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DDG Wolff highlights role of WTO in facilitating agri-food chains
The World Trade Organisation (WTO’s) rules-based framework benefits farmers and other participants in nascent and developing agri-food value chains by facilitating their daily operations and encouraging regulatory cooperation among governments, WTO Deputy Director-General Alan Wolff told the G-20 Agricultural Summit in Niigata, Japan on 11 May.
“All stakeholders in agri-food value chains, and all countries at every stage of economic development, stand to benefit from fully participating in a strengthened and dynamic multilateral trading system,” he said. This is what he said:
I would like to thank the Government of Japan for hosting this meeting, and for the excellent facilities and arrangements offered to make our meetings and our stay in Niigata fruitful and enjoyable.
Technological advances have fundamentally transformed the interactions within domestic and international agri-food value chains. Of particular relevance to our discussion today are the main results of a recent report on Global Value Chain Development. Its findings were discussed on 13 April at a special event during the 2019 Spring Meetings of the IMF and World Bank Group.
The Global Value Chain Development Report 2019
Many of the findings of the Report, co-published by the WTO, the World Bank Group, OECD, the Institute of Developing Economies (IDE-JETRO), the Research Center of Global Value Chains of the University of International Business and Economics, and the China Development Research Foundation can apply and should be applied to agriculture trade:
The Report underscores the continued evolution of global value chains (GVCs) in the last two decades and their critical role in opening new markets for countries, sectors and firms, notably by reducing trade barriers and lowering costs. GVCs play a major positive role in the world economy. There are very substantia direct economic benefits.
Empirical research has shown that trade has not been a significant factor in the loss of manufacturing jobs in developed economies and has generated employment and increased incomes in developing economies. As production processes have evolved under global value chains, job gains have been recorded in the services sector. This is crucially important for agri-food value chains (FVCs), demonstrating broad gains in both developed and developing economies.
The Report does recognize that GVCs can cause structural changes which vary considerably across regions, countries and individuals with different skill levels, particularly in developed countries. The Report therefore underscores the need for governments to design and implement adjustment policies to ensure that economic gains, which outweigh the costs, are spread more evenly. The Report concludes that on-going digital transformation provides significant scope to boost global growth, and indeed trade, especially for small and medium enterprises (SMEs).
Innovation, digital connectivity, Information Communications and Technology (ICT)
The WTO has underscored the importance of ICT in helping developing countries to enhance digital connectivity. In December 2015, at the WTO Ministerial Conference in Nairobi, the scope of the Information Technology Agreement (ITA) was expanded to include a further 201 high-tech products. ITA benefits are extended to the entire WTO membership.
With the benefits of greater availability of ITC products and services, FVC (food value chain)/GVC stakeholders are increasingly able to rely on real time access to data to inform their planting, processing, marketing, distribution and investment decisions. Enhancing investments in digital connectivity, electronic logistical support mechanisms and ICT-powered information systems can generate new efficiencies within FVCs/GVCs, particularly in agri-food industries, which are data-intensive, exposed to risks (e.g., weather vagaries, price volatility, food safety, etc.) and highly dependent on the services sector.
Examples of benefits to stakeholders in the value chains include the following:
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Traceability enhances food safety. Finding a problem earlier can reduce health risks, reduce supply disruptions, reduce costs (sometimes very dramatically) to producers and distributors, and reduce waste;
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Producers, including small holders, can become closer to consumers, delivering fresher products more quickly, with improved consumer choice and experience as well as enhanced economic returns to producers. This is particularly important to those with relatively limited incomes;
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Greater access to real time market and policy information on prices will promote enhanced regulatory compliance at every stage of the supply chain (safety and quality standards, financial requirements, customs procedures, etc.), encouraging the inclusion of smaller players, bridging distances and reducing trade costs;
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Closer collaboration and coordination among local, regional and international public and private partners and institutions lead to faster integration. Each stakeholder’s capacity to anticipate and manage risks builds stronger resilience in the entire agri-food chain;
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The adoption of sustainable and “climate-smart” production practices using satellite and earth observation technology, drone-powered crop treatment and monitoring systems as well as modern traceability solutions and risk-management techniques such as blockchain technology and e-certification can generate productivity increases, input cost reductions (fertilizers, pesticides, water), and thus contribute to better farm incomes and positive food security and nutrition outcomes, while being more sustainable and lessening adverse impact on the environment.
To maximize efficiency gains, the GVC Development Report 2019 calls for governments to develop comprehensive digital strategies that encompass investments in ICT; provide for training and capacity-building; and improve trade openness, the business environment and innovation. Indeed, institutional research and educational frameworks at local, regional and international level must be designed and implemented in a way that is supportive of GVC stakeholders.
Stakeholders of any FVC can better anticipate price fluctuations and take necessary actions in their respective fields, whether they are active in futures markets and insurance, or represent the farming community, food manufacturing, trading, distribution, investment. Without transparency, which is the cornerstone of a predictable trading environment, informed and sound decision-making, let alone effective risk management, would be elusive.
The WTO rules-based framework provides practical commercial benefits to participants in nascent and developing FVCs/GVCs and their stakeholders by facilitating their daily operations and encouraging regulatory cooperation among governments. In a GVC environment, when import barriers raise input costs and act as a tax on a Member’s own exports, policies that restrict, or unnecessarily increase, the costs of trade hinder the development of agri-food value chains.
Enhancing the overall competitiveness of agri-food GVCs and allowing industries to exploit underlying comparative advantages require the adoption of open and transparent trade policies. This includes reducing distorting domestic support and market access barriers; ensuring that non-tariff measures are transparent, and, in the case of food safety measures, that they are science-based and applied in a non-discriminatory manner.
In addition to the ITA, the WTO Agreements cover food safety (SPS), technical barriers to trade (TBT), intellectual property rights that are relevant to technology transfer policies and regulations (TRIPS), streamlined and modernized customs procedures (Trade Facilitation) and Services. Each represents an important context for the development of the necessary components of value added in agri-food exports and in final products. They help ensure that GVCs operate efficiently.
Among the new developments in the WTO, Members are currently considering possible reform steps in the fields of E-commerce, investment, and micro, medium and small enterprises (MSMEs), that are designed to strengthen the multilateral trading system.
Positive results in these endeavors will generate new pathways for sustainable agricultural policy reform and inclusive economic growth. All stakeholders in agri-food value chains, and all countries at every stage of economic development, stand to benefit from fully participating in a strengthened and dynamic multilateral trading system.
E-commerce
E-commerce has the potential to generate growth opportunities both within domestic agri-food value chains as well as in cross-border trade. By connecting remote rural communities to markets, e-commerce is increasingly being used to move agricultural produce from surplus to deficit areas. A WTO study found that by 2030, digital technologies could boost trade by up to 34%, lowering costs and increasing productivity.
The availability of the latest technologies should be as widespread as possible. The huge technological gaps that exist among countries in terms of digital connectivity need to be bridged. Technical assistance and capacity building will be required.
At the last WTO Ministerial Conference in Buenos Aires in December 2017, a group of WTO Members took steps to seek common ground. In a transparent and inclusive manner, 76 countries decided to launch a Member-led Initiative on E-commerce. The sponsors and other interested Members have been sharing experiences and insights. Earlier this year, 77 WTO Members announced their intention to launch negotiations and develop new rules to discipline the trade-related aspects of e-commerce, including:
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facilitation of e-commerce transactions (e.g. customs facilitation measures, paperless trading, e-signatures and e-payments);
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issues related to market access and data flows;
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consumer and personal data; and
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transparency of e-commerce measures and regulations.
E-commerce discussions and upcoming negotiations at the WTO can build on a large and growing number of bilateral and regional agreements that contain provisions to facilitate cross-border e-commerce. Currently about 30% of the RTAs notified to the WTO contain e-commerce provisions, and this number is expected to increase. The work within the WTO on e-commerce and the digital economy is expected to have an important bearing on agri-food GVCs. Farmers and others in the food value chain should have a recognized right to access to, and free movement, of data relevant to assuring their participation of the benefits of this technological revolution.
In the WTO, such work also proceeds on a second track, with discussions under the Work Programme on Electronic Commerce taking place in regular WTO bodies, and under the auspices of the WTO General Council. Close attention should be paid to any decision that repeals or limits the decision taken by Members not to impose customs duties on electronic transmissions (the Moratorium on customs duties on electronic transmission that has been routinely extended for two-year periods).
Investment facilitation
While WTO rules already cover trade-related investment measures (the TRIMs Agreement), an initiative on Investment Facilitation for Development was also jointly sponsored by a large group of Members at the last Ministerial Conference.
Structured discussions are currently taking place among over 50 delegations, including many developing and LDC Members as well as non-signatories. As is the case with E-commerce, domestic laws, bilateral as well as RTAs have already operationalized some of the elements that are being discussed at multilateral level.
Recently, the discussions have moved to a new phase, with lively exchanges on Members’ standpoints, experiences, as well as the likely scope, functions and components of new disciplines that would streamline administrative processes and requirements; improve the transparency and predictability of investment measures; enhance international cooperation, information sharing and the exchange of best practices; and reflect the development dimension of the multilateral framework.
The participating WTO Members have underscored the need to encourage participation by additional developing country Members. They plan to explore further technical assistance and capacity-building in this area. Facilitating investments in the agricultural sector and institutional capacities, including digital and physical infrastructure and logistical support services; education; and innovation is vital to establishing domestic enabling environments and sound development strategies, including for agri-food sectors.
Training and capacity-building: within FVCs/GVCs
Capacity-building and skills development are critical determinants of competitiveness within GVCs and essential components for successful developing country participation in GVCs. The GVC Development Report 2019 emphasizes the importance of training and capacity-building to maximize the gains from GVCs.
Commitments to enhance investment in research, education, research and extension are important pieces of the puzzle. At the same time, it is important that solutions to develop both human skills and institutional capacity emanate from national policy makers, taking account of domestic economic and social dimensions.
WTO’s Reviews of the Aid-For-Trade Initiative have also confirmed that skills were a major supply-side constraint for small operators in developing countries. Even as trade and investment flows foster the dissemination of knowledge and promote the transfer technology and know-how, MSMEs in developing countries, particularly the least-developed (LDCs), need to acquire the skills, talent and expertise that are required to reap the benefits of GVC participation in the digital economy.
Training and capacity-building: food safety along FVCs/GVCs
Within the framework of the Standards Trade Development Facility (STDF), which is hosted by the WTO Secretariat, the WTO collaborates with FAO, OIE, WHO and the World Bank, and donor countries, to assist developing countries meet food safety requirements in their export markets and enhance market access to higher-value domestic, regional and global markets.
In making trade work for growth, employment and poverty reduction, the STDF has been working in a dynamic, inclusive and pragmatic way. Ensuring that efforts have a sustained and lasting impact on the ground is vitally important in approaching skills development from an integrated value chain perspective. This translates into strengthened relationships; enhanced awareness of the needs of respective stakeholders; efficient diffusion of technology and best practices; and increased access to technical and market information.
The STDF has reached out to several target groups of stakeholders. These include small-holders, farm associations and cooperatives, extension officers, commodity processors, marketing and distribution services, traders, national institutions and commodity boards, food safety and quality inspection units, as well as technical, vocational, education and research centres, local universities, international commodity organizations, and NGOs that are active in advancing the technical know-how, productive capacities and competitiveness of smaller GVC players.
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Farmers were taught how to handle chemicals and equipment efficiently for safer pest and disease control. State-of-the-art on-farm and post-harvest practices and regulations have been rolled out, increasing farmer productivity, enhancing product quality and safety, reducing post-harvest losses, and successfully reducing the number of buyer and importer rejections in export destinations.
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To generate multiplier effects, government-accredited vocational training programmes integrated training modules on advanced production technologies; and processing centers were upgraded and obtained Good Manufacturing Practice certification.
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Electronic traceability systems were designed and implemented to track the movement of agricultural products along the supply chain. The recipients were trained to create and maintain standardized records and feeding systems that will often be permanently cloud-based to ensure online access.
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Ultimately, beneficiary countries in Africa, Asia and Latin America have gained a better understanding of the articulation of supply chains in a range of agricultural and fisheries value chains. In each case, product safety and quality has improved in an integrated manner along the value chain.
Annex
Examples of SDTF-supported projects that strengthen GVCs/FVCs for the benefit of developing countries
Partnerships in Senegal boost safe cabbage production and regional exports
Beneficiary: Farmers and other stakeholders along the cabbage value chain in Senegal
Led by: AUMN
Time-frame: February 2012 – July 2014
STDF funding: US$577,142 (total project value US$636,175)
The safe trade gap
The cabbage sector is one of the most important sectors of Senegalese agriculture, and Senegal is one of the main suppliers of cabbage for the region. Yet, the sector in the country was not well organized, and suffered from a lack of awareness and expertise on how to meet sanitary and phytosanitary (SPS) standards. Information gaps resulted in pest attacks, and the excessive use or misuse of pesticides, which led to rejections at borders due to toxic residues that were not in line with export market requirements. At the same time, tackling poverty and driving rural development in cabbage growing areas was a pressing challenge. To boost productivity in the cabbage sector and promote better access to regional markets, there was a need to find solutions to plug gaps in safety and quality across the value chain.
Partnership approach
Collaboration and dialogue among the public and private actors in the cabbage sector was key to the success of the project, led by the Association des Unions Maraichères des Niayes (AUMN). Together, small-scale growers, traders and government agencies worked with the industry association to revitalize cabbage production and develop the sector. A draft national strategy was developed and laid the foundation for stakeholder cooperation, helping to promote value chain development and replicate the project’s approach longer-term. The project supplied quality inputs (seeds, fertilizers and pesticides) to growers, rolled out technical training and support for producers on good agricultural practices and ran targeted marketing campaigns on safety and quality production.
Results
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Increased farmer productivity – from 15 to 30 tonnes per hectare; improved quality –pesticide residues dropped reassuring customers of non-toxic products, with benefits for public health and the environment; more competitive prices – processing costs fell by 42%.
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Introduction of new cabbage species adapted to the seasons; use of innovative production techniques, and monitoring of major pests. A traceability sheet collected real-time information on the production cost of quality cabbage and is now used by producers.
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Upgraded transport, packing and conservation along the value chain. The use of crates to transport the produce and cold rooms to store the cabbage helped to preserve cabbage quality. Producers were also able to opt for 2, 10 and 15 kg bags valued by end consumers.
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Producers gained new market shares in the region, in particular in Mauritania, Mali, The Gambia and Guinea-Bissau. Exports went from 1,900 tonnes in 2008 to 6,000 tonnes in 2014.
Sustaining impact
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By improving phytosanitary conditions, the project led to improved quality of cabbage and is being used as an example for other cabbage producers in the area and wider region.
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An inter-professional cabbage network was set up during the project, which continues to strengthen dialogue between growers and sellers.
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The project led to more purchasing and order contracts and more predictability for traders, including demand tailored to customer needs, such as requests for different cabbage sizes.
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Thanks to the project, AUMN has become a key partner for the national SPS authorities on topics related to the development of the horticultural sector as a whole.
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Improved infrastructure, including better roads to safely transport cabbage and inputs to growers, which came about during the project, is supporting rural development in the area.
“The project’s success was due to genuine collaboration between the private sector and public institutions. We joined our efforts in support of a common objective – helping small-scale producers to improve the quality and safety of cabbage, which increased their access to regional export markets”. Mamadou Ndiaye, Association des Unions Maraîchères des Niayes, Senegal
Stronger phytosanitary controls help Uganda’s flower exports to grow
Beneficiary: Flower producers in Uganda
Led by: CABI and the Department of Crop Protection in Uganda and the Uganda Flower Exporters Association
Time-frame: January 2012 – May 2015
STDF funding: US$348,632 (total project value US$392,154)
The safe trade gap
Flower producers in Uganda faced heavy losses with the growing interception of cut flower exports to the EU. Costs rose with increased inspections, treatment and rejected consignments. In turn, investment in the sector was slowing, which was impacting on trade flows and economic growth. The problem – plant pests. The solution – getting the right tools and knowledge on phytosanitary measures in place to keep the flower supply chain safe. At the same time this would help to safeguard the livelihoods of the country’s 6,000 flower workers, 80% of them women, and their families.
Partnership approach
Flower producers and exporters came together with the Department of Crop Protection (DCP) in Uganda to build capacity to meet international phytosanitary standards and EU requirements. A strong public-private partnership between the DCP and the Uganda Flower Exporters Association (UFEA) was created based on joint dialogue and planning. Efforts were made to raise awareness and gain buy-in from national decision-makers. With technical expertise from CABI and other partners, hands-on practical training and study tours were rolled out for the public and private sector. Government teams were deployed to boost efficiency of inspections and certification at exit points and an electronic format for export certification and accessible reference materials were developed.
Results
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Numbers of interceptions on roses due to plant pests fell from 34 in 2013 to 18 in 2014 and to less than five in 2015 and continued to fall in 2016. The livelihoods of the majority women workers dependent on the flower industry stand to benefit as exports to the EU continue.
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Over 100 scouts across the flower sector and 10 inspectors have been trained by COPE. Inspectors and industry showed high levels of knowledge on international phytosanitary standards and EU legislation to meet EU market demands.
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A streamlined inspection and export certification system was set up, together with a surveillance, monitoring and traceability system. A manual with 12 Standard Operating Procedures was developed with operations linked to the Plant Protection and Health Act 2015.
Sustaining impact
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An evaluation in 2015 found that thanks to the project there was “improved compliance with international phytosanitary standards for production and export of flowers for the European market.” “Awareness on the relevant phytosanitary issues in relation to the export to the EU has increased significantly” and, at the same time, “the response of the cut flower sector on the survey and monitoring program reached a very reactive and responsive level.”
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Flower farms have also set up a self-regulating system on monitoring and surveillance, with disincentives for non-compliance, managed by a Task Team of government and industry.
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The DCP and UFEA have since signed a new public-private partnership to sustain their collaboration and increase flower production and exports.
This statement reflects the work of the WTO’s Agriculture Division, and particularly of Majda Petschen and the Division Director, Edwini Kessie. The STDF material reflects the work of that institution and of the STDF Staff Secretary of the STDF, Melvin Spreij.
