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Fintech in Sub-Saharan Africa: A potential game changer
Mobile money has grown exponentially in sub-Saharan Africa over the past 10 years, making the region the global leader in mobile money innovation, adoption, and usage.
M-Pesa, the mobile payments system started in Kenya in 2007, now boasts 30 million users with services offered in countries as diverse as Albania, D.R. Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania. Prospective agreements with MTN Group will allow both Orange Money and M-Pesa services to cover an even larger number of countries across the continent.
Mobile money and greater financial inclusion
While access to traditional banking services remains almost a mirage for most Africans, the near-universal availability of mobile phones has allowed millions to access mobile money services. Mobile money accounts now surpass bank accounts in the region and greater financial inclusion has benefited large swathes of the population that remain unbanked including the poor, the young, and women.
Sub-Saharan Africa is the only region in the world where close to 10 percent of GDP in transactions occur through mobile money. This compares with just 7 percent of GDP in Asia and less than 2 percent of GDP in other regions.
Most African users now rely on mobile payments to send and receive money domestically, Increasingly, they are taking advantage of new services to also send and receive money internationally. In addition, they use mobile money to pay their bills, receive their wages, and pay for goods and services.
Moving up the financial services value chain
Innovation is allowing Africans to move up the “financial services value chain”. From mobile payments, customers in sub-Saharan Africa are gaining access to mobile banking and other services as they open saving accounts, take out loans, purchase insurance, and invest in Government securities or in stock markets with a few touches of their mobile phone. They can even “borrow” electricity and pay later instead of sitting in the dark.
New innovations in fintech are proceeding rapidly. New technologies are being developed and implemented on the continent, and they have the potential to yield significant benefits for Africa. Recognizing this, foreign investors have stepped up their backing for African fintech firms, while those firms develop solutions adapted to the region, for example, to cater for the relatively lower internet speed in some areas. The falling price of smartphones will also help the region reap the rewards of internet-based solutions.
Greater digital inclusion and innovation
In a new African Department Paper, IMF staff suggest that the challenge now is for the continent to leverage this success in mobile money. It needs to transition to other fintech services and a digital economy. Greater digital inclusion and innovation will not only spur economic growth but a growth that comes with new jobs – the number one preoccupation on a continent that will see more than half the world’s population growth by 2050.
Africa is well positioned to meet its fintech and digital challenges, and with the right policies in place, it could reap a “digital dividend”.
But first, policymakers need to address the existing large infrastructure gap in the region, starting with electricity and internet services. Second: Africa will need to balance the perennial demands of fast-moving innovation against the slower pace of regulation. Good regulation is needed but stifling innovation would be costly.
Fintech beyond financial services
Finally, a message to policymakers and entrepreneurs: consider the potential of fintech beyond the narrow confines of financial services. This untapped resource can help create jobs and increase the productivity of both workers and firms. Ultimately, fintech could be the critical stepping stone towards a digital economy for Africa – a continent where most countries are still overly dependent on a few dominant sectors. Fintech – if exploited well – could yet prove key to this structural transformation.
This paper was prepared by staff team led by Amadou N. R. Sy and composed of Rodolfo Maino, Alexander Massara, Hector Perez-Saiz, and Preya Sharma.
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tralac’s Daily News Selection
Negotiating African trade policy:
Event reminders
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Expert meeting on Non-Tariff Barriers (NTB) Reporting, Monitoring and Elimination under the AfCFTA (concluded today in Nairobi)
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11th meeting of the AfCFTA TWG on Rules of Origin (starts Monday in Addis)
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Experts’ session for the 5th meeting of the Ministerial Working Group on the Single African Air Transport Market (starts Monday in Addis)
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Tweeted updates by WTO DG Roberto DG Azevêdo: Great to meet with Ethiopia’s Finance Minister Ahmed Shide, along with Commissioner for Investments Abebe Abebayehu, Senior Advisor to the PM and Chief Trade Negotiator Mamo Mihretu and Deputy Finance Minister, Mr Eyob Tekalign, in Addis Ababa. We continued discussions on the country’s accession to the WTO. I look forward to building on this momentum and to supporting Ethiopia’s continued integration with the global economy.
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Ethiopia’s WTO Accession status: further details can be accessed here
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WTO Accessions Rules seminar. Deputy DG Alan Wolff welcomed 29 participants from 15 acceding governments attending the first Seminar on WTO Accession Rules (4-15 February, Geneva). “Some accessions are more complex than others. For China, by far the largest country to accede to the WTO, there were thousands of regulations and statutes that needed to be amended. It was an immense task. For a few acceding countries, they were already in close economic relationships with countries that were already WTO members, so they knew many of the rules and lived by them already. Thirty-six countries have joined the WTO since it was founded 24 years ago. Several of their chief negotiators for accession have talked with you already. Last Thursday, the Inaugural Session of the Accession Negotiators’ Network took place in the meeting with you. I was very happy to see how the original idea behind the establishment of this Network had become reality. Dialogue and experience-sharing are powerful tools for advancing accession negotiations. The former accessions negotiators’ enthusiasm and their stories are marvellous. I listened with interest. Clearly for many, maybe for all of them, working for their countries’ WTO accession was a high point of their professional careers. Why? Because they got to know their economies intimately, including what its needs were. They got to know what other governments wanted of them. They played one of the most important roles for their countries that few have the opportunity to experience.” [Details on WTO Accessions in progress can be accessed here]
Economic integration in the Maghreb: an untapped source of growth (IMF)
Individual countries of the Maghreb have achieved substantial progress on trade, but, as a region they remain the least integrated in the world. The share of intraregional trade is less than 5% of their total trade, substantially lower than in all other regional trading blocs around the world. Geopolitical considerations and restrictive economic policies have stifled regional integration. Economic policies have been guided by country-level considerations, with little attention to the region, and are not coordinated. Restrictions on trade and capital flows remain substantial and constrain regional integration for the private sector. Extract:
Trade within the Maghreb suffers because of restrictive trade policies. Maghreb countries face lower tariffs with Europe than when trading among themselves. In general, the simple average of applied tariffs in Maghreb countries is significantly higher than in the Group of Twenty countries or emerging market and developing economies (Figure 6). For example, the simple average tariff duty in Maghreb countries was about 14% in 2016, compared with 5% in the European Union, 4% in the United States, and 10% in China. Algeria is the most protected market, with an average tariff rate of 19%, while in other countries the rates are about 12%. Furthermore, selected sectors are heavily protected even in countries relatively open for trade. For example, the import duty on agricultural products is 28% in Morocco and 31% in Tunisia. Algeria tariff and nontariff barriers were hardened in early 2018 with a temporary ban on the import of about 850 categories of goods, the extension of the list of goods subject to a 30% excise tax, and significantly increased customs duties (up to 60%) for some other products. In addition to tariff barriers, intraregional trade also faces multiple nontariff impediments. For example, the average cost to export is one of the highest in the world and varies substantially across the region, between the most efficient exporters (Morocco and Tunisia) and the least efficient (Algeria, Libya, Mauritania).
Namibia, eSwatini most exposed to slow revenue pool growth in SACU (Moody’s)
Namibia and eSwatini are most exposed to the impact of only modest growth in the revenue of SACU, Moody’s Investors Service says in a new report. Weaker growth in South Africa (Baa3 stable) since 2011 has reduced the revenue pool available to all SACU member countries. “Although we anticipate a modest acceleration in South Africa’s economy in 2019 and 2020, we do not expect a material increase in SACU revenue,” said David Rogovic, a Moody’s Assistant Vice President - Analyst and co-author of the report. “Our expectation of only modest growth in SACU revenue has implications for eSwatini (B2 negative), Namibia (Ba1 negative), and Botswana (A2 stable) as it accounts for a sizeable proportion of their fiscal revenue and current account receipts.”
Zimbabwe not yet ready for full AfCFTA (The Herald)
Zimbabwe should ramp up value addition and beneficiation of its products so that the country can benefit from the full implementation of the AfCFTA once it comes into fruition, Speaker of the National Assembly Advocate Jacob Mudenda has said. The call comes at a time when members of the AU are intensifying efforts for the realisation of the AfCFTA. But, while addressing parliamentarians at an awareness workshop on the AfCFTA, Advocate Mudenda said Zimbabwe is currently losing out billions from exporting raw products, and that the introduction of the AfCFTA could make the situation worse. “Zimbabwe currently does not have a trade policy in place and the Industrial Development Policy expired in 2016 and up to now it is still in draft form. Thus the Portfolio Committee on Foreign Affairs and International Trade, and on Industry and Commerce have their work cut out and should play their oversight role in ensuring that the trade policy is put in place at the earliest possible convenience and possibly translating it into a law. As a country, it is imperative that we put our house in order first for us to be able to benefit from the free trade area outside our borders.”
