to three days. With the new road, travel time will be cut by at least two days.”
African Development Fund 15 replenishment meeting: address by AfDB’s President Adesina
Fragility must not be seen as an end state. Nations may go through fragility, but they can exit and become stable, dynamic, prosperous and resilient to debilitating shocks. That’s our goal for the ADF- a powerful instrument to help build resilience of low-income countries. For at the end of the day, for the AfCFTA to work, we cannot integrate fragile states; we can only integrate resilient states. The ADF has shown its capacity to help achieve this. On ADF impact: Just see the recently inaugurated impressive Senegambia Bridge, connecting Senegal and The Gambia, a dream since 1974, realized in January 2019 because of the ADF; Visualize the Addis-Ababa-Nairobi-Mombasa road corridor that’s helped to increase trade by 400% between the two countries; Spend a moment and take in the Kazungula Bridge that’ll connect Botswana and Zambia, Namibia and the Democratic Republic of Congo, and reduce waiting time from 14 days to just one hour! [Delivered on 2 July, Antananarivo]
Related: The AfDB has posted its 2019 – 2021 Work Programme and Budget Document. Figure 3: 2019 financing operations distribution by High 5s priority areas: Light up and Power Africa (16%); Feed Africa (18%); Industrialize Africa (19%); Integrate Africa (15%); Improve Quality of Life for the People of Africa (32%).
GlobalData: Nigeria to lead transport construction with $9.8bn investment in Africa (Guardian)
Nigeria will lead other Sub-Saharan African countries in transport construction with an investment portfolio rising from $7.6bn in 2019 to $9.8bn in 2020. Moreover, investment in transport (road, bridges and railway) construction in Africa, is set for rapid growth from $47.1bn this year to $69bn next year (in nominal terms), based on projects being tracked by a leading data and analytics company, GlobalData. This investment is poised at accelerating the economic and trade integration process on the continent with the entry into force of the Agreement on the AfCFTA. GlobalData’s latest report, ‘African Transport Networks’ reveals that growth in transport construction in Africa is being driven by increasing investment in railway projects. Spending will be led by Nigeria, Kenya and Egypt where transport investment will increase from $7.6bn, $9.5bn and $5.6bn, respectively, in 2019 to $9.8bn, $8.5bn and $7.5bn in 2020. GlobalData is currently tracking 448 large-scale transport projects across Africa worth $430.3bn in both the public and private sectors at all stages from announcement to execution.
West Africa targets $57bn investment, integrated ports, rail sector (Guardian)
West African countries will later this month meet at the West African Ports and Rail Evolution (22-23 July, Lagos) to chart path to integrated ports, road and rail transport sector, with new investments in excess of $57 billion for the region. Experts, at a roundtable meeting yesterday, were unanimous that the West African transportation corridor is arguably the least integrated passage in the world, despite enormous opportunities that abound. Managing Director, Grolla Port Services, Graham Lawal: “But in order to unlock the West African hinterland, ports and rail authorities are working together to set up new logistics infrastructure where investment figures of single projects in the sector go up to $10bn. With 50% of ports and terminal operators wanting to expand their port facilities and over $57 billion worth of infrastructure projects being rolled out for the region, all eyes are on West Africa to make it a more integrated transport corridor as it is with its Southern African neighbours, and as it sits on the cusp of an infrastructure boom.”
Today’s Quick Links: Ben Crawford: Is the internet a ‘silver bullet’ for Africa? Victor Bhoroma: Revisiting the Beitbridge-Harare highway Reuters: Vedanta appeals to South African court to protect Zambian business Mozambican president Filipe Nyusi: Mozambique committed to international law after ‘tuna bond’ ruling 3rd Africa Energy Market Place: Africa needs bolder private financing models for power transmission lines Ghana: Akufo-Addo considers dual Citizenship Bill Tanzania: Govt invites Vietnamese investors to buy cashewnuts Civil society criticizes secretive Asia-Pacific free trade negotiations |
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Today, in Geneva: “The AfCFTA – From Dream to Reality”: tralac and the Sidley Emerging Enterprises Pro Bono Program organised an AfCFTA Breakfast Event this morning in Niamey for high-level policymakers to discuss and assess what must be done for the AfCFTA to become fully operational and implemented successfully.
Discussants recognised the substantial promises made by the AfCFTA in terms of boosting intra-Africa trade, but also highlighted the challenges that will inevitably be faced along the way – from reaching an agreement on trade in services to negotiating rules of origin.
Global Review of Aid for Trade: selected updates
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Audio recordings of concluded plenary sessions and side-events have been posted
- Linking trade facilitation with sector development and investment policy to promote industry and services in Africa: tralac and the Tony Blair Institute for Global Change (TBI) organised a side event at the Aid for Trade Global Review this afternoon. tralac Advisory Board member Patrick Low presented on the topic: The role of services in industrial development and regional value chain development in Africa.
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More work needed to tackle barriers women entrepreneurs face in trade. The WTO and the World Bank launched a joint research project to deepen the understanding of the linkages between trade and gender. The final report resulting from this research will shed light on issues such as: challenges and opportunities of women traders, and policies that can best help women gain from trade. Over the past few months, the WTO has also been working in partnership with the South Asian Women Development Forum and Trade Mark East Africa. Together, we have conducted two regional surveys, one in South Asia and one in East Africa targeting women entrepreneurs. Over 200 women entrepreneurs working in the formal sector were surveyed. Let me highlight a few of the findings: First, results show that most women wanted to export and join global markets but were not sure where the opportunities were or how to access them. Second, more than half of the women entrepreneurs interviewed indicated that they had not received any training on trade regulations in the areas where they have set up their business. Third, over 90% of the interviewees, including those already running existing and well-established businesses, showed interest in receiving trade-related training.
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Digital trade in Africa – implications for inclusion and human rights. In February 2019, the AUC, ECA and other stakeholders were mandated to prepare a digital transformation strategy for the continent, to include effective means of securing a digital identity for all Africans. That initiative is complemented by the Digital Trade and Digital Economy Strategy that is being prepared by the Department of Trade and Industry of the AUC. The recommendations on the strategies are to be submitted in early 2020. It is hoped that insights from the various contributions to this publication will help to shape the ongoing discussions on those recommendations.
pdf Executive summary and policy recommendations (1.82 MB) : Trade and development cooperation extract There is a need for a collaborative and consensus-based approach at the multilateral level to arrive at improved technology transfer-related provisions that cater for the unique situation of the least technologically advanced countries, which are latecomers to the use of digital technology. The least technologically advanced countries should be granted, under a global digital trade regime, the flexibilities and exemptions necessary to enable them to realize their right to development and achieve the Sustainable Development Goals. There is a need for a comprehensive aid-for digital-technology programme to facilitate digital technology transfer and enhance the absorptive and adaptation capacities of the least technologically advanced countries. Before signing any trade agreement, it is imperative to undertake a systematic audit of all its provisions (including those pertaining to digital trade policy) and their implications for human rights and development.
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Aid for Trade in Asia and the Pacific: Promoting economic diversification and empowerment. By AfT categories, gender equality is more strongly mainstreamed in aid for building productive capacity (35.1% of the total in 2009-2017), particularly banking and financial services, business and other services, forestry, agriculture, and tourism. This is followed by trade policies and regulations (22%). The proportion of gender-targeted aid is lowest in aid for economic infrastructure at only about one-tenth. Noting that aid for economic infrastructure comprises the largest shares of total AfT, increasing AfT’s impact on gender equality and women’s empowerment would entail increasing gender targeting of aid in these sectors. AfT that targets ICT-enabled services, however, remains a small fraction of total AfT. It accounted for just 8.5% of total AfT over 2002–2017, despite nearly doubling from an annual average of $375.3m over 2002–2005 to $646.2m for 2016–2017. Clearly, the potential for shoring up aid in ICT-enabled services is great, especially given the growing contribution these sectors make to diversifying product and export markets and encouraging more inclusive trade. [Thematic chapters: Regional trends; Promoting women’s economic empowerment; Integrated support for small firms promotes inclusive growth; The digital economy, diversification and empowerment; Conclusion - rational for targeted interventions. Downloads: Full report, Summary]
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Making e-commerce work for all: speech by DG Roberto Azevêdo. According to the latest data for 2017, e-commerce sales have reached an annual growth of 13%, reaching a value of around $29 trillion. In fact, a WTO study found that by lowering costs and increasing productivity, digital technologies could provide an additional boost to trade by up to 34% by 2030. The digital divide still poses a big barrier for countries’ ability to engage in e-commerce. You all know the figures. Across Africa, only one in four people uses the internet. In LDCs, it’s less than one in ten. And the gap is not only between developed and developing countries, but also between men and women, rural and urban areas, small and large firms. Over the past few years, at the WTO, we have witnessed growing interest in discussing e-commerce issues in more detail. This includes the work under the existing Work Programme on Electronic Commerce. And it includes the Joint Initiative on E-commerce. This initiative, which is open to all WTO members, now includes 78 members representing 90% of global trade. And they have now begun negotiations on e‑commerce issues, asthey relate to trade. We are seeing discussions touch upon a range of issues, including conversations related to development. Participants are interested in understanding the unique challenges faced by developing countries and LDCs and what kind of assistance they need to participate in e-commerce flows. This is encouraging. This effort should be as inclusive as possible. We can’t allow a fragmentation of the digital world. It would mean higher costs and higher barriers to entry, affecting developing countries and smaller businesses the most. In fact, this was a strong message that has also emerged from the G20 Summit in Osaka, where leaders launched the “Osaka track” to help guide these efforts.
NEPAD Infrastructure Project Preparation Facility Special Fund: update (AU)
NEPAD-IPPF Fund Manager, Mr. Mike Salawou, stated that cumulative contributions by donor partners including the African Development Bank amounted to $102m out of which $96.1m had been committed to approve 91 projects. As per June 2019, 60 studies have been completed. ”While disbursements on supported projects have reached a high level, beyond that and without any new contributions to the Fund, NEPAD-IPPF will no longer be in a position to support further project preparation activities,” Mr. Salawou affirmed.
Implementing the TFA: Trade facilitation activities in Zambia (SAIIA)
Zambia is an ideal case study for examining the political and economic challenges that landlocked lower-middle-income African countries face in driving trade facilitation reforms and improving their overall trade performance. The Zambian case study provides a snapshot of the challenges and status quo of trade facilitation reforms at four critical border posts (Chirundu, Kazungula, Kasumbalesa, Nakonde-Tunduma OSBPs). The paper concludes by highlighting potential best practices that have emerged from Zambia as takeaways for the broader Southern African region. [The author: Asmita Parshotam]
Rwanda and the IMF: pdf Staff Report for 2019 Article IV Consultation, Debt sustainability analysis (1.90 MB)
Box 1: Macroeconomic framework for the DSA. The medium- and long- term framework underpinning the DSA assumes that Rwanda continues to enjoy robust growth, with low and stable inflation. A limited growth dividend is implied from the broad public investment in infrastructure to support greater export diversification, and to improve agricultural productivity and resilience. Mobilizing the private sector as the main engine for growth and job creation will be critical, along with sustained levels of investment - consistent with the NST or meeting the MDGs - and increased human capital. Key highlights include:
Growth: The near-term growth outlook maintains growth around 8 percent through 2022, declining to 7.2 percent by 2028, and to 6.5 percent by 2039. Relative to previous DSAs, this is a slight upward revision to growth in the near term, but a more conservative growth projection over the medium- to long- term, consistent with an economy where population growth is slowing over time. Upside risks around the long-term growth potential of the economy exist, particularly from faster TFP growth.
External sector: Exports of goods and services are expected to grow steadily (11% on average during 2019–39), roughly in line with historical rates, but below recent very rapid growth. This reflects, in part, strategic public investments and export promotion, and development plans. Import needs are expected to remain high, particularly in the near term as high public and private investment rates are maintained, declining slightly over the medium term. Consequently, while Rwanda’s current account is projected to remain in deficit, it is expected to narrow somewhat over the DSA horizon, reaching 7 percent by 2039.