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AU begs Nigeria to join new trade zone: the recent Financial Times article, reposted. “We are encouraging [Nigeria] to be among the founding parties and sign the agreement before 30 May,” Albert Muchanga, the AU trade commissioner, said in an interview with the Financial Times at the regional body’s headquarters in Addis Ababa. “Africa’s share of global trade is going to increase as a result of enlarging the domestic market,” he said. “It is in their interests to ratify.”
IATA updates for African air freight, passenger demand in March
The 22nd session of the Intergovernmental Committee of Experts for West Africa was held last week in Liberia on the theme Demographic dynamics for sustainable development in West Africa. Profiled background document, pdf National capacities and mechanisms for assessing progress in the Implementation of Agendas 2030 and 2063 (1.80 MB) – state of play, challenges and prospects in West Africa (pdf):
On the basis of a survey of public structures in charge of planning and statistical production in West Africa and a literature review, an analysis of the data collected was carried out in order to identify the challenges and prospects of national capacities and mechanisms for monitoring and evaluating the 2030 and 2063 agendas. At the end of the analysis, the following main messages deserve to be highlighted:
At the level of the National Statistical Systems: Overall, the National Statistical Systems (NSS) in West Africa are relatively well organized with the NSIs as a central structure with a primary producer role. All countries also have a legal framework for statistical activity. NSS in all countries also have Statistical Master Plans, which are essential strategic planning tools for effective statistical activity. In addition, most master plans include a plan for strengthening statistical production and staff training that builds the capacity of statistical staff. In terms of statistical data quality, West African countries have the most significant deficiencies in the regularity and accessibility of statistical data. With regard to regularity in particular, on average, 52.3% of the main data collection operations do not respect the prescribed production deadlines. In some countries, the rate of non-regularity exceeds two thirds (2/3) of the main collection operations. For some collection operations, relatively long delays are noted, sometimes exceeding 100% of the prescribed deadlines.
Given the low level of regularity of major data collection operations in countries, there is a significant risk that a relatively large proportion of the SDG and Agenda 2063 indicators may not be regularly reported, which would compromise the timely and regular reporting. On average in the 10 countries analysed, more than half of the indicators are at risk of not being reported due to a lack of regularity. In almost all countries, production structures have significant deficiencies in terms of professional statisticians. 8 out of 10 countries consider that they do not have sufficient statistical professionals to effectively meet the need for statistical production for the monitoring and evaluation of the SDGs, including Agenda 2063. On average, the number of statisticians per 100,000 inhabitants is 2.88 compared to a European average of about 15 statisticians per 100,000 inhabitants.
Guinea-Bissau: IMF statement
At the end of the visit, Mr Rasmussen issued the following statement (extract): “Guinea-Bissau’s fiscal position remains under stress. Due primarily to higher than planned expenditures, the government deficit in early 2019 was significantly larger than envisioned in the draft budget. The deficit was also much larger than the same period in 2018, where it for the year as a whole reached an estimated 5.1% of GDP on commitment basis. At the same time, financing pressures have grown, resulting in a rising balance of unpaid bills. On current course, the financing gap for 2019 is estimated at about 3% of GDP. While higher cashew output should help raise real GDP growth from the estimated 3.8% in 2018 to about 5% in 2019, lower cashew prices imply downside risks to economic activity and government revenue collection.”
Botswana: Performance and learning review of the Country Partnership Framework, FY16 - FY20 (World Bank)
The Performance and Learning Review (pdf) assesses progress under the current Country Partnership Framework (FY16-20) and proposes adjustments to its substance and implementation. PLR consultations confirmed the continued relevance of the CPF to Botswana’s National Development Plan (NDP 11). However, challenges facing the IBRD portfolio caused the WBG and the Government of Botswana to candidly assess the realism of the existing CPF. The changes are summarized as follows: extend the CPF by one year (to FY21) to allow for dynamics leading up to the October 2019 elections and then gauge the new cabinet’s priorities, intensify World Bank implementation support given client capacity constraints. In designing new projects, explore a broader mix of instruments to build institutional capacity, rebalance the scope and size of the WBG portfolio to ensure better strategic coverage of the agreed CPF pillars in line with the focus on human capital, and build on the growing collaboration between the World Bank, IFC and MIGA in Botswana to leverage private sector resources for development outcomes. [Related CPF reviews: Eswatini (FY15-FY18), Namibia (FY14-FY17)]
Kasumbalesa: Zambia-DRC border post set for facelift (The East African)
The DRC and and Zambia’s Kasumbalesa border post is a typical African border. It is the main link between the DRC and southern Africa countries like Botswana, Malawi and South Africa - the region’s super power. Zambia and DRC clear about 500 trucks on each side per day. For the last past month, however, truckers have suffered a prolonged traffic congestion. “From Kitwe to here (Kasumbalesa), I have been on the road for two weeks,” one trucker Emili Ibrahim Kasongo, a Tanzanian, told Africa Review. Zambia collects an estimated $560,000 monthly through Kasumbalesa border post where 500 trucks cross into the DRC daily. To cross over to DRC, Mr Kasongo now has to pay a notification notice of $20 again, the other one having expired during the time spent in traffic. The congestion started with a protest by truckers over clearance at Whiskey which means that between Kasumbalesa and Lubumbashi, a distance of 90 kilometres three toll points form a non-tariff barrier to trade. In addition, the toll fees over the stretch are the highest in the region; reaching $900 for a round trip over a distance of the 420 kilometres to Kolwezi towards the Angola border. “It has taken me one week to get here (Kasumbalesa from Zambia’s Copperbelt). It is a sad situation for our colleagues that get paid on the number of trips that they make. But I’m lucky I am carrying mining machines headed into Kolwezi,” Anthony Mulenga, a trucker said.
Rwanda: Chinese garment firm to create 7,500 jobs (New Times)
Rwanda has signed partnership deal with a Chinese garment firm, Pink Mango C&D, to set up a modern garment factory in Kigali, expected to employ thousands of Rwandans in the long run, Rwanda Development Board announced on Friday. Pink Mango C&D will establish a factory in the Kigali Special Economic zone that will produce garments for both the domestic and export markets. According to the statement, Pink Mango C&D is expected to provide 7,500 jobs to Rwandans by the fifth year and cumulative export earnings of $20m over the next five years. “Furthermore, Pink Mango C&D is expected to build capacity and skills transfer to 500 workers of local garment cooperatives who will also benefit from some of their supply contracts through an outsourcing model,” reads the statement in part.
Tanzania’s gold export earnings up by $100m (The Citizen)
Sustained government checks on mining activities and increased production among major producers, mainly Geita and North Mara, have boosted the country’s gold export earnings. According to the Bank of Tanzania monthly economic review for April (pdf), export earnings from gold increased by $100m (about Sh223 billion) during the year ended March, this year, compared to the year ended March 2018. The review shows that export earnings from gold increased to $1.68bn during the year ending March, this year, from $1.53bn recorded during the year ending in March 2018. The increase has also improved earnings from non-traditional goods exports, which account for 78% of goods exports and 40% of total exports to $3.47bn during the year ended in March this year.
Kenyan MPs warn farmers: Release maize or it will be imported (Business Daily)
The government will be forced to import maize if farmers continue to hoard their produce and demand high prices, the National Assembly Committee on Agriculture has warned. Committee chairman Adan Ali said growers have refused to part with maize in the hope of making more money. He said the local market is offering better prices than the government, thus farmers are avoiding the National Cereals and Produce Board (NCPB). According to Agriculture CS Mwangi Kiunjuri, they have tried to convince farmers to deliver maize to NCPB depots in vain. “I personally asked those with more than 400 bags to sell to NCPB but the situation at the depots has not improved,” added Mr Kiunjuri. The CS said NCPB failed to meet its target of buying two million bags owing to better prices offered by the market and the worsening drought in the country. [The EAC Agriculture Budget Summit 2019 took place on Friday: an overview of the discussion, here and here]
Zambia: Climate-smart agriculture investment plan (World Bank)
The Government of Zambia (GoZ) is integrating climate change concerns into its agriculture policy agenda. Under its Zambia climate-smart agriculture (CSA) strategy framework, the GoZ is promoting the rollout of CSA practices that will sustainably increase productivity, enhance resilience, and reduce or remove greenhouse gas emissions. The CSA investment plan aims to identify and fill knowledge gaps about CSA’s local- and national-level benefits, specifically under climate change, inform policy development, and prioritize investment opportunities. Extracts on agricultural trade issues:
With respect to trade, the target of doubling net exports by 2050 is partially feasible. CSA, such as crop diversification, reducing post-harvest loss, or minimum soil disturbance, can potentially enhance international competitiveness and transform Zambia into a net exporter of additional commodities. The aim to enhance net exports by 2050 is reached for maize and millet, and - under extreme climate change scenarios - for cassava and cotton, even with conventional practices. When adopting CSA practices (see Figure ES.2), such as crop diversification, Zambia has the potential to become a net exporter of groundnuts, increase net exports of maize, and decrease net imports of soybeans by 2050, compared to a situation with conventional agricultural practices.
Under business-as-usual (BAU), trade trends vary across commodities. Climate change is a strong driver of both imports and exports. Figure 5.13 shows net agricultural trade (exports minus imports) for key agricultural commodities in 2010 and 2050 as well as the sector vision target of doubling net exports in 2050. The results are mixed. For cassava, cotton, maize, and millet net trade is positive in 2010 and is expected to increase by 2050. Of these, only maize and millet are expected to achieve the vision target of doubling net trade by 2050. For cassava and sugar cane, which also show positive net trade in 2010, a decrease is projected. For beef, pork, and several crops, including groundnuts, rice, soybeans, sweet potatoes, and wheat, net imports are expected to increase.
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West Africa’s ICE focuses on demographic dynamics for sustainable development in the region
The 22nd Meeting of the Intergovernmental Committee of senior officials and Experts (ICE) for West Africa concluded in Liberia on 10 May 2019. It was held under the theme, Demographic dynamics for sustainable development in West Africa: challenges and policy measures.
Organised by the Sub-Regional Office for West Africa (SRO-WA) of the United Nations Economic Commission for Africa (ECA) and the Government of Liberia, this ICE session is expected to come up with solid recommendations on economic and social development issues facing the continent’s most populous region.
Delegates discussed recent regional and international developments likely to impact economic and social development in West African countries; identify major challenges and to propose policy guidelines to help accelerate sustainable development in the sub-region.
Liberia’s Finance and Development Planning Minister, Samuel D. Tweah Jr, lauded the ECA for its continuous support to Liberia and the sub-region, especially in pursuit of the 2030 Agenda for Sustainable Development Goals and Africa’s Agenda 2063.
“I hope that strong recommendations in terms of education, agriculture and finances will be made by the participants at this important meeting. These recommendations should also be available at the level of our parliaments so that they have an impact on national polices,” the Minister said.
He said such recommendations should not only be the preserve of the annual Conference of African Ministers of Finance, Planning and Economic Development but trickle down to lawmakers and others for maximum benefit.
For his part, Director of the ECA in West Africa, Bakary Dosso, said three reasons justify choosing the theme of this meeting.
“First, it is a strategic choice. Demographic Dynamics for Development is the new area of specialization of the ECA Sub regional Office for West Africa. Secondly, the West African region is at the forefront of issues related to population dynamics and development. Lastly, the current momentum. There is a worldwide agenda to identify and seize the windows of opportunity of demographic dividend in Africa,” he said.
Mr. Dosso said the region was in 2018 home to 377 million people or 30 percent of Africa’s population. He said the most populated region of the continent was growing at a pace of 2.7 percent per annum, adding this will double every 25 years.
“Out of an estimated population of 377 million in 2018, just over 200 million or 53.5 percent of the people live below the national poverty line demonstrating the magnitude of the challenges facing the region,” said the Director.
Accordingly, he said that countries in the sub-region need to reform their macroeconomic and financial frameworks; invest in human capital; tackle infrastructure deficits; and improve the business climate to positively and sustainably reverse trends.
Mr. Dosso said the success lies in the ability of the national leadership to execute on time, to monitor and evaluate the implementation of the different agendas to which it has committed for the transformation of their respective countries and continent.
He said institutional capacity for evaluation and monitoring of development agendas has been identified as one of the missing links in development processes in West Africa.
The Representative of the United Nations Development Program (UNDP) in Liberia, Pa Lamin Beyai, said: “The challenges we face as a sub-region are immense. But the United Nations, working as one in each of your countries, is ready to support you to benefit from the demographic dividend. For that to happen, the progress made in regional integration needs to be sustained in the short, medium, and long terms to ensure that our youthful population is a true force for development, peace, and security.”
The Intergovernmental Committee of Experts meets annually with high-level decision-makers from member States to discuss economic and social performance and make relevant recommendations.
In this light, participants reviewed statutory reports prepared by the Secretariat. They also reviewed the reports on Implementing the SRO-WA Work Program in 2018 and prospects for 2019; Regional Profile of West Africa; and Progress in Implementing the Sustainable Development Goals (SDGs) in West Africa.
This ICE session was preceded by an ad hoc expert group meeting from 6 to 7 May 2019, on the theme: National capacities and mechanisms in evaluating progress in the implementation of agendas 2030 and 2063: assessment, challenges and prospects in West Africa.
Delegates from the 15 West African States as well as senior representatives and experts from the ECOWAS, Union Economique et Monétaire Ouest Africaine (UEMOA), the Mano River Union (UFM), and other intergovernmental organizations (IGOs) of the Sub-Region attended the ICE. In addition to ECA experts, representatives of other UN agencies, partners, NGOs, development and research institutions were also in attendance.
National capacities and mechanisms for assessing progress in the Implementation of Agendas 2030 and 2063:
State of play, challenges and prospects in West Africa
The purpose of this study was to analyse the capacities and mechanisms of the fifteen (15) West African countries to assess progress in the implementation of the 2030 and 2063 agendas. The aim was to take stock of the capacities of the national statistical systems, the organisation of the monitoring and evaluation system for the 2030 and 2063 agendas, identify the major challenges and propose recommendations for improving the system.
At the end of the analysis, the following main messages deserve to be highlighted.
At the level of the National Statistical Systems:
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Overall, the National Statistical Systems (NSS) in West Africa are relatively well organized with the NSIs as a central structure with a primary producer role. All countries also have a legal framework for statistical activity. NSS in all countries also have Statistical Master Plans, which are essential strategic planning tools for effective statistical activity. In addition, most master plans include a plan for strengthening statistical production and staff training that builds the capacity of statistical staff.
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In terms of statistical data quality, West African countries have the most significant deficiencies in the regularity and accessibility of statistical data.
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With regard to regularity in particular, on average, 52.3% of the main data collection operations do not respect the prescribed production deadlines. In some countries, the rate of non-regularity exceeds two thirds (2/3) of the main collection operations. For some collection operations, relatively long delays are noted, sometimes exceeding 100% of the prescribed deadlines.
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Given the low level of regularity of major data collection operations in countries, there is a significant risk that a relatively large proportion of the SDG and Agenda 2063 indicators may not be regularly reported, which would compromise the timely and regular reporting. On average in the 10 countries analysed, more than half of the indicators are at risk of not being reported due to a lack of regularity.
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In almost all countries, production structures have significant deficiencies in terms of professional statisticians. 8 out of 10 countries consider that they do not have sufficient statistical professionals to effectively meet the need for statistical production for the monitoring and evaluation of the SDGs, including Agenda 2063. On average, the number of statisticians per 100,000 inhabitants is 2.88 compared to a European average of about 15 statisticians per 100,000 inhabitants.
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National statistical data production and dissemination structures have limited knowledge of new data collection, processing and dissemination techniques – data collection by tablet/smartphone (CAPI) and online data collection using web tools (CAWI). Of the 10 countries examined, 8 have unsatisfactory knowledge of online data collection using web tools.
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The autonomy of countries in financing statistics is weak. Indeed, in almost all countries, most of the main data collection operations are financed mainly from external resources, giving the impression that statistics are not a priority in West African countries.
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Generally, States’ commitments to finance statistics are not respected. This argument is supported by the low disbursement rates of NSO budgets, some of which are below 50% in some years.
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Very few West African countries have statistical development funds, which contributes to increased instability and irregularity in the resources allocated to statistical financing.
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Closing the statistical data gap to ensure that the 232 SDG indicators, including Agenda 2063, are properly reported will require relatively large amounts of funding ranging from 340 thousand to 280 million US dollars depending on the country.
At the level of the institutional monitoring and evaluation system:
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After 4 and 6 years of implementation of the SDG and Agenda 2063 respectively, very few countries have formalized through official acts the monitoring and evaluation mechanism of the two Agendas.
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In most countries, 90% of the countries surveyed believe that the current structures that produce the SDG report are the most appropriate. The situation is more mixed with Agenda 2063. Indeed, only 60% of the countries consider the choice of the structure in charge of monitoring-evaluation of this reference framework to be appropriate.
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The frequency of reporting differs from one Development Agenda to another but also from one country to another; this also complicates the production of an integrated and coherent report at the country and regional levels, in accordance with the requirements of the AU/UN Development Framework.
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The schedules of data-producing structures, in particular the INS, and those responsible for producing SDG and Agenda 2063 reports are poorly synchronized; this is not likely to promote up-to-date data to meet the need for report production.
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The Bus King of Africa (Moneyweb)
Having conquered the South African bus market, Busmark CEO Pat Nodada is now partnering with the Industrial Development Corporation to build bus factories across Africa, starting with Zimbabwe, Kenya, Nigeria and Ghana. It’s a bold move that will increase Busmark’s monthly output from 100 to 500 buses over the next five years. The IDC is taking a R2bn bet that Nodada can pull this off by replicating the same formula that turned Busmark into the dominant bus maker in SA, with an estimated 40% of the local and 20% of the Zimbabwean market. Nodada bought into the company a decade ago, retooled its Randfontein factory to supply city transporters such as Metrobus and MyCiti and promptly won a contract to supply the Gautrain fleet. This month 30 buses left the Randfontein factory destined for Kenya, part of an order for 90 units. This is a prelude to the opening of a new bus assembly plant in Nairobi later this year in a joint venture with Mercedes Toyota Tsuscho that will turn out 20 units a month. A similar-sized factory will open up in Harare in July this year. A much larger factory with the capacity to churn out 250 units a month will open in Nigeria next year, followed by a fourth factory in Ghana by 2022. Smart factories are also in the works for Port Elizabeth and Durban. [South Africa: Navara spearheads Nissan’s African expansion plans]
Business Barometer: Africa CEO Survey (Oxford Business Group)
As part of its second survey on the African economy, the global research and consultancy firm asked 787 C-suite executives in eight countries across the continent a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment. More than four-fifths (84%) of executives said they felt positive or very positive about local business conditions in the year ahead, with 78% telling OBG that they expected their company to make a significant investment in the months ahead, up from 74% in 2018’s survey. A similar number (72%) of interviewees were confident that the African Continental Free Trade Area would have a positive or very positive impact on intra-regional trade levels. Commenting in her blog, Souhir Mzali, OBG’s Regional Editor for Africa, said the reasons for optimism among business leaders were multiple, ranging from rising interest in the continent from China and beyond, and the investments that have ensued to the rollout of public investment programmes for infrastructure. The AfCFTA, she added, while far from challenge-free, had the potential to significantly boost trade volumes. [Related blog from Souhir Mzali: The AfCFTA has crossed the ratification threshold – what’s next?]