Ghana: Importers’ capital shrinks after cedi slumps by 9% in a year (GhanaWeb)
Importers have said their capital has shrunk significantly over the past one year as the cedi continues to weaken against major trading currencies, especially the US dollar. The Ghana cedi has depreciated against the US dollar by 9% to GH¢4.92 from GH¢4.43 in February 2018, the fastest rate of depreciation in four months. The Deputy General-Secretary of the Ghana Union of Traders Associations, Richard Amamoo told the B&FT how the cedi-depreciation has affected his business. “Last year [August], a full container of speakers cost me $20,000 at the rate of GH¢4.7 to the dollar, making it GH¢90,000. But that same quantity of products will cost me GH¢103,000 using the current interbank rate of GH¢5.16. This means I need an additional GH¢9,200 to import that same container today.”
Ghanaian-German Business Council: update (GhanaWeb)
Ghana has signed a MoU with the Federal Republic of Germany to establish the German-Ghanaian Business Council. The council will facilitate the exchange of information and views on economic cooperation, trade and investment; promote industrial cooperation on Small and Medium scale enterprises; collaborate on matters of mutual interest in respect of multilateral trade negotiations.
Songwe: Africa’s health and wellness sector has potential to create millions of jobs (UNECA)
First International Food Safety Conference: updates
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On Tuesday, the conference, organized by the FAO, WHO, WTO and the AU, shone a light on the need to root out dangerous food, which is also hampering progress towards sustainable development everywhere. “Safeguarding our food is a shared responsibility. We must all play our part”, said FAO Director-General José Graziano da Silva. “We must work together to scale up food safety in national and international political agendas.” Unsafe food-related illness overloads healthcare systems and damages economies, trade and tourism. Moreover, the impact of unsafe food costs low- and middle-income economies around $95bn in lost productivity each year. Food safety must be a paramount goal at every stage of the food chain, from production to harvest, processing, storage, distribution, preparation and consumption, conference participants stressed. [ pdf Chairperson’s Summary (536 KB) ]
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Hunger on the rise in Africa. The joint UN pdf 2018 Africa Regional Overview of Food Security and Nutrition Report (5.67 MB) reveals that the prevalence of undernourishment continues to rise and now affects 20% of the population on the continent, more than in any other region. After years of decline, recent statistics from the joint report of the ECA and the FAO show that there are 821 million undernourished people in the world. Of these, 257 million are in Africa, of which 237 million in sub-Saharan Africa and 20 million in Northern Africa. Compared to 2015, there are 34.5 million more undernourished people in Africa. Nearly half of the increase is due to the rise in the number of undernourished people in Western Africa, while another third is from Eastern Africa.
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WTO DG Roberto Azevêdo: “We will be hosting the second part of this event at our headquarters in Geneva on 23-24 April: the FAO-WHO-WTO Forum on Food Safety and Trade. It will be an opportunity to explore the deeper inter-linkages with trade issues. The WTO underpins global trade – complemented by important regional initiatives like the AfCFTA. In this context, the WTO’s Trade Facilitation Agreement can play a positive role. It aims at streamlining border processes to help goods move more smoothly and more quickly. Reducing the time needed for goods to cross borders can make all the difference when your exports are perishable products, such as cut flowers or green beans from Kenya and animal products from Ethiopia. And reducing trade costs is important for everyone. Of course, the safety of imported products also needs to be ensured, and the Agreement recognizes that cooperation among different border agencies plays a fundamental role.” [OECD’s Joint Working Party on Trade and Environment: report on a set of policy indicators on trade and environment (pdf)]
World Employment and Social Outlook: Trends 2019 (ILO)
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Hunger on the rise in Africa, new UN report reveals
A new joint United Nations report reveals that hunger is on the rise in Africa following years of decline due to a number of reasons, including difficult global economic conditions, adverse climatic conditions due to El Niño and soaring staple food prices.
Launched today, the Africa Regional Overview of Food Security and Nutrition 2018: Addressing the threat from climate variability and extremes for food security and nutrition reveals that the prevalence of undernourishment continues to rise and now affects 20 percent of the population on the continent, more than in any other region.
After years of decline, recent statistics from the joint report of the Economic Commission for Africa (ECA) and the Food and Agriculture Organization of the United Nations (FAO) show that there are 821 million undernourished people in the world.
Of these, 257 million are in Africa, of which 237 million in sub-Saharan Africa and 20 million in Northern Africa. Compared to 2015, there are 34.5 million more undernourished people in Africa.
Nearly half of the increase is due to the rise in the number of undernourished people in Western Africa, while another third is from Eastern Africa.
In her speech during the launch of the report, ECA’s deputy Executive Secretary, Giovani Biha, said the report sounds alarm bells for the continent, adding at this rate, Africa does not seem to be on track to achieve sustainable development goal number 2, which is zero hunger
“Interestingly, African economies grew at impressive rates often exceeding five per cent over the past decade spanning from 2004 to 2014. However, poverty and hunger are still hanging in as significant economic growth has not been integrated and inclusive,” she said.
She said to achieve the SDGs by 2030, including SDG 2, Africa needs to enact reforms that would help build resilience, and raise potential growth and its inclusiveness.
Achieving this would require policies to enhance the continent’s structural transformation efforts through the facilitation of the reallocation of labour and capital towards more productive sectors of national economies, including modernizing the agriculture sector.
Food insecurity in some countries in Africa has been worsened by conflict, often in combination with adverse weather, which has left millions of people in need of urgent assistance.
For her part, Ms. Maria Helena Semedo, Deputy Director-General, FAO, said it is sad that after years of progress, the continent was regressing in its efforts to improve food security.
“Policy-makers must work towards scaling-up actions to strengthen the resilience of people’s livelihoods, food systems and nutrition to climate variability and extremes,” she said, adding the FAO will continue to work with its partners in an effort to combat hunger on the continent.
Based on ECA research, countries need to address food and nutrition insecurity within a holistic approach, one built around six main lines of action that involve:
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dealing with water, energy and food stress, with a view to managing natural resources sustainably to secure land and water rights and creating a macroeconomic environment that promotes the efficient use of natural resources;
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integrating food security into rural and agricultural transformation programmes, with the aim of enhancing the resilience of rural residents;
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developing pro-poor policies that enhance the purchasing power of poor people;
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developing national approaches to food and nutrition security that are resilient to shocks and other stresses;
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encouraging and facilitating a multi-sectoral approach to food security and resilience through coordinating plans and programmes across line ministries; and
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orienting national food security policies towards more domestic food self-reliance, within a sub-regional/regional economic community perspective.
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tralac’s Daily News Selection: AU Summit review
A guide to the AU Summit:
Outcomes, commentaries, side-events, country postings
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South Africa deposited its AfCFTA instrument of ratification, as did Mauritania and Republic of Congo, with the Chairperson of the African Union Commission on the sidelines of the 32nd African Union Summit.
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Report on Institutional Reform: Remarks by President Kagame at a closed session. “The scope of Africa’s political ambition requires an institution endowed with all the technical competence to deliver the results we want. The strength of our institutional reform is the constant search for solutions through dialogue and consensus.”
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Key decisions of the 32nd Ordinary Session of the Assembly of the African Union
On the AfCFTA. Endorsed the recommendations of African Union Ministers of Trade on: Template on Tariff Liberalization which will be used by Member States in preparing the AfCFTA Schedules of Tariff Concessions; and the designation of Sensitive Products and Exclusion List on the basis of the following criteria: food security, national security, fiscal revenue, livelihood and industrialization.
Decided that Member States wishing to enter into partnerships with third parties should inform the Assembly with assurance that those efforts will not undermine the AU vision of creating one African market.
Requested the AUC, with the assistance of technical partners, to undertake an assessment of the requirements for the establishment of a future common market including steps to be taken as well as their implications and challenges, for consideration by the AU Ministers of Trade.
Requested AU Ministers responsible for trade to: submit the Schedules of Tariff Concessions, and Schedules of Specific Commitments on Trade in Services in line with agreed modalities to the July 2019 and January 2020 Sessions of the Assembly, respectively, for adoption; and conclude the negotiations on Investment, Competition Policy and Intellectual Property Rights, and submit the draft legal texts to the January 2021 Session of the Assembly for adoption through the Specialised Technical Committee on Justice and Legal Affairs.
On post-2020 partnership with the European Union. Assembly recalled the decision which stressed the need to ensure that Africa speaks with one voice in the various platforms of partnership with the EU, and requested the Commission to ensure cohesion between the Post-Cotonou Agreement and the Post-2020 Continent-to-Continent Partnership, so that continental priorities, as articulated in Agenda 2063 and other related instruments, are consistently reflected in both tracks.
Assembly elected the Bureau of the Assembly of the Union for 2019. Chairperson: Egypt; 1st Vice-Chairperson: South Africa; 2nd Vice-Chairperson: DRC; 3rd Vice-Chairperson: Niger; Rapporteur: Rwanda
Diarise: The first Mid-Year Coordination Meeting of the AU and the RECs will now take place on 7-8 July 2019 in Niamey. Next year’s 33rd Ordinary Session of the Assembly will take place on 30 and 31 January 2020 in Addis Ababa.