The Seychelles and the IMF: pdf Staff Report for the 2019 Article IV Consultation (1.29 MB)
Tourism-related sectors directly contribute about one-third of GDP, while tourism receipts and canned tuna exports represent over half of the exports of goods and services. The authorities’ “Blue Economy” initiatives have focused on diversifying and upgrading the tourism and fishery industries. The authorities recently finalized the National Development Strategy, which includes an updated diversification strategy in these two industries. Staff supported the authorities’ plans to deepen and diversify tourism and upgrade the value-chain of the fisheries sector under the Blue Economy initiatives. Box 5: Tourism and fisheries diversification and value-upgrading. Mixed results from plans to diversify the tourism sector and increase local content signal the need for further action. The Tourism Master Plan of 2012‒20 had identified environmental, historical and cultural holidays as avenues for diversification beyond the current beach destination model. Progress in these areas has been limited. Similarly, a high concentration of European tourists led authorities to push for newer markets in Africa and Asia. Recent data suggests some diversification has happened, as the share of European tourists in total arrivals fell from 75% to 65% between 2010 and 2018, offset by the increase in the share of Asian tourists. Another area of success has been local guest houses and self-catering establishments. [Selected Issues: pdf A Financial Conditions Index for Seychelles (292 KB) ]
Today’s Quick Links: World Bank: New country classifications by income level, 2019-2020 Saweria Mswangi, Christian Vidal: Africa needs its own pool of trade policy advisors An update on the World Bank’s Ghana Economic Transformation Project OECD strengthens co-operation with Morocco: Renews Morocco country programme agreement Reuters: Industry doubts remain over Ivory Coast, Ghana cocoa floor price World Bank briefs: Estimating the impact of the Mojo-Hawassa Expressway, Measuring the impact of rural road rehabilitation in Nigeria Andrew Robinson, Malcolm Hartwell: Africa free-trade pact gives hope amid bars to transport corridors World Bank: Reducing stunting through multisectoral efforts in Sub-Saharan Africa |
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Diarise: Next year’s 2020 Conference of African Ministers of Finance, Planning and Economic Development will take place in Addis Ababa, 18-24 March, on the theme The future of Africa: industrialization in the digital era
Important AfCFTA updates:
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President Buhari has announced that Nigeria will sign the AFCFTA agreement during this weekend’s extra-ordinary AU Summit in Niger. Extracts from a twitter thread by @NGRPresident: Nigeria is signing the AfCFTA Agreement after extensive domestic consultations, and is focused on taking advantage of ongoing negotiations to secure the necessary safeguards against smuggling, dumping and other risks/threats. Let me state unequivocally that trade is important for us as a nation and to all nations. Economic progress is what makes the world go around. Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis.” [Note: Benin and Eritrea are the two outliers wrt signing the agreement]
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The objectives of today’s AfCFTA Civil Society Forum, held in Niamey: to improve regular information flow on trade issues; suggest a framework for the establishment of AfCFTA National Committees; improve co-ordination among relevant government ministries and agencies including through clear mandates and assigning of responsibilities; improve participation opportunities for stakeholders in the work programme of the AfCFTA; and to strengthen the culture of dialogue and inclusiveness. tralac’s Trudi Hartzenberg chaired the panel on Promoting inclusive trade across Africa: the role of women entrepreneurs
Important AGOA updates:
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The 2019 AGOA Forum will take place in Abidjan (3-6 August) on the theme “AGOA and the future: developing a new paradigm to guide US-Africa trade and investment”.
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The Office of the US Trade Representative has initiated the annual eligibility review of Sub-Saharan countries on AGOA country eligibility for calendar year 2020. Important dates to note (pdf): 14 August, for filing requests to appear at the 27 August public hearing, and for filing pre-hearing briefs, statements, or comments on sub-Saharan African countries’ AGOA eligibility; a public hearing will be convened on 27 August.
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A related commentary by CGD’s Sarah Rose: Prosper Africa promises to double two-way trade and investment between the US and Africa; but what’s the starting point?
The WTO’s 7th Global Review of Aid for Trade began today: selected highlights
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Welcoming remarks by WTO DG Roberto Azevêdo: “Since it was launched just over a decade ago, over $409bn have been disbursed under the Aid for Trade initiative, reaching 146 countries or territories”
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Aid for Trade at a Glance 2019: Economic diversification and empowerment
Using development aid to build trade capacity in poor countries is helping to improve economic diversification and to economically empower marginalised groups, yet progress remains geographically uneven, according to the latest OECD-WTO report on Aid for Trade. The report says 47 developing countries (mostly in Africa), out of the 88 surveyed, report progress in diversifying their economies since the OECD-WTO Aid for Trade Initiative was launched in 2006, a picture backed up by trade statistics. Most progress has been seen in agricultural sectors followed by services and industry. Countries still struggling to use international commerce to diversify their economies are the least-developed countries or those that are small islands, landlocked, resource-dependent or ravaged by conflict. The 2019 report says $409bn in official development assistance and $346bn in concessional loans has been used since 2006 to boost trade in developing countries by investing it in areas like infrastructure, regulation or providing access to technical assistance. Another $100bn in ODA and loans from donor countries was committed in 2017, and assistance between developing countries provided another $9bn. Every US dollar invested in aid for trade has been found to generate $8 worth of exports in developing countries and nearly $20 of exports in least-developed countries, depending on the country and the type of investment. [Downloads include a 40-page summary, pdf]
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Report: pdf An inclusive African Continental Free Trade Area: Aid for Trade and the empowerment of women and young people (878 KB)
In terms of sub-regional distribution of Aid for Trade to Africa, the highest proportion in 2017 was directed to projects in East and North Africa (Table 1). In 2017, 30% of the disbursements went to East Africa, amounting to $4.5bn, an increase from $4.3bn in 2015. The amount to North Africa also increased, this time significantly, from $2.7bn in 2015 to $3.5bn in 2017, marking an increase of 32.2%. Aid for Trade is now higher in the North that in the West of Africa, although figures for the latter region also rose to approximately $3.5bn (23% of total, Figure III).
In North Africa, the increase was mainly driven by rising Aid for Trade to Morocco (+ $756.4m) and to Tunisia (+ $300.9m). A decline in Aid for Trade to Sudan (- $148.3m) and Egypt (-$75.9m) was also registered. In West Africa, considerable increases were experienced by Niger (+ $174.2m) and Nigeria (+ $105.3m), whereas the largest decreases were to Senegal (- $51.2m) and Ghana (- $47.8m). In East Africa the largest gains were to Rwanda (+ $186.6m) and Ethiopia (+ $146.3m), whereas the largest decrease was experienced by Tanzania (- $65.8m).
Aid for Trade disbursements decreased to Southern Africa and Central Africa, to $1.5bn and $300m, respectively, representing a decline of 28.7% and 24.9%. In Southern Africa, Aid for Trade disbursements to Malawi increased (+ $198.2m) between 2015 and 2017; this was offset by the decreases to South Africa (- $404.8m) and Angola (- $215.2m). In Central Africa, the Aid for Trade disbursements decreased to Chad (-$54.4m) and Gabon (-$58.5m), which contributed to the region-wide decrease in flows.
The largest recipients of Aid for Trade disbursements have remained the same since 2013: Morocco, Kenya, Ethiopia, Egypt and Tanzania (Figure III). In 2017, Morocco accounted for 11.5% of all Aid for Trade to Africa. Altogether, the top five countries represented 34.2% of the envelope to the continent. These same countries also accounted for 24.0% of ODA disbursements. From the perspective of the smallest recipients of flows, the situation also remained largely unchanged; these countries included Equatorial Guinea, Libya, Seychelles and Botswana.
Aid for Trade flows should be considered in relation to the size and population of the recipient country and as a percentage of the overall ODA it receives (Figure IV). In Seychelles, for example, the 45% proportion of Aid for Trade to ODA received was higher than the average for Africa (25.5%). The same applies to other small-sized countries, such as the Comoros (32%), Mauritius (47%) and Djibouti (29%). In Benin and the Gambia, Aid for Trade represented about 28% of ODA, in Mauritania 32% and in Liberia 36%. On the other hand, in larger countries, disbursements represent a smaller share of the ODA they received, as was the case in Ethiopia (21%), Nigeria (20%) and Mozambique (25%) respectively).
Project-level data are available for 13,051 projects in Africa in 2017. It is, therefore, of interest to observe the share of projects which have a non-zero gender indicator as an indication of incorporation of gender dimension in the project. For 2017, out of the available projects, 4,145 projects (representing 32% of the projects) had a non-zero gender marker. Only 455 projects, or 3.5%, had gender equality as a principal objective (Figure XIII). Given the commitment assigned to women’s economic empowerment, the low level of gender mainstreaming indicates room for improvement in the design of Aid for Trade projects.
Some variations are apparent between categories of Aid for Trade. In productive capacity, a relatively higher share of projects are assigned a gender marker of 1 or 2, with 35.3% 4.4%, respectively. Projects with gender equality as a principal objective are more prevalent in banking and financial services (7.3%). The largest number of projects are included in agriculture (241 or 4.3% for principal and 2,049 or 36.4% for significant objective). The highest share of non-zero gender markers falls in business and other services (47.1%). Economic infrastructure projects include a large share of projects with a zero gender marker. In particular, transport and storage is clearly considered a gender-neutral area, as only 7.8% have a non-zero marker. In 2017, two out of a total of 1,322 projects were assigned a gender marker of 2. In energy generation and supply, only 16% of the projects included gender equality as an objective, and in communication, the figure was 25%.
There are only six projects categorized as trade-related adjustment, with none of them incorporating gender equality. Similarly, in trade policy and regulations, only six projects have gender as a principle objective. This represents less than 1% of all projects. Even when projects that have gender as a significant objective are considered, nonzero projects represent less than 15% of trade policy projects. When considering subcategories, some differences emerge. Trade education projects are relatively speaking more gender mainstreamed, with nearly 44% including gender as a principal or significant objective. Trade facilitation, a subcategory in which projects potentially offer many benefits for women, included 17.2% of non-zero projects. [Note: This report was prepared by the African Trade Policy Centre, in collaboration with WTO, in the context of the 2019 Global Review of Aid for Trade]
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Finland’s Minister for Foreign Trade and Development, Minister Ville Skinnari: “The recent entry into force of the African Continental Free Trade Agreement is a great achievement and could generate important development benefits in the future. Together with our EU partners, we are ready to support African economic integration processes with a vision to form an EU-Africa Free Trade Agreement in the future. Our new government will also prepare a comprehensive Africa strategy, which will be based on the 2030 Agenda with an aim to expand our political and economic interaction with African countries. Africa is and will also be in the future the main focal area of our development cooperation.”
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Trade finance and the compliance challenge: a showcase of international cooperation
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Facilitating trade through regulatory cooperation: the case of the WTO’s TBT/SPS agreements and committees
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Underway, in Niamey: 9th Session of African Ministers of Trade in preparation for the Extra-Ordinary Summit scheduled for 7 July. The summit will also be preceded by the Civil Society Forum (tomorrow) and the Business Forum (Saturday).
Starting today, in Johannesburg: OSISA’s Southern Africa’s Debt Conundrum conference. The conference objectives include improving the understanding of ‘new’ debt issues and setting up a platform/network for collaboration (pdf).
Featured trade policy commentary, by Ann Linde, Sweden’s Minister for Foreign Trade: Taking gender in trade more seriously
Inequalities in the Least Developed Countries: some lessons from Africa (SAJE/UNU-WIDER)
This special issue comprises six papers analysing different dimensions of inequalities in African countries. Three papers deal with the trend in inequality in consumption in Mozambique, with multidimensional poverty in four sub‐Saharan countries, and with the relationship between living conditions and subjective well‐being in African countries. The other three are focused on gender issues and are focused on Mozambique, dealing with gender inequalities in the access to contract farming arrangements as well as to employment out of subsistence agriculture, or with the effect of women’s empowerment on children’s health. This introduction (by Carlos Gradín and Finn Tarp) provides a short overview of how they contribute to a better understanding of inequalities in low‐income countries. [Mozambique Institutional Diagnostic launch workshop]
Kenya’s exports to Asia down 20.9% y-o-y in Q1 (Xinhua)
Kenya’s exports to Asia fell by 20.9% on a yearly basis to 40.9 billion Kenyan shillings ($409m) in the first quarter of 2019, latest data showed. The drop in earnings from tea exports to Pakistan was the main reason for the overall decline in total exports to Far East Asia, the Kenya National Bureau of Statistics said in a statement on Monday. Notable declines in exports to Asia were recorded in the value of total exports to Pakistan and India which registered declines of 29.9% and 50.8% respectively, while value of total exports to China and Japan increased during the quarter under review, said KNBS. Imports from Asia accounted for 61.2% of Kenya’s total imports during the period under review. Reductions in value of imports from China, India, Japan and Malaysia which registered declines of 12.4%, 22.9%, 11.1% 25.1% respectively, contributed to the decline in imports from the region during the quarter, said KNBS. The east African nation’s exports to the European Union rose 6.6%, to 40.1 billion Kenyan shillings from January to March, boosted by increased shipment of agricultural produce. Kenya’s exports to Africa were valued at 53.4 billion Kenyan shillings in the first quarter while imports from Africa amounted to 52.6 billion Kenyan shillings. [KNBS downloads: Quarterly Balance of Payments Report First Quarter; Quarterly Gross Domestic Product Report First Quarter, 2019]
Egypt reports 6.6% rise in exports to international groups in 2018 (Ahram)
Egyptian exports to international groups in which Egypt is a member hit $28.7bn in 2018 against $26.9bn in 2017, marking a 6.6% rise. In a bulletin on Tuesday, the Central Agency for Public Mobilization and Statistics said that these international groups are the UN Economic and Social Commission for Western Asia, the Sahel and Sahara Group, COMESA, the Group of 15 and the Arab Free Trade Zone. Egypt’s exports to the Arab free trade zone topped the list at $9.4bn in 2018. Exports to ESCWA came in second, recording $7.9bn in 2018, while COMESA came in last with exports registering $1.9bn.