Nigeria and the AfCFTA: highlights from yesterday’s briefing by the Minister of Industry, Trade and Investment, Okechukwu Enelamah (Premium Times)
The Minister of Industry, Trade and Investment, Okechukwu Enelamah, has said Nigeria does not lose anything by not signing the AfCFTA agreement. He said Nigeria’s priority is to conclude the series of consultations with various interest groups on the impact the agreement could have on Nigeria’s national interest and the economy. “We are working on the African Continental Trade Agreement, which will come into force soon,” the minister said during a media briefing in Abuja on Thursday on the activities of his ministry in the last four years. “We are working on putting our house in order by discouraging trade malpractices, dumping, smuggling, bringing sub-standard goods into Nigeria and the things that are inimical to the progress of the country’s industry, economy, and trade. But, the issue is not a question of the first country to sign. The important thing to Nigeria is that, what is worth doing at all is worth doing well. The consultation is important. Nigeria will sign the agreement when it has finished doing its homework. Nigeria will be going into the agreement stronger, having finished the consultations. Countries that have signed the agreement are now doing their stakeholders consultations. But, Nigeria chose to do its consultations first before signing. We hope that in the end, we will all be in the same place,” he said. According to the minister, the country’s priority concern about the agreement is its proper implementation “that will be good, not only for Nigeria, but for Africa.”
Key recommendations from the recent EABC-UNECA conference on the AfCFTA and the role of the private sector: extracts
EAC Partner States, in collaboration with the private sector, should identify and address existing impediments at national and regional to the full implementation of the AfCFTA...should enhance capacity building to strengthen its institutions to enable them to discharge new mandates derived from AfCFTA…should embark on compressive awareness creation on opportunities and challenges presented by AfCFTA…should work together in addressing supply-side constraints to enhance the competitiveness of EAC Producers in the AfCFTA.
EAC Partner States, in collaboration with the private sector, should work together in addressing supply-side constraints to enhance the competitiveness of EAC Manufacturers in the AfCFTA; There is a need to have an EAC CET structure that recognizes the different levels of integration at the continental and drives down the cost of regionally manufactured products; Development of rules of origin regime at AfCFTA level that reflect the already existing at EAC level; Fully implement the existing regional initiatives in selected services sectors such as Tourism, in order to accrue the gains and make the EAC services providers in these sectors, more competitive at the AU level e.g. EAC Tourism Bill, Single Tourist Visa; Gender-responsive private sector representation at all levels of negotiations; Sensitize private sector on challenges and benefits/opportunities of Trade in services liberalization at Continental level. [Download: pdf Highlights of the EABC-UNECA Conference on the AfCFTA (853 KB) ] [Diarise: German–EAC Business and Investment Expert Dialogue, 14 May, Arusha]
UNIDO publishes new Competitive Industrial Performance Report
UNIDO’s Competitive Industrial Performance Report 2018 is based on the analysis of eight indicators of industrial performance which are used to construct a composite index, widely known as the CIP Index. Countries are ranked by the index score indicating their relative position in global manufacturing. An upward shift in rank over time indicates a gain in competitive industrial performance in comparison to others. The CIP Index is a widely used by international development agencies to rank countries in the context of their development priorities. The CIP Report also presents the ranking of countries according to each of the eight indicators as well as by country groups and regions. The best performing three counties according to the CIP Report 2018 are Germany, Japan and China. Germany has been on top of the ranking for many years, followed by Japan and the United States. However, now China has overtaken the United States and occupies third position. The 2018 report covers 150 countries (pdf), more than any previous report. For the first time, the CIP Report includes a new dimension to the index reflecting the effect of industrial production on the environment. Section 2.3.8: Sub-Saharan Africa (p57). Figure 2.17 shows that the performance of sub-Saharan African countries in CIP Dimensions 1 and 3 is particularly poor. Yet some countries have made some advances in technological deepening and upgrading. This result is driven by comparatively sophisticated manufacturing production systems in Swaziland and South Africa. [See Table 2.8: Regional and global 2018 CIP rank, sub-Saharan Africa]
How economic transformation happens at the sector level: evidence from Africa and Asia (ODI)
This paper explores the factors that shape the prospects of success in economic transformation at the sector level. It provides an evidence base on the factors and conditions that drive or hold back economic transformation by focusing on examples where changes at a sector level triggered economic transformation, and the roles different actors played throughout this process. Extract (pdf): In several of the successful cases, favourable balances of political and economic interests supported transformation because they resulted in credible commitments to investors. In Ghana, this took the form of cross-party political support for the cocoa sector and the key sectoral institution. In Mauritius, high-level political backing for a consensus view on the desired future direction of the economy was important. In Ethiopia, state investments in air transport were backed by a long-term policy vision designed by a regime that is relatively secure. In South Africa, multi-year policy visions provided a credible platform for long-term planning in the automotive sector. In failures, such commitments were typically uncertain, undermining investor confidence. For example, the government’s credibility in the case of cashews in Mozambique was undermined by poor communication, the perception that the policy reforms were World Bank-driven and the knowledge that processing could be profitable only with government protection. In Tanzania, the power of food-importing businesses undermined the credibility of the presidential rice initiative and the East African Community’s tariff rules. [The authors: Neil Balchin, David Booth, Dirk Willem te Velde]
Made in Ethiopia: challenges in the garment industry’s new frontier. This report from the NYU Stern Center for Business and Human Rights assesses the arrival of the global apparel industry in Ethiopia, identifies problems related to low wage levels, and makes recommendations for a way forward that benefits the industry, Ethiopia, and Ethiopian factory workers.
Fostering sustainable development through Chinese overseas economic and trade cooperation zones: status quo and practical guidelines for the way forward (pdf). The author is Moritz Weigel (China Africa Advisory). View other presentations delivered during the recent Sustainable Industrial Areas conference (8-10 April, Addis Ababa).
Arab-Africa Trade Bridges Programme: Dubai Exports in bid to boost Arab-Africa trade (Zawya)
The two-day Agri-Food Forum was attended by 40 companies from 15 African countries, witnessed over 200 business-to-business meetings on building mutual relations and enhancing agri-food exports. Mohammed Ali Al Kamali, deputy CEO of Dubai Exports, said the forum primarily sought to enhance relations between the private sector in Africa and the UAE so that they are well-positioned to take advantage of existing and emerging opportunities in both regions. “A key element of the Dubai Exports strategy is to support and create platforms for buyers and suppliers to share information on new and emerging markets,” Al Kamali said.
Today’s Quick Links: The documentation, presentations from this week’s Commission on Science and Technology for Development in Geneva Bloomberg: Trump shatters trade truce in big 2020 gamble 16 developing countries to participate in India’s WTO Ministerial Meeting (13-14 May) IGAD conference on forced displacement and mixed migration: Horn of African states pledge support for regulated migration Africa Blue Economy Forum (25-26 June, Tunis): African businesses urged to dive into Blue Economy Wandile Sihlobo: Zimbabwe’s land reform and white farmer compensation 13th Asia/Africa IFA Conference 2019 (pdf): Mauritius remains a great place to grow businesses, states Minister Sesungkur Egyptian-Francophone cooperation to support Africa New report highlights continued threat to African elephants from poaching |
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East African Private sector discusses their contribution to the AfCFTA
EABC charts out ways to leverage on the AfCFTA
The African Continental Free Trade Area (AfCFTA) isn’t simply a ‘Free Trade Agreement’; it’s about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen.
This was the tone from the discussions of the meeting held on 25 April 2019 in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA.
The one-day meeting, organized jointly between the East African Business Council (EABC) and the UN Economic Commission for Africa (ECA), convened close to 40 key players from the region’s private sector.
The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million.
“Together African economies have a collective GDP of 2.5 trillion USD, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent,” said Andrew Mold, Acting Director of ECA in Eastern Africa. “This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment”.
Nick Nesbitt, Chairman of EABC, emphasized the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. “I really applaud everybody who has involved in creating the AfCFTA because their vision is the one of pan-Africanism. It is something our founding founders aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc,” he said.
Kenneth Bagamuhunda, Director General of Customs and Trade at the East African Community Secretariat, cited the experience of Regional Economic Communities as the building blocks for the AfCFTA. “The AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks,” he said.
Bagamuhunda highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.
The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA. 22 countries have ratified the agreement, which was the minimum number required for it to enter into force.
Panel discussions on the opportunities and challenges for the EAC within the context of the AfCFTA
Led by EABC Chairman, Nick Nesbitt, the panelists thoroughly discussed the opportunities and challenges for the EAC within the context of the AfCFTA. The panelists were Mr. Kenneth Bagamuhunda, Director General Customs & Trade, EAC and Mr. Andrew Mold, Officer in Charge for Eastern Africa, UNECA. The Moderator of the panel discussion was Ms. Novella Nikwigize, News Anchor and Producer, Rwanda TV.
In summary, the following issues were raised during the discussion:
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Given that the EAC has moved in terms of integration the region should reposition to take advantage of the AfCFTA despite the challenges at EAC level and look for leeways in the continental market
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The need to chart out mechanism on how to leverage on the AfCFTA
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Leverage the EAC private sector in AfCFA
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Diversifying intra-EAC trade to boost intra-Africa trade
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Need to address outstanding issues among EAC Partner States
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Strengthening regional value chains to attract local and foreign investors in existing and new innovation sectors
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Instruments and infrastructure are there we need to implement them and highlight remaining issues and challenges in subsectors
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Personal responsibility of private sector members Trust
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The private sector as arbitrator between realities on the ground and policy makers
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An open and optimistic approach towards the AfCFTA
Summary of Key Recommendations
For EAC businesses to optimize on AfCFTA opportunities and overcome challenges presented by the Agreement, the EAC Private Sector have proposed the following recommendations:
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The EAC Partner States at the national and regional level should adequately involve the private sector in the negotiating process of AfCFTA instruments to ensure regional private sector interests are taken on board
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There is a need to leverage the EAC at the AfCFTA level. Take into consideration lessons from at EAC level for purposes of leveraging the AfCFTA
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The private sector should not only look at positioning for the benefits but also how the benefits come by.
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Strengthen the ambition of the AfCFTA over the longer term to consolidate the RECs and realize a continental customs union
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Leverage AfCFTA as a platform for negotiations with the rest of the world: reinforce a coherent African trade policy
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EAC Partner States in collaboration with Private Sector should identify and address existing impediments at national and regional to the full implementation of the AfCFTA
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The EAC Partner States in collaboration with the private sector should enhance capacity building to strengthen its institutions to enable them to discharge new mandates derived from AfCFTA
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The EAC Partner States in collaboration with Private Sector should embark on compressive awareness creation on opportunities and challenges presented by AfCFTA
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The EAC Partner States in collaboration with Private Sector should work together in addressing supply-side constraints to enhance the competitiveness of EAC Producers in the AfCFTA
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Use of existing national and regional business organizational structures to engage with national trade negotiators
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Two to Tango: An evaluation of World Bank Group support to fostering regional integration (World Bank)
This evaluation assesses the Bank Group’s effectiveness and comparative advantage in fostering regional integration during FY2003–17 and draws lessons that can be used to inform future regional integration operations. This evaluation applied three sets of methods to gather the evidence related to the Bank Group’s effectiveness, including: Portfolio review and analysis of a stratified sample of regional integration interventions; Regional case studies in East Africa, Central Asia, and South Asia based on the intensity (high or low) of Bank Group regional integration activities; and Econometric analysis on the macroeconomic effects of Bank Group support, construction of a regional integration index, and a data-envelopment analysis to identify frontier regions and sub-regions with the most potential for regional integration. Main findings (extract):
Overall, the Bank Group’s efforts to foster regional integration have led to mostly positive development outcomes in the Sub-Saharan Africa Region and in infrastructure sectors. Bank Group regional integration efforts in other regions and sectors have been sporadic and not prioritized according to regional needs or client demand. Though the IDA Regional Window program has also contributed to regional integration (mainly in the Africa Region), the development outcomes of its interventions are not significantly different from similar projects co-financed outside the program. The most promising outcomes were increased knowledge exchange and clients’ enhanced understanding of regional benefits and regional issues. The Bank Group contributed, to a lesser extent, to regional policy harmonization and formation of new regional institutions or functional agencies.
AfDB Civil Society Forum: update
Deeper engagement with civil society on development projects has resulted in acceptance of projects by communities and greater regional integration, but the pace must move faster, participants gathered for the opening of the African Development Banks’s Civil Society Forum heard Monday. In her welcome remarks, Jennifer Blanke, Vice President Agriculture, Human and Social Development Complex said the Bank was working with governments and the AU to build the critical infrastructure for a faster realization of integration goals, beginning 2025. Blanke who chairs the AfDB-Civil Society committee, said the Bank’s engagement with civil society formed a crucial part of its policy making process and outcomes of the forum will be integrated in an action plan to boost intra-African trade from the current low level of 15%. But while there have been some milestones under the plan, challenges remain, mostly due to political interest of member states, the forum heard. [ pdf Concept Note (194 KB) ]
pdf A single digital market for East Africa (6.71 MB) : Presenting a vision, strategic framework, implementation roadmap and impact assessment (World Bank)
East Africa cannot afford to think small. At the current, incremental pace of economic and social advancement, too many of today’s youth will continue to be denied the opportunity to live up to their potential. The rise of digital technologies offers a chance to disrupt this trajectory, unlocking new pathways for rapid economic growth, innovation, job creation, and access to services which would have been unimaginable only a decade ago. The burgeoning tech start-up clusters in Nairobi, Dar, Kampala, and Kigali provide inspiration for what the future could hold. Tapping into this potential will require bold, visionary leadership and deeper integration of the region’s digital economy and innovation ecosystem. By working together and seizing opportunities to ‘leapfrog’ outdated infrastructure, technology, and business models, East African countries can position the region as a premier digital investment and innovation destination. In isolation, East African countries will miss out on this opportunity, left behind by rapid technological advancement and rivals with large domestic or integrated regional markets and more proactive digital investment and reform strategies. This report outlines the impetus for creating a single digital market (SDM) in East Africa, which would drive deeper integration and spur increased dynamism of the digital economies of six East African countries: Burundi, Kenya, Rwanda, South Sudan, Tanzania, Uganda. The SDM initiative will leverage and work through existing regional institutions and platforms, such as the East Africa Communications Organization, the EAC, Northern Corridor Committee, and at the continental level, through the AfCFTA and the Smart Africa Alliance.
Inaugural US-Kenya Bilateral Strategic Dialogue: joint statement
Uganda and the IMF
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IMF Executive Board Concludes 2019 Article IV Consultation. Directors welcomed the authorities’ intention to develop a fiscal rule to manage future oil revenues and encouraged the authorities to consider adopting an interim debt ceiling to guide fiscal policy. Directors also stressed the need to improve fiscal policy formulation and implementation including through a more binding approach to the annual budget process and encouraged the authorities to promptly adopt and implement the Domestic Revenue Mobilization Strategy given Uganda’s still low revenue collection. While Uganda’s debt level remains at low risk of debt distress, Directors cautioned that debt metrics had weakened, some investment projects may not generate the envisaged return, and interest payments are rising. Directors thus called on the authorities to keep debt below 50% of GDP in nominal terms over the medium term to safeguard the hard‑earned favorable debt sustainability rating.