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Infographic tweeted by @AU_KwesiQuartey: Did you know? Since the adoption of the Decision on Financing of the Union in July 2016, there has been unprecedented momentum gathered around its implementation. 16 countries are collecting the 0.2% levy on eligible imports.
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Selected commentaries: Empowering the African Union (Donald Kaberuka, Project Syndicate), The reform engine of the African Union has started – over to Egypt to keep it running (Jan Vanheukelom, ECDPM blog), Congo’s Tshisekedi welcomed warmly into the AU fold (Carien du Plessis, Daily Maverick), Africa’s forgotten stateless population (Ineke Mules and Andrew Wasike, DW)
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Smart Africa Alliance: speech by President Kagame at the high-level lunch on Digital Transformation in Africa. Digital identity is the start of a long and valuable chain of capabilities that make citizens better able to participate productively in the regional and global economy. But digital systems can only function well when they are trusted. Information must be protected from unauthorised access. It should be clear who owns the data that people generate and how it will be used. Different digital platforms must also be able to communicate with each other seamlessly. Otherwise, we are merely rebuilding the same fragmentation in the cloud, that we have been working to transcend here on the ground in the African Union. That is why working together to design common standards and guidelines, that serve Africa’s unique needs, is as important for e-government, as it is for e-commerce. I would like to recall the value of the Smart Africa Alliance for implementing technology-based initiatives on a regional basis.
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African Leadership Meeting on Investing in Health: remarks by AUC Chairperson Moussa Faki Mahamat, Rwanda’s President Kagame, UN SG António Guterres, Norwegian Prime Minister Erna Solberg, statement by the Global Fund
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African Leaders for Nutrition Initiative: Continental Nutrition Accountability Scorecard
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Africa Business: Health Forum 2019. Executive summary of Healthcare and Economic Growth in Africa (pdf)
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Country perspectives on the AU Summit: (a) How can Egypt benefit economically from African Union presidency?; (b) Seychelles’ plans to advance Blue Economy highlighted at African Union; (c) Uhuru hosts historic meeting of leaders on African renaissance; (d) Ghana’s President:Africa should never permit slavery again; (e) AU security chief warns ‘terrorism expanding’ in Sahel; (f) Immediate and durable solutions to the displacement crisis in Africa needed says IFRC
Nigeria and South Africa: shaping prospects for the African Continental Free Trade Area (ECDPM)
Building on these findings, this paper analyses the domestic political economy of regional trade policymaking in Africa’s two largest economies, Nigeria and South Africa. This analysis draws on secondary sources, and on interviews carried out between April and December 2018 in Ethiopia, Nigeria and South Africa. It aims to identify the key domestic actors and factors that influence the way these two swing states participate in regional trade negotiations and that are likely to influence whether and how the two states effectively implement the AfCFTA. Through this analysis, the paper shows how certain domestic dynamics within these two countries have influenced the AfCFTA negotiations and shaped the content of the AfCFTA Agreement. The paper also identifies specific actors and factors within Nigeria and South Africa that could support or impede effective AfCFTA implementation. Extract (pdf):
South African services firms and industries tend to be less vocal in relation to regional trade negotiations, despite having a significant footprint on the African continent in areas such as finance, telecommunications and retail. This is likely due to the fact that South African services firms have been able to do business in Africa very successfully, even in the absence of formal agreements governing regional services trade, and because they recognise the government’s reluctance to negotiate meaningful services trade liberalisation. In fact, even beyond the services sector, there is a general scepticism among the private sector as to the value of regional trade agreements. While recognising the potential benefits of improved access to new markets, the South African private sector is wary about these benefits actually materialising. This is because at the REC level, they have experienced many examples of regional commitments not being implemented by member states or of tariffs being replaced by non-tariff barriers. They are also aware that the South African government is unlikely to hold other member states accountable for not enforcing regional trade agreements and that there is generally no recourse when rights and obligations are not respected. This at least partly explains the apparent lack of interest in the AfCFTA among South Africa’s private sector. [The authors: Sean Woolfrey, Philomena Apiko, Kesa Pharatlhatlhe]
Wandile Sihlobo: A record year for SA’s agricultural exports (Fin24)
Recently released data on SA’s agricultural trade for December 2018 paint a clear picture that is worth highlighting of the full year’s agricultural trade performance. In 2018, South Africa’s agricultural exports grew by 7% y/y to US$10.6bn, a record level in a dataset starting from 2001. This was underpinned by increased exports of oranges, grapes, wine, maize, apples, wool, lemons, mandarins and pears, amongst other products. Over the same period, imports increased marginally to US$6.7bn. The key imported products were rice, wheat, offal, palm oil, whiskey, live cattle and oilcakes for animal feed. But overall, this subsequently led to a 21% y/y increase in South Africa’s agricultural trade balance to a record US$3.9bn.
Mozambique joins international network for certification of fruits and vegetables (Club of Mozambique)
The National Institute for Standardisation and Quality of Mozambique (INNOQ) announced today that it will join an international cooperation network for the certification of fruits and vegetables in the country. INNOQ and the organisation Solidaridad Network Southern Africa will work together to “make products more competitive at national and international level and establish a quality standard for the industry value chain in order to safeguard public health”, the institute says in a communique. Solidaridad Southern Africa will support INNOQ in acquiring laboratory equipment for the analysis of pesticide residues and hiring a consultant who will set the parameters of a national quality standard for fruits and vegetables. The work will be developed in connection with two of Mozambique’s major large-scale supermarket chains and will rely on producer and purchaser databases, producing all necessary documentation for approval by international standards (“Global Gap” and subsequent accreditation by ISO 17065), it concludes.
The FAO/WHO/AU International Conference on Food Safety began today in Addis: access the conference documentation here. Profiled papers:
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The need for integrated approaches to address food safety risk: the case of mycotoxins in Africa (pdf). “The health impact of exposure is grossly underreported due to lack of coordinated monitoring and medical surveillance. Mycotoxins are neglected as major public health problems and their control is inadequately funded and not prioritized by many African governments.
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pdf Digital transformation of the food system (106 KB) . The complexity, fragmentation and global nature of the food supply chain is a key driver for use of digital technology in the food supply chain in order to provide enhanced traceability of food and safer food to consumers. The forward projections for population growth will place increased pressure on food production systems to cope with the demand for food, and in developing countries consumers are now demanding more processed and packaged foods leading to accelerated investment in process automation. Use of big data to improve food safety, quality and culture is endless; however, challenges remain in regard to getting sign on from industry to critically evaluate its needs for high risk foods; provision of sufficient training of scientists with expertise in food systems issues; and keeping costs for SMEs and developing countries to a minimum.”
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President Ramaphosa deposits SA’s AfCFTA instrument of ratification
President Cyril Ramaphosa has handed over South Africa’s instrument of ratification of the African Continental Free Trade Area (AfCFTA) on the sidelines of the 32nd Ordinary Session of Assembly of the African Union in Addis Ababa, Ethiopia.
The development came after Parliament ratified the Agreement on the establishment of the AfCFTA in December. The Agreement will come into effect once 22 member states have deposited their instruments of ratification.
South Africa’s ratification, alongside that of Mauritania and the Republic of Congo, who also deposited their instruments of ratification during the AU Summit, brings the number of countries that have ratified (or approved ratification of) the AfCFTA Agreement to 18.
The AfCFTA was launched during an Extra-ordinary Summit of the African Union (AU) Heads of State and Government in Kigali, Rwanda in March 2018. South Africa signed the agreement in July 2018 in Nouakchott, Mauritania and has now handed in the instrument of ratification, a formal approval by Parliament of the AfCFTA, to H.E Moussa Faki Mahamat, Chairperson of the African Union Commission.
“We do so willingly having been mandated to do, becoming one of those African states who have now signed to become full participants of the [African Continental Free Trade Area]. We therefore deposit this instrument with great pride and joy,” President Ramaphosa said.
“This step demonstrates South Africa’s binding and unwavering commitment to the implementation of the AfCFTA, which will remove trading barriers, boost intra-Africa trade and build an integrated and diversified market, with a GDP of approximately 3.3 trillion USD,” a statement from the Presidency read.
President Ramaphosa said the AfCFTA not only opens up a market of 1.2 billion people but also offers great opportunity for the South African economy. “It creates opportunities for all of us as Africans.”
“It opens opportunities for economic development and infrastructure progress for all the other countries on the African continent. We are very pleased that the AU has seen it correct to move the continent in this direct so that all countries can progress economically and in other ways,” the President said.
President Ramaphosa thanked Faki Mahamat for his leadership and all the work that has been done to bring to existence this free trade area.
“As South Africa we will participate with great commitment and enthusiasm,” he said.