Nigeria and the AfCFTA: ACCI President says Nigeria’s interest is duly protected (The Tide)
The President of the Abuja Chamber of Commerce and Industry, Mr Adetokunbo Kayode, says Nigeria’s interest in the AfCTA agreement is duly protected. Kayode told newsmen in Moscow that Nigeria should not delay further in signing the agreement as it had little or nothing to worry about. “Nigeria can never be oppressed economically in Africa. In fact, Nigeria may be taken as an oppressor and we have no reason playing last in this game, many of us feel worried and concerned. And nobody should give the impression that Nigeria cannot compete when the AfCFTA agreement is signed; we can compete favourably. The reason for the delay in signing was because there was some laxity about consultations, especially with the private sector. I agree there was no consultation by government initially with the private sector but that issue has been resolved.” [Dr Babafemi Badejo: Nigeria shouldn’t lead from behind]
Nigerian National Bureau of Statistics: Nigerian Capital Importation, Q1 2019. By origin: UK, USA, South Africa dominate
Kenya: How growing poverty is fanning anger at foreign traders (Standard)
The traders in Gikomba have co-existed for ages,” says, Scholastica Odhiambo, an Economics lecturer from Maseno University. The Chagga, an enterprising community from Tanzania, is perhaps the most conspicuous foreigners in Gikomba Market. Yet they are as old as the market itself. They deal mostly in second-hand clothes and are known for their aggressive marketing strategies. The way they have won the hearts of customers is not any different from the way their Tanzanian compatriots - artist Diamond Platnumz and a host of other Bongo musicians - have taken over the Kenyan air-waves through songs. But, unlike the Chinese, there is no evidence that the Chagga have undercut their local competitors by pricing their wares relatively lower. It is not really that the Ugandans and Tanzanians are taking away from Kenyans, it is the country that is not baking enough national cake for everyone in the party, and when it has baked a bigger cake it has failed in distributing it evenly.
World Tariff Profiles: latest edition is posted (WTO/ ITC/UNCTAD)
Tariff data are presented in comparative tables and in one-page profiles for over 170 countries and customs territories. Statistics on non-tariff measures by country and by product group complement the data on tariffs. A new table containing import and export profiles indicates the value of imports and exports for each country and customs territory and the average tariffs applied to these products. The special topic of this year’s World Tariff Profiles is Aligning trade and tariff policies with sustainable development. The chapter provides statistics on tariffs applied to technological goods that may assist countries in fulfilling certain Sustainable Development Goals. [Various downloads are available here]
WCO Council maps the road ahead during its annual sessions (WCO)
The Council (27-29 June) endorsed an E-Commerce package and agreed to continue developing additional technical specifications. To further enhance Customs-Post cooperation, the Council adopted the “Joint WCO UPU Guidelines on exchange of electronic advance data between Posts and Customs.” An implementation strategy, an action plan and a capacity building mechanism aimed at ensuring the widespread adoption and implementation of the Framework of Standards were also adopted. In addition, the Council adopted the new WCO Strategic Plan for 2019/2022 with its nine priority areas, namely coordinated border management, security and safety, the Revised Kyoto Convention, e-commerce, the Harmonized System, the Capacity Building Strategy, performance measurement, integrity, and digital Customs and data analysis.
Taking another look at policy research on China’s accession to the WTO (World Bank)
Recent work on China’s accession to the WTO pays little attention to the wave of reforms in China in the 1980s and 1990s. These reforms created the preconditions for accession and strongly influenced its outcomes. The preeminence of processing trade at the time of accession sharply reduced the impact of accession-related tariff reductions on exports and set the stage for China’s increases in domestic value added and reduction in China’s involvement in global production sharing since that time. The assessment in this paper (pdf), based on export data and simulation results on the ex ante accession-related effects on export volumes in the literature, finds that the accession must have increased China’s real export growth by at most 6 percentage points between 1997 and 2005. This effect is substantial, but not as large as suggested by the difference between the pre- and post-accession export growth rates in the four years before and after accession. This is because the influence of cyclical fluctuations related to the Asian financial crisis and the US dot-com crash dampened export growth in the period before accession in 2001 and accelerated it afterward.
China and the world: Inside the dynamics of a changing relationship (McKinsey Global Institute)
The MGI’s new China-World Exposure Index shows that the world’s relative exposure to China has increased, while China’s to the world has fallen. Accompanying this shifting exposure are the signs of stresses in the relationship. It examines the state of China’s integration with the world on eight dimensions, concluding that while China has achieved scale this has not always translated into global integration. The research establishes evidence of a shift in the mutual exposure of China to the rest of the world, and vice versa, and estimates the value that could be at stake from more or less engagement. Finally, the research offers thoughts about how businesses could respond to a new era of uncertainty. Extract (pdf): Resource-rich countries are highly exposed to Chinese demand. Countries that export natural resources are highly exposed to Chinese demand.For example, Chinese imports now account for 15% of production in South Africa, compared with only 2% in the period from 2003 to 2007. Similarly, Chinese imports now account for 16% of gross output in Australia, compared with just 4% in the earlier period. Iron ore alone accounts for 48% of Australia’s exports to China (minerals and metals in total represent 84% of exports), and 21 of Australia’s mining and quarrying output is exported to China. [WEF: Have we reached peak integration between China and the world?]
E-commerce as a potential new engine for growth in Asia (IMF)
The use of e-commerce around the world has accelerated in recent years, with Asia, led by China, spearheading the rise. Using cross-country enterprise survey data, this paper shows that firms engaged in e-commerce have higher productivity and generate a larger share of their revenues from exports than other firms. This is particularly true in Asia, where firms have 30% higher productivity and generate about 50% more of their revenues from exports.
ICC declaration: Next Century of Global Business
Issued upon conclusion of the world business organization’s Centenary Summit (last week in Paris), the declaration endorses Intergovernmental Panel on Climate Change findings on the urgent need to keep the global temperature increase below 1.5 degrees Celsius, and underscores the urgent need for policy frameworks that support alignment of business operations with this target. Extract (pdf): While many business models face increasing disruption from the rapid acceleration of digital technologies, trust in the transparent and responsible use of these services is eroding. To maximise the benefits of the digital economy, we will collaborate with governments to create policy environments conducive to a thriving digital ecosystem and promote a multistakeholder governance model for a secure, resilient and open Internet. We will also support the human-centric evolution of emerging technologies. It is clear in the 21st century that the capitalist model must also enable these transformations, and we will support private sector leaders to meet the calls of shareholders, governments and the public for a more inclusive and responsible capitalism.
Working on a warmer planet: The impact of heat stress on labour productivity and decent work (ILO)
The sector expected to be worst affected, globally, is agriculture. 940 million people around the world work in the agricultural sector. It is projected to account for 60% of global working hours lost due to heat stress by the year 2030. The construction sector will also be severely impacted with an estimated 19% of global working hours lost by the same date. Other sectors especially at risk are environmental goods and services, refuse collection, emergency, repair work, transport, tourism, sports and some forms of industrial work. The impact will be unequally distributed around the world (pdf). The regions losing the most working hours are expected to be southern Asia and western Africa, where approximately 5% of working hours are expected to be lost in 2030, corresponding to around 43 million and 9 million jobs, respectively.
Today’s Quick Links: ECA, TradeMark East Africa partner towards the implementation of AfCFTA South Africa, Liberia to establish joint trade commission Kenya, South Sudan agree to deepen trade ties The future of African Gold: developing the West African gold economy In Senegal, old clothes get a new life for profit Reuters: Zambia, Zimbabwe to start building Batoka power plant next year From cocoa to cannabis: Nigerian farmers seek fortunes inside forbidden farms World Bank: Liberia Domestic Revenue Mobilization Policy Notes OECD: Realising regional potentials through better market integration in China (pdf) |
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Two key trade policy events are taking place this week:
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The Aid for Trade Global Review 2019 gets underway in Geneva on Wednesday, ending on Friday. By addressing the supply-side capacity and trade-related infrastructure constraints of developing, and in particular least developed countries, Aid for Trade can help advance the 2030 Agenda for Sustainable Development. Aid for Trade aims to make trade more inclusive and ensure that its benefits are spread further and wider.
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The 35th Ordinary Session of the Executive Council takes place on Thursday and Friday in Niamey. It will be followed by the 12th Extraordinary Summit on AfCFTA (7 July) and the First Mid-Year Coordination Meeting of the AU and the RECs (8 July)
Afreximbank’s flagship publication, African Trade Report 2019: African trade in a digital world, is posted. This report also undertakes a comprehensive review of policies and regulatory reforms that can ensure a successful transition towards digital transformation and propel countries to their full potential in the digital age. It stresses that some of the key challenges that have affected the growth of African trade – most notably a deficit of physical infrastructure and its inherent implications for supply-side constraints – will not suddenly disappear in the digital era. The report then argues for bold investment to bridge the digital divide that exists between Africa and the rest of the world. In addition to digital infrastructure, success in the digital era will depend on the capacity of African governments to strengthen their competitiveness and bolster their regulatory environments for the development of digital ecosystems. Furthermore, African governments must adopt and implement strong incentive measures for African businesses to increase their digital competitiveness and boost their level of innovation, to drive the process of digital transformation. The report is organised into eight chapters (pdf):
After this introduction and executive summary, Chapter 2 covers thematic research about “Digital Transformation for Intra-Regional Trade and Industrialisation in Africa.” Chapter 3 reviews global and African economic and financial developments, while Chapter 4 discusses global and African trade and the trading environment. Chapter 5 reviews the dynamics in commodity markets; Chapter 6 discusses intra-African trade; Chapter 7 reviews the potential implications of digital transformation for intra-African trade. The concluding Chapter 8 reviews the prospects for global and African economic and trade developments in the near term.
South Africa: Trade statistics for May 2019 (SARS)
The R1.74bn trade surplus for May 2019 is attributable to exports of R112.07bn and imports of R110.33bn (pdf). Exports increased from April 2019 to May 2019 by R8.43bn (8.1%) while imports increased from by R3.17bn (3.0%). Exports for the year-to-date (1 January to 31 May) increased by 10.4% from R459.53bn in 2018 to R507.36bn in 2019. Imports for the year-to-date of R513.41bn are 8.9% more than the R471.61bn imports recorded in January to May 2018, leaving a cumulative trade deficit of R6.05bn for 2019. On a year-on-year basis, the R1.74bn trade surplus for May 2019 is a deterioration from the R4.76bn recorded in May 2018.
Botswana: International merchandise trade statistics March 2019 (pdf, Statistics Botswana)
Botswana’s overall exports amounted to P6, 457.3 million, representing a rise of 89.2%, compared to the revised February 2019 value of P3, 413.3 million. On the other hand, imports stood at P5, 759.2 million, showing a decrease of 7.5% from the revised February 2019 value of P6, 226.5 million. Subsequently, the country recorded a positive trade balance of P698.1 million. The UAE was the largest destination for Botswana’s exports, having received 22.6% of total exports during the month under review. India and Belgium came second and third with market shares of 18.5% and 17.6%, respectively. Israel and South Africa got 9.1% each, Singapore and Hong Kong received 7.5% and 6.3% of total exports respectively. Botswana’s exports were mostly absorbed by Asia with a market stake of 64.8%, the EU with 17.8% and SACU with 13.2%. South Africa was the major source of imports into Botswana with a contribution of 60.7% to the country’s total imports. Namibia and Canada, followed with contributions of 14.1% and 5.3% respectively. India and Belgium also made significant contributions to the country’s imports with 4.4% and 4.3% in that order. [Bank of Namibia: First Quarter Bulletin, Jan-March 2019 (pdf)]
ECOWAS finally adopts ECO as a single currency (Pulse)
Beginning in January 2020, countries within the West African sub-region will be able to use a single currency called ECO. The currency was adopted by the Authority of ECOWAS Heads of State and Government on Saturday in Nigeria’s capital Abuja. The West African leaders endorsed the currency at their 55th Ordinary Session and approved a road map towards the currency’s issuance in January 2020. There was a roadmap to ensure that all member countries meet three primary criteria for the adoption of the currency. That includes member countries having a budget deficit of not more than 3%; average annual inflation of less than 10% with a long-term goal of not more than 5% by 2019. Countries were expected to also have gross reserves that can finance at least three months of imports. The other convergence criteria that have been adopted by ECOWAS are public debt or Gross Domestic Product of not more than 70%.