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pdf 2019 Article IV Consultation Report (2.47 MB) . The current account deficit has also increased to 6.1% of GDP in FY17/18. Imports of goods and services grew by 17% - largely on account of capital goods related to the infrastructure projects. This outweighed the 9% growth of exports. Uganda has a diversified export base with predominantly regional export destinations. In FY18/19, the current account deficit is expected to further widen to 7.2% of GDP mostly due to increased imports of capital goods for public investment projects, oil projects, and FDI. International reserves stood at $3.2bn at end-FY17/18 - a decline by $210m - and are expected to remain stable at 4 months of imports in FY18/19. [See Text Figures 4 and 5: Weight of neighbouring countries in exports is rising; Exports are well diversified]
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pdf Selected Issues Report (375 KB) : Addressing employment challenges in Uganda. Ugandan firms are very small on average, as firms face challenges to expand within the business environment. Ugandan firms are very small compared with regional peers, reflecting the large share of own-account workers in the economy. The World Bank enterprise survey (2013) indicates that infrastructure especially electricity, competition with informal firms, access to finance, tax rates, labor regulation and trade are among the key issues that Uganda firms face. At the same time, Uganda firms have made more progress on innovation than SSA firms on average, with higher shares of firms introducing process innovation and new product and services. [Uganda’s economic outlook in six charts]
Nigeria and the AfCFTA: tweeted updates by Nigeria’s Federal Ministry of Industry, Trade and Investment. The [AfCFTA] stakeholders asked to be fully briefed so they were in the loop. After all the consultations, the president asked for an impact assessment. That work has been concluded and now being put together for the president hopefully to approve. “The AfCFTA is a 50 to 100 year+ agreement, so it’s not about being the quickest. It’s about doing it well. We started with engaging stakeholders. Some other countries approved first and are now consulting. Hopefully we’ll all arrive at the same place.” [Related updates: Olu Fasan: Nigeria must help its industries succeed, but not by cocooning them; FG partners EU, GIZ to deepen economic diversification programme; Emmanuel Okogba: Reasons for Nigeria’s seeming reluctance on ECOWAS single currency]
SADC: Regional Vulnerability Assessment and Analysis Programme workshop concludes tomorrow in Windhoek
ECOWAS Parliament: First Ordinary Session of the Fourth Legislature opens in Abuja
WTO launches updated profiles on trade in value-added terms and global value chains (WTO)
The profiles draw from data in the OECD’s Trade in Value-Added (TiVA) database and provide an update to the profiles previously released three years ago. An explanatory note (pdf) provides definitions of the indicators shown in the profiles and guidance on the data differences between the two releases. The full list of country profiles can be found here. Each profile starts by displaying the share of domestic and foreign components in the economy’s total exports and how these have changed between 2005 and 2015 (the latest year available in the TiVA database). Breakdowns are provided of the top export industries and top export destinations for each economy. The profile also quantifies the economy’s level of participation in GVCs as a supplier and buyer of intermediate products, indicating the top trading partners. The contribution of the services sector to trade in value-added terms and the value of its exports and imports of intermediate products for merchandise and services are also covered. A new set of profiles showing trade in value-added terms by sector will be released later this year. [Download: South Africa profile, pdf]
Blockchain: A new opportunity for strengthening trade in the Commonwealth
It remains nascent, untested and complex but already some Commonwealth members are seeing tangible benefits from its application to key industries. It is clearly worthy of consideration when taking decisions over technology, economic, and social investments. The conceptual case for blockchain technologies is compelling, but also raw. What is certain is that it is rarely easy to convert technological innovation into transformational inclusive economic change. Considerable media discussion does not eclipse the paucity of successful pilots or scalable examples. Indeed, many commentators are predicting five to ten years’ maturation of blockchain technologies before widespread adoption results from emerging practice and pilots. It is worth restating the complexity of blockchain technology, being not a unitary innovation but several that build upon, integrate and complement one another. Each economic sector will require bespoke development, deployment and learning associated with elements of blockchain technology. However, there are signs that blockchain technologies will disrupt many economic sectors during the next decade. For Commonwealth member countries, it is key to improve knowledge of their business and population needs, to determine how and what to invest in to ensure the gains from the looming disruption are maximised and the risks mitigated. [The author: James MacGregor]
Today’s Quick Links: Francois Baird: Putting the Brazilian fox in charge of the South African hens Congo gears towards continental trade strategy Major boost for Nigeria as US increases oil imports from Africa 4th International Public-Private Partnerships Forum: summary of speech by ECA’s Executive Secretary, Vera Songwe. Profiled document: Standard on Public-Private Partnerships in Railways German parliament extends army’s Africa missions CFR’s Belt and Road Tracker |
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IMF Executive Board 2019 Article IV Consultation with Uganda
Uganda’s economy continues its robust recovery with projected growth of 6.3 percent in FY2018/19. Timely implementation of public infrastructure and oil-related projects would support growth in the medium term, according to the IMF’s latest assessment of the Ugandan economy.
Uganda is among the countries with the fastest growing population in Africa and remains on course to exceed 60 million by 2030. This challenges the country to create more than 600,000 jobs a year for its expanding labor force and to ensure that the benefits of growth are shared fairly.
Uganda’s economy continues its recovery. The economy grew by 6.1 percent in FY17/18, with a strong services sector and a rebound in agriculture from the previous year’s drought. Investor surveys suggest that business conditions and sentiment are strong, while credit to the private sector has improved, helped by an accommodative monetary policy stance. Over the medium term, growth could range from 6 to 7 percent if infrastructure and oil sector investments proceed as planned.
Uganda’s development strategy prioritizes scaling up public investment to address critical infrastructure bottlenecks. Long-term sustainability of the development strategy also depends on strong investment in people. Given limited budget resources, the government must find a balance between infrastructure needs and supporting social sectors, such as health and education.
Vulnerabilities are increasing. Uganda has relied on external borrowing to finance its large-scale infrastructure projects, which contributed to rising debt, putting more strain on the budget as more resources need to be allocated for interest payments. Nevertheless, the country remains at low risk of debt distress. To help keep debt at manageable levels, the government is finalizing a 5-year domestic revenue mobilization strategy.
The current account deficit widened to 6.1 percent of GDP in FY17/18, somewhat weaker than desirable. With gross international reserves of $3.4 billion (4.2 months of next year’s imports) at end-February, Uganda has a sound buffer against external shocks. The main risks to the outlook are unfavorable weather conditions, domestic and regional political tensions, and further delays in the start of oil production.
Executive Board Assessment
Executive Directors agreed with the thrust of the staff appraisal. They commended Uganda’s macroeconomic performance and development gains over the last three decades, including halving its poverty rate. Noting Uganda’s growing population and job creation needs, Directors encouraged further progress towards poverty reduction and shared prosperity, through strong macroeconomic policies, human capital development, and improvements in institutions and governance with continued IMF capacity development support.
Directors welcomed the authorities’ intention to develop a fiscal rule to manage future oil revenues and encouraged the authorities to consider adopting an interim debt ceiling to guide fiscal policy. Directors also stressed the need to improve fiscal policy formulation and implementation including through a more binding approach to the annual budget process and encouraged the authorities to promptly adopt and implement the Domestic Revenue Mobilization Strategy given Uganda’s still low revenue collection.
Directors noted that a more balanced expenditure composition between infrastructure and social development (especially for the youth, women and low‑skilled workers) would better support inclusive growth and highlighted the need for spending prioritization, addressing domestic arrears and continued efforts to strengthen public finance and investment management practices.
While Uganda’s debt level remains at low risk of debt distress, Directors cautioned that debt metrics had weakened, some investment projects may not generate the envisaged return, and interest payments are rising. Directors thus called on the authorities to keep debt below 50 percent of GDP in nominal terms over the medium term to safeguard the hard‑earned favorable debt sustainability rating.
Directors agreed that inflation targeting continues to serve Uganda well under the central bank’s stewardship. They indicated that monetary policy could remain supportive for now and agreed on building reserves opportunistically under a flexible exchange rate regime given external vulnerabilities. Directors also urged the authorities to strengthen the Bank of Uganda’s financial position through recapitalization and expenditure measures.
Directors concurred that bank supervision and regulation are generally sound and noted the importance of a more favorable business environment and greater access to finance for a private sector‑led growth.
Finally, Directors welcomed the improvements in Uganda’s compliance with the AML/CFT standards and its decision to begin accession to the Extractive Industries Transparency Initiative. They called for further efforts to strengthen governance and reduce corruption, including addressing weak implementation of the relevant legal framework.
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African Development Bank Civil Society Forum, partners, seek faster continental integration
Engaging Civil Society in Regional Integration for Africa’s Economic Prosperity
Deeper engagement with civil society on development projects has resulted in acceptance of projects by communities and greater regional integration, but the pace must move faster, participants gathered for the opening of the African Development Banks’s Civil Society Forum heard Monday.
In her welcome remarks, Jennifer Blanke, Vice President Agriculture, Human and Social Development Complex said the Bank was working with governments and the African Union to build the critical infrastructure for a faster realization of integration goals, beginning 2025.
Blanke who chairs the African Development Bank-Civil society committee, said Africa will benefit from its power and strong workforce only through increased trade among itself, adding that this would ensure transformation and job creation.
The 10th anniversary of the Bank’s Civil Society Forum took place at the Bank’s Abidjan headquarters and was attended by representatives of civil society from across the continent. The three-day forum covered topics such as engaging youth civil society to accelerate regional integration, innovative approaches for accelerating integration and leveraging the strength of civil society.
Blanke said the Bank’s engagement with civil society formed a crucial part of its policy making process and outcomes of the forum will be integrated in an action plan to boost intra African trade from the current low level of 15 percent.
But while there have been some milestones under the plan, challenges remain, mostly due to political interest of member states, the forum heard.
“We must transcend big politics and begin to build in Africans a sense of belonging... The African civil society is ready to play its role. More than ever before, it is capable of tackling most of the many challenges facing this continent. Over the last decades, the African Civil Society landscape has undergone tremendous transformation and is rich in experience and expertise. Use us. Use us well beyond consultative roles,” remarked Augustine Njamnshi, Vice-Chair of the African Development Bank’s Civil Society Committee.
The Bank’s director for Regional integration Moono Muputola said civil society engagement has facilitated safer trade across borders for women. In March 2018, the Bank approved the pdf Regional Integration Strategic Framework (2.10 MB) with three key pillars: Infrastructure Connectivity, Trade and Investment and Financial Integration. It has granted $4.8 million to the African Union to help establish the secretariat and supporting programs.
The 54-state continent with a population of 1 billion people and a combined GDP of over $3.4 trillion, has outlined plans for regional integration and trade to provide huge opportunities for its entrepreneurs and producers.
In renewed efforts to boost trade relations, the African Union in March 2018 launched an African Continental Free Trade Agreement estimated at $3 trillion. Some 44 countries signed up to the deal, while others, including the most populous nation Nigeria, have yet to subscribe to it.
Regional integration is one of the Bank’s High 5 strategic objectives, linked closely to other priorities to foster the required economic transformation on the continent through the free movement of goods, services, people, capital, energy, and knowledge across borders.
Niger’s former Minister for Privatization Alma Oumarou who spoke during a panel session after the opening ceremony said a united continent would be stronger at negotiations with external trade partners such as the European Union.
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New commentaries on the AfCFTA:
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tralac’s Gerhard Erasmus: The institutional design of the AfCFTA. Why do international trade arrangements have their own institutions? What do these institutions do and how important are they for delivering the intended outcomes? This paper discusses these questions with respect to the AfCFTA. The aim is to broaden the scope of the discussion about the potential impact of the AfCFTA. Will the AfCFTA add a unique dimension to Africa’s developmental strategies and abilities, or will it be a case of more of the same? The relevant provisions in the legal instruments of the AfCFTA are studied for indications as to what can be expected.
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COMESA’s Francis Mangeni: AfCFTA success and the lessons from regional economic blocs. Rather than theoretical constructs, the actual entry points for African economic integration have been the current existential issues the regions faced: drought and desertification for IGAD, peace and security for ECOWAS, infrastructure and industrialisation for SADC, trade and financial facilitation for COMESA; and nostalgia over a beloved economic community that collapsed in 1977 in EAC. African economic integration still takes place in a global political and economic order. However, African must secure its financial autonomy and progressively eliminate over-dependence on some partners. ECOWAS has been able to mobilise $630m annually from its community levy system. The African Union levy of 0.2% on imports has so far raised $800m for the Peace Fund to support peace and security operations. Donor funding in the meantime continues to fill in existing gaps in other regional bodies. The EAC has mobilised $500m in project financing mainly for trade facilitation. Long term, the sustainable building of capabilities is a critical success factor. The capabilities are entrepreneurial, leadership, intellectual, diplomatic and negotiational, mobilizational, proposal and drafting and textual preparation and explanation, and managerial.
São Tomé and Príncipe and the AfCFTA: Capitalize on the Blue Economy, UNECA urges
The UNECA has reiterated its “availability and commitment” to work with the Republic of Sao Tome and Principe on taking advantage of its Blue Economy endowments to capitalize on the AfCFTA. Antonio Pedro, Director of the Subregional Office for Central Africa, gave the assurances during a recent AfCFTA roadshow held in Sao Tome to inform and sensitize major actors of the island on the opportunities offered by the AfCFTA when it becomes operational in July, and the steps Sao Tome should take to make the most of it. The authorities in Sao Tome also requested the Subregional Office for Central Africa and the ECCAS Secretariat to conduct a study on high-potential service sectors to inform the formulation of the national AfCFTA strategy.
The 38th meeting of the EAC Council of Ministers is underway in Arusha: the Ministerial Session will take place on Friday. The meeting of the EAC’s policy-making organ will consider various policy and institutional matters geared towards deepening and widening the regional integration agenda.
New ACP-EU Partnership: chief negotiators conclude regional consultations, culminating with African leaders’ meeting in Eswatini. As with other regional consultations held in the Pacific and the Caribbean regions, the objective was to discuss specific needs and priorities of the region, while exploring how to best address them in the future ACP-EU agreement. It is expected that today’s discussion will fuel and enrich the tailor-made Africa pillar to be created within the future ACP-EU agreement, also known as the “post-Cotonou” agreement. [Elizabeth Morgan: Strengthening Caribbean-EU relations]
African trade diplomats briefed on ITC trade and market intelligence tools (ITC)
ITC experts briefed trade attachés from Botswana, the Comoros, Eritrea, Rwanda, Uganda and Zambia on how to use ITC’s suite of free online tools: Trade Map, Market Access Map, the Rules of Origin Facilitator, the Export Potential Map and the Market Price Information portal. The feedback from the participants was highly positive. “The event deepened ITC’s relationship with the Geneva-based diplomatic missions of its partner countries,’ said Ramin Granfar, a country manager in ITC’s Office for Africa. Future briefings are planned on topics including ITC’s e-learning platform, the SME Trade Academy, and SheTrades, ITC’s flagship initiative on women’s economic empowerment.
Third AU-UN Annual Conference: joint communiqué (UNECA)
On 6 May, UN Secretary-General António Guterres and AU Commission Chairperson Moussa Faki Mahamat convened the Third AU-UN Annual Conference in New York. Continued collaboration for the implementation of the AfCFTA and other related instruments, including the Free Movement Protocol and the Single African Air Transport Market, was discussed, notably in view of their significant potential to boost regional integration, strengthen inclusive economic growth, generate jobs for young Africans, alleviate poverty and lead to more stable and peaceful societies. The Conference urged greater efforts to harness Africa’s youth dividend, notably with investments in health, education, data and in science and technology. The urgent need to ensure investments for development of robust data ecosystem at the country and regional levels, enabling evidence-based policy-making, as well as tracking progress of the two agendas, were underscored. They acknowledged the important role of technology and digital identity as a transformative force for African economies and achieving sustainable development and underpinned by the smooth implementation of the AfCFTA.
COMESA countries maintain high sugar production: update from the Africa Sugar Conference
Eight countries in the COMESA region have maintained their grip in sugar production with most of the raw produce being exported to the EU, USA and China. The top producer of sugar is Eswatini, having produced over 650, 000 metric tonnes (MT) followed by Egypt at 595, 000 MT, then Zambia with 450, 000 MT. Ethiopia produced 450, 000 MT, Zimbabwe 391, 000 MT, Kenya is at 376, 000 MT, while Mauritius and Malawi produced over 355, 000 and 239, 000 MT respectively.
Madagascar Economic Update: managing fuel pricing (World Bank)
The economy has continued to perform well, with growth in 2018 estimated at 5.2%, above regional and global averages. External demand for Malagasy goods and services remains strong, with exports such as cash crops, metals and business process outsourcing performing well. A small but dynamic private sector is responding to this increased economic activity with banking, logistics and services to support companies all under expansion. The central challenge remains of how this growth can benefit a wider population, so that Madagascar can make inroads in reducing poverty. Increasing access to reliable, sustainable and affordable energy supply is critical in this regard. Improving the reliability of energy supply would support firm’s competitiveness, which is crucial for helping industries to grow and creating job opportunities. At the household level, only an estimated 13% of the population has access to electricity. Extract on Madagascar’s Real Sector:
The performance of the manufacturing sector was mixed, particularly for goods produced in export processing zones. Overall, the growth of the secondary sector decelerated from 9% in 2017 to 5.4% in 2018. Garments feature among Madagascar’s top three exports and realized mixed performance. The value of garment exports to France and Germany fell by 25%, which is significant as an estimated 50% of garment production in export processing zones is destined to these two markets. However, this lackluster performance of exports to European markets was to some extent compensated by an increase in the value of garment exports to the US by 25.5%. Given global growth prospects, demand for Malagasy garments is expected to pick up over the medium term, which should be reinforced by plans to strengthen capacity of the Toamasina Port. Demand for other Malagasy goods remained strong. The price of vanilla continues to remain high, but is likely to fall over the medium term as more suppliers enter the market. The price of nickel has been on a upward trend although was a slump in prices at the end of quarter 1, 2019, whilst cobalt prices continue to rise.
South Africa: Pakistan cement producers challenge SA import duties (Business Day)
Pakistan cement exporters are putting pressure on their government to convince SA to overturn the existing anti-dumping duty on imported cement from that country. Mohammad Rafiq Memon, chairman of the Pakistan-SA Business Forum, has called for the intervention of the Pakistan authorities. “Before the antidumping duty, annual cement exports to South Africa were worth $700m, but has subsequently dropped to $100m,” he says. Memon says SA should revisit the decision to impose the anti-dumping duties in the interest of fair trade. Since the imposition of the duties on Pakistan cement, Vietnam has taken over as the largest exporter to SA, with 30,000 to 50,000 tons imported into the country each month, according to construction market intelligence firm Industry Insight.
Ethiopia reaps rewards of tax policy reform (AfDB)
These findings were revealed at a workshop in Addis Ababa hosted by the AfDB and a high-level delegation from the Ethiopian government. An AfDB study found that the introduction of electronic cash registers increased value added tax collections and payments by about 32%, with variations by sectors of activity, size of firms and locations. This increase can be considered large. However, given the low tax base, there is significant scope to mobilize domestic resources by accelerating reforms, notably on the use of third-party information on taxpayers, promoting electronic tax filing and payment systems, and enhancing analytical capacity using comprehensive national databases. The workshop formed part of the Bank’s commitment to helping the government fund its ambitious development plans. In this regard, the Bank conducted original research to evaluate the impact of major tax policy reforms in Ethiopia, in collaboration with the Ethiopian Development Research Institute and the Ministry of Revenue and the Ethiopian Customs Commission (formerly Ethiopian Revenue and Customs Authority).
Consumer groups express support for multilateral trade, stress priorities for e-commerce (WTO)
The meeting at the WTO, held at the request of Consumers International, was the first event to be organized solely for consumer organizations as part of the WTO’s Trade Dialogues initiative. It brought together 15 representatives of consumer organizations from around the world and a number of private sector representatives. Extract from the summary of the issues raised at the meeting (pdf): Consumer groups voiced their interest in seizing the window of opportunity posed by ongoing discussions on e-commerce at the WTO. There will be more than 2 billion consumers online by 2021 and it is crucial to ensure policies will be in place that make the world fair, safe and sustainable for them. Transparency in the negotiations is important and consumer groups would like to be informed about the proposals and be included in consultations with their respective governments to ensure their interests are being represented. In addition to reducing prices and enhancing choice, consumer groups would also like the ecommerce negotiations to address: [A commentary by Seema Bathla, Abhishek Jha: Talking fair trade in Delhi (13-14 May, New Delhi)]
Christine Lagarde: How to ensure the effective and sustainable financing of international development (IMF)
Strengthening debt management will also be crucial. This can be quite tricky. As debt instruments get more complicated, debt management capacity needs to become more sophisticated. Yet today, only 40% of countries meet basic standards for debt recording, while just a third meet standards for reporting and monitoring of guarantees. Technical assistance will be critical here. Let me now talk about the role of creditors, who have a vital role to play in encouraging greater transparency. As we have seen in Mozambique, private lenders can effectively facilitate hidden debt. Even for official creditors, non-disclosure agreements or complicated financing modalities can work against transparency. I therefore welcome the work being done by the Institute of International Finance on Principles for Debt Transparency of private creditors. I also welcome the G-20’s self-assessment relative to its operational guidelines for sustainable financing. I encourage all G-20 members to participate. Also, most importantly, the Paris Club can play an important role in coordinating debt resolution because it incorporates best practices and has a wide membership - recently expanded to include Korea and Brazil. Wider membership of the Paris Club, including new official and plurilateral creditors, could help secure more rapid and coordinated debt resolutions.