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International push to improve food safety
International Food Safety Conference opens with call for greater global cooperation
Greater international cooperation is needed to prevent unsafe food from causing ill health and hampering progress towards sustainable development, world leaders said at today’s opening session of the First International Food Safety Conference, in Addis Ababa, organized by the African Union (AU), the Food and Agriculture Organization of the United Nations (FAO), the World Health Organization (WHO) and the World Trade Organization (WTO).
A follow-up event, the International Forum on Food Safety and Trade, which will focus on interlinkages between food safety and trade, is scheduled to be hosted by WTO in Geneva (23-24 April). The two meetings are expected to galvanize support and lead to actions in the key areas that are strategic for the future of food safety.
Food contaminated with bacteria, viruses, parasites, toxins or chemicals causes more than 600 million people to fall ill and 420 000 to die worldwide every year. Illness linked to unsafe food overloads healthcare systems and damages economies, trade and tourism. The impact of unsafe food costs low- and middle-income economies around $95 billion in lost productivity each year. Because of these threats, food safety must be a paramount goal at every stage of the food chain, from production to harvest, processing, storage, distribution, preparation and consumption, conference participants stressed.
“The partnership between the African Union and the United Nations has been longstanding and strategic,” said African Union Commission chairperson Moussa Faki Mahamat. “This food safety conference is a demonstration of this partnership. Without safe foods, it is not possible to achieve food security,” he said.
“There is no food security without food safety,” agreed FAO Director-General José Graziano da Silva during his remarks. “This conference is a great opportunity for the international community to strengthen political commitments and engage in key actions. Safeguarding our food is a shared responsibility. We must all play our part. We must work together to scale up food safety in national and international political agendas,” he said.
“Food should be a source of nourishment and enjoyment, not a cause of disease or death,” said Dr Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization. “Unsafe food is responsible for hundreds of thousands of deaths every year, but has not received the political attention it deserves. Ensuring people have access to safe food takes sustained investment in stronger regulations, laboratories, surveillance and monitoring. In our globalized world, food safety is everyone’s issue.”
“Food safety is a central element of public health and will be crucial in achieving the 2030 Sustainable Development Goals,” WTO Director-General Roberto Azevedo said. “Trade is an important force to lift people out of poverty… when we reconvene in Geneva in April we will consider these issues in more depth,” he added.
Around 130 countries are participating in the two-day conference, including ministers of agriculture, health, and trade. Leading scientific experts, partner agencies and representatives of consumers, food producers, civil society organizations and the private sector are also taking part.
The aim of the conference is to identify key actions that will ensure the availability of, and access to, safe food now and in the future. This will require a strengthened commitment at the highest political level to scale up food safety in the 2030 Agenda for Sustainable Development.
Changing food systems
Technological advances, digitalization, novel foods and processing methods provide a wealth of opportunities to simultaneously enhance food safety, and improve nutrition, livelihoods and trade. At the same time, climate change and the globalization of food production, coupled with a growing global population and increasing urbanization, pose new challenges to food safety. Food systems are becoming even more complex and interlinked, blurring lines of regulatory responsibility. Solutions to these potential problems require intersectoral and concerted international action.
Strengthened collaboration
A central theme of the conference is that food safety systems need to keep pace with the way food is produced and consumed. This requires a sustained investment and coordinated, multi-sectoral approaches for regulatory legislation, suitable laboratory capacities, and adequate disease surveillance and food monitoring programmes, all of which need to be supported by information technologies, shared information, training and education.
Speech by WTO Director General Roberto Azevêdo
Food safety is a central element of public health and will be crucial in achieving the 2030 Sustainable Development Goals.
So this Conference is a welcome way of highlighting this vital topic.
The WTO is happy to be a part of it. In fact, we will be hosting the second part of this event at our headquarters in Geneva on 23-24 April: the FAO-WHO-WTO Forum on Food Safety and Trade. It will be an opportunity to explore the deeper interlinkages with trade issues.
Trade matters because it helps lift people out of poverty. It helps economies to grow. It helps workers to find better jobs, businesses to find new markets, and consumers to access a wider range of products, with lower prices.
The World Trade Organization underpins global trade – complemented by important regional initiatives like the African Continental Free Trade Area.
But our job isn’t just to boost trade. We must also ensure that trade works together with vital public policy and health imperatives such as food safety.
We need to maintain effective food control systems to ensure that imported food is safe.
Consumers need to be able to trust the food that they import just as they would trust the food that is supplied domestically. Importing food helps to lower prices, particularly for goods that are consumed by the poorest in society – and they need to be confident that their food is safe.
Equally, exporters must know what the food safety standards are and be able to comply with them.
The WTO, and its range of rules and disciplines, helps us to achieve all this. The WTO’s Sanitary and Phytosanitary (SPS) Agreement is a prime example.
Since it entered into force 24 years ago, this Agreement has made a very important contribution. It ensures that food safety requirements are based on science and that they are fit for purpose, thereby protecting public health and at the same time minimizing unnecessary trade costs and barriers. This is in everyone’s interests.
Taking full advantage of the trading system to achieve these ends requires capacity. This was recognized by the FAO, WHO and WTO, together with the OIE and the World Bank, when we came together to establish the Standards and Trade Development Facility (the STDF).
This facility provides a platform for development partners to come together to:
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discuss capacity building needs in this area,
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share experiences and good practice, leverage additional funding,
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and work on coordinated and coherent solutions.
The STDF also provides funding for the development and implementation of innovative projects, benefiting both the public and private sector. The goal is to build capacity in developing countries to implement international sanitary and phytosanitary standards, and to help them gain and maintain market access.
This is important work. And it is particularly important in the context of the new opportunities and challenges that are facing food safety and trade.
When we reconvene in Geneva in April, we will consider some of these issues in more depth, so I’ll be very brief today.
And let me start with digitalization and use of new technologies. They are already having an impact on both food safety and trade.
These technologies make it easier to trace products throughout a supply chain, and traceability is key to ensuring food safety and addressing risks when they arise. Electronic certification can be more reliable and efficient than paper-based systems, therefore reducing costs and facilitating trade.
But the use of such technologies requires investment. So a key focus of the discussion must be on how to bridge the digital divide between countries at different levels of development.
In this context, the WTO’s Trade Facilitation Agreement can play a positive role. It aims at streamlining border processes to help goods move more smoothly and more quickly. Reducing the time needed for goods to cross borders can make all the difference when your exports are perishable products, such as cut flowers or green beans from Kenya and animal products from Ethiopia. And reducing trade costs is important for everyone.
Of course, the safety of imported products also needs to be ensured, and the Agreement recognizes that cooperation among different border agencies plays a fundamental role.
Another key issue is access to information.
Surveys among traders show that information costs are very high. It can take a lot of time and resources to find out exactly what food safety and other requirements their products need to comply with, and what procedures and documentation requirements apply at the border.
Therefore, improving transparency is vital. This is a key part of our work at the WTO. We are working to make it easier for traders and for producers along the value chain to find this essential information.
In this vein, together with ITC and the United Nations Department of Economic and Social Affairs, the WTO has developed a tool, called ePing. It is designed to help small businesses, traders and other stakeholders stay informed about food safety and other requirements. They receive email updates whenever there is a new regulation in a market or on a product that they are interested in.
This innovation has already proved very successful – and so I think this is something that we should seek to build on in future.
Taking a broader perspective, we need to ensure that we use the latest technologies and innovations to support food safety and agriculture in general.
Farmers need to have access to the best available information and technology, and consumers increasingly expect to have access to information about their food.
Regulatory frameworks should support this. So we should look at how farmers, consumers and those engaged in food value chains can benefit from the digital revolution – in the interests of us all.
I detect a real desire to deepen the debate on these issues. We must ensure that we are fully ready to meet the challenges and seize the opportunities that we see on the horizon.
So I wish you all a successful meeting and fruitful exchanges over the coming days.
And I look forward to welcoming all of you to the WTO in April to continue the conversation.
Thank you.
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Key decisions of the 32nd Ordinary Session of the Assembly of the African Union
Highlighted decisions adopted in Addis Ababa, January 2019
Decision on the African Continental Free Trade Area (AfCFTA)
Assembly:
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Endorsed the recommendations of African Union Ministers of Trade on: Template on Tariff Liberalization which will be used by Member States in preparing the AfCFTA Schedules of Tariff Concessions; and the designation of Sensitive Products and Exclusion List on the basis of the following criteria: food security, national security, fiscal revenue, livelihood and industrialization.
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Decided that Member States wishing to enter into partnerships with third parties should inform the Assembly with assurance that those efforts will not undermine the African Union vision of creating one African market
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Requested the African Union Commission, with the assistance of technical partners, to undertake an assessment of the requirements for the establishment of a future common market including steps to be taken as well as their implications and challenges, for consideration by the African Union Ministers of Trade.