East African Legislative Assembly approves EAC 2019/2020 budget proposals
The EAC Budget presented to the House last week by the Deputy Minister for Foreign Affairs and East African Cooperation of Tanzania, Dr Damas Ndumbaro, amounts to $111,450,529. The EAC Budget is to be appropriated, inter alia, as follows: EAC Secretariat ($53,296,404), EALA ($18,973,845) and the East African Court of Justice ($4,225,241). According to the Chair of Council of Ministers, the priority interventions for FY 2019/2020, include the consolidation of the Single Customs Territory and promotion of intra- and extra-EAC trade and export competitiveness, development of regional infrastructure, effective implementation of the Common Market Protocol and the enhancement of regional industrial development. Other areas include the implementation of the roadmap towards the EAC Monetary Union, institutional transformation focusing on implementation of the institutional review recommendations and improvement of performance management at the EAC Organs and institutions. The 2019/2020 Budget is to be financed by Partner State contributions through the Ministries of EAC Affairs ($49,791,446); Ministries responsible for Education ($4,379,968) and Ministries responsible for Fisheries ($ 2,060,845). Development partners will support the Community to the tune of ($54,031,725) while Member Universities will inject $468,300. The miscellaneous revenue is pegged at $296,145 while the General Reserve shall contribute USD 422,100. [Kenya’s Cabinet Secretary, Ministry of EAC and Regional Development, Adan Mohammed: Kenya is fully committed to EAC integration process]
Rwanda and the IMF: Executive board concludes 2019 Article IV Consultation and request for a three-year Policy Coordination Instrument
Directors welcomed the National Strategy for Transformation’s focus to increase reliance on the private sector as an engine of growth and job creation, and highlighted the supportive measures to bolster financial development and mobilize national savings and improve education. Noting Rwanda’s inherent challenges in attracting private investment, they welcomed the African Continental Free Trade Area as a means for creating larger markets. They saw initiatives such as the G-20 Compact with Africa, together with aid directed toward blended finance, as vehicles to leverage additional private financing.
Outcomes from the G20 meetings in Osaka, Japan
pdf G20 Osaka Leaders’ Declaration (755 KB) : extract. We welcome the pdf G20 Ministerial Statement on Trade and Digital Economy (89 KB) in Tsukuba. We strive to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open. International trade and investment are important engines of growth, productivity, innovation, job creation and development. We reaffirm our support for the necessary reform of the World Trade Organization (WTO) to improve its functions. We will work constructively with other WTO members, including in the lead up to the 12th WTO Ministerial Conference. We agree that action is necessary regarding the functioning of the dispute settlement system consistent with the rules as negotiated by WTO members. Furthermore, we recognize the complementary roles of bilateral and regional free trade agreements that are WTO-consistent. We will work to ensure a level playing field to foster an enabling business environment. [Sixteen accompanying annexures are available for individual download] [ pdf Business and Policy Examples for Sustainable and Inclusive Growth through Trade and Investment (6.18 MB) - refer to Paragraph 53, G20 Ministerial Statement on Trade and Digital Economy]
From development to differentiation: just how much has the world changed? (UNCTAD)
Given the divergent growth performances of developing countries since the establishment of the WTO, there is a growing debate on whether these can still be collectively categorized as ‘developing’ and whether those that have enjoyed sustained growth over the past quarter century should continue to receive special treatment in the context of trade, and by implication other international negotiations. This paper (pdf) traces the history and reasons for the emergence of special and differential treatment provisions in the trade negotiations. It examines various development indicators in order to assess whether the developing world has evolved to the extent that a change in this basic principle of the multilateral trading system is required. The paper argues that the economic and social gaps between developed and developing countries remain significant despite the gains in some countries over the last quarter century.
Fund transfers by Moroccan expatriates: context, evolution and prospects for capacity-building (UNECA)
The main purpose of the study (according to the terms of reference) is to analyse the general context and dynamics of Moroccan emigration, as well as the determinants for fund transfers, particularly those intended for investment. This report has three central themes (pdf). The first concerns the general situation of Moroccans living abroad and the main socio demographic characteristics. The second deals with the main features of Moroccan expatriate fund transfers. It presents a few analytical elements for understanding the strengths and weaknesses of transfers, as well as the opportunities and risks. The third covers policy recommendations, for the purposes of lifting the constraints weighing on fund transfers and boosting the contribution of these transfers to Morocco’s development.
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Africa’s output grew by 3.4% in 2018, Afreximbank’s African Trade Report 2019 shows
Africa’s output grew by 3.4 per cent between 2017 and 2018 despite the slowdown in global growth during that period, a new report by the African Export-Import Bank (Afreximbank) has shown.
The African Trade Report 2019: African Trade in a Digital World, launched in Moscow during the 26th Afreximbank Annual Meetings, states that Africa’s total merchandise trade in 2018 had a value of over $997.9 billion, noting that the continent remained one of the fastest growing regions in the world.
World Trade Organisation estimates show that the volume of global merchandise trade grew by 3 percent in 2018, down from 4.6 percent in 2017.
According to The African Trade Report 2019, the findings highlight the resilience of Africa’s economies to global volatility at a time of rising uncertainty, escalating trade wars and tariffs between the United States, China and others. The resilience reflects the diversification of Africa’s trading partners in the context of South-South trade, growing fixed investment and public and private consumption, boosted by expanding urban populations and softening inflation. These factors reduce Africa’s exposure to the business cycles associated with individual countries and regions.
The report noted that while the European Union remained Africa’s main continental trading partner in 2018 – accounting for 29.8 percent of total trade – African trade with the South grew significantly over the last decade to account for more than 35 percent of the continent’s total trade in 2018. China and India further consolidated their positions as Africa’s first and second single largest trading partners, accounting for over 21 percent of total African trade in 2018. Intra-African trade also increased steadily in 2018, growing by 17 percent to reach $159 billion.
The report highlights that Africa has the potential to do more, noting that its contribution to global trade remains marginal at 2.6 percent, up from 2.4 percent in 2017, and that, while intra-African trade rose to 16 percent in 2018 from 5 percent in 1980, it remains low compared to intra-regional trade in Europe and Asia.
The report states that ongoing digitalisation is paving the way for a new African economy, with e-commerce platforms and internet penetration expediting transactions, reducing costs and leading to a new generation of transnational digital consumers.
The report urges African governments to further capitalise on the opportunities associated with digitalisation, by bolstering regulatory environments and supporting the development of digital ecosystems.
Digitalization, the reports states, can unlock Africa’s potential in driving economic development and the integration of African countries into the world economy. It can also reduce the region’s dependency on raw commodities and natural resources by helping economies diversify into more value-added products that can enhance extra-and intra-African trade.
Prof. Benedict Oramah, President of Afreximbank, said: “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population and our ever-closer investment and trading links with emerging partners in the South. We must exert concerted action to ensure that we develop, industrialize and diversify our industries and supporting infrastructure to foster regional integration and participate fully in regional and global value chains.”
Chief Economist and author of the report, Dr Hippolyte Fofack said: “Intra-African trade, which grew by 17 percent in 2018, more than three times the rate of growth of extra-African trade, was the major driver of Africa’s total merchandise trade in 2018.”
Background
Afreximbank’s Africa Trade Report 2019 was launched at the Afreximbank Annual Meetings by Amb. Albert Muchanga, Commissioner for Trade and Industry of the African Union Commission, and Prof. Benedict Oramah, President of Afreximbank.
More than 100 speakers, including government ministers, central bank governors, international trade organisations, export credit agencies, business leaders, African and global trade development experts, and academics, spoke during the three days of the 26th Afreximbank Annual Meetings, which focused on the theme ‘Harnessing Emerging Partnerships in an Era of Rising Protectionism’.
The African Trade Report 2019 has been made available to download courtesy of Afreximbank Research.
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Nigeria and the AfCFTA:
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Statement by H.E. President Buhari on receiving the Report of the Committee to assess Impact and Readiness for the AfCFTA. Extract: “For AfCFTA to succeed, we must develop policies that promote African production, among other benefits. Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of “made in Africa goods. That is, goods and services made locally with dominant African content in terms of raw materials and value addition. If we allow unbridled imports to continue, it will dominate our trade. The implication of this is that coastal importing nations will prosper while landlocked nations will continue to suffer and depend on aid. As I stated during the inauguration of this Committee, many of the challenges we face today, whether security, economic or corruption are rooted in our inability, over the years, to domesticate the production of the most basic requirements and create jobs for our very vibrant, young and dynamic population. Henceforth, we shall ensure that our negotiated agreements create business opportunities for Africa’s manufacturers, service providers and innovators.”
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Presidential committee recommends that Nigeria sign AfCFTA. Chairman of the Presidential Committee on Impact and Readiness Assessment, Desmond Obadiah, said the treaty will have positive and negative impacts on Nigeria and its neighbours. “Our report recognises that there will be significant adjustment costs to manage the negative impacts and to take advantage of the opportunities. The adjustment costs will include retraining workers in declining sectors to be able to take up employment in growing sectors, providing capital to business owners to retool their plants to remain operational and attracting investments to growing sectors in order to produce goods and services to export to Africa. The Committee proposed policies, programmes, projects and interventions which may position Nigeria adequately for the AfCFTA. We identified sectors which can act as arrowheads for Nigeria’s expansion into Africa, while efforts are intensified to attract private sector investments to the productive sectors. Our reports shows that on the balance, Nigeria should consider joining the AfCFTA and using the opportunity of the ongoing AfCFTA Phase I negotiations to secure the necessary safeguards required to ensure that our domestic policies and programs are not compromised.” [Manufacturers Association of Nigeria, Lagos Chamber of Commerce and Industry ask Buhari to sign the AfCFTA]
The EU and the AfCFTA: EU to provide 40 billion euros in grants to help create jobs in Africa
This was revealed by Ambassador Ranieri Sabatucci, the EU Ambassador to the AU, in an opening address to a two-day Horn of Africa AfCFTA forum focusing on the pharmaceutical industry. “As was highlighted by the EU Commission President, Juncker, in his state of the union speech in September last year, referring to the AfCFTA, he expressed the wish that the long term perspective is to create a comprehensive continent to continent free trade agreement between EU and Africa.” He said to prepare for this, economic partnership agreements, free trade agreements, “including the deep and comprehensive free trade areas and others in the countries north of Africa and other trade issues with the EU should be exploited to the greatest extent as building blocks to the benefit of the AfCFTA”. “To support this, a massive support of 40 billion Euros of grants under the new Africa-European Alliance for Jobs and Growth is proposed as from 2021 to 2027 to, among others, attract investments that would create 10 million jobs in Africa,” he said, adding the EU will continue to increase its support to Africa in that regard.
Five Facts on Fintech: Fact No 3 – Sub-Saharan Africa is a global leader in mobile money innovation, adoption, and usage. The region leads the world in mobile money accounts per capita (both registered and active accounts), mobile money outlets, and volume of mobile money transactions. Close to 10% of GDP in transactions are occurring through mobile money, compared with just 7% of GDP in Asia and less than 2% of GDP in other regions. Extract from the report Fintech: the experience so far: Countries in Southern Africa have seen notable increases in delivery of financial services through digital channels, but there is still room for significant improvement. Based on Findex 2018, the percentage of adults who made or received a digital payment in the last 12 months in South Africa, Namibia, Botswana, and Zambia stood at 48%, 33%, 36%, and 19% respectively. While these numbers are higher compared to Sub Saharan Africa median average of 13%, the levels are significantly lower compared to countries such as Kenya at 63%. [The authors: Tobias Adrian, Ceyla Pazarbasioglu]
Botswana: SADC TRF project gathers pace (Southern Times). The Ministry of Investment, Trade and Industry Minister has now taken a leading role in the development of the e-commerce strategy, which is funded through the EU/SADC trade-related facility programme. The mandate for the facilitation of e-commerce had since been delegated to the Ministry of Investment, Trade and Industry. “For Botswana, Euro 2 600 000 has been availed to us to implement the various interventions. The project was initially planned to be completed at the end of September 2019,” said Investment, Trade and Industry Minister, Bogolo Kenewendo, when launching the project. She added: “We are delighted that the project has been extended by a further two years from October 2019 up to September 2021 to allow us to complete implementation of all our activities.” [SACU and the Namibian revenue fix]
A rendezvous on Central Africa’s Digital Economy (23-27 September, Malabo). The main objective of the thirty-fifth session of the ICE is to consider ways and means to better mainstream the digital economy into the economic diversification strategies of the sub-region to accelerate its structural transformation, and to pool the efforts of all Central African countries in terms of digital technology, to set up an integrated digital ecosystem. Extract from the concept note (pdf): Twenty-one of the 25 least connected countries in the world are in the African continent, where only 22% of the population has access to the internet. Central Africa is not spared. In fact, it is one of the least connected African regions in the world. Indeed, according to the “2018 Global Digital” report, Central Africa recorded the lowest internet penetration rate with only 12%, behind North Africa with 49%, West Africa with 39% and East Africa with 27% Internet penetration rate. In addition, the sub-region still has serious setbacks such as the lack of a reliable and secure 24-hours-a-day broadband infrastructure, an ICT skills gap and weak institutional capacity to support innovative firms.