China: Debt cancellation (pdf, Development Re-imagined)
Selected pointers: Over the period 2000 to 2018, China has written off c$9.8bn of debt to other countries; this has been highly variable year-on-year. The geographical distribution of Chinese debt cancellation shows a significant skew towards African countries. The vast majority of Chinese debt cancellation has been to APAC and Africa, within which Eastern Africa has received the largest amount (c.$1bn). In value terms, medium HDI ranked countries are the largest proportion (c.56%); in volume terms, low HDI countries makes up the greatest share of cancellations.
Today’s Quick Links: Pan African Parliament swears in 8 new members West African regional anti-corruption network recommends modalities for corruption risk assessment training Asoko Insight: Tanzania’s leading fintech providers Nigeria: Judge rules MTN met deadline to respond to tax demand |
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New ACP-EU Partnership: Chief negotiators conclude successful series of regional consultations, culminating with African leaders’ meeting
On 3 May 2019, in Eswatini, Chief negotiators Neven Mimica and Robert Dussey met with African Ministers to discuss the African pillar of the future partnership between the EU and 79 countries in Africa, the Caribbean and the Pacific (ACP).
As with other regional consultations held in the Pacific and the Caribbean regions, the objective was to discuss specific needs and priorities of the region, while exploring how to best address them in the future ACP-EU agreement. It is expected that Friday’s discussion will fuel and enrich the tailor-made Africa pillar to be created within the future ACP-EU agreement, also known as the “post-Cotonou” agreement.
In Mbabane, Eswatini, the EU’s Chief Negotiator, Commissioner for International Cooperation and Development Neven Mimica, said: “Today’s meeting has given us a strong basis and political direction on how to reinforce EU-Africa relations under our future agreement. We believe that further driving economic growth to improve people’s lives and reduce poverty should be at the heart of our work. Other priorities include promoting democratic principles, while protecting our citizens and our environment.”
Professor Robert Dussey, the ACP’s Chief Negotiator and Chair of the Ministerial Central Negotiating Group, who is also the Minister for Foreign Affairs, Cooperation and Africa integration of Togo, said: “The just completed consultation for the Africa region adds to the outcome of consultations for the Caribbean and the Pacific, which have helped us understand better the priorities of the ACP regions. This is critically important in the context of current negotiations for a new ACP-EU Partnership Agreement. We remain focused on working with our EU partners to address the priorities of the three regions.”
The Minister of Foreign Affairs and International Cooperation of Eswatini, Ms Thuli Dladla added: “The Kingdom of Eswatini is honoured and proud as lead negotiator for the Africa Protocol and host to the just-concluded consultations to have facilitated the expression of Africa’s strategic priorities which has set the stage for real engagement to reach a mutually beneficial agreement with the European Union.”
Background
The Cotonou Agreement currently governing EU-ACP relations is due to expire in 2020. Negotiations on a new ACP-EU Partnership were launched in New York on 28 September 2018 in the margins of the United Nations General Assembly.
The two first series of talks mainly focused on the common foundation at EU-ACP level. This contains the values and principles that bring the EU and ACP countries together. It also indicates the strategic priority areas that the two sides intend to prospectively work on together.
The envisaged structure of the future agreement includes a common foundation and specific, action-oriented regional pillars, to focus on each region’s needs. To that end, the first round of consultations on the regional pillars is now concluded. Through the future partnership, EU and ACP countries will seek closer political cooperation on the world stage. Together, they represent more than half of all UN member countries and unite over 1.5 billion people.
For more information
pdf ACP Negotiating Mandate for a Post-Cotonou Partnership Agreement with the EU (1.00 MB)
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2019 Draft Joint OECD/WTO Aid for Trade at a Glance: OECD posts the abstracts for the nine chapters (pdf)
This seventh edition of the Aid for Trade at a Glance publication seeks to explore the implications of economic diversification and empowerment through trade and aid and aid for trade. The joint publication is prepared in collaboration with the Enhanced Integrated Framework, ITC, UNCTAD, UNIDO and the WBG. Secretary-General Gurría will launch the publication at the seventh Global Review to be hosted by the WTO on 3-5 July 2019.
Diarise: Kenya’s transport sector – measuring its value chains and exploiting its potential (14-15 May, Nairobi). This seminar, part of the UNCTAD-UNECA project on services trade in Africa, will sensitize key national stakeholders of transport services about the importance, tools and roles of stakeholders in measuring target value chains, and how this supports Kenya’s capacity to design policies which promote a higher degree of integration into RVCs.
Kenya: pdf AfDB’s Country Strategy Paper 2019-2023 and Country Portfolio Performance Review (2.14 MB)
Kenya’s private sector continues to be vibrant but remains characterized by a dichotomous structure: a formal business sector, which is relatively healthy and productive but concentrated in a few firms, and a massive, informal, low-productivity small business sector, which contributes 83% of employment in the private sector. Kenya’s private sector has not reached its full productive capacity, mainly due to persisting infrastructure deficits, increased perception of corruption, relatively weak regulatory environment, and a shortage of appropriately trained workforce. This notwithstanding, the 2018 Doing Business indicators show Kenya moving upwards to rank 80 in 2017 from 92 in 2016 and 108 in 2015. Annex 18 summarizes other planned policies, legal and institutional reforms by the government to support manufacturing.
The performance of the Bank Group’s portfolio in Kenya is assessed satisfactory with an overall assessment of 3.03 (on a scale of 1-4) in 2018. This performance is the result of enhanced dialogue and engagement with the GoK, which has resulted in reducing implementation delays. As of end-2018, the Bank’s portfolio in Kenya is composed of 38 operations (26 public and 11 private) with a total commitment of UA 2.38 billion. The portfolio is composed of energy (27%), transport (26%), water supply & sanitation (24.4%), finance (12.3%), agriculture (6%), social (4%), and multi-sector (0.3%).
Extract from Annex 20: Sector briefs. pdf Para 23: Regional Trade (2.14 MB) : In 2016, three of Kenya’s top 10 export destinations were EAC Partner states (Uganda, Tanzania, Rwanda) and approximately 18% of Kenya’s total exports were the EAC region. Kenya enjoys a positive trade balance with the region indicating that the EAC contributes positively to its balance of payments current account position. However, the trade balance with the EAC has stagnated at a positive but relatively low level and exports to the EAC regional market are growing but at a slower pace compared to exports to the rest of the world. Challenges: (i) Regional development is constrained by inadequate infrastructure; (ii) EAC countries have a narrow basket of value-added exports and do not produce enough of what other countries want; (iii) Coordination challenges for regional projects such as LAPSETT between EAC countries as well within government ministries and departments, and between the public and private sectors. (iv) Persistence of non-tariff barriers Kenya is accused of imposing such as: cumbersome customs and administrative documentation procedures; cumbersome inspection requirements; police road blocks and weighbridges; varying trade regulations; cumbersome, and costly transiting procedures; duplicity in the functions of agencies involved in verifying the quality, quantity, and dutiable value of imports and export cargo; and business registration and licensing; (v) Non-implementation of regional commitments such as a lack of recognition of Rules of Origin certificates among EAC Partner States; (vi) Fragility issues around the EAC. Opportunities:
Anzetse Were: China made smart move on standard gauge rail financing (Business Daily)
Creating markets in Angola: Opportunities for development through the private sector (World Bank)
The economic crisis in Angola has led to a rethinking about new sources of growth and has revealed the cost of past economic mis-governance. With limited oil reserves and prices unlikely to regain former heights, the public sector must relinquish its role as a core engine of growth. Since 2000, government spending and financial sector growth have been responsible for almost half of Angola’s growth, while consumption fed by higher oil prices accounted for nearly another 40%. Infrastructure and human capital development, however, contributed very little, despite large public spending. The presence of low-performing State-Owned Enterprises (SOEs) in productive sectors, and more generally the dominance of politically-connected interests, have not led to the expected diversification of the economy. In terms of external trade, Angola is one of the least diversified economies in the world, with 96.5% of exports in 2016 comprised of oil and diamonds.
Important segments of the economy remain dominated by state-owned companies and politically connected firms. Angola is home to Africa’s largest SOE, Sonangol. Despite several waves of privatizations in the late 1990s and 2000s, SOE assets in the portfolio of the Institute for Management of State Assets and Shareholdings (IGAPE]) represent 78% of the country’s GDP today. Sonangol’s revenues alone are equivalent to 25% of GDP, and its assets 40%.
On the other side of the spectrum, the private sector is overwhelmingly represented by sole proprietor firms, and firms are on average small. A majority (55%) are sole proprietorships, and altogether they employ a relatively small number of people (21 on average). Almost 60% of businesses are concentrated in Luanda. Several sectors have thrived during the oil boom years: construction and real estate, commerce, and distribution, as well as finance, are connected to oil cash flows and construction. To a lesser extent, telecoms and air transport have also benefited from the fast-growing economy. Together, the growth of these sectors has changed the face of the economy, now dominated by the services sectors. However, they have not contributed enough to put the economy on a sustainable growth path, as the private contribution to growth has been slightly negative. Spillovers from these sectors to the rest of the economy seem to have been modest at best. Agriculture and manufacturing, which have long been prioritized by the government for support and expansion, have failed to take off in spite of receiving large public investments.
Angola’s logistics sector significantly lags its regional peers both in terms of availability and efficiency. The aggregated Logistics Performance Index puts Angola at 160 out of 167 countries. The same is true for the quality of its air, port, rail, and road infrastructure (that is, 139 out of 144 according to the Global Competitiveness Report) despite the significant public investment in key transport infrastructure since the end of the war. The state is heavily involved in the sector with 15 SOEs in the operations of key transport infrastructure and services, including maritime transport, port management, terminal operations, airlines, airport management and services. Public companies have been performing relatively poorly, with $90m losses on average in the last two years of 2016–17; they have accumulated liabilities amounting to 3% of GDP.
Mahindra to tap South Africa for business expansion into rest of the Africa (Devdiscourse)
Mahindra wants to make South Africa the hub of its exports into the rest of the Africa, a senior official of the company has said. Arvind Mathew, Chief of International Operations at Mahindra & Mahindra, joined Rajesh Gupta, CEO of the company’s local subsidiary, Mahindra SA, on Friday to launch two models in the 7500 series and three in the 6000 series of its tractors from its farming equipment range, which are very popular in India and several other countries. “Africa is the future agricultural base of the world,” Mathew told reporters and farming sector representatives at the event in the heart of the farming community in North West Province.
Advancing Gender Equality in Customs Administration: Mauritius hosts regional workshop (GoM)
The Mauritius Revenue Authority has launched a five-day regional workshop on “Advancing Gender Equality in Customs Administration” at the World Customs Organisation Regional Training Centre in Mer Rouge. The workshop (6-10 May) is the second workshop on “Advancing gender equality in Customs Administrations” and is being sponsored by the WCO, through the financial support of the Finland ESA Project II. Participants from nine different countries namely Eswatini, Kenya, Malawi, Mauritius, Rwanda, Seychelles, South Africa, Uganda and Zimbabwe are also attending.
EU releases proposal on new WTO rules for electronic commerce
The EU has made public its text proposal on future rules and obligations on e-commerce as part of WTO negotiations on e-commerce endorsed by Ministers in the margins of the Davos World Economic Forum in January 2019. The pdf EU text proposal (210 KB) will be discussed along with proposals from other participating WTO Members, on 13-15 May in Geneva. The EU is fully committed to advancing the WTO negotiations on e-commerce, which have just started. It will seek to negotiate a commercially meaningful set of rules on e-commerce with as many WTO Members as possible. To this end, the EU tabled initial negotiating proposals for a broad set of rules and commitments that would for instance:
India warns WTO about EU’s proposal for e-commerce rules (Mint)
India has expressed apprehensions about the EU’s proposal on Friday to create new e-commerce rules on grounds that the high standards being proposed could decimate both the goods and services tariff rules under the World Trade Organisation (WTO), impacting its domestic industry and job creation. Addressing the informal Trade Negotiations Committee of the Heads of Delegates on Friday, India’s permanent representative at the WTO J.S. Deepak said most developing countries including India are not ready for binding rules in e-commerce. “We fear the impact of some of the e-commerce rules being proposed under the Joint Initiative on e-commerce, on existing trade rules, particularly the General Agreement on Tariffs and Trade (GATT) tariffs, which protect our industry, and General Agreement on Trade in Services (GATS) schedules that provide us useful flexibilities. Both the GATT and GATS could wither away due to the onslaught of the so-called ‘high standard’ e-commerce elements,” he added. India has decided to hold an informal WTO ministerial meeting of select developing countries on 13-14 May in New Delhi to finalize a Delhi Declaration on development and WTO reforms including on e-commerce.
UK trade commissioner: “Post-Brexit Britain will be Africa’s largest G7 investor” (Africa Report)
The UK’s trade commissioner for Africa, Emma Wade-Smith, says Brexit is an opportunity not a threat, with Britain poised to improve on existing EU trade agreements and invest billions in African growth. “By 2022, our ambition is that the UK will be the largest G7 investor in Africa, with our private sector companies taking the lead in investing the billions that will see African economies growing by trillions,” Wade-Smith told The Africa Report in an interview, echoing Prime Minister Theresa May’s target set last year. Trade between Africa and the UK is growing, says Wade-Smith, a former diplomat who was appointed Her Majesty’s Trade Commissioner for Africa in June 2018. She has been based in South Africa since 2016, and set up the Department for International Trade’s pan-African regional trade team in April 2017.
Today’s Quick Links: South Africa inks oil exploration deal with South Sudan Financial Tmes: Jumia’s rise exposes challenges of online shopping in Africa Kenya: Boost for Uhuru job creation plan as EPZ approves textile firm UNCTAD’s Mauritius workshop: Empowering selected LDCs to upgrade and diversify their fish exports |
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Diarise: The G-20 Niigata Agricultural Summit (11-12 May) on the theme Toward Sustainable Agro-Food Sector – emerging issues and good practices
Japan’s trade insurance to cover full African investment (Nikkei)
Lesotho and the IMF:
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IMF Executive Board concludes 2019 Article IV Consultation. Directors welcomed the progress made in restoring peace and stability. Directors, however, noted that Lesotho continues to face significant challenges, stemming mainly from the declining SACU revenues and high government expenditures. Against this background, Directors underscored the need for both short- and medium-term measures to preserve fiscal and external sustainability, as well as generate strong and inclusive growth. Directors emphasized that the fiscal adjustment needs to be reoriented to favor growth and efficiency. Reducing the high public wage bill over time will provide space for the authorities’ strategic priorities. Directors also stressed the need for greater efficiency in health and education spending to ensure better outcomes.
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pdf 2019 Article IV Consultation report (1.65 MB) . The current account deficit increased to 8.4% of GDP in 2018/19 reflecting a fall in SACU revenues. SACU revenues increased to 17.7% of GDP in FY 2017/18 from 13.3% in FY 2016/17, still significantly below the recent peak of 24.1% in FY2014/15. SACU revenues have declined again in FY 2018/19 and are expected to remain subdued owing to sluggish growth in South Africa. Rapid import growth, even in a depressed economic context with fiscal cash rationing, and weaker export of services offset stronger diamond exports and led to a worsening of the trade balance. For the medium term, imports are expected to grow rapidly as construction of the Lesotho Highlands Water Project Phase II begins leading to a worsening of the current account. However, the project will be financed with capital grants from South Africa.
Over the next three years, growth is expected to be driven by construction related to the second phase of the Lesotho Highlands Water Project. In addition to the project (see Box 1), production of diamonds and textiles have positive prospects. Inflation is expected to pick up somewhat as the VAT rate hike is passed-through and economic conditions improve mildly. External risks largely center on spillovers from South Africa. The FAO has identified Lesotho as being at high risk of drought that could increase malnourishment among vulnerable populations and lead to higher expenditures on food subsidies and crisis management. The cost of the response to the 2016 drought was estimated at 2% of GDP by the UN.
New UNU-WIDER publications on Southern African trade and development issues:
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The contribution of services to trade and development in Southern Africa. The authors examine evidence on international services trade for the Southern African Development Community between 1995 and 2012, and supplement this with a review of Foreign Direct Investment from South Africa. Tradable services appear to have made a limited contribution to total trade for most countries, and there is little evidence of significant regional integration or specialization in higher value-added activities. Extract from the conclusion (pdf):
Regional trade agreements should seek to develop regional specializations, whereby clusters of related firms benefit from a shared pool of proficient labour, technology spill-overs, and specialized infrastructure. For instance, the AfCFTA should aim to go well beyond the obvious reduction in tariff barriers and begin to address deeper limitations, such as restrictions on foreign equity in establishing a foreign commercial base, differences in standards and rules for licensing and professional accreditation, favouritism in state-related contracts, and restrictions on the immigration of skilled professionals.