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Requested the African Union Ministers responsible for trade to: submit the Schedules of Tariff Concessions, and Schedules of Specific Commitments on Trade in Services in line with agreed modalities to the July 2019 and January 2020 Sessions of the Assembly, respectively, for adoption; and conclude the negotiations on Investment, Competition Policy and Intellectual Property Rights, and submit the draft legal texts to the January 2021 Session of the Assembly for adoption through the Specialised Technical Committee on Justice and Legal Affairs.
On the institutional reform of the African Union
Assembly:
- Delegated to the Executive Council its authority to consider and approve the Statute and Rules of Procedure of the Governance Structures of the African Union Development Agency, AUDA/NEPAD, during its 35th Ordinary Session of the Executive Council in Niamey, Niger, June/July 2019
On Post-2020 Partnership with the European Union
Assembly:
- Recalled the decision which stressed the need to ensure that Africa speaks with one voice in the various platforms of partnership with the EU, and requested the Commission to ensure cohesion between the Post-Cotonou Agreement and the Post-2020 Continent-to-Continent Partnership, so that continental priorities, as articulated in Agenda 2063 and other related instruments, are consistently reflected in both tracks.
On the state of governance in Africa
Assembly:
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Welcomed the Africa Governance Report developed by the APRM and urged the Member States to consider the recommendations contained in the Report with a view to enhancing good governance and sharing best practices at both country and continental levels
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Urged the Member States to develop national governance reports as a self-assessment tool for promoting good governance in line with the recommendations of the Report
On the Report of the 28th Summit of the Forum of the African Peer Review Mechanism
Assembly:
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Decided that the African peer Review Mechanism (APRM) shall be an Organ of the Africa Union in line with Article 5(2) of the Constitutive Act;
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Welcomed the peer review Reports of Cote d’Ivoire and Mozambique and encouraged both countries to take into account observations of Member States during the presentation of the review reports to the APR Forum as well as the recommendations contained in reports in the development and implementation of their National Programme of Action, as a necessary step in furthering the goal of the APRM
On the Katowice Climate Conference (UNFCCC COP 24) and Africa’s engagements at the Global Climate Change Conference at COP25/CMP15
Assembly:
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Urged parties to the Paris Agreement to recognize the special circumstances and needs of African countries, in line with the relevant and previous decisions adopted by the Conference of the Parties, and called upon the incoming presidency of the Conference of the Parties to continue with the consultations, with a view to reaching a decision in that regard by the twenty-fifth session of the Conference of the Parties, and requested the AGN to continue pursuing the issue
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Urged developed countries to continue to scale up mobilized climate finance towards achieving the 2020 finance goal through private and public funds to deliver on the US$100 billion annually, building on the needs of developing countries and enhancing the country ownership of developing countries, and further enhance the provisions of predictable and sustainable finance building on the floor of the 100 billion USD annually
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Encouraged African countries to ratify the Kigali Amendment of the Montreal protocol as a vehicle to strengthen efforts to tackle climate change.
On Financing the Union
Assembly,
Mandated the Commission to do the following:
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Provide technical support to Member States in accelerating the implementation of the 0.2% levy;
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Facilitate the involvement of the Committee of Fifteen Finance Ministers (F15) in the consideration of the annual audit report of the Union;
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Facilitate a retreat of the F15 to assess mechanisms on its working methods as well as consider modalities on how it can accelerate the implementation of decisions on Financing of the Union;
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Strengthen the Secretariat of the Financing of the Union with a view of providing adequate support to the F15 and Member States.
The Assembly also adopted a number of declarations, resolutions and one motion. Details of these as well as the full decisions will be available soon.
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Report on AU Institutional Reform: Closed session at the 32nd African Union Summit
Remarks by President Paul Kagame, 10 February 2019
I begin by thanking you all, once again, for taking part in the Extraordinary Summit last November dedicated to advancing the institutional reform. In carrying out this assignment, it is impossible to overstate the value of the continuous advice and counsel that we have received from you. Allow me to use this moment to express my great appreciation for your support.
The consensus that was reached on key decisions marked an important turning point. There is still work to do, but we are on schedule and the steepest hills on this journey lie behind us. What is critical at this juncture is to sustain this good momentum and remain much more and better focused on results.
Excellencies, there are essentially only two matters requiring our attention at this Summit.
The first is the new scale of assessment for the regular budget and the Peace Fund. The Executive Council has prepared a draft decision for our consideration.
As you are aware, the decisions we take are based on a number of guiding principles, including the ability to pay, solidarity, equitable burden-sharing, and avoiding risk concentration. I am also happy to report that 50 countries have made their payments to the Peace Fund, which now stands at 89 million dollars.
The second item is the approval of the Panel of Eminent Africans, composed of one member from each Region. This group has the critical responsibility of overseeing the pre-selection of candidates for the senior leadership of the Commission. I call upon the Regions to conclude their consultations on this matter.
The consultative process on the reform of the African Union Organs continues. Several Organs have already provided detailed recommendations to the Commission, for which we are appreciative. These submissions will be independently analysed and reviewed by a joint retreat of the PRC and the Organs, before initial recommendations are presented to the Executive Council at its next session.
The scope of Africa’s political ambition requires an institution endowed with all the technical competence to deliver the results we want. The strength of our institutional reform is the constant search for solutions through dialogue and consensus.
Excellencies, I thank you for your attention, and most especially for your continued trust and support.
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Kagame makes case for African digital identity
President Paul Kagame has backed the on-going efforts by the African Union to further accelerate the adoption of digital identities, saying this would shore up citizen inclusion in the global economy.
He was speaking on Monday, 11 February at a High-Level Lunch on Digital Transformation in Africa on the sidelines of the 32nd Ordinary Session of the AU in Addis Ababa, Ethiopia.
Kagame said that digital identity is the start of a long and valuable chain of capabilities that make citizens better able to participate productively in the regional and global economy. He, however, noted that digital systems can only function well when they are trusted.
The outgoing Chairperson of the African Union has previously emphasised that much as the future of the global economy is digital, Africa critically needed different kinds of physical infrastructure if it was going to fully embark on the digitalisation journey.
Earlier, President Kagame had chaired the Smart Africa board meeting, where he updated the participants that the Smart Africa Alliance had grown to over 24 member states with a total market of over 600 million people.
The alliance is a framework for implementation, monitoring and evaluation of the SMART Africa Manifesto, designed to make it actionable.
Currently, the Alliance is a partnership bringing together all African countries adhering to the Manifesto represented by the AU, the ITU, World Bank, AfDB, ECA, the GSMA, ICANN and the Private Sector.
Remarks by President Kagame at the High-Level Lunch on Digital Transformation in Africa
Yesterday at the [32nd Ordinary Session of the African Union] opening ceremony, I mentioned that “the future of the global economy is digital”. I should have added: “and government”.
Still, it is not digital alone. As the President of Egypt, the Chairperson of the African Union, mentioned to us yesterday, different kinds of physical infrastructure are going to be very important in support of the digitalisation of our continent.
In this case, e-government is a powerful tool for improving both the quality and accessibility of government services. In Rwanda, we have used the Irembo platform to make many public records available online, such as land titles, birth certificates, visas, driver’s licenses, national ID, and even mountain gorilla trekking permits.
Digital identity is the start of a long and valuable chain of capabilities that make citizens better able to participate productively in the regional and global economy. But digital systems can only function well when they are trusted. Information must be protected from unauthorised access. It should be clear who owns the data that people generate and how it will be used.
Different digital platforms must also be able to communicate with each other seamlessly. Otherwise, we are merely rebuilding the same fragmentation in the cloud, that we have been working to transcend here on the ground in the African Union. That is why working together to design common standards and guidelines, that serve Africa’s unique needs, is as important for e-government, as it is for e-commerce.
I would like to recall the value of the Smart Africa Alliance for implementing technology-based initiatives on a regional basis.
Smart Africa, working together with the World Bank (I would like to say that the Vice President of the World Bank is in our midst – thank you for being here), the Economic Commission for Africa, and of course the African Union – led by the Commissioner for Infrastructure and Energy – along with the Ministers of ICT of our continent. All working together, the momentum created by the digital identity decision taken at this Summit will be seized.
We are fortunate to be joined by the President of Estonia. Her country is among the most advanced in terms of e-government and digitalisation, and this was the centrepiece of Estonia’s chairmanship of the European Union in 2017. We congratulate you, Madame President, and your country.
President Kaljulaid is also a good friend of Africa, and there is a clear willingness by Estonia to collaborate productively with our continent, especially in digitalisation.
Excellencies, Ladies and Gentlemen, I wish to thank you all for being with us here today, and for the ideas that you will be able to share with us. Thank you for your kind attention, and I look forward to our lunch discussion.