World Bank: The digital disconnect of informal businesses. Can digital technologies change the informal sector? The answer seems to be not yet. Informal firms hardly use basic technologies such as computers or even the internet for their business activities. Results from recently completed World Bank Surveys of informal businesses show that only about 1% of informal businesses in Lao PDR and Mozambique use computers for their operations. The figures for internet use are not that different with only 1 in 200 businesses in Mozambique using internet, and slightly higher in Zimbabwe with only 2% of businesses using internet. However, there is hope. Mobile money, particularly in the two African countries, has significantly penetrated the informal economy. In Mozambique over 40% and in Zimbabwe nearly half of businesses utilize mobile money in their operations. Studies have found that formal firms that use mobile money tend to invest more. An open question we wish to explore in the upcoming survey is whether mobile money can make informal firms more productive. [The authors: Asif Islam, Filip Jolevski]
SME Competitiveness Outlook 2019. Annual additional private investments of $1 trillion in small businesses in developing countries would play a pivotal role towards achieving the Sustainable Development Goals. This is according to the SME Competitiveness Outlook 2019: Big Money for Small Business – Financing the Sustainable Development Goals, released yesterday by the International Trade Centre. Currently, just a fraction of the $80 trillion managed by global asset managers is invested in small and medium enterprises in developing countries. At the same time, there is great, untapped potential to channel capital held by global funds towards these profitable investment opportunities. According to the SME Competitiveness Outlook 2019, the main factors holding investors back from channeling more funding into otherwise profitable investment opportunities in developing countries include a lack of scalable investment projects, non-transparent investment processes, misguided perceptions of the risks of investing in SMEs, and a lack of knowledge about enterprise capacities. Other key findings and recommendations of the SME Competitiveness Outlook 2019 include:
Landry Signé, Eric Olander: Can Trump’s Prosper Africa make America greater than China and other partners in Africa? (Brookings)
FOCAC updates
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Joint statement of the Coordinators’ Meeting on the Implementation of the Follow-up Actions of the FOCAC Beijing Summit. Both sides will encourage their companies to strengthen project cooperation in accordance with market principles, in pursuit of economic and social benefits, in line with the actual capacity of African countries, and based on clearly-defined responsibilities. Both sides will further promote the exchanges between Governments, legislatures, political parties, young people, women, think tanks and NGOs in order to foster a good environment for China-Africa friendship and cooperation. The Chinese side is ready to increase technological transfer and training, encourage innovation cooperation and regional value chains development, support African countries in cultivating more technical, industrial and management professionals, and promote people-centered and sustainable partnership between China and Africa. Both sides will take the particularity and vulnerability of Small Island Developing States into consideration while implement the outcomes of FOCAC Beijing Summit. [FOCAC work report: Assistant Foreign Minister Chen Xiaodong; Keynote speech: Foreign Minister Wang Yi]
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E-commerce signals new future for ties between China, Africa. Charles Kayonga, ambassador of Rwanda to China, told the Global Times on Thursday that e-commerce platforms including eWTP can stimulate the creativity and productivity of the continent. “E-commerce is not a magic pill that solves every problem,” he said. “It can’t solve Africa’s deficit in its trade with China. To solve trade issues, you need productivity and manufacturing, and e-commerce can stimulate that, by opening up the market for African companies.” Hannah Ryder, CEO of Development Reimagined, an international development consultancy dedicated to finding new solutions to African development, told the Global Times that e-commerce is “absolutely the future” of trade between China and Africa. The new channel is improving mutual understanding and increasing opportunities on both sides. “A lot of African countries still have no idea about the huge potential of the Chinese market,” Ryder said. “People still have a lot of stereotypes about China and there is a lack of knowledge about what’s going on in there.”
Members reviewed a record number of over 50 new notifications since the last Committee meeting in February. They were assisted by a WTO Secretariat update on the state of the ratification and notification process, which showed that 144 or almost 90% of all members have already deposited a ratification instrument. The most recent ratifications were from Egypt, Morocco and Angola. The Agreement entered into force on 22 February 2017 when the WTO crossed the required threshold of 110 member ratifications. Several delegations drew attention to outstanding notifications, especially in the area of implementation. Reference was made to an upcoming deadline for the submission of definitive dates for implementing measures requiring capacity building support.
Today’s Quick Links: The G20 summit, starting today, is a chance for SA to boost foreign investment Ronak Gopaldas, Anish Shivdasani: Africa needs to find ‘smart cuts’ to shorten its road to success South Africa: The tricky thing about double tax agreements South Africa – UAE Business Forum: UAE recognises SA as gateway to the African continent Nigeria’s non-oil exports to UAE hit $608m in 2017 WTO’s DDG Wolff: The trading system faces severe challenges but none are insurmountable What to expect from the World Economic Forum’s China meeting (1-3 July) WCO: New integrity development tool available online UNCTAD launches new statistical quality assurance tool Welfare impact of value-added tax reform: the case of the Democratic Republic of Congo |
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Joint Statement of the Coordinators’ Meeting on the Implementation of the Follow-up Actions of the FOCAC Beijing Summit
To jointly advance the implementation of the follow-up actions of the Forum on China-Africa Cooperation (FOCAC) Beijing Summit,
Coordinators from the People’s Republic of China, 53 African countries and the African Union Commission (AUC) held a meeting of Coordinators in Beijing on 25 June 2019.
Both sides applauded the great success and the far-reaching historical significance of the FOCAC Beijing Summit convened from 3 to 4 September 2018. Both sides highly commended China’s policy toward Africa and new measures for China-Africa cooperation underpinned by the eight major initiatives and associated financing totaling US$60 billion, articulated by President Xi Jinping of the People’s Republic of China at the Summit, and measures manifested in the pdf FOCAC Beijing Action Plan (2019-2021) (327 KB) . Both sides decided to work together on the follow-up actions of the Summit under the principles embodied in the pdf Beijing Declaration (418 KB) , engage in Belt and Road cooperation, deepen and elevate China-Africa cooperation, and work toward an even stronger China-Africa community with a shared future. The two sides have agreed on the following:
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Both sides commend the initiative by China and Senegal, co-chairs of the FOCAC, to hold this Coordinators’ Meeting and reaffirm the commitment of China and Africa to implementing the follow-up actions of the Beijing Summit, to seeking greater complementarity between China-Africa Belt and Road cooperation and Agenda 2063 of the African Union (AU), the development strategies of African countries and the 2030 Agenda for Sustainable Development of the United Nations. Together, the two sides will work toward a China-Africa community with a shared future that features joint responsibility, win-win cooperation, happiness for all, common cultural prosperity, common security, and harmonious co-existence.
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Both sides welcome important cooperation outcomes and early harvests achieved by the two sides following the FOCAC Beijing Summit. Both sides express their readiness to step up cooperation in such areas as infrastructure development, industry partnering, and trade and investment, to tap into their cooperation potential in green development, capacity building, health, people-to-people exchanges, and peace and security, and to improve the structure of cooperation for the greater benefit of both peoples.
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Noting the profound changes in the global landscape and the complex external environment facing China-Africa relations, the two sides commit themselves to multilateralism and free trade, opposing protectionism and unilateralism, safeguarding the UN-centered international system, and working together toward a community with a shared future for mankind, thus making greater contribution to world peace and development.
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The African side congratulates China on the successful hosting of the second Belt and Road Forum for International Cooperation, and speaks highly of President Xi’s emphasis on promoting high-quality Belt and Road cooperation under the principle of extensive consultation, joint contribution and shared benefits and that of open, green and clean cooperation to foster a global partnership of connectivity with high-standard, people-centered and sustainable cooperation, as such cooperation has provided more opportunities for Africa to engage in international cooperation and improve people’s lives. China welcomes Africa’s active participation in Belt and Road cooperation which will lend fresh impetus to win-win cooperation and common development of China and Africa.
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China commends, respects and supports Africa for progress made in the implementation of Agenda 2063 key flagship Projects, in particular the entry into force of the African Continental Free Trade Area, which marks a historical milestone on the path to Africa’s regional integration imperative.
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The African side commends China’s commitment to the principle of sincerity, real results, affinity and good faith and that of pursuing the greater good and shared interests in its cooperation with African countries, believing that the four-point commitment and the “five-no” approach put forward by China at the FOCAC Beijing Summit speak volumes about the defining features of China-Africa relations, i.e. solidarity and cooperation, and point out a right path for international cooperation with Africa. The Chinese side commends African commitment to continuing to foster a closer relationship based on mutual trust and win-win cooperation. Acting on the above-mentioned principles and approaches, and with a commitment to common, efficient, green, safe and open development, the two sides will strengthen their strategic guidance and deepen the coordination of policies, mechanisms, and their cooperation:
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The two sides will be guided by the strategic vision of building an even stronger China-Africa community with a shared future. The two sides will fully implement the strategic common understandings reached between Chinese and African leaders during the Beijing Summit, maintain the momentum of high-level exchanges, and enhance strategic communication and experience-sharing on governance, with a view to elevating China-Africa comprehensive strategic and cooperative partnership.
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The two sides will strengthen coordination on policies and mechanisms at the bilateral and multilateral levels. To deliver the follow-up actions of the Beijing Summit, the two sides will further improve policy measures, formulate and advance national plans, and provide policy support for the eight major initiatives and the FOCAC Beijing Action Plan (2019-2021). Both sides will enhance the institution building of FOCAC, continue to make good use of the Chinese Follow-up Committee of FOCAC, and welcome the establishment and improvement of follow-up implementation mechanisms on the African side in the next few years. Together, the two sides will ensure efficient, results-oriented and smooth implementation of the follow-up actions of the Beijing Summit.
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The two sides will work for greater synergies in market development, project cooperation and intellectual support. China and Africa will seek greater complementarity among their strengths in finance, technology, equipment, production capacity, human resources, market potential, energy, and natural resources. China will continue to support Africa in building free trade zones, special economic zones and industrial parks, provide assistance in the areas of trade, industrialization, SMEs development, entrepreneurship development, and high-quality data of the digital age, encourage competent and well-qualified Chinese companies to invest in Africa, strengthening partnerships through joint-ventures and cooperation with African private sector, and welcome African companies to invest in China. Both sides will encourage their companies to strengthen project cooperation in accordance with market principles, in pursuit of economic and social benefits, in line with the actual capacity of African countries, and based on clearly-defined responsibilities. Both sides will further promote the exchanges between Governments, legislatures, political parties, young people, women, think tanks and NGOs in order to foster a good environment for China-Africa friendship and cooperation. The Chinese side is ready to increase technological transfer and training, encourage innovation cooperation and regional value chains development, support African countries in cultivating more technical, industrial and management professionals, and promote people-centered and sustainable partnership between China and Africa. Both sides will take the particularity and vulnerability of Small Island Developing States into consideration while implement the outcomes of FOCAC Beijing Summit.
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The two sides share the view that China-Africa friendship is built on a solid foundation and growing from strength to strength, that China-Africa cooperation is results-oriented, efficient and fruitful, that FOCAC is running well and setting the pace for international cooperation with Africa, and that nothing could stop the pursuit for win-win cooperation and common development by China and Africa or undermine their determination to stay united in their cooperation.
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Both sides welcome continued contribution by the international community to African-led efforts in promoting peace and development in Africa through bilateral, trilateral or multilateral cooperation leveraging the strengths of relevant stakeholders on the basis of equality, mutual benefit and mutual respect.
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The African side expresses its appreciation to relevant Chinese authorities for successfully organizing this pragmatic and fruitful Coordinators’ Meeting.
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President Buhari accepts Report of the Committee to assess Impact and Readiness for the AfCFTA
Address by HE. Muhammadu Buhari, President of the Federal Republic of Nigeria, at the Formal Acceptance of the Report of the Committee to assess Impact and Readiness for the Africa Continental Free Trade Area Agreement (Afcfta) on Thursday, 27th June 2019
It is my pleasure to welcome all of you to this occasion to receive the report on the impact of the African Continental Free Trade Area (AfCFTA) and Nigeria’s readiness for it.
It has been over a year now since the African Union Heads of States adopted the Phase I Agreement on the African Continental Free Trade Area (AfCFTA) at its 10th Extraordinary Summit in Kigali, Rwanda, on 21st of March 2018.
Since then, a lot has been said about Nigeria’s decision to conduct a detailed study on how this agreement will impact us as a country.
Let me state unequivocally that trade is important for us as a nation and to all nations. Economic progress is what makes the world go around.
Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis.
The AfCFTA will have both positive and negative effects on us as a nation and on our region.
As Africa’s largest economy and most populous country, we cannot afford to rush into such agreements without full and proper consultation with all stakeholders.
As you mentioned in your report, intra-African trade is only 14% of Africa’s total trade. Our consumption is mostly of goods imported from outside the continent.
For AfCFTA to succeed, we must develop policies that promote African production, among other benefits.
Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of “made in Africa goods”. That is, goods and services made locally with dominant African content in terms of raw materials and value addition.
If we allow unbridled imports to continue, it will dominate our trade. The implication of this, is that coastal importing nations will prosper while landlocked nations will continue to suffer and depend on aid.
As I stated during the inauguration of this Committee, many of the challenges we face today, whether security, economic or corruption are rooted in our inability, over the years, to domesticate the production of the most basic requirements and create jobs for our very vibrant, young and dynamic population.
Henceforth, we shall ensure that our negotiated agreements create business opportunities for Africa’s manufacturers, service providers and innovators.
The AfCFTA we aspire to have should therefore not only create wealth for investors but also jobs and prosperity for our vibrant and hardworking citizens. The benefits of economic growth must be prosperity for the masses.
I am very delighted to receive your report today and with the time spent, skills applied and energy invested, I am confident that the Committee has been thorough and diligent.