Governments should start by listening to private industry and understanding its needs and priorities. It matters a great deal whether the growth of tradable services is mainly constrained by trade barriers, state regulations, and bureaucratic procedures, or by the restricted mindsets, strategies, and internal capabilities of the firms themselves. More research is needed on how to develop domestic firms’ capabilities, whether by boosting the supply of relevant skillsets, fostering business networks, and mutual learning, or by encouraging foreign suppliers to transfer expertise by forming joint ventures with local companies. The right approach may vary in different sectors and could benefit from a series of industry-specific studies. Distinguishing between the performance of multinational enterprises and domestic firms could be important to an understanding of how and why companies grow and develop. Analysing the strength of their embeddedness and linkages to manufacturing, construction, and other branches of the economy is an important part of this assessment. [The authors: Justin Visagie, Ivan Turok; UNCTAD: Services key to revving up economic growth and development]
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Motorcycle parts and aftermarket industry regional value chain in Southern Africa. In the SADC region, all motorcycles and their parts are imported from offshore markets. All imported motorcycles are categorized as ‘new’ motorcycle imports and are shipped in predominantly as completely built units. This research considers the possibility of SADC countries assembling motorcycles and establishing a regional value chain; South Africa has manufacturing capabilities and capacity in the assembly of motor vehicles and the production of parts for motor vehicles. There is also potential to grow demand for motorcycles among low-income households as a more affordable and time-efficient mode of transport. The paper argues that to develop a competitive motorcycle industry would require a concerted effort by the governments in the region to attract global players and, in partnership with them, to shift demand patterns and build supply capabilities. Extract from the conclusion (pdf): Several Original Equipment Manufacturers already have a presence in the region in automotive production and in motorcycle distribution, retail, and servicing; any strategy would need to engage with them and persuade them to consider establishing an SADC motorcycle industry as part of their long-term strategy. The rapidly growing Chinese motorcycle manufacturers, which are looking at globalizing their operations, also present an opportunity, since foreign motorcycle manufacturers can expand globally by setting up assembly plants and/or parts manufacturing operations in developing countries (as illustrated by the Kenyan experience) through the provision of incentives and tax breaks. Foreign direct investment will be attracted and job opportunities in the region increased in high value-added production activities. [The authors: Sithembiso Mtanga, Richard McCamel]
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Evaluating the impact of global oil prices on SADC and the potential for increased trade in biofuels and natural gas within the region. This paper investigates whether Southern African Development Community countries that are vulnerable to changes in oil prices could instead substitute oil and petroleum products with biofuels and gas from within the region. A pooled mean group estimator was used to determine the impact of oil prices on the gross domestic product of 15 SADC countries. Results indicate that Mauritius, Mozambique, Tanzania, and Zambia would be negatively affected by oil price changes. Next, two gravity models capturing bilateral trade between South Africa and Zambia and those countries identified as being vulnerable were estimated using pseudo-Poisson maximum likelihood. The main finding, based on the gross domestic products of the exporter and importer countries, is that potential for trade is higher with South Africa than Zambia. This implies that these countries are more likely to import gas and biofuels from there. Transport costs are the main impediments to importing from Zambia. [The author: Alfred Moyo]
South Africa: Value of vehicle and components exports set a record in 2018 (Business Day)
The SA motor industry’s trade deficit narrowed by more than 7% in 2018 as vehicle and components exports set new records. The latest Automotive Export Manual, published today, shows that the deficit - the value difference between imports and exports - shrank from R43.5bn in 2017 to R40.3bn in 2018. The manual, published by the Automotive Industry Export Council (AIEC), shows that the value of SA vehicle and component exports hit a record R178.8bn in 2018. Most of this, R127.5bn, came from the export of 351,139 cars and commercial vehicle - another record. The value of components exports grew by 2% to R51.3bn. The total value of all automotive imports in 2018 was R219.1bn. Without after-market spare parts, the figure would have been R162bn. The number of export destinations - 155 countries and territories - was another record.
Wandile Sihlobo: What agribusiness can do for SA’s economy (Fin24)
From a destination point of view, the African continent and Europe continued to be the largest markets for South Africa’s agricultural exports, collectively absorbing 66% of total exports in 2018, measured in value terms. In more detail, Africa remained South Africa’s largest market, accounting for 39% of agricultural exports. The leading products to these markets were beverages, fruit, vegetables, wool, sugar and grains. Asia is also an important market for South Africa’s agricultural exports, demanding a 25% export share in 2018. Wool, fruit, grains, beverages, vegetables and meat were the leading products exported to this particular region. The Americas and the rest of the world accounted for 5% and 4% shares.
Kenya: Duty-free maize imports window to open in July (Business Daily)
Kenya is set to open duty free maize imports from July to plug the grain shortage that has seen the price of flour rise 30% in one month. Agriculture Cabinet Secretary Mwangi Kiunjuri told millers in a closed-door meeting that strategies are in place, including waving of a 50% duty imposed on imported grain from outside the EAC region, to avoid last minute rush. Mr Kiunjuri, who met with both millers and animal feed manufacturers, said the importation of both yellow and white maize will be opened once the current stocks are exhausted. [Kenya: Alcohol exports drop to five-year low on illicit trade]
Agricultural trade in a time of uncertainty: WTO DDG Alan Wolff says trading system must evolve to keep up with change in agricultural markets
Speaking at a recent event organized by the Farm Foundation in Arlington, Virginia, Alan Wolff encouraged agriculture negotiators to turn technical discussions and information sharing at the WTO into real negotiation. Taking stock of the challenges that farmers are facing on various fronts, DDG Wolff highlighted the vital importance of the multilateral trading system to the global agri-food system and urged members to redouble efforts to update WTO agriculture rules. Extract from his speech:
The transmission belt is E-commerce, which must include freedom of movement of goods, services and data across borders. Today an NGO in London helps farmers in Kenya know when to apply lime to their land. China is experimenting with artificial intelligence to identify sick pigs to cull them in order to stop the spread of swine flu. Increased dairy production in China increases the demand for feed from other sources. E-commerce is an enormous enabler of advances in agriculture. All of this is under threat today. There is talk of the moratorium on customs duties on electronic transmissions which expires in December of this year not being renewed. If this is the case, there is more than some mischief that could befall the world’s economies and their agricultural sectors. If the expiration meant that countries could now decide what tariffs to apply to the content of electronic transmissions, world commerce could be strangled. [Download: Farm Foundation conference programme (pdf)]
Today’s Quick Links: A preview of Africa Trade Week (23-25 June, Johannesburg): Africa gains traction as trade destination Mauritius: World Bank Group executive directors discuss transformation to a high-income economy Jaindi Kisero: Take these steps to revamp Kenya’s railways MTN appoints Jonas chairperson designate, establishes international advisory board Mauritius: Launching SME Certification Scheme to strengthen competitiveness of enterprises World Bank scales up support for Mozambique, Malawi, and Zimbabwe in the wake of Cyclone Idai Peter Chacha Wankuru: For the first time, the relative economic size of Kenya’s counties is clear China’s African swine fever outbreak and US trade war combine to create perfect storm for Chinese economy Pig `Ebola’ virus sends shock waves through global food chain USDA expects smaller ASF impact on China |
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Services key to revving up economic growth and development
The services sector accounts for more economic activity than any other and its contribution to gross domestic product, trade and employment is ticking up.
Enhancing the services sector can boost the economies of developing countries and fast-track their progress towards meeting global goals on sustainability, attendees at the seventh session of UNCTAD’s multi-year expert meeting on trade, services and development heard on 1 May.
“The services sector is responsible for two thirds of total productivity growth in developing countries,” said UNCTAD Deputy Secretary-General Isabelle Durant while opening the meeting at the UN’s European headquarters in Geneva, Switzerland.
Ms. Durant said services are key to building productive capacity as they are the main contributors to economic output, accounting for 56% of total output in developing countries.
UNCTAD defines productive capacity as “the productive resources, entrepreneurial capabilities and production linkages which together determine the capacity of a country to produce goods and services and enable it to grow and develop.”
Services also account for 51% of global employment, are the main source of job creation and of female employment, and the main destination for foreign direct investment, constituting about 50% of the world total.
In trade, though services account for a smaller share than goods in total direct exports, they are important as their exports have grown more than goods’ exports in recent years, especially in developing countries.
However, Ms Durant warned that inequalities between developed and developing countries persist when it comes to benefiting from services.
“In addition, the emergence and spread of new technologies, such as artificial intelligence or blockchain, will have an impact on services,” said Ms. Durant, urging appropriate policy responses.
Services in the digital era
UNCTAD’s director of the division on international trade and commodities, Pamela Coke-Hamilton, said digitalization of economies would dramatically transform the services sector. “With the rise of new technologies, there are new ways of trading,” she said.
Digitalization reduces production, transaction and trade costs, notably in e-commerce and digital financial services, which foster financial inclusion. It also gives real market access, Ms. Coke-Hamilton said.
“Mobile phones have completely changed our ability to buy and sell. Services have been completely revolutionized,” she said.
She cited the example of the music industry, in which digitalization has given musicians the power to own and reap more benefits from their works.
More action needed on data and linkages
Ms. Coke-Hamilton drew attention to the data limitations that persist in the services sector. “Having eight-year-old data is a problem. We have to address the huge data vacuum,” she said.
She also underscored the importance of strengthening linkages between services and other economic sectors. Linkages are apparent in infrastructure services such as telecommunications and information and communications technology, enabling cooperation between different activities and participants in the production process.
“The longer we take to incorporate new technologies and innovations into production processes is going to mitigate against how well we do in the new economy,” she said.
Ms. Coke-Hamilton also called for the strengthening of policy, regulatory and institutional frameworks for services in developing countries to harvest more benefits for development.
Services as critical inputs
International University in Geneva’s Christian Pauletto said services are critical inputs powering various sectors. “For example, in tourism, you find services such as transportation, entertainment, telecommunication, financial services, construction, waste management, water and electricity supply,” he said.
In another example, the Chevy Volt vehicle model had 10 million lines of software codes and the value of its software and electronic components amounted to around 40% of the total value of the car, according to a 2017 study by the European Commission’s Lucian Cernat.
Services are driving profitability in manufacturing, said Murat Yülek, rector of Ostim Technical University in Turkey. “Today we cannot separate industrialization from services. If you wish to make good profits in manufacturing, you have to embrace services,” he said.
University of London’s Antonio Andreoni, a senior lecturer in economics at the School of Oriental and African Studies, said more should be done to bolster solutions created for services in developing countries.
“When I move around Africa, I see so many innovations. We need more policies and actions to promote them,” Mr. Andreoni said.
The multi-year expert meeting on trade, services and development took place on 1 and 2 May at the Palais des Nations.
Policy recommendations from the meeting are expected to inform the review of progress made towards achieving the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals at the a high-level political forum focusing in the issue, in New York in July.
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Diarise: Horn of Africa AfCFTA Regional Trade Forum (23-24 May, Addis Ababa)
Extract from the pdf concept note (570 KB) : While engagement with the private sector is a theme that cuts across all Trade Forums, each Forum also identifies issues that are particularly relevant, if not unique, to the specific context of its region. In that context, the Horn of Africa sub-region (here understood to include Somalia, Djibouti, Eritrea, Ethiopia, Sudan, South Sudan) is entirely made up of least developed countries, with two of them, Ethiopia and South Sudan, being landlocked. As a result, imports and exports from virtually all these countries often suffer from disproportionately high transaction costs due to either challenges of sheer geographical distance from markets and dependence on the infrastructure and institutions of transit countries (especially for the landlocked but also for others) or inadequate essential infrastructure within their own territories, underdeveloped logistics services, bureaucratic red tape, and the like.
In many cases, the solutions to these challenges lie in the proper management and effective implementation of region-specific agreements on transport and communication infrastructure. The AfCFTA not only reduces or eliminates barriers to trade and harmonises standards, it also provides an overarching framework within which regions can address their peculiar challenges in a specific manner. This way, the AfCFTA will help Africa trade more, and do so more competitively, with itself and with the rest of the world, which is even more true for the least-developed and landlocked countries in this region.
And a related AfCFTA Forum in Johannesburg, on a date to be announced. @Yadeyemi: Happening now. Leading a UNECA mission to DIRCO in Pretoria to finalize discussions on the @AfCfta Trade Forum planned for Johannesburg after the elections in South Africa.
Phyllis Wakiaga: Opportunities for EAC in African free trade area (Business Daily)
Our challenges in integration are also hampered by political and social differences, which manifest in seemingly endless non-tariff barriers that threaten to weaken our overall contribution to global trade. For instance, EAC global trade decreased in 2017 to a meagre 0.2% from 0.3% the previous year. The trade deficit also increased by 63.1% to $17.4bn. Our exports to the world also decreased, and of these, only 29.2% were destined for COMESA and other intra-regional markets. The latter numbers can be boosted within the AfCFTA through increased collaboration and goodwill to make use of existing instruments and well-designed policies that will enhance trade and get rid of long-standing barriers.
Going forward, it is important to give priority to collaboration that will see supply chains strengthened across borders and governments laying the ground work for the ease of movement of goods and people. This will help in realising the full potential of intra-regional market. Additionally, we need to put into action a robust EAC export promotion strategy for products in other regions and minimise intra-regional rivalry. It will, similarly, define the role of incentives in trading with future EAC trading partners. Indeed, the EAC is uniquely poised to be a leading regional bloc in the next few years. We ought not to let what’s in store for us be derailed in the short-term. [The author is CEO of Kenya Association of Manufacturers]
Related: EABC-UNECA workshop on AfCFTA: summary of key recommendations
West Africa: Accessibility and infrastructure in border cities (OECD)
This report, part of the “Cities” collection, analyses road accessibility, transport corridors and checkpoints set up in border towns in West Africa. An innovative model shows that the population base of border towns could be 14% greater if there were no delays at border crossings. The existence of roadside checks decreases the size of this population base from 12 to 50%. A study of 59 jointly planned or operated border posts in sub-Saharan Africa shows that trade facilitation runs up against the special interests of public servants and private-sector actors making a living from regional integration frictions.
Extract from the chapter: Road accessibility of West African border cities. The wait times observed at border crossings, the checks conducted on transport routes and the advanced deterioration of large portions of the road network constitute three major obstacles to market integration and the flow of people within the region. These obstacles, which have been quantified at the local and regional levels for the first time using an innovative accessibility model, call for differentiated political solutions. Border delays and “administrative hassles” are the products of corrupt practices and clientelistic arrangements negotiated between state employees and private-sector actors. Their resiliency testifies to the financial interests at play in the flow of goods and people within the region.
Extract from the chapter: Border cities, transport corridor and border posts. West Africa is the continental region with the highest percentage of non-operational OSBPs. Why are there problems with setting up these structures that are intended to facilitate trade and reduce corruption? This question is an important one, not only for the African states and regional organisations that backed the construction of six border posts that were non-operational in 2017, but also for nine other planned posts. Kraké-Sémé, Ayorou-Labézanga, Makalondi-Kantchari, Malanville-Gaya, Noépé-Akanu and Pétel Kolé all indicate that the problems encountered by non-operational border posts are linked as much to the harmonisation of customs procedures (Box 2.2) as they are to the special interests of those who make a living from border trade. OSBPs shed light on the limits of institutional integration and call into question the financial interests linked to the informal flows of people and merchandise crossing borders. While under construction, coalitions of public- and private-sector actors were formed to delay the effective operational date of border posts, in some cases for a number of years.
Egypt: WBG to extend current strategy (World Bank)
With Egypt’s economic reforms showing early signs of success, the World Bank Group has announced a two-year year extension to its 2015-2019 Country Partnership Framework. The decision was announced following a formal review of the results of the current framework by the World Bank Group’s Board of Executive Directors. Almost 77% of the original CPF objectives have already been achieved or are on track to be achieved by the end of the original framework period. Important legislation to support the business-enabling environment has been enacted, and automated government processes have reduced the bureaucratic hurdles to doing business. As such, Egypt’s ease of doing business ranking climbed from 131st out of 189 economies in 2016 to 120th out of 190 economies in 2018.
UK-Nigeria First Economic Development Forum: highlights (This Day)
Nigeria and the United Kingdom have agreed to fast-track key regulation to deepen the insurance market, expand the digital economy and explore Naira-denominated financial instruments in collaboration with the City of London. Both countries are also to endeavour to accelerate progress on franchise regulation to facilitate British brands positioning and investments that deliver sustainable new jobs in Nigeria. These are part of the communique signed at the First Economic Development Forum of both countries in Abuja on Tuesday by the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, and Foreign Secretary, Jeremy Hunt, who led the UK delegation. The joint delegation also stressed the need for opportunities to showcase high-quality Nigerian and British goods and services in their respective markets, and for more Nigerian exports to comply with global standards for better bilateral trade and investment. Towards this end, senior ministers shall meet in London before the end of 2019 for the second meeting of the EDF as an important step towards an Africa Investment Summit to create the conditions for more British investment in Nigeria, including in manufacturing and services.
Kenya to lower fiscal deficit to 5.6% in 2019/20 fiscal year (Reuters)
Kenya will cut its budget deficit to 5.6% of GDP in its 2019/20 (July-June) fiscal year from a revised 6.1% of GDP in this fiscal year, the Treasury said in a draft budget summary sent to parliament this week. The East African nation will borrow 324.3 billion shillings ($3.21bn), equivalent to 3.0% of GDP, from abroad during the fiscal year and 289.2 bln shillings, or 2.7% of GDP, from the local market, the document showed. The government aims to reduce the overall budget deficit to 3.8% of GDP in the 2022/23 fiscal year, the Treasury said. [Zambia’s 2018 fiscal deficit above forecast at 7.5% of GDP]
Ghana: Relief for importers as Ghana Trade Hub mobile app goes live (GNA)
The free-to-download Ghana Trade Hub Mobile App is available on both Google Play store for Android users and on IOS- App store. The Ghana Trade Hub Mobile App is easy to operate and the processes have been broken down into specifics – depending on whether one wants trade information on general goods, used vehicles, or whether one simply wants to track a consignment. For example, the App has four simple steps to follow so as to obtain duty information on general goods:
Ivory Coast 2019/20 cotton exports to hit record high: USDA attache (Reuters)
Ivory Coast, Africa’s fourth-largest cotton producer, is expected to export record amounts of cotton in the 2019/20 season, according to a report by a US Department of Agriculture attache published on Wednesday. Ivorian cotton exports in 2019/20 are forecast at 875,000 bales, a new record, as yields improve and the area dedicated to cotton production expands. Overall production for 2019/20 is forecast at 925,000 bales. “Assuming normal conditions, the country appears poised to solidify its status as one of Africa’s major exporters behind only Mali, Benin, and Burkina Faso,” the report said. [Benin’s agriculture has a good season, but it wasn’t easy]
South African trade updates: SARS pencils in an extra R10bn in tobacco excise revenue after clamping down on illicit industry (Daily Maverick); Nearly R5bn in trade deals for Cape Town, Western Cape declared in 2018/19 (IOL); SA’s trade deficit narrows, but storm clouds remain on horizon (IOL)
Bakang Ntshingane: The future is Asian, and Africa’s hinterland is there (Daily Maverick)
Our relations with China must not be a substitute for relations with the rest of Asia. The region is a vast landscape that stretches far and wide. We must also seek to expand our services and products into the rest of Asian markets to exploit the region’s integrated linkages that connect five-billion people through trade, finance and infrastructure networks. South East Asia remains an economic and strategic hub of the world, teeming with young, urban entrepreneurial youth. We must start to build networks in the rest of the region. African states must strive to establish more diplomatic presence in Asia, not just when China opens a cheque book. Asia is the world’s intermediate goods production and export hub and the lessons to be learnt are beyond valuable. Africa will continue to grow, and African leaders will need to be more pragmatic in their diplomacy to engage and collaborate with Asia. [The author is a graduate student at Chonbuk National University’s Department of International Trade in South Korea]
The effects of pollution and business environment on firm productivity in Africa (World Bank)
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AfCFTA ratification update
The AfCFTA Agreement will enter into force on 30 May: update from AUC
The Chairperson of the AU Commission, Moussa Faki Mahamat, flanked by the AU Commissioner for Trade and Industry, Albert Muchanga, received two deposits of instruments of ratification of the AfCFTA Agreement (29 April). The instruments were from Dr Brima Patrick Kapuwa, Permanent Representative of Sierra Leone to the AU (representing the 21st member state to do so) and Lamin Baali, Permanent Representative of the Saharawi Republic to the AU (representing the 22nd ratification). All that is now left is for the AU and African Ministers of Trade to finalize work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an Extraordinary Heads of State and Government Summit on 7 July 2019. The supporting instruments are: rules of origin; schedules of tariff concessions on trade in goods; online non-tariff barriers monitoring and elimination mechanism; digital payments and settlement platform; African Trade Observatory Portal. The African Ministers of Trade are scheduled to meet in Kampala in the first week of June this year to review work on these supporting instruments ahead of the Extraordinary Summit on the AfCFTA.
tralac Working Paper: Ratification of the AfCFTA Agreement – What happens next?