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tralac’s Daily News Selection
32nd Ordinary Session of the African Union: opening address by President Kagame
The future of the global economy is digital. At this Summit, we will consider guidelines for a common African approach to digital identity management. The purpose of this initiative is to increase economic inclusivity and trust for our citizens, particularly in the context of growing regional integration. This is only the first step of what must be a consistent and comprehensive effort by the African Union, and all Member States, to prepare for the technologies that are remaking global commerce, especially artificial intelligence, robotics, data mining, and cyber security. We should not fear these changes or attempt to delay them. That would be futile and counter-productive. They are the future engines of productivity and prosperity for our youth. But in order to secure our place, we must face the world as a unified bloc and work closely with other regional organisations and the private sector to ensure that the interests and the rights of Africans in their own data are guaranteed. [Related: Kagame hands over AU chair to Sisi; AU summit opens with focus on peace and migration]
Note: Tomorrow’s tralac daily news selection will carry a comprehensive set of postings from the summit, which closes today
Africa Tech Summit (13-15 February, Kigali): preview
Nigerian committee examining AfCFTA issues final report – Minister Geoffrey Onyeama (UrduPoint)
The Nigerian special committee, set up to examine the consequences of the country’s joining the African Continental Free Trade Area, has just submitted its final report to the authorities, Nigerian Foreign Minister Geoffrey Onyeama told Sputnik on Monday, adding that if the committee’s report was favorable, Nigeria would ratify the deal “very soon.” The Nigerian minister recalled that the agreement required ratification by 23 countries before entering into force, adding that 21 states have ratified it so far. “We would like to accede [the AfCFTA] before the act comes into force, and it’s almost there,” Onyema specified.
Women in informal cross-border trade in Malawi, Tanzania and Zambia (UNCTAD)
Trade flows in these three countries follow the international pattern of commodity-dependent regions. In all three countries, exports are dominated by primary products. In particular: Unmanufactured tobacco is the top export commodity of Malawi, and accounted for 43% of Malawi’s total exports in 2016; Gold is the top export commodity of the United Republic of Tanzania and represented 33% of total Tanzanian exports in 2016; Copper is the main export commodity of Zambia, accounting for 68% of Zambian exports in 2016. In both Zambia and Malawi exports are highly concentrated, with both countries relying on a single commodity as the main source of their exports revenue. Export concentration is lower in the United Republic of Tanzania. Trade flows among the three countries account for relatively small shares of their total exports. This is not surprising given their small economies and trade capacity. Malawi, as the smallest economy among the three, has a relatively larger share of its exports with the United Republic of Tanzania and Zambia (see annex 1, table A1.1). Table 1 presents the main export products in the bilateral trade among these countries. Extract (pdf):
This section examines the measures that specifically apply to small-scale trade through simplified trade regimes (STRs) and other trade-facilitating mechanisms. These provisions have been developed as a result of the complexity of the official trade regime in the three countries under consideration. Table 8 compares the requirements for trade and the applied national systems of the three countries. The difficulty, complexity, and incompatibility of these national systems help explain why small-scale traders opt for unofficial trade. Linked policy recommendation #4: Better tailoring of simplified trade regimes to the needs of small-scale traders and promoting the uptake of those regimes. The low uptake of STRs is largely explained by the requirements and costs associated with them, which remain cumbersome even though they facilitate certain trade provisions. To better tailor STRs to the needs of small-scale traders, in turn strengthening the incentives to use formal routes, policymakers should consider (i) providing faster and streamlined clearance times; (ii) issuing certificates and permits at the border; (iii) expanding (and regularly updating) the list of eligible goods to include products that are most commonly traded, and taking into account seasonality factors; (iv) lifting excise duties for STR transactions involving goods that are regularly traded by small-scale traders such as soft drinks; and (v) increasing the threshold for STR transactions to US$2,000, as has already been done in some countries, which would encourage small-scale traders who deal with medium sized consignments to enter the scheme.
The African Model: Asia’s path may not work, but there is an alternative (African Arguments)
All this suggests that the Asian path may be both unfeasible and undesirable for Africa. But there is an alternative. It may be impossible to reduce poverty without industrialisation, but industrialisation does not necessarily need to focus on exports. Africa’s “population boom” does not just create challenges but also opportunities through a process of domestic market integration. Growing domestic markets enhance consumer demand, while rapid urbanisation increases labour productivity. The greater population density of cities allows for a higher degree of resource sharing, access to public goods such as a health and education, divisions of labour, and faster spill-overs of knowledge. A stronger focus on domestic markets also tends to strengthen the linkages between a country’s agricultural, industrial and service sectors without having one sector alone (i.e. manufacturing) pulling the economy to higher GDP levels. This suggests that rather than producing for international markets, most of Africa’s economic growth in the coming decades may be better realised by catering to and connecting growing domestic markets. For policy-makers, the path chosen and the focus for industrialisation raises many questions. For example, which road should be built or improved next; one that connects urban hubs or one to the coast? Should domestic firms be granted start-up subsidies, and if so, which ones? Under what conditions should African countries allow foreign investors to operate? [The authors: Marlous van Waijenburg, Ewout Frankema]
Tanzania plans to ban fish imports from China (The East African)
The government has announced a plan to review the Fisheries Act and regulations governing the sector to pave the way for a total ban on fish imports, especially from China and Vietnam. Luhaga Mpina, the Minister for Livestock and Fisheries, said that regulations will be put in place to safeguard local fisheries. “We are looking to protect Tanzania’s marine resources through proper arrangements for commercial fishing, to make it beneficial to those in the business,” Mr Mpina said. Tanzania produces about 336,821 tonnes of fish per year, against a demand of 731,000 tonnes. The country imports about 24,000 tonnes of fish per month worth Tsh56 billion ($25m), mostly from China, Vietnam and other states around the Indian Ocean. [China garlic hits 50% of Kenya’s market supply]
Kenya says Tanzania, Uganda are distorting maize market (The East African)
Kenyan farmers have raised the alarm on the saturation of the cereals market with maize from Uganda and Tanzania, causing a glut and denying them income. A bumper harvest across the region last year caused an oversupply and a subsequent fall in prices, resulting in farmers struggling to get market access and leaving governments unable to buy all the maize for their strategic reserves. A presidential task force formed last year has released a report reiterating the farmers’ concerns, accusing the two East African states of distorting the Kenyan market by over-exporting maize to the country. The report, dated January 28, 2019, cites an imbalance of trade between Kenya and the other EAC states, which has seen the country import more maize than required in spite of a bumper harvest in the North Rift region. The report, which will be presented to President Uhuru Kenyatta, comes at a time when maize farmers are embroiled in a tussle with the government over prices that they say are too low, and the failure by the National Cereals and Produce Board to buy all their produce.
US investors demand $96m for loss of Rwanda contracts (The East African)
A group of US investors have taken Rwanda to an international court, seeking compensation of $95m after the government seized their mining concessions, effectively denying them operating licences. The suit before the International Centre for Settlement of Investment Disputes is a setback to Rwanda’s mining sector, which has lately gone through a series of reforms aimed at attracting large-scale investors and increasing revenues from mineral exports. The US investors trading as Bayview Group and Natural Resources Development, filed a lawsuit at the ICSID in 2017under case file No. ARB/18/21, but it was not until mid-2018 that a procedure agenda was developed, documents show. Three arbitrators — two British nationals, Barbara Dohman and Nicholas Phillips, and the American Truman Bidwell — were appointed for the hearing. The ICSID has set a procedure agenda for the tribunal hearing to begin in March and run till December 2020.
UAE eyes Kenya’s maritime sector (Business Daily)
Dubai is set to acquire the freight forwarding business and assets of a Kenyan logistics firm in a move that cements the country’s foray into the local shipping sector. The United Arab Emirates, through its newly incorporated local entity ISS Global Forwarding Limited, is acquiring the freight forwarding division of Dodwell & Co. (East Africa) Limited. The deal, which has been approved by the regulator, Competition Authority of Kenya , could see the UAE government step up competition in the local logistics sector dominated by players including Danish conglomerate Maersk and French firm Bolloré.
Egypt’s Ministry of Transport studies establishing railway line extending to Sudan (Egypt Today)
“The Ministry of Transportation studied with several consultants establishing a railway line of 600 km in length linking Egypt to Sudan to increase trade movement between the two countries,” Minister of Transportation Hisham Arafat stated. This came during the minister’s tour in the high dam in Aswan with his Sudanese counterpart Hatim Al Sir Ali on Monday, Feb. 11. “This decision came upon President Abdel Fatah al-Sisi’s directions,” Arafat clarified. The High Dam station is expected to become an important logistic area, as it could greatly contribute to strengthening trade exchange and cargo transport between Egypt and Sudan, Arafat said. The minister also revealed that the railway sector will not be privatized, rather shared with the private sector.