Let me assure you that your report will form part of the consideration in our decision on the next steps on the AfCFTA in particular and on broader trade integration subjects.
Let me congratulate all members of the Committee for the work done. I thank all stakeholders and organizations including our development partners that provided support to the Committee in one form or another.
I thank you.
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tralac’s Daily News Selection
The African Group at the WTO has circulated a statement on the Appellate Body impasse:
An extract: “In the last year, we note with alarming concern the systemic risks facing the WTO’s Appellate Body. The WTO derives its credibility from its mandated function to enforce the commitments entered into by its Members. With the looming paralysis of the Appellate Body come 10 December 2019, there will be no credible enforcement mechanism of the rules-based multilateral trading system. Existing rules will be unenforceable and discussions or negotiations on new rules will be redundant. The African Group is acutely aware that an urgent solution is required to ensure the effective functioning of the WTO’s Appellate Body as a legitimate forum where all Members can exercise equal opportunity in enforcing their rights. It is critical that all Members contribute to the strengthening of the dispute settlement system in order to enhance predictability in the functioning of the Appellate Body.
UNCTAD’s flagship publication, Economic Development in Africa Report 2019, has been released. The theme: Made in Africa – Rules of Origin for enhanced intra-African trade
Rules of origin – the criteria needed to determine the nationality of a product – could make or break the AfCFTA that entered into force in May, says a new UNCTAD report. The Economic Development in Africa Report 2019 (pdf) notes that rules of origin could be a game changer for the continent as long as they are simple, transparent, business friendly and predictable. The report warns that if rules of origin are made too costly or complex to comply with, firms may instead forego these preferences and choose to trade with partners outside the AfCFTA. Equally, the status quo may prove more appealing; for example, they may stick to trading only within existing regional economic communities, with few incremental gains arising from consolidating the regional market. While rules of origin should be context specific, UNCTAD recommends that they are kept simple, transparent, business friendly and predictable. Also, the rules should take into account the level of productive capacities and structural asymmetries across the broad set of countries, including the Least Developed Countries, which face challenges in making use of preferential tariffs, let alone implement demanding origin requirements. The report shows that some African LDCs and non-LDCs are largely unable to make use of preferential treatment for their exports to external partners. These countries include Benin (preference utilization rate of 4.6%), Burkina Faso (0%), the Central African Republic (0%), Djibouti (3.5%), Equatorial Guinea (6.8%), Guinea (0%) and Guinea-Bissau (0%). Others are Liberia (0%), Libya (0%), Mali (0.4%), Seychelles (0%), Sierra Leone (0%), Somalia (1.1%), Togo (0%) and Tanzania (6%).
An African Arguments commentary by Archie Matheson: The AfCFTA is laudable, but its imminent benefits are overstated. “Highlighting these uncertainties is not a criticism of the admirable goals of AfCFTA, which in the long-term is still likely to have a markedly positive impact on the intra-African trade of goods and services. Rather, it is recognition that in the next few years, and perhaps further into the 2020s, its impact will likely not be as pronounced as suggested by some of its proponents. It is vital that expectations of governments and businesses are managed, and that signatories have the patience to deliver a project over what will be a long time period.”
Commentaries on Prosper Africa:
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Witney Schneidman, Jay Ireland: Can the US and Africa prosper together? It will be more challenging for the Trump administration to have success on the trade front. For one, the level of two-way trade was $61.8bn last year. This was 57% less than its 10-year high of $142bn in 2008 (Figure 1). Several factors explain the dramatic decrease. First, with the emergence of US energy self-sufficiency, our historically high need for African oil is now zero. On the other hand, the long-term competitive issue for US trade in Africa is the proliferation of the EU’s Economic Partnership Agreements. These agreements provide EU goods, services, and companies with tariff advantages with more than 40 African countries. As the USTR noted in its March 2019 National Trade Competitiveness report, the EPAs have “eroded” US trade competitiveness with South Africa and the countries of the Southern African Development Community. This erosion will only intensify across the continent as the EPAs come into force, and as Africa implements the new Continental Free Trade Agreement. US-African commercial relations were energized by the US-Africa Trade and Investment Summit in Maputo, but the administration needs to keep that momentum going. The AGOA Forum in Côte d’Ivoire in August will be another opportunity for US officials to show their commitment to the African continent and Prosper Africa. The Trump administration should also consider convening a third high-level US-Africa Business Forum on the margins of the UN General Assembly in September. The previous forums, in 2014 and again in 2016, proved to be major catalysts to US business success in Africa.
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Judd Devermont: Prosper Africa’s partial answer to promoting US trade and investment. Prosper Africa was designed to solve a persistent problem for US companies: how to navigate the US bureaucracy and benefit from its various programs and services. As indicated by the President’s Advisory Council on Doing Business in Africa in 2017, it is difficult to compete with foreign competitors because the United States does not offer a whole-of-government approach. A US firm seeking assistance has to go on a frustrating scavenger hunt, knocking on individual department and agency doors to secure US support. Prosper Africa seeks to remove this hurdle to trade and investment. It is essentially a “back-of-the-house” fix, which many US firms say is welcomed and long overdue. Prosper Africa has real potential, and it is not too late to refine its framework to increase US trade and investment in sub-Saharan Africa. At the minimum, it requires greater focus and more attention to dismantling barriers to US investments. Below are some recommendations to ensure a better rate of return on this initiative.
Stephany Zoo: What Africa can learn from China about data privacy (WEF)
After taking a group of 15 entrepreneurs from Nigeria, Kenya, South Africa, and other African countries on a learning journey to China’s tech powerhouses, the one thing they were all unequivocally amazed by was the country’s data usage prowess. Across Africa, where the cost of development is high and efficiency is low to begin with, leveraging the power of big data should be a priority. This knowledge and technology transfer can be immediately implemented between China and more developed African countries, such as Nigeria, Ghana and Kenya. It is imperative that, rather than pushing foreign data privacy policies on Africa, governments are able to customize according to a country’s growth stage, enforcement resources and cultural context. The argument for gradual data privacy legislation in Africa is clear: that the costs threaten not only to stifle Africa’s innovation, but unquestioningly adopting another continent’s standards might put it at an even greater disadvantage. [Underway in Accra: Africa regional data protection and privacy conference; Conference www]
UAE’s ECI partners with South Africa’s Export Credit Agency (Trade Arabia)
Etihad Credit Insurance, the UAE Federal Credit Insurance Company, has partnered with Export Credit Insurance Corporation, the South African export credit agency to enhance bilateral trade relations between the two countries. The MoU was signed by Massimo Falcioni (CEO of ECI) and Kutoane Kutoane (CEO of ECIC) during the UAE-South Africa Business Forum organised by the UAE Ministry of Economy and held at Africa trade week in Johannesburg in the presence of senior officials from both the organisations. Under this MoU, both institutions will form a cooperative task force to explore trade, technical and economic collaborations that are based on the defined areas of interest. These include SME programmes; investment and globalisation; market intelligence and business practices; insurance, co-insurance collections; and trade shows, events, and forums.
Women join fight against illegal trade at Kenya-Uganda border (Daily Nation)
Authorities along the Kenya-Uganda border are roping in business groups run by women in a campaign meant to make official border points attractive to traders and dissuade them from using illegal crossings. This, they hope, will tame smuggling of banned or fake goods and raise avenues to collect more tax from traders using the revamped Busia OSBP, the Malaba crossing and other border points under renovation. During the cross-border women traders’ conference facilitated by Trademark East Africa in collaboration with State department for Gender held in Busia, Wednesday, it was revealed that women, who are among key stakeholders in cross-border trade, have been avoiding regular borders out of fear of harassment. In the process, they deny the two countries the much sought after revenue.
Kenya: EPZ companies push for power, labour cost cuts (Daily Nation)
Export Processing Zones companies have asked the State to lower labour and electricity costs while also slashing work permit fees for expatriates to boost Kenya’s earnings from the Africans Growth and Opportunity Act. Kenya Export Manufacture Association vice chairman, Thomas Puthoor, says the EPZ has great potential but is held back by inability to attract more investors who prefer neighbouring countries. “EPZs in the country are not willing to expand due to existing costs despite having available labour. Our competitors such as Ethiopia and Madagascar have attracted more investors after lowering electricity cost and expatriate permit fees,” he said. Kema has also complained of high wages in Kenya that he rated at an average minimum of Sh22,000 compared to Ethiopia and Madagascar at Sh6,000 and Sh8,000 respectively. [Central Corridor stakeholders call on Dar port to cut charges]
Today’s Quick Links: Ghana Economic Transformation Project: $100m to boost Ghana’s Industrial Parks Wandile Sihlobo: SA horticulture is blooming, but there’s still room for growth Reuters: Nigerian court case between MTN, attorney general over $2bn tax dispute adjourned to 29 October South Africa-Nigeria Investment Conference: Brand South Africa statement Mauritius Revenue Authority training workshop on money laundering and financing of terrorism Making secure land tenure count for global development goals and national policy: evidence from Zambia Malawi, Mozambique, Zambia: Global mitigation policies and developing country economies |
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Rules of Origin key to success of African Continental Free Trade Area
Rules of origin should be made simple and business friendly for the gains expected from the AfCFTA to be realized.
Rules of origin – the criteria needed to determine the nationality of a product – could make or break the African Continental Free Trade Area (AfCFTA) that entered into force in May, says a new UNCTAD report.
The Economic Development in Africa Report 2019 notes that rules of origin could be a game changer for the continent as long as they are simple, transparent, business friendly and predictable.
“The AfCFTA is a landmark achievement in the continent’s history of regional integration and is expected to generate significant gains. But it is the rules of origin that will determine whether preferential trade liberalization under the AfCFTA can be a game changer for Africa’s industrialization,” UNCTAD Secretary-General Mukhisa Kituyi said.
Currently intra-African trade is a mere 15%, compared to around 47% in America, 61% in Asia and 67% in Europe, according to UNCTAD data for 2015 to 2017, but the AfCFTA could radically change that.
If the agreement is fully implemented, the gross domestic product of most African countries could increase by 1% to 3% once all tariffs are eliminated, according to UNCTAD estimates.
Boost to intra-African trade expected
The AfCFTA is expected to boost intra-African trade by 33% once full tariff liberalization is implemented, attracting additional intra-African investments and creating market opportunities to foster Africa’s industrialization through regional value chains, according to the report.
However, many of these gains could be undermined if rules of origin are not appropriately designed and enforced to support preferential trade liberalization.
Preferential trade liberalization is the raison d’être of a free trade area (FTA), whereby member countries scrap import tariffs and quotas among themselves on most traded goods, in order to confer a competitive advantage to firms within the FTA.
But to qualify for such preferences, firms within the FTA must meet rules of origin requirements.
These define the conditions that firms must comply with in order to authenticate that their goods originate from the FTA and are thus eligible for preferential treatment within the FTA.
“Rules of origin are the cornerstone for the effective implementation of preferential trade liberalization, the critical policy tool needed to make any FTA operational and are of vital importance in creating opportunities for African LDCs to boost trade,” Dr. Kituyi said.
How rules of origin would work
By granting each other trade preferences, AfCFTA member countries would source more intermediate and final goods among themselves rather than import from abroad.
By doing so, more trade would be created within the AfCFTA, serving as a base to support the development of regional value chains and the building of manufacturing capacities in Africa.
Trade and industrialization are closely intertwined, as spurring regional integration is likely to boost domestic and regional value addition.
By supporting intra-African trade, the AfCFTA would also advance Africa’s industrialization agenda through regional value-chain development, reduce Africa’s dependence on commodities and generate the jobs needed to harness Africa’s demographic dividend.
But whether in practice firms within the AfCFTA utilize trade preferences and the extent to which they would do so depends on the way rules of origin are designed and implemented.
Rules of origin should neither be costly nor complex
The report warns that if rules of origin are made too costly or complex to comply with, firms may instead forego these preferences and choose to trade with partners outside the AfCFTA.
Equally, the status quo may prove more appealing; for example, they may stick to trading only within existing regional economic communities, with few incremental gains arising from consolidating the regional market.
While rules of origin should be context specific, UNCTAD recommends that they are kept simple, transparent, business friendly and predictable.
Also, the rules should take into account the level of productive capacities and structural asymmetries across the broad set of countries, including the Least Developed Countries (LDCs), which face challenges in making use of preferential tariffs, let alone implement demanding origin requirements.
Countries unable to tap preferential treatment
The report shows that some African LDCs and non-LDCs are largely unable to make use of preferential treatment for their exports to external partners.
These countries include Benin (preference utilization rate of 4.6%), Burkina Faso (0%), the Central African Republic (0%), Djibouti (3.5%), Equatorial Guinea (6.8%), Guinea (0%) and Guinea-Bissau (0%). Others are Liberia (0%), Libya (0%), Mali (0.4%), Seychelles (0%), Sierra Leone (0%), Somalia (1.1%), Togo (0%) and Tanzania (6%).