What happens once the required number of ratifications have been deposited? Is it true, as some tweets proclaim, that the “world’s largest trading bloc” then factually exists? Or, as one correspondent recently asked: After the agreement enters into force, does that mean that the African continent is a free trade area? In order to answer these and other frequently asked questions about the AfCFTA, and to clarify the bigger picture, this working paper discusses and explains certain aspects of this new trade arrangement by consulting the legal instruments which are being adopted as part of the process of establishing the AfCFTA. [The author: Gerhard Erasmus]
The 8th Joint Retreat of the Permanent Representatives’ Committee and the AUC began yesterday in Tunis. The AUC Chairperson said the upcoming Coordination Meeting, to be held in Niamey, is a key element to reinforce greater operational synergy between the AU and the RECs to ensure a clearer distribution and differentiation of roles between the regional bodies and the continental organisation.
The WTO’s Regional Trade Policy Course began yesterday in Mauritius. The course, being run until 21 June, is offered by the WTO in collaboration with the University of Mauritius. It is being attended by some 30 participants from African countries as well as local participants from the Ministry of Foreign Affairs, Regional Integration and International Trade.
South Africa’s March trade statistics: a surplus of R5bn (SARS)
The South African Revenue Service has released trade statistics for March 2019 recording a trade surplus of R5.00bn. The year-to-date (1 January - 31 March 2019) trade deficit of R3.83bn is an improvement on the deficit for the comparable period in 2018 of R18.66bn. Exports year-on-year increased by 7.6% whilst imports for the same period showed an increase of 13.1%. The R5bn trade surplus for March 2019 is attributable to exports of R105.4bn and imports of R100.4bn. Exports increased from February 2019 to March 2019 by R7.33bn (7.5%) while imports increased from February 2019 to March 2019 by R6.19bn (6.6%).
South Africa: SARS seeks technology to curb revenue leakages in illicit tobacco industry
South Africa experiences significant losses in excise revenue due to a global increase in the manufacturing, supply and sale of illicit excisable products. In response to this challenge, SARS has embarked on a process to mitigate such illicit and non-compliant activities by means of improved policy, enhanced processes and the use of advanced technology to uniquely mark products, in order to strengthen the enforcement environment and ensure overall control of the supply chain. SARS is looking to introduce the track-and-trace marker technology in the cigarette industry, which will enable the organisation to monitor the journey from cigarette manufacturing plants to points of sale and/or import or export trades. This non-intrusive technological innovation is expected to boost the monitoring and control of duties and taxes in this industry significantly. A tender for the provision of a Production Management and a Track and Trace solution for cigarettes has been published on the SARS Website.
Nigeria: Illegal mining worries Federal Government (ThisDay)
The Ministry of Mines and Steel Development has announced plans to establish a mining surveillance task force to checkmate illegal mining activities in the country. The Minister of State, Ministry of Solid Minerals and Steel Development, Bwari Abubakar, explained that the task force would be made up of all security agencies in each state, to comb the entire country and identify those in the business of illegal mining. The Minister who was represented by his Special Assistant, Davies Olapade, at the Nigeria Mining business investment summit organised by the Lagos Chamber of Commerce and Industry (LCCI), said the ministry was doing a lot to block revenue leakages, stressing that it recently collaborated with the Nigeria Customs Service and Ministry of Internal Affairs to ensure that the minerals are not smuggled out of the country. [SON solicits Nigerians support to tackle sub-standard goods]
A Devex Q&A: How local pharmaceutical production can improve access to quality medicines
There are still significant barriers preventing local manufacturers from taking on the manufacturing of essential medicines. Speaking to Devex, Mazi Sam Ohuabunwa, president of the Pharmaceutical Society of Nigeria, listed the challenges, explained how they can be overcome, and what the development community can be doing to eliminate medicines that hinder rather than help improve global health.
Kenya: Uhuru didn’t ask for SGR extension funds from China says State House
State House chief of staff, Nzioka Waita, said in a statement: “It is important to note that the question of funding for the extension of the Standard Guage Railway from Naivasha to Kisumu was not on the agenda of the meeting between the two President’s.” Mr Nzioka said the agenda of the bilateral meeting between President Kenyatta and China President Xi Jinping, which he termed “extremely successful”, covered the following areas: The signing of a trade agreement for the export of frozen avocados from Kenya to China which followed the signing of an MoU on Sanitary and Phytosanitary Standards late last year for the export to China from Kenya of various horticultural products; The signing of a Framework Agreement between the Kenya National Highways Authority and the China Road and Bridge Cooperation for the construction of Kenya’s first expressway from Jomo Kenyatta International Airport to Westlands; The signing of a financing agreement valued at Sh17 billion between Kenya and China EXIM Bank for the construction of the Konza Technopolis Data Center and IT infrastructure. Mr Nzioka noted that the SGR is a regional project involving several countries and negotiation for its funding could take years. [Uganda: Fears over blocking Naivasha dry port]
Kenya: Fitch affirms Kenya at ‘B+’; outlook stable
Kenya’s current account deficit (CAD) has narrowed, but remains high. Better export performance, along with lower capital imports and lower global oil prices, reduced Kenya’s trade deficit to 11% of GDP in 2018 from an average of 16% over 2008 to 2017 and tourist earnings and remittances have also increased. Fitch estimates the 2018 CAD at 5.2% of GDP and forecasts it to remain at around 5% in 2019 and 2020. Low levels of FDI increase Kenya’s reliance on external debt flows to finance the CAD. At 31% of GDP, net external debt is well above the peer median of 15%. Kenya’s reserve position eases some of the vulnerability from high external debt. International reserves were USD8.2 billion as of January 2019 (approximately four months of CXP) and Fitch forecasts reserves to increase to USD8.9 billion by end-2019. The Kenyan shilling experienced a slight depreciation in 4Q18 but bounced back in January 2019 and remained stable through 1Q19.
Tanzania, Uganda officials meet to address border-related challenges (Xinhua)
Permanent Secretaries from Tanzania and Uganda on Tuesday met in the country’s northwestern region of Kagera to discuss border-related challenges. Faraji Mnyepe, Permanent Secretary in Tanzania’s Ministry for Foreign Affairs and East African Cooperation, said among the key issues to be discussed include ways of reinforcing international borders between the two states as well as sustainable development of Kagera River Basin-a river that drains into Lake Victoria.
No hostility between Tanzania and Malawi: Tanzanian president (Xinhua)
“During my administration Tanzania and Malawi will always remain best neighboring friends,” Magufuli told a public rally broadcast live by state-owned Tanzania Broadcasting Corporation in the southern highlands district of Kyela on the shore of Lake Nyasa in Mbeya region. Magufuli made the remarks against the background of reports that Tanzania and Malawi were mired in a long-standing conflict over boundaries on Lake Nyasa. Last week, the Tanzanian and Malawian leaders directed relevant ministers to urgently sort out challenges that were slowing down trade between the two countries. A statement said the leaders had directed the ministers to accelerate construction of a one-stop border post at Kasumulu on the two countries’ border post to facilitate trade between the neighbors. Addressing a joint news conference, Magufuli said trade between Tanzania and Malawi was still low where 2018 records indicated a trade volume amounting to a paltry $64m.
Nigeria: Senate directs trade minister to return N14.3bn diverted fund (Daily Trust)
Mauritius and the IMF:
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Staff Report for the 2019 Article IV Consultation. Discussions during the 2019 Article IV consultation focused on preserving fiscal sustainability, regaining external competitiveness, and maintaining financial integrity and stability. Main policy recommendations: Pursue fiscal consolidation from the forthcoming budget FY2019/20 to build fiscal credibility and set public debt firmly on a declining path into the medium term; The current monetary policy stance is broadly appropriate, but vigilance is warranted against any emerging inflationary pressures; The declining external competitiveness needs to be addressed through concerted efforts to boost productivity, labor market efficiency, and economic diversification; Measures introduced to improve the business climate and support small-scale entrepreneurs, youth skill development, and female labor force participation are welcome, but efforts should focus on enhancing their effectiveness; The recommendations of the FATF-style regional body to strengthen the AML/CFT framework should be expeditiously implemented. [ pdf Staff report (1.30 MB) ]
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pdf Selected Issues report. (856 KB) Extract on export structure: Mauritius has much room to improve the sophistication of its export basket. Mauritius’ goods export complexity has been consistently below that of other major GFCs (see figure 11). This gap is driven by the high ubiquity (or low uniqueness) of Mauritius’ exports (see Box 1). Mauritius’ export basket also lacks diversification relative to its global competitors, as indicated by the inverse Herfindahl-Hirschman Index (HHI) in Figure 12.18. The complexity of its services exports has also lagged that of other global competitors. Calculating the average complexity of service export categories, Mauritius fares much lower than other GFCs. Mauritius’ dependence on tourism (with a low complexity score) and a relatively narrow base in high complexity sectors such as finance are the key reasons for this gap. In 2014, for example, finance comprised only 3% of Mauritius’ services exports, while the average for other GFCs was 14%. By contrast, travel constituted 45% of Mauritius’ services exports in 2014, which is over four times the average for its comparators (11%). Why does Mauritius lag in export complexity?
Uganda and the World Bank: An 11-member delegation of the WBG Executive Directors visited Uganda (23-26 April) to get a first hand view of the Bank’s support to the country’s development priorities. The delegation represents 92 countries and nearly 51% of the Bank shareholding. The WBG has a strong partnership with Uganda, with a cumulative investment of more than $10bn since 1963.
Entrepreneurship funds in Africa: distinguishing the good from the bad (The Conversation)
The challenge for countries is how to support the growth of SMEs. Various African governments have experimented with ways to help address the $140bn funding gap for startups and SMEs. For example, one approach has been to set up entrepreneurship funds. Based on my experience of watching their performance over the past 18 years, I would issue some words of caution. Some entrepreneurship support models work better than others. And how they are set up – particularly the governance structures put in place to manage them – is key to their success, or failure. Tackling Africa’s job creation challenge requires innovative thinking and initiatives that support private sector-led growth. Looking to the model of Small Enterprise Assistance Funds and enterprise funds, African governments can spur local ecosystems and drive new private capital to regions today seen as unfriendly or too risky to outside investors. Properly structured investments today could yield much larger dividends tomorrow. [The author, Aubrey Hruby, is a Senior Fellow, Africa Center, Georgetown University]
Toumert AI: E-payment platforms necessary for Africa’s economic development (Global Times)
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AfCFTA Agreement secures minimum threshold of 22 ratifications for entry into force
The Chairperson of the AU Commission, H.E. Moussa Faki Mahamat, flanked by the AU Commissioner for Trade and Industry, His Excellency Albert Muchanga, received two (2) deposits of instruments of ratification of the African Continental Free Trade Area (AfCFTA) Agreement today, 29th April 2019.
The instruments were from H.E. Dr. Brima Patrick Kapuwa, Permanent Representative of Sierra Leone to the African Union (representing the 21st member state to do so) and H.E. Lamin Baali, Permanent Representative of the Saharawi Republic to the African Union (representing the 22nd ratification).
The Chairperson hailed the two deposits as timely and significant steps towards removing the fragmentation of African economies and markets, a process that will create a large market that is critical to increasing trade and investments on the continent.
The two deposits meet the minimum threshold of ratifications required under pdf Article 23 of the AfCFTA Agreement (4.67 MB) for it to enter into force thirty (30) days after deposit of the twenty-second (22nd) deposit made by the Saharawi Republic. The AfCFTA Agreement will in this regard enter into force on 30th May, 2019.
All that is now left is for the African Union and African Ministers of Trade to finalize work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an Extraordinary Heads of State and Government Summit on 7th July 2019.
The supporting instruments are: rules of origin; schedules of tariff concessions on trade in goods; online non-tariff barriers monitoring and elimination mechanism; digital payments and settlement platform; and, African Trade Observatory Portal.
The African Ministers of Trade are scheduled to meet in Kampala, Uganda in the first week of June this year to review work on these supporting instruments ahead of the Extraordinary Summit on the AfCFTA.
The Chairperson also paid tribute to the Champion of the AfCFTA, His Excellency Mr. Mahamadou Issoufou, President of the Republic of Niger, for his strong and sustained advocacy to have all African Union Member States sign and ratify the AfCFTA Agreement.
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DITE for Africa: Introducing the AU’s Digital Identity, Digital Trade and Digital Economy initiative. Download the pdf concept note (176 KB)
AfCFTA updates:
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This week in Arusha, Tanzania: EAC experts meeting on the AfCFTA
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Seychelles continues to evaluate Africa free trade pact now coming into force. Seychelles will continue discussions and negotiations before signing on to the AfCFTA, a deal that could open the door to more trade to and from the island nation, said a top official. “For Seychelles, we have signed the agreement, but we have not ratified it yet. This is because we feel that there are still negotiations and discussion to be done before we proceed,” Ashik Hassan, the director of trade at the ministry of finance, Ashik Hassan, told SNA. “For example, there are measures concerning rules of origin. Basically, it is one of the conditions that you need to meet to get the preferential rate of tariff. It makes sure that the product you are exporting into the African market originates from Seychelles,” said Hassan. Since the island nation’s exports are very limited, Hassan pointed out that it is important that the rule that is agreed on does not restrict Seychelles in any way. Seychelles exports tuna, he noted: “But then again how do we prove that it really originates from Seychelles when exporting."
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AU Commission prepares for single market launch in July. The four-day consultative workshop last week in Arusha attracted trade and Customs officials from member states of COMESA, EAC, IGAD and SADC. “AUC and development partners felt it important to build capacity and provide expertise to delegations from AU member states,” said the chairman of the AfCFTA negotiating forum, Alexander Rubanga from Uganda. Experts from the WTO, ITC, World Bank and Unctad attended the GIZ-supported workshop to equip trade and customs officials with the information needed to implement the agreement. Willie Shumba, the AUC senior expert and advisor on Customs and Continental Free Trade Area Unit, said the officials received extensive training on some elements of data transposition and alignment of data with the MFN applied tariff.
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Related: Zambia’s pending ratification of the TFTA Agreement: summary of a recent stakeholder workshop held in the Copperbelt
- New tralac Working Paper, by Gerhard Erasmus: The AfCFTA as a Strategy and a Design
REC updates:
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The EALA resumed its sitting today in Arusha. The 5th Meeting of the 2nd Session of EALA commenced this morning in Arusha and will conclude on 18 May. Key items during the three-week Sitting include the debate on the East African Community Youth Council Bill, 2017 and the Report of the Committee on consideration and review of the Accounts Report for the Financial Year ended June 30th, 2017. Also, to be tabled and debated in the House is a key report of the Committee of Agriculture, Tourism and Natural Resources on oversight with stakeholders for budgetary enhancement in the agricultural sector, an activity which took place in March this year. The whole House will also meet with a number of stakeholders. A sensitization workshop on Tripartite Transport and Transit facilitation programme (TTTFP) is planned to apprise the House of progress in the transport and infrastructure sector. The initiative has carried out baseline studies in 19 participating Member States (including EAC partner states). The workshop will unpack TTTFP legal instruments for the proposed Vehicle Load Management Agreement, as well as developed model laws and other standards. AFRODAD will also hold a session with the Assembly on iIlicit financial flows and sovereign debt crisis – in the context of Africa in general and East Africa, in particular. [The EAC’s calendar of events for this week]
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IGAD adopts a regional posture in its fight against tuberculosis at cross border areas. The recent five-day workshop brought together the heads of the national TB programme, experts on M&E and information system within the TB programme, and in-country national and district assessors. In 2018, IGAD Health and the USAID-funded Challenge TB Project conducted assessments to gather information on the situation and services related to TB prevention and control at the IGAD countries border areas, and to understand the current inter-country TB presumptive and patient referral system. The assessment collected data from 26 border areas Health facilities prioritized by IGAD for cross border activities and representing the IGAD member states of Ethiopia, Kenya, Somalia, South Sudan, Sudan and Uganda.