Potential international employment effects of a hard Brexit (IWH)
A disorderly withdrawal of the UK from the EU would impact many of the world’s economies. As a recent study by the Halle Institute for Economic Research based on data for 43 countries shows, a total of more than 600,000 jobs could suffer the consequences of a hard Brexit. In absolute numbers Germany would be hit the hardest, with more than 100,000 jobs affected, followed by China (just under 60,000) and France (around 50,000) as well as Poland and Italy (around 46,000 jobs each). The shortage of skilled labour in many developed economies suggests that companies may try to keep their staff by, for example, reducing working hours or opening up new markets. IWH economists gave a detailed breakdown of (a) which industries would be affected in (b) which countries and (c) what consequences this would have for the respective labour markets. All calculations are based on the assumption that demand for EU goods and services in the UK will fall by a quarter after a hard Brexit, without British demand for goods from other regions increasing. This is due to higher prices, since imports from the remaining EU countries would become more expensive because of new tariffs.
Today’s Quick Links: Ghana: Parliamentary select committee on roads and transport visits Tema port expansion project Record EUR 3.3bn EIB engagement across Africa supports private sector, clean energy, transport and water investment World Bank’s IFC to grow Mena investments in 2019 Preparation of Infrastructure Financing Trends for Africa 2018: AfDB EOI |
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32nd African Union Heads of State and Government Summit kicks off
The supreme organ of the African Union (AU), the Assembly, which comprises Heads of State and Government of all the 55 African countries, began its 32nd Ordinary Session on 10 February 2019 in Addis Ababa.
The Assembly meeting is the culmination of the Union’s statutory meetings and was preceded by the meetings of the Executive Council and the Permanent Representatives Committee. Among the responsibilities of the Assembly are to determine the AU’s policies, establish its priorities, adopt its annual programme and monitor the implementation of its policies and decisions.
In this regard, the Heads of State and Government received several reports including a report on the Outcome of the Leadership In Health Financing Funds High Level Meeting to be presented by President Paul Kagame of Rwanda; report on the status of the African Continental Free Trade Area (AfCFTA) by President Mamadou Issoufou of Niger; as well as a report on progress achieved with regard to Agenda 2063 from President Alassane Dramane Ouattara of Cote D’ivoire.
The Chairperson of the African Union Commission Mr. Moussa Faki Mahamat presented reports on the Implementation of the Institutional Reform of the AU and the Annual Report on the activities of the Union and its organs. Other reports presented during the Assembly meeting were to gauge the progress made in the implementation of flagship projects of Africa’s Agenda 2063.
While making his opening remarks, President Kagame welcomed to the Assembly, the new leaders of the Democratic Republic of Congo H.E. Felix Tshisekedi, and of Madagascar, H.E. Andry Rajoelina. President Kagame commended Guinea-Bissau, Botswana, and Zambia for signing the instrument for the African Continental Free Trade Area (AfCFTA) during this Summit, and encouraged those signatories who have not yet ratified to do so, at the earliest opportunity.
Regarding the efforts made towards sustainable financing of the Union, President Kagame remarked that the relaunched Peace Fund now stands at $89 million dollars, with 50 Member States contributing. “This demonstrates the force of our collective resolve and ability,” he commented.
The Summit marked the end of Rwanda’s chairpersonship of the Union and President Kagame handed over to President Abdul Fattah Al-Sisi of Egypt during the opening ceremony.
President Abdul Fattah Al-Sisi called for the creation of more job opportunities, and encouraged investments. The Chairperson of the African Union emphasized the need to resolve the ongoing challenges in Africa, particularly terrorism and extremism.
On his part, while speaking at the opening ceremony, AUC Chairperson Mr. Moussa Faki Mahamat noted that the Commission is excited to build on the continental priorities under Egypt's leadership.
The Chairperson noted progress in democratic practices across the continent. He stated that in all elections in Africa, the Commission has endeavoured to provide the necessary support and to ensure the best possible accompaniment to Member States engaged in often difficult electoral processes.
The AUC Chairperson expressed his satisfaction with the recent Peace Agreement and peace-building efforts between the Central African Republic’s Government and armed groups under the umbrella of the African Union.
Talking about the institutional reform of the AU, the Chairperson of the Commission noted steady progress towards financial autonomy and accountability within the Union.”Reform is irreversible,” he said.
The Assembly was addressed by the UN Secretary General António Guterres who remarked that the AU and UN are working together successfully across the continent, with Africa firmly in the lead, and there was a need to do more to strengthen the partnership.
Mr. Guterres further stated that “Africa hosts nearly a third of the world’s refugees and internally displaced persons. Despite the continent’s own social, economic and security challenges, Africa’s governments and people have kept borders, doors and hearts open to millions in need”.
Other leaders to address the Assembly included by Mr. Ahmed Aboul Gheit, Secretary General of the League of Arab States and the President of the State of Palestine and the Palestinian National Authority, Mr. Mahmoud Abbas. Invited guests who addressed the meeting were Dr. Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization, Mr Bill Gates, Co-Chair of the Bill and Melinda Gates Foundation, and Mr. Gianni Infantino, FIFA President.
The results of the election for the Bureau of the Assembly for 2019 were announced as follows:
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AU Chairperson: Abdul Fattah Al-Sisi, President of the Arab Republic of Egypt;
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1st Vice Chairperson: Cyril Ramaphosa, President of the Republic of South Africa;
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2nd Vice Chairperson: Félix Tshisekedi, President of the Democratic Republic of the Congo;
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3rd Vice Chairperson: Mahamadou Issoufou, President of the Republic of the Niger;
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4th Vice Chairperson: Paul Kagame, President of the Republic of Rwanda (Rapporteur).
The Chairperson of the African Union for 2020 will be H.E. Cyril Ramaphosa, President of the Republic of South Africa.
The Summit was held under the 2019 theme; “The Year of Refugees, Returnees and Internally Displaced Persons: Towards Durable Solutions to Forced displacement in Africa”.
Address by President Kagame at Opening of 32nd Ordinary Session of the African Union
It is my honour to welcome you to the 32nd Ordinary Summit of the Assembly of the African Union. We warmly welcome to the Assembly the new leaders of the Democratic Republic of Congo, His Excellency Félix Tshisekedi, and of Madagascar, His Excellency Andry Rajoelina. We congratulate you and the peoples of both your countries for these important transitions.
Excellencies, I would like to take this moment to record my debt of gratitude to you for entrusting me with the privilege of leading our organisation during this eventful year.
Our objective was to continue building a stronger and more capable African Union that is able to deliver on the pillars of Agenda 2063 and better represent Africa’s interests on the global stage. The steps forward that were achieved reflect the long-standing commitment and aspirations of Africa’s leaders and citizens.
The Continental Free Trade Area was signed and now, less than one year later, it stands only weeks away from entry into force, thanks to the accelerating pace of ratification.
We commend Guinea-Bissau, Botswana, and Zambia for signing the instrument during this Summit, and encourage those signatories who have not yet ratified to do so at the earliest opportunity.
Last year, we strengthened our partnerships with other regions, both in substance and tone, and that trend will continue.
The relaunched Peace Fund now stands at $89 million, with 50 Member States contributing. This demonstrates the force of our collective resolve and ability. We will continue to work with the United Nations towards a sustainable mechanism for funding African-led peace support operations. I wish on this point, Mr Secretary-General, to thank you for bringing the United Nations and the African Union into strong partnership.
We commend the recent peace agreement reached among the parties in the Central African Republic, and thank the Commission and the Member States involved in supporting this process. This accord must be implemented and respected.
The agenda for this Summit reflects the capacity of our Union to address an increasingly complex range of challenges and priorities.
We have the specifications for the African passport, which generated so much excitement among our citizens when it was first presented more than two years ago. This is a step forward on the path to full implementation of the Protocol on the Free Movement of Persons, which was also adopted last year.
Yesterday the African Union convened a ground-breaking meeting with our key partners in the field of public health. The current global context requires us to increase domestic funding for the health programmes that have made such a tremendous difference in the lives of our people over the past two decades. I thank the many Heads of State and Government who contributed to the Declaration on this topic, which is to be considered by the Assembly.
The future of the global economy is digital. At this Summit, we will consider guidelines for a common African approach to digital identity management. The purpose of this initiative is to increase economic inclusivity and trust for our citizens, particularly in the context of growing regional integration.
This is only the first step of what must be a consistent and comprehensive effort by the African Union, and all Member States, to prepare for the technologies that are remaking global commerce, especially artificial intelligence, robotics, data mining, and cyber security.
We should not fear these changes or attempt to delay them. That would be futile and counter-productive. They are the future engines of productivity and prosperity for our youth.
But in order to secure our place, we must face the world as a unified bloc and work closely with other regional organisations and the private sector to ensure that the interests and the rights of Africans in their own data are guaranteed.
This urgent task is yet another reason why it was necessary to strengthen the African Union’s capabilities. To fulfil our political objectives, we require an organisation that is agile, healthy, and effective.