To make AfCFTA rules of origin accessible to firms, an online intra-African trade platform serving as a repository for rules of origin in multiple local languages could be created, the report recommends. Simple rules of origin make it easier to detect origin fraud.
Further, to make AfCFTA rules of origin less costly for firms to comply with, the capacities of customs authorities in enforcing them should be built and cross-border cooperation among customs authorities fostered.
The report also notes that establishing regular platforms for public-private dialogues can help in identifying any challenges to implementation of rules of origin within the AfCFTA to keep them business friendly and supportive of trade for the private sector.
What are rules of origin?
Rules of origin are a “passport” enabling goods to circulate duty-free within a free trade area (FTA) as long as these goods qualify as originating within the FTA.
The rules define the criteria that must be met for a product to be considered as having its origin in an exporting country within the FTA and qualify for preferential treatment (zero import tariffs) inside the FTA. In other words, they determine the economic origin of goods within an FTA.
A committee on rules of origin will be set up under the AfCFTA agreement to annually review the implementation of the rules, its transparency provisions and submit reports and recommendations to a committee of senior trade officials.
Read more:
Rules of origin, tariffs and the AfCFTA
Ratification of the AfCFTA Agreement: What happens next?
Implementing the AfCFTA: Obligations, Qualifications and Exceptions
Facts & Figures
State of regional trade in Africa
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Total trade from Africa to the rest of the world averaged US$760 billion in current prices in the period 2015-2017, compared with $481 billion from Oceania, $4,109 billion from Europe, $5,140 billion from America and $6,801 billion from Asia.
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The share of exports from Africa to the rest of the world ranged from 80% to 90% in 2000-2017. The only other region with a higher export dependence on the rest of the world is Oceania.
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Intra-African exports were 16.6% of total exports in 2017, compared with 68.1% in Europe, 59.4% in Asia, 55.0% in America and 7.0% in Oceania.
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Intra-African trade, defined as the average of intra-African exports and imports, was around 2% during the period 2015–2017, while comparative figures for America, Asia, Europe and Oceania were, respectively, 47%, 61%, 67% and 7%.
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Since 2008, Africa, along with Asia, is the only region with a rising trend in intraregional trade.
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In 2016, intra-regional economic community trade was highest in SADC ($34.7 billion), followed by CEN–SAD ($18.7 billion), ECOWAS ($11.4 billion), COMESA ($10.7 billion), AMU ($4.2 billion), EAC ($3.1 billion), IGAD ($2.5 billion) and ECCAS ($0.8 billion).
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With regard to the share of intra-regional economic community trade in total trade in Africa, in 2016, there were deeper levels of integration in SADC (84.9 per cent), followed by COMESA (59.5 per cent), CEN–SAD (58.4 per cent), ECOWAS (56.7 per cent), AMU (51.8 per cent), IGAD (49.0 per cent), EAC (48.3 per cent) and ECCAS (17.7 per cent).
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The 10 leading intra-African exporters in 2015–2017 were Eswatini (70.6%), Namibia (52.9%), Zimbabwe (51.6%), Uganda (51.4%), Togo (51.1%), Senegal (45.6%), Djibouti (41.9%), Lesotho (39.9%), Kenya (39.3%) and Malawi (38.3%).
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The 10 countries with the lowest share of intra-African exports were Chad (0.2%), Guinea (1.6%), Eritrea (2.3%), Equatorial Guinea (3.5%), Cabo Verde (3.6%), Angola (3.9%), Libya (4.5%), Guinea Bissau (4.7%), Liberia (5.1%) and Algeria (5.5%).
State of trade facilitation
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On average, applied tariff rates to intra-regional economic community members amount to 7.4% in CEN-SAD, 5.6% in ECOWAS, 3.8% in SADC, 2.6% in AMU, 1.89% in COMESA, 1.86% in ECCAS, 1.80% in IGAD and zero in EAC.
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Sub-Saharan Africa has the highest cost to export compared with all other regions and the highest cost to import with the exceptions of Latin America and the Caribbean based on border compliance, and South Asia, based on documentary compliance.
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In 23 developing countries (13 in Africa) and LDCs during 2010-2013, 35% of the most difficult non-tariff measures applied by partner countries to manufacturing exports concern rules of origin and related documentation.
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The most frequent complaints registered on the non-tariff barriers reporting, monitoring and eliminating mechanism of the Tripartite Free Trade Agreement relate to rules of origin (11% of filed complaints).
Rules of origin
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Prior to the 2011 Generalized System of Preferences (GSP) reforms, the more flexible rules of origin under the African Growth and Opportunity Act of the United States (requiring single transformation) have been found to stimulate exports from LDCs in Africa rather than the more restrictive rules of origin under the Everything but Arms initiative of the European Union.
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Based on a gravity model for 155 countries and about 100 preferential trade agreements, Estevadeordal and Suominen (2005) find: (i) that preferential trade agreements with restrictive rules of origin tend to depress aggregate trade flows; (ii) regime-wide rules of origin that allow for flexibility in the application of product-specific rules of origin facilitate trade; (iii) restrictive rules of origin in final goods encourage trade in intermediate goods; and (iv) the negative effects of stringent product-specific rules of origin dissipate over time.
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Intra-African trade values (in terms of both imports and exports) of the 20 products with the highest preference margins were relatively low, with the exception of tobacco products, beer and spirits, knit T-shirts, wine and women’s suits and pants, reflecting in part the difficulty of sourcing these products from within Africa.
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François et al. (2006) find that exporters start to request preferences when preferential margins are around 0% and 4.5%. For the 20 products in Africa with the highest export values, preferential margins exceed 4.5% for 11 products, including five of the six top export products, namely, petroleum gases; gold; petroleum oils, refined; diamonds; and cars.
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The share of imports of goods from Africa that is eligible and makes use of external preferential treatment varies greatly between trading partners, and is highest in Chile, the Republic of Korea and the United States.
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With regard to the use of external preferential schemes by countries in Africa, some countries are largely unable to make use of preferential treatment for their exports to external partners, namely, Benin (underutilization rate of 95.4%), Burkina Faso (100%), the Central African Republic (100%), Djibouti (96.5%), Equatorial Guinea (93.2%), Guinea (100%), Guinea-Bissau (100%), Liberia (100%), Libya (100%), Mali (99.6%), Seychelles (100%), Sierra Leone (100%), Somalia (98.9%), Togo (100%) and the United Republic of Tanzania (94%).
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Underutilization rates are low for: Botswana (1.1%), Cabo Verde (3.6%), Chad (0.1%), Côte d’Ivoire (2%), the Comoros (4.3%), Ghana (2.3%), Kenya (4.5%), Lesotho (1.7%), Madagascar (4.9%) and Mauritania (3.1%).
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In 2016, unused preferences were highest for mineral products, amounting to $2.3 billion, followed by precious materials ($1.4 billion) and vegetable products ($0.6 billion). In terms of shares of underutilization in 2016, precision instruments had the highest, followed by chemicals, wood and hides and skins.
TEA
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Kenya is one of the most successful examples of the inclusion of smallholder farmers in the tea value chain, owing to deliberate efforts to enhance their stake in the governance of the processing and marketing stages (FAO, 2014). They account for over 70% of national tea production, with half a million people deriving their livelihood from this cultivation.
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Africa accounted for over 20% of global tea exports and 12% of imports in 2015–2017. In this respect, Kenya is by far the leading African country as the world’s third-largest tea exporter, with a market share of approximately 17 per cent during the same period. Between 2015 and 2017, about 43% of tea imports to Africa was sourced from China, another 40% from within Africa; the rest originated primarily from India and Sri Lanka.
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Overall, the intra-African market accounts for roughly 25% of tea exports from Africa.
COCOA
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Although exports of cocoa and related products from Africa to the rest of the world dwarf the intra-African market – on average $7.8 billion per year, compared with $170 million in the 2015-2017 period – the latter’s composition is primarily higher value added products, with chocolate accounting for nearly 60% of the total.
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There is a possible dichotomy concerning Africa’s participation in the cocoa value chain. On the one hand, most cocoa-producing countries are integrated through the supply of raw materials and semi-processed intermediates (forward participation) embodying limited value added and are directed mainly to developed markets. On the other hand, a few manufacturing hubs – for example, Egypt and South Africa – supply final chocolate products for their domestic and subregional markets, but predominantly source their intermediate inputs (backward participation) from outside the continent.
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The cocoa-chocolate sector remains heavily protected in Africa, with median most-favoured nation tariffs ranging from roughly 5% to 25%, depending on the HS heading. There is clear evidence of tariff peaks – tariff rates of 15% or more – and tariff escalation.
COTTON
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70% of cotton exports from Africa are primary intermediates embodying limited value addition, such as cotton fibres (whether carded or not); only 12% take the form of yarn, and 18% of cotton fabrics. Conversely some 12% of Africa’s cotton imports is accounted for by primary intermediates; 16%, by yarn; and as much as 72%, by cotton fabrics.
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Intra-African trade accounts for only 15% of cotton exports and 12% of imports and for 10% of the continent’s apparel exports, and 17% of its imports.
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In 2001–2017, LDCs benefited from duty-free, quota-free market access to the European Union under the Everything but Arms initiative. However, since the 2011 reform of the Generalized System of Preferences, the new rules of origin approach applicable to textiles and apparel originating from LDCs switched from double to single transformation. This reform was accompanied by a significant boost to the market share of LDCs in the European Union, as well as by improvements in the rate of preference utilization.
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Anecdotal evidence suggests that even in countries with reasonably vibrant apparel industries such as Mauritius, SMEs often find it more difficult to maintain competitiveness than larger firms, when having to comply with double transformation requirements.
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If a double-transformation approach is considered, full cumulation might be crucial in ensuring that preferences applying to the Continental Free Trade Area remain commercially valuable and do not excessively hamper the strategies of African firms.
BEVERAGES
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Reliance on intra-African imports is comparatively higher for beer (44%) and soft drinks (39%), than for spirits (14%). Leading importers in the region are Namibia, Mozambique, Uganda, Lesotho, the United Republic of Tanzania, Ghana, Rwanda, Mauritius, Mali, Benin and Tunisia.
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Beverage exports in the region are subject to substantial tariffs, considering that most countries within Africa trade with one another at most-favoured nation rates. In 2014-2016, the median rates for countries in sub-Saharan Africa ranged from 20% to 30%, depending on the tariff heading.
AUTOMOTIVE
- The automotive industry in Africa remains extremely outward-oriented, especially in relation to passenger cars, where the regional market accounted for less than 10% of exports and 2% of imports.
Related News
Appellate Body impasse: Communication from the African Group to the WTO General Council
1. Context
The dispute settlement system is recognized in Article 3.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) as a central element in providing security and predictability to the multilateral trading system.
For almost two decades in the DSU negotiations, the African Group sought to address the structural defects in the functioning of this central part of the WTO’s legal and jurisdictional instruments. The Group submitted a number of communications and proposals aimed at increasing our access to make use of the WTO dispute settlement mechanism and obtain favourable rules in the DSU to safeguard and promote our interests in the multilateral trading system. These remain an important priority for the African Group.
In the last year, we note with alarming concern the systemic risks facing the WTO’s Appellate Body. The WTO derives its credibility from its mandated function to enforce the commitments entered into by its Members. With the looming paralysis of the Appellate Body come 10 December 2019, there will be no credible enforcement mechanism of the rules-based multilateral trading system. Existing rules will be unenforceable and discussions or negotiations on new rules will be redundant.
The African Group is acutely aware that an urgent solution is required to ensure the effective functioning of the WTO’s Appellate Body as a legitimate forum where all Members can exercise equal opportunity in enforcing their rights. It is critical that all Members contribute to the strengthening of the dispute settlement system in order to enhance predictability in the functioning of the Appellate Body.
The African Union Ministers of Trade urged that ‘priority attention is given to resolving the impasse and commit to work with all WTO Members to find mutually acceptable solutions, while preserving the essential features and integrity of the system’.
The African Group takes note of all the proposals and submissions on DSU reform to date. We urge Members to ensure that any reform should facilitate the participation of African countries in the dispute settlement system, thereby alleviating the difficulties African countries face in using the system.
With respect to DSU reform, the African Group is not in favour of making any linkages to resolving the urgent crisis in the Appellate Body with the broader WTO reform agenda. The African Group reaffirms paragraph 47 of the Doha Ministerial Declaration which specifically excludes the DSU negotiations from the single undertaking.
The African Group encourages all Members to engage constructively to resolve the Appellate Body impasse. Any agreed procedures and timelines should not compromise the effective functioning of the dispute settlement system.
The African Group submits for Members’ consideration amendments to certain provisions of the DSU. These amendments are aimed at strengthening the functioning of the Appellate Body based on concerns raised about its functioning. We urge Members to engage in a solution-based approach and call on Members to fill the vacancies on the Appellate Body immediately.
2. Transitional rules for outgoing Appellate Body members
The Appellate Body selection process shall be launched automatically no later than three (3) months before expiry of the term of office.
Rule 15 should be maintained to allow outgoing Appellate Body Members to discharge their duties until the position has been filled but not longer than a period of two (2) years following the expiry of the term of office.