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ECOWAS moves to promote free movement and tackle trafficking in persons. The delegation from the ECOWAS Commission, in collaboration with IOM, the Nigeria Immigration Service and Nigeria’s National Agency for the Prohibition of Trafficking in Persons, engaged law enforcement agencies and community citizens from Nigeria, Benin and Togo in a four-day advocacy and sensitization campaign which ended on 26th April 2019. The exercise included roundtable meetings with the Road Transport Employers’ Association of Nigeria in Mile 2 Lagos state, interaction with transporters and drivers at the Jonquet motor park in Cotonou and the engagement of law enforcement officers and community citizens in the border areas of Seme-Krake border (Nigeria-Benin) and the Hilla-Condji border (Benin-Togo). During the sensitization exercise, the ECOWAS Commission’s Commissioner for Trade, Customs and Free Movement, Tei Konzi stated that the ECOWAS National Biometric Identity card (ENBIC) will serve to improve the security architecture of the region and mitigate the challenges of irregular migration in West Africa.
Kiprono Kittony: Regional integration should be made a priority across Africa (The Star)
By introducing healthy competition, regional trade usually puts pressure on local industries to improve competitiveness. For example, the recent case of Ugandan eggs being cheaper than those produced in Kenya is a wake-up call to Kenya to address the competitiveness of its agroindustry. We also need to identify the comparative advantages we enjoy as a region – such as a young labour force, recent investments in transport infrastructure and access to over 80 ports worldwide via Mombasa, among others – and leverage on these to develop joint import substitution plans. There are a lot of products we import as a region that we can produce by ourselves at a lower cost, helping us build regional capacity, reduce trade deficits and strengthen macroeconomic indicators. Importantly, much broader reforms are needed at a political level. This is because regional integration is generally more successful where there is minimal political and ideological difference among participating countries. Tanzania and Kenya therefore need to work on their issues; but so do Rwanda and Uganda, whose ongoing diplomatic stand-off has resulted in disruptions at their borders, impacting trade and investment. [The author is Chairperson of the Kenya National Chamber of Commerce and Industry. East Africa’s state airlines need to co-operate to grow]
Kenya-Ethiopia border initiative: a move towards sustainable peace. A joint commentary by Johan Borgstam (EU ambassador to Ethiopia), Stefano A. Dejak (EU ambassador to Kenya), Aeneas Chuma (UN Resident Coordinator in Ethiopia), Siddharth Chatterjee (the UN Resident Coordinator in Kenya)
Kenya fails to secure $3.6b from China for third phase of SGR line to Kisumu (The East African)
Kenyan President Uhuru Kenyatta returned from China without funding for the third phase of his signature standard gauge railway- a critical segment of the Northern Corridor project that is supposed to link the port of Mombasa with the Great Lakes Region’s landlocked states. Instead, Kenya bagged some $400m it says will be used to upgrade its 120-years old metre gauge railway to Malaba on the border with Uganda. Transport Cabinet Secretary James Macharia, who spoke to The EastAfrican on phone from Beijing, said Nairobi will henceforth treat upgrade of the Naivasha to Malaba metre gauge railway segment as a priority, even as it pursues funding for the remaining Naivasha-Kisumu-Malaba section of the SGR line. “We have agreed to work on upgrading the metre gauge railway as a priority so that once construction of the Nairobi-Naivasha section is complete in August, we can evacuate goods to Malaba on time,” Mr Macharia said, adding that the upgrade works will start in two months’ time. [Related: Editorial comment: Is the well of Chinese credit really bottomless?; EAC panics as China refuses to finance railway project; Reviving rail line to Kisumu needs more than new tracks]
Digital tax stamps: a waste of Uganda tax payer’s money? (The Independent)
Digital tax stamps are tamper-proof physical paper stamps with security features and codes that are applied to goods or their packaging to prevent counterfeiting. The stamps enable traders and manufacturers track the product’s movement and government to monitor compliance of the product and stamp. But the current situation both at the UNBS and URA shows that the initiative is already dead from its inception, and instead government is likely to incur costs with minimum or no returns. First, the initiative is targeting formal manufacturers who already have clear and audited production and distribution processes for tax purposes, signaling the digital tax stamp company will add limited value into the tax collection measures. Secondly, UNBS has a limited number of staff for not only covering the entire country but also for doing many things. Currently, UNBS covers only 17 entry points out of about 165 borders, leaving most of the borders with no manpower and an avenue for smugglers.
Global declining competition (IMF)
Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000-2015. Second, the markup increase is driven by already high-markup firms (top decile of the markup distribution) that charge increasing markups. Third, markups increased mostly among advanced economies but not in emerging markets. Fourth, there is a non-monotonic relation between firm size and markups that is first decreasing and then increasing. Finally, the increase is mostly driven by increases within incumbents and also by market share reallocation towards high-markup entrants.
Today’s Quick Links: Kenya to open mission in Hargeisa to boost social, economic links Kenya exports under AGOA deal grew by 25% last year Anzetse Were: Why Kenyans and Africans do not feel economic growth Tanzania farmers embark on commercial avocado farming project Diplomatic ties between Tanzania-Israel bear socio-economic fruit Mozambique integrated Liquified Natural Gas project: the AfDB has posted the Environmental and Social Impact Assessment summary and the Resettlement Action Plan summary Joint communique of the leaders’ roundtable meeting of the Second Belt and Road Forum UK’s Foreign Secretary starts first visit to Africa: Senegal, Ghana, Nigeria, Ethiopia, Kenya ICT investments in OECD and Partner countries: trends, policies and evaluation (pdf) UAE inaugurates Centre for Fourth Industrial Revolution |
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Seychelles continues to evaluate Africa free trade pact now coming into force
Seychelles will continue discussions and negotiations before signing on to the African Continental Free Trade Area (AfCFTA), a deal that could open the door to more trade to and from the island nation, said a top official.
The island nation in the western Indian Ocean has signed the agreement but has yet to ratify it.
The African Continental Free Trade Area agreement brokered by the African Union in March last year requires members to remove tariffs from 90 percent of goods, allowing free access to commodities, goods, and services across the continent.
The agreement, which needed to be ratified by 22 out of the 55 member states, can now become operational [once the 22 countries have deposited their instruments of ratification with the African Union Chairperson]. The Gambia’s parliament was the 22nd nation to [notify its parliamentary approval to] ratify the agreement on April 2.[*]
“For Seychelles, we have signed the agreement, but we have not ratified it yet. This is because we feel that there are still negotiations and discussion to be done before we proceed,” Ashik Hassan, the director of trade at the ministry of finance, Ashik Hassan, told SNA on Wednesday.
“For example, there are measures concerning rules of origin. Basically, it is one of the conditions that you need to meet to get the preferential rate of tariff. It makes sure that the product you are exporting into the African market originates from Seychelles,” said Hassan.
Since the island nation’s exports are very limited, Hassan pointed out that it is important that the rule that is agreed on does not restrict Seychelles in any way.
Seychelles exports tuna, he noted. “But then again how do we prove that it really originates from Seychelles when exporting,” he added.
Hassan said that on the other hand “as a country we are opening our doors to enable our producers to eventually trade more with other markets in the African continent at a now lower tariff. We have a high Gross Domestic Product (GDP) and we have a lot of potential in the African market.”
The major export originating from Seychelles is in the fisheries industry – the second top contributor to the island nation’s economy.
According to the figures of the Seychelles’ National Bureau of Statistics released in September last year, the exports of fresh and frozen fish from January to June last year rose to 5,025 tonnes – an increase of 116 percent compared to the 2,451 tonnes of the same period in 2017.
If Seychelles does not ratify the agreement, Hassan said that “this is simply because as a country we need to preserve the national interest. As an island state, our economies of scale is not the same compared to those landlocked countries in the African continent. We cannot ratify something that will put us at a disadvantage.”
The trade agreement is set to become operational within a month after the required number of endorsements are deposited with the African Union chairperson’s office. Once operational it will cover a market of 1.2 billion people and a combined gross domestic product of $2.5 trillion – making it the world’s largest free trade area since the formation of the World Trade Organisation seven decades ago.
[*] Find out more about the ratification process in tralac’s AfCFTA Status of Ratification infographic.
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Zambian govt holds sensitization meeting on the TFTA
The Zambian government recently held a sensitization meeting with stakeholders on the Copperbelt mainly from the Chambers of Commerce and the private sector on the Tripartite Free Trade Area (TFTA). The meeting was held ahead of Zambia’s pending ratification of the TFTA Agreement.
The Sensitization was facilitated by the Department of Foreign Trade in the Ministry of Commerce, Trade and Industry.
Speaking at the event, Permanent Secretary in the Ministry of Commerce, Trade and Industry, Mrs Kayula Siame, who was represented by Chief Economist, Mr. Paul Mumba said once effected, the TFTA will spur a new web of opportunities in Zambia and beyond.
She said local exporters will be afforded an opportunity to competitively grow their international market and consumers will equally get a broader scope of products.
“I urge the private sector to take advantage of the trade space that Government has created through the Ministry of Commerce, Trade and Industry and the opportunities that the TFTA will bring,” Mrs Kayula said.
At the same event, COMESA Director of Trade and Customs Dr. Francis Mangeni called on the private sector to actively participate in trade deliberations.
“Quite a number of countries have involved the private sector in their negotiation delegations, Zambia must consider doing the same, as it will ease dissemination of information,” Dr Mangeni added.
The private sector present in the meeting, raised concern on what Zambia will contribute to the huge market considering the country’s current low production and poor quality goods.
They have however supported the idea of ratifying the TFTA cautioning that Government must improve the Manufacturing and Industrial Sectors if Zambia is to be relevant once the TFTA is in force.
The participants were drawn from Chambers of Commerce in the districts of Kitwe, Ndola, Solwezi, Mansa, Kasama and Chinsali. The TFTA brings together three regions of East African Community (EAC), COMESA and the Southern African Development Community (SADC).
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Zimbabwe shoots down Masiyiwa’s rand proposal (Bulawayo24)
Industry and Commerce minister, Nqobizitha Mangaliso Ndlovu has shot down the suggestion by billionaire telecoms tycoon Strive Masiyiwa for Zimbabwe to price all goods in South African rand to achieve price stability. Masiyiwa recently said the country would do well to abandon the United States dollar as the currency of settlement for rand imports which account for 80% of goods sold in Zimbabwe, while also calling for the pricing of goods in the South African currency without necessarily joining the Rand Monetary Union. But in an interview in Plumtree, Ndlovu said the multi-currency system was ideal and advantageous because it allowed the country to have choice when trading. “The multi-currency system is more advantageous in this regard than using one currency. We are flexible in trading in different currencies of the countries we trade in using their currencies. The issue of pricing needs a holistic approach. There is a tendency to profiteer. That’s why President Emmerson Mnangagwa made the clarion call that, although inflation is going up, we have to tackle it together with business and hope to address it in the near future.” [Botswana ready to increase Zimbabwe trade ties; Museveni eyes improved trade with Zimbabwe]
Botswana: AfDB extends $80m line of credit to help industrialization, regional integration
The line of credit will be provided to the Botswana Development Corporation, via the AfDB’s private sector window and will be used to finance local companies in the Botswana’s manufacturing, transport, logistics and services sectors. In total, the projects are expected to create between 2500 and 2800 jobs, including 1200 to 1300 for women, in particular in these sectors.
Andrew McGregor: South African companies must seize FDI opportunities in Africa (Africa Report)
Who Owns Whom ownership research shows that there are 2,599 foreign direct investments by South African companies on the rest of the continent. The finance, insurance and business services sectors are leading, followed by wholesale and retail, and manufacturing. The biggest FDI is by Bidvest, followed by Standard Bank, which secured 28% of its headline earnings from these investments in its last financial year. Imperial Logistics obtained 26% of its profit from Africa. While ShopRite does not feature in the top 10, it has 22 subsidiaries operating 419 stores in 14 countries outside South Africa, making it the biggest South African player in the retail space on the continent. It derives 16% of group sales from its African footprint.
Eighth Borderless Alliance Africa conference: Ghana, the sub-region’s trade and transit hub (GNA)
The Government on Thursday re-affirmed its commitment to make Ghana a major trade transit hub in the West African sub-region and all efforts will be made to actualise this objective. Mr Kweku Ofori Asiamah, Minister of Transport, said transport played a crucial role in trade facilitation, social development and growth of national and regional economies. “For this reason, reducing cost, delays and removing all unnecessary obstacles within the transport corridors within our sub-region will not only make trading more competitive and accessible, but will also bring about development,” Mr Asiamah stated in Accra. Mr Asiamah whose speech was read on his behalf at the opening of the Eighth Borderless Alliance Africa Conference said the Government had undertaken a number of reforms aimed at improving the business environment through various initiatives such as the implementation of the “Paperless System” at the nation’s ports.
The Transport Minister noted that Government was also pursuing an aggressive programme to expand ports infrastructure. He said construction works were also underway for the development of four container berths with deep-sea draught of 16 metres; stating that the new terminal, which had 50% automation would be the biggest within the sub-region on completion. He said similarly, the Government had also put in place a programme to develop a Dry Port at Boankra near Kumasi, as part of the integrated logistics system. He said the project when completed, goods bound for the middle belt and northern part of the country as well as the landlocked countries of Burkina Faso, Niger and Mali would be charged at the inland port for onward transfer. [ECOWAS examines PPP model to address budget constraints]
Nigeria seeks Saudi Arabia investment in building refinery (Premium Times)
The Minister of State for Petroleum Resources, Ibe Kachikwu, says the Nigerian Government was looking at the possibilities of having the Kingdom of Saudi Arabia build a refinery in Nigeria. He said the government has begun talks with the Saudi official oil company, Saudi Aramco, for investment in Nigeria’s moribund refineries and liquefied natural gas-producing company. Mr Kachikwu said this whie speaking on Bloomberg TV On Wednesday, on the sidelines of the Financial Sector Conference, at Riyadh, Saudi Arabia. “We are looking at the cooperation across multi-levels, refinery, for example, we are looking for investment in four of our refineries. We are looking at the potential for Liquefied Natural Gas investment. We are looking at some straight trade deals in terms of our DSDP programme, to see how they (Saudi Arabia) can participate and bring in products into the country,” he added. [Nigeria will sign African free trade pact, ACCI assures AU]
WTO reform: DDG Wolff suggests members look at accessions as source of inspiration
Is there scope for members to look at the experience of WTO accessions for additional inspiration in the ongoing WTO reform debate, asked Deputy Director-General Alan Wolff at a meeting of the Informal Group of Acceding Governments on 25 April. Governments that have joined the WTO since 1995 and observer governments currently seeking WTO membership are “key stakeholders in the ongoing debate and have a voice that should be heard,” he underlined. Extract from the speech:
“With over one-fifth of the WTO Membership now composed of economies that have gone through the accession process, and with a further 22 (and possibly more) economies in the accession queue, it is inevitable that the results of accession negotiations will continue to inform discussions on the future of the multilateral trading system and will accompany the evolution of WTO rules. WTO Members who come in through Article XII are generally better equipped to exploit the multilateral trading system than many of their senior partners who had an easier time getting in. Thanks to the rigours of the accession process, they have in place WTO-compliant legislation and institutional mechanisms. Their awareness of the system’s challenges and its weaknesses and strengths has been honed by the negotiating process. And more importantly, their political commitment to the WTO should normally be assured due to the difficult political choices that have had to be made at home to meet the demands for domestic reform. In other words, Article XII Members tend to be very good and active friends of the system. All members need to increase their efforts, exercising collective leadership, it the multilateral trading system is to progress and continue to be fit for purpose.” [ICC/JETRO symposium considers WTO reform]
World Bank’s new president skips China’s Belt and Road for Africa trip (Reuters)
David Malpass, fresh from a senior Trump administration post at the US Treasury Department, is instead making his first foreign trip as the World Bank’s leader to sub-Saharan Africa to highlight his vision for the bank’s poverty reduction and development agenda. A World Bank spokesman said Malpass will be traveling this weekend to Madagascar, Ethiopia and Mozambique before flying to Egypt and a debt conference in Paris. Malpass has said that Africa is a key priority for the bank due to its high concentration of the world’s poorest people.
Second Belt and Road Forum for International Cooperation: selected updates
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President Xi Jinping’s keynote address. Over the past seven decades, we in China have, based on its realities, constantly explored the way forward through practices, and have succeeded in following the path of socialism with Chinese characteristics. Today, China has reached a new historical starting point. However, we are keenly aware that with all we have achieved, there are still many mountains to scale and many shoals to navigate. We will continue to advance along the path of socialism with Chinese characteristics, deepen sweeping reforms, pursue quality development, and expand opening-up. We remain committed to peaceful development and will endeavor to build a community with a shared future for mankind. Going forward, China will take a series of major reform and opening-up measures and make stronger institutional and structural moves to boost higher quality opening-up. First, we will expand market access for foreign investment in more areas. Second, we will intensify efforts to enhance international cooperation in intellectual property protection. Third, we will increase the import of goods and services on an even larger scale. Fourth, we will more effectively engage in international macro-economic policy coordination. Fifth, we will work harder to ensure the implementation of opening-up related policies. [SCMP infographic: How China is looking beyond borders]
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Christine Lagarde: Stronger frameworks in the new phase of Belt and Road. At the same time, history has taught us that, if not managed carefully, infrastructure investments can lead to a problematic increase in debt. I have said before that, to be fully successful, the Belt and Road should only go where it is needed. I would add today that it should only go where it is sustainable, in all aspects. Fortunately, the Chinese government is already taking some steps to ensure this is the case. The new debt sustainability framework that will be utilized to evaluate BRI projects is a significant move in the right direction. BRI 2.0 can also benefit from increased transparency, open procurement with competitive bidding, and better risk assessment in project selection. The launch of the green investment principle at this conference is a further important step forward for the BRI — and a step forward for green, low-carbon and climate-resilient investment. Debt sustainability and green sustainability will strengthen BRI sustainability. [Jaindi Kisero: We [Kenya] should go slow on Chinese loans, they are hurting us]
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Deborah Brautigam: Is China the world’s loan shark? (New York Times). In most of Africa and Latin America, in other words, China’s lending is significant, but fears that the Chinese government is deliberately preying on countries in need are unfounded.
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Related CSAE workshop (19-20 March 2020), call for papers: China’s engagement with the African continent.
Today’s Quick Links: Turkey-Africa trade volume totals $179bn in last decade ECOWAS develops training on corruption assessment Egypt’s CIB looks to East Africa for growth Suriname establishes 1st African embassy: in Accra 26th EU-Japan Summit: joint statement (pdf), European Commission press release Japan’s Abe urges EU to avoid no-deal Brexit ‘by all means’ Japan opposed to linking currency to trade despite American fears over US dollar devaluation China goes hi-tech, giving Indian exporters the opportunity to fill the void |