3. Composition of Appellate Body members
Increase the number of the Appellate Body Members from seven (7) to nine (9) Members. In the composition of the Appellate Body, factors such as regional balance, gender representivity and multilingualism may be considered. This provision will amend paragraph 1 of Article 17 of the DSU.
4. Term of office for Appellate Body
The maximum term of office of Members of the WTO Appellate Body shall be seven (7) years, non-renewable. This provision will amend paragraph 2 of Article 17 of the DSU.
5. Duration of examination of cases before the Appellate Body
The duration of ninety (90) days for the examination of cases submitted to the Appellate Body and the presentation of reports should be maintained. However, in exceptional circumstances, the Appellate Body may exceed the ninety (90) day time limit but not more than one hundred and twenty (120) days for the examination of cases referred to the Appellate Body, and for the submission of expected reports. Days not worked (weekends and public holidays) should not be counted. This provision will amend paragraph 5 of Article 17 of the DSU.
The volume of documentation of parties’ submissions should not exceed thirty (30) pages.
6. The application of obiter dicta during disputes
Findings unnecessary and unrelated to resolving of a dispute may affect the rights and obligations of Members. The AB should limit itself to the issues raised by the parties to the dispute. Under no circumstance should it pronounce on issues not raised by any parties to the dispute.
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tralac’s Daily News Selection
The role of rules of origin in boosting intra-African trade: a CNBC interview with Junior Davis, chief of UNCTAD’s Africa Section
AfDB voting powers, as at 31 May 2019.
Key regional members: Nigeria (9.347%), Egypt (5.667%), South Africa (5.094%), Algeria (4.279%), Morocco (3.621%).
Key non-regional members: US (6.672%), Japan (5.532%), Germany (4.191%), Canada (3.870%).
Strengthening the gender dimension of Aid for Trade in the Least Developed Countries
Gender-responsive aid for trade committed by bilateral donors to LDCs has increased from $921m in 2006-07 to $3.7bn in 2016-17 – an increase from 17% to 40% of total aid for trade. These sums and relative shares differ greatly by sector. In 2016-17, the sector with the highest amount of gender-responsive aid for trade was agriculture at $1.7bn; followed by transport at $1bn and energy at $441m. When looking at the proportion of gender-marked assistance in total aid for trade commitments to different sectors in LDCs, agriculture was also the highest in 2016-17 at 71%; followed by trade policies at 48%. However, the share of gender-responsive aid in the infrastructure sectors was only 33% in transport, 20% in energy and 5% in communications. In terms of recipient countries, the majority of LDCs with the highest share of gender-responsive aid for trade in 2016-17 were located in Africa – varying greatly from 88% in Yemen, down to 41% in Rwanda. Given that 60% of total aid for trade directed at LDCs is not gender-responsive, there is considerable scope for improvement. [The authors: Marianne Musumeci and Kaori Miyamoto, are attached to the OECD]
Namibia, SACU review FTA with the European Free Trade Association (NBC)
The Ministry of Mines and Energy has called on trade experts to find innovative ways to contribute to the success of the review process of the EFTA Free Trade Area agreement (with Iceland, Liechtenstein, Norway, Switzerland). The agreement was entered into on 1 May 2008. The agreement covers trade in goods by providing duty-free market access for most industrial goods, including fish and other marine products, and provides for concessions on processed agricultural products. The ministry’s policy analyst, Jeanetha Tjitaura, said Namibia plans to increase the beef quota under Article 2 of the Protocol on Beef from 500 to 1 500 tonnes. Namibia is also requesting the transposition of the 400 tonnes of sheep meat currently under the GSP scheme into the main agreement and to seek an additional 600 tonnes to increase it to 1 000 tonnes.
Lesotho: Rapid eTrade Readiness Assessment (UNCTAD)
How could Lesotho grow its trade potential by leveraging its current economic performance and the promise of e-commerce? Conducted at the request of the Lesotho government, the assessment identifies ways in which the nation could improve its ability to trade online, leveraging off its more than decade-long impressive annual growth rate of 3.6%. These include measures to improve its telecommunications infrastructure, trade logistics, payment solutions, laws and regulations, skills development, and financing, which can accelerate e-commerce and spread the benefits throughout the economy. The goal is also to help Lesotho graduate from the LDC category. Lesotho can tap the digital economy if it focuses primarily on two important areas: affordable access to connectivity and improved legislation. Lesotho is connected to the region, via South Africa, through three main submarine cables. The 3G coverage network is almost 100% and mobile usage is widespread. But the use of the Internet, even mobile Internet, remains limited – only 37% of the population has an active mobile broadband subscription and the costs are prohibitive, the report finds.
Central African Economic and Monetary Community: Deepening regional integration to advance growth and prosperity (World Bank)
The study is organized as follows. Chapter 1 (pdf) takes stock of recent economic developments in CEMAC and documents low levels of intra-regional trade and convergence; this is a concern as economic convergence is both a prerequisite for a successful economic and monetary union and the expected outcome of the regional integration process itself. These structural constraints are further explored in Chapter 2 which identifies unreliable electricity, weak governance and corruption, unfair competition from the informal sector, taxation and access to finance as the top five binding constraints for the CEMAC business environment. While most improvements to the business climate require national policy reforms, there is also scope for regional interventions to promote regional financial stability and integration to deepen access to finance (Chapter 3) and to ensure a level playing field for investment and taxation across CEMAC through a simplified and transparent corporate income tax framework, countering harmful tax competition, and by strengthening investment into regional supply chains (Chapter 4).
Chapter 5 analyses current trade patterns in CEMAC and explores the role of trade policy in deepening integration. While CEMAC has a common external tariff, there are significant divergences at national level. Furthermore, there are significant non-tariff barriers and behind the border restrictions that prevent intra-regional trade. Non-tariff barriers and non-compliance with CEMAC transit agreements is particularly visible in regional agricultural trade. This is explored in Chapter 6 which looks at constraints to agricultural productions and barriers to regional agricultural trade in CEMAC. Chapter 7 complements the analyses in previous chapters by bringing a political economy perspective to regional integration in CEMAC. It underlines the importance of a political commitment to integrate and coordinate, but also to comply with regional directives and surveillance.
Central Africa: Inaugural meeting of the Boosting Intra-African Trade regional taskforce (UNECA)
Central African countries were recently urged to align their external trade data classification system, with the 2017 World Customs Organization’s Harmonized System (HS17) for clearly identifying products which will be categorized as ‘free,’ ‘sensitive,’ and ‘excluded,’ within the AfCFTA regime. The experts examined and validated a list of 379 products termed sensitive (7% of tradable products as per the HS17), 172 products considered excluded (3% of tradable products) and rest of products termed free (90% of tradable products), to be presented to the next AfCFTA negotiating rounds, as the consensual taxonomy for free and restricted items to be traded in Central Africa. Examples of excluded goods proposed are meat, fish and cocoa; while some goods considered sensitive include live poultry, crude palm oil and milk.
The meeting noted that the situation is complex for Central Africa, given that many countries in the subregion have based their inventory of free, sensitive and excluded goods on a template called HS12 (The 2012 World Customs Organization’s Harmonized System) which is no longer in force as per the latest advice of the African Union Ministers of Trade. The trade ministers recommend that product categorization must be based on the template code-named HS17, hinged on their external trade records from 2015 to 2017. Due to tight deadlines, the Douala meeting advised that CEMAC member States (who are also members of ECCAS) having the same tariff regime, to propose a collective list of products while the other countries belonging exclusively to ECCAS, present their bids of product categorization, individually, in the meantime.
Chad’s AfCFTA strategy: update (UNECA)
At the retreat, co-organized by Chad’s National AfCFTA Negotiation Committee and ECA’s Subregional Office for Central Africa, bringing together state officials and members of the private sector, the main worries raised were Chad’s readiness to compete with Africa’s industrial giants and the fate of customs revenue for the country. ECA’s experts – Adama Coulibaly and Simon Yannick Fouda – quickly comforted their Chadian interlocutors, referring them to recommendations of a recent subregional stakeholder meeting in Douala, Cameroon, in which key points for a Central Africa AfCFTA strategy were mooted to cushion the effects of competition and the short-term challenges countries may face on customs revenue. The masterplan, in the offing, lays emphasis on energy supply, agribusiness (especially meat and leather products), construction works and the digital economy.
Participants called for coherence between Chad’s AfCFTA strategy and all other development strategies including PDIDE, a point which the country’s Minister of Mines, Trade and Industry Development and Private Sector Promotion, Ahmat Mahamat Bachir, insisted on. Participants also called on the Chadian Government to use the advent of AfCFTA as an opportunity to quickly strengthen its standards, norms and measurers institutions, improve on official statistics and to avail the National AfCFTA Committee with the requisite resources to enable it prepare a solid national strategy for the common market. The stakeholders also requested that ECA conducts a SWOT analysis on the Chadian economy, making the necessary linkages with its existing macroeconomic framework, production structure and trade flows; and to propose detailed measures to mitigate the risks that would come with the continental trade agreement and indicates pathways for Chad to finance its participation in it.
Nigeria: NEPC, MAN partner on improved market access under AfCFTA regime (The Guardian)
With the ratification of the AfCFTA, the Nigerian Export Promotion Council and Manufacturers Association of Nigeria have urged local producers to embrace voluntary certification in order to increase their access to new markets that will be created under the deal. Already, the NEPC has commenced training on international certification for members of the Organised Private Sector in line with its Go Global, Go for Certification initiative. Speaking at a training session recently, the Director General of MAN, Segun Ajayi-Kadir, urged members of MAN Export Group to take advantage of voluntary certifications to explore new markets. Ajayi-Kadir, who was represented by Adeyemi Folorunso, said manufacturers should be ready to compete globally, adding that with the implementation of the AfCFTA which will provide new markets in the continent, it is imperative that Nigerian manufacturers are prepared to take advantage of the opportunities that the trade deal will offer. The council said it had engaged a reputable Indian-based certification expert, TopCertifier, to provide certification awareness training to manufacturers and exporters.
COMESA: Experts identify priorities for capacity building to enhance market access for Kenya’s agriculture exports
Upgrading and accreditation of laboratories for testing agricultural products for export has been identified as one of the priority areas that could benefit through the new COMESA-led project on mainstreaming Sanitary and Phytosanitary Standards capacity building into national policy frameworks. This is according to industry experts attending a three-day training course this week in Nairobi on using the Prioritizing SPS Investments for Market Access framework. The training is being conducted by COMESA and the Standards and Trade Development Facility, a WTO agency. [New SPS project to increase market access of agricultural products]
Byte by Byte: Policy innovation for transforming Africa’s food system with digital technologies (Malabo Montpellier Panel)
This report summarizes the key findings of a systematic analysis of what seven African countries (Côte d’Ivoire, Ghana, Kenya, Morocco, Nigeria, Rwanda, Senegal) at the forefront of progress on digitalization of the agriculture sector have done right. It identifies interventions that work and benefit famers and other actors in the value chain and recommends options for policy and program innovation that allow countries to develop a “digitalization ecosystem” in which digital technologies and services can be developed and used to foster growth and competitiveness in Africa’s agriculture value chains. Highlighted recommendations (pdf): Placing digitalization at the core of national agricultural growth and transformation strategies and policies; Creating a transparent and smart regulatory environment that promotes the development and confident use of digital technologies and services and limits the risks; Expanding university curricula to spur digital innovation and the development of an African agtech sector; Introducing fiscal incentives to spur digital innovation and to facilitate market entry and the import of technologies until local markets are developed; Developing digital agriculture innovation hubs to create an innovation ecosystem for young people to develop locally suitable technologies and digital solutions. [Noble Banadda: Africa’s next “leapfrog” opportunity – digital agriculture; Food Systems Action Platform for West Africa conference (20-21 June, Abidjan): accelerating food transformation in West Africa through technology]
Progress of the World’s Women 2019-2020: Families in a changing world (UN Women)
UN Women’s flagship report, “Progress of the world’s women 2019–2020: Families in a changing world”, assesses the reality of families today in the context of sweeping economic, demographic, political, and social transformation. The report features global, regional, and national data. It also analyses key issues such as family laws, employment, unpaid care work, violence against women, and families and migration. The study notes that women continue to enter the labour market in large numbers, but marriage and motherhood reduce their participation rates along with the income and benefits that come with it. Half of married women between the ages of 25 and 54, two-thirds of single women and 96 per cent of married men, participate in the global labour force, according to new data. The fact that women continue to do three times as much unpaid care and domestic work as men, is a major driver of these inequalities.
Today’s Quick Links: Should Kinshasa be fast-tracked to EAC? Ten reasons why we should welcome DR Congo to the EAC IATA Regional Aviation Forum for West and Central Africa (pdf): Ghana’s Vice President outlines why Africa needs single air transport Launch of the African Women Leadership Fund Online Platform The impact of mobile money on poor rural households: experimental evidence from Uganda Cautionary tale of tax incentives for cigarette makers from Zambia Mozambique: Overview of tobacco use, tobacco control legislation, and taxation Dr Liam Fox: Future of Trade and Export Forum speech |