What remains is to pass the baton to the next Chairperson of the Union, none other than my friend and brother, His Excellency Abdul Fattah Al-Sisi, President of the Arab Republic of Egypt. With our full and unqualified support, there is no doubt that he will take our Union forward decisively, to new and greater heights.
Excellencies, I would be remiss if I did not particularly single out the comfort, joy, and support that I got from the Chairperson of the African Union Commission and the Commissioners working together as a team. They are world-class and did everything we needed of them.
There is another team, which supported the process of reforms. Let me say, Excellencies, in Africa, we have high-quality people for any service you want, from any part of our continent. All we need to do is tap into that talent and move forward with Africa’s agenda.
I thank you once again, Heads of State and leaders in different capacities, and look forward to even more vibrant progress with the new Chairperson.
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tralac’s Gerhard Erasmus on the AfCFTA’s institutions: Could the Secretariat hold the key to implementation?
This working paper discusses what institutions the AfCFTA will have and what they will be able to do once the Agreement enters into force. How will these institutions (the AfCFTA Secretariat, in particular) contribute to the fulfilment of the ambitious objective of boosting trade in goods and services among the 55 Member States of the African Union? Will they ensure that intra-African integration will happen in a rules-based manner? The answers to these questions are important. Institutions will be vital for what happens once implementation of the AfCFTA Protocols begins. The institutional design of the AfCFTA contains indications of a compromise between creating a structure within the existing AU system and a proper trade organisation. The former feature might be more dominant but ultimately the State Parties will be individually responsible for implementing the obligations agreed to. If the AfCFTA structures are not endowed with monitoring and oversight powers, there will be delays and incoherent results. And if they cannot provide technical assistance and practical guidance, the promise of the AfCFTA will remain beyond the reach of many.
AU Trade Observatory Project: AUC, EUC, ITC, and RECs to sign letter of intent, tomorrow in Addis, for its implementation
Trade information systems in Africa have traditionally been oriented towards the exterior; mainly to Europe, the Americas, the Middle East and Asia. In addition, an important bulk of intra-African trade has gone largely unrecorded, partly due to the predominance of informal trade. An increasing number of African countries are gradually establishing national trade information portals and systems and some RECs are progressively moving in the same direction. However, several challenges remain, including: outdated information; uniformity of data; limited expertise in data and information collection, processing and analysis; absence of data and information on non-tariff measures and, most importantly, on informal trade and limited collaboration between various government agencies as well as between Member States and RECs. The African Union Trade Observatory will perform the following functions: Collect trade and trade-related qualitative and quantitative data and information from Member States and other sources; Analyse trade and trade-related data and information, focusing on emerging issues such as regional value chains and e-commerce; Establish a data base for African trade that is used to publish and disseminate information on intra-African trade; Monitor and evaluate the implementation process and impact of the AfCFTA and the BIAT; Provide relevant and detailed trade and trade-related information for the private sector.
Ahead of the AU Summit (starting Sunday):
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Africa making encouraging progress in the ratification of the AfCFTA, says AUC Chairperson. “At the current pace of ratification, we can anticipate the entry into force of the agreement in the coming weeks. I hope that the six countries that have not yet signed this instrument will do so in the shortest possible time and that those who have already taken this step will quickly conclude the ratification procedures”, Mr Faki Mahamat said, as he addressed the opening ceremony of the AU’s executive meeting in Addis Ababa. But he also noted, as important, the need to be vigilant in ensuring that international commitments made by some Member States with third parties do not contradict the provisions of the Free Trade Area. The attainment of the objectives of the Free Trade Area also implies the need to quicken the ratification of the Single Air Transport Market and the Protocol on the Free Movement of Persons, and the African passport, as part of the integration process. The Chairperson added that the establishment of the financial institutions of the Union namely the Central Bank, the investment bank and the African Monetary Fund, must be accelerated. [ pdf Download statement (274 KB) ]
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34th Ordinary Session of the Executive Council: pdf statement by Vera Songwe (432 KB) . “For a continent desperate for growth, we cannot afford to marginalize a considerable share of our population. If we are to put the numbers into perspective, 22 million refugees represent twice the population of Tunisia, it is close to the population of Ivory Coast. The GDP of Tunisia today is about $40bn, twice that is $80bn, the GDP of Ivory Coast is $40bn. Or if the populations could be as productive as some of our most productive societies like Mauritius, whose GDP is $12bn with a population of slightly over 1.2 million people, this means with only a third of our refugee and IDP populations we could add another $42bn to Africa’s GDP. We cannot afford to let the $80bn of Africa’s economy go to waste in camps. The benefits of the AfCFTA must benefit those people too. They must have an identity and they must be able to engage.”
EU-SADC EPA Joint Council (19 February, Cape Town): provisional agenda (pdf)
Institutional aspects of the EPA between the EU and SADC: (i) Rules of Procedure for the Joint Council and the Trade and Development Committee; (ii) Rules of procedure for Dispute Settlement and Code of Conduct for Arbitrators and Mediators; (iii) List of arbitrators under the Dispute Settlement. State-of-Play of trade relations under EU-SADC Economic Partnership Agreement. SACU safeguard duty on frozen bone-in chicken cuts imported from the EU.
South Africa: FDI, Doing Business highlights from President Ramaphosa’s State of the Nation Address (The Presidency)
As part of our ongoing work to remove constraints to greater investment, we have established a team from the Presidency, Invest SA, National Treasury and the Department of Planning, Monitoring and Evaluation that will address the policy, legal, regulatory and administrative barriers that frustrate investors. This is an important aspect of our work to improve the ease of doing business in South Africa, which is essential to attracting investment. This team will report progress to Cabinet on a monthly basis. The World Bank’s annual Doing Business Report currently ranks South Africa 82 out of 190 countries tracked. We have set ourselves the target of being among the top 50 global performers within the next 3 years.
To stimulate growth in the economy, to build more businesses and employ more people, we need to find new and larger markets for our goods and services. We will therefore be focusing greater attention on expanding exports. In line with Jobs Summit commitments, we will focus on the export of manufactured goods and trade in services such as business process outsourcing and the remote delivery of medical services. We will also be looking at establishing special economic zones that are dedicated to producing specific types of products, such as clothing and textiles, for example. To improve the competitiveness of our exports, we will complete the studies that have begun on reducing the costs of electricity, trade, communications, transport and other costs. We will focus on raising the sophistication of our exports. [Selected associated responses: BUSA, COSATU, Minerals Council]
Maputo Corridor Logistics Initiative closes its doors (FTW)
Following its 14th AGM in Mbombela this week, the Maputo Corridor Logistics Initiative has closed its doors. Established in 2004 to make the Maputo Corridor the first choice for the region’s stakeholders, it has worked closely with public and private sector stakeholders to address non-tariff and technical barriers to trade on the corridor. Capacity and funding issues have however forced the organisation to close shop. “It is extremely difficult to quantify the impact of the MCLI’s work over the years, but it is clear that without the organisation’s ability to harness and exploit every available platform for highlighting the benefits of the Maputo Corridor and its growth in capacity and throughput, the Maputo Corridor would not have achieved the status it has as one of Africa’s leading transport corridors,” said MCLI CEO Barbara Mommen. “The Board’s decision to cease operations at the end of February 2019 was taken after two years of unrelenting pressure and a thorough examination of the different options confronting us.”
Nigeria, Gulf of Guinea safe hub for international trade (ThisDay)
The Director General of the Nigerian Maritime Administration and Safety Agency, Dr Dakuku Peterside has stated that efforts by the federal government to check piracy will provide the necessary assurance to foreign investors that Nigeria and the Gulf of Guinea, to a large extent, is a safe hub for international trade. Speaking shortly after the unveiling of the Nigerian Maritime Forecast 2019-2020 in Lagos, Peterside opined that the maritime sector has the potential of increasing greatly its contribution to Nigeria’s GDP in no distant future, as the country has the biggest market in Africa. He noted that the country generates about 65-67% of cargo throughput in West Africa, and 65% of all cargo heading for these regions will most likely end up in the Nigerian market. On the regulatory aspect of the 2019 forecast: ”It is expected that the Maritime Offenses Bill (Anti-Piracy) will be passed into law within the margin of the 8th National Assembly to provide a robust and detailed framework to criminalise and punish piracy and unlawful acts in the Nigerian maritime domain as well as give further expression to the relevant provisions of the International Maritime Convention on maritime security to which Nigeria is a party. Other Bills that would impact on the sector are National Transport Commission Bill, Petroleum Industry Governance Bill, National Inland Waterways Authority Amendment Bill, Coastal and Inland Shipping (Cabotage) Amendment/Revised Bill and Ports and Harbour Bill.” [...…Says multilateral cooperation key to vessel safety]
Benin joins ECOWAS regional hydrocarbon programme (Journal du Cameroun)
Benin has agreed to join a regional programme to facilitate the supply of petroleum products in the ECOWAS region, the cabinet said in a statement seen by APA on Thursday.”Due to its geographical position and the security conditions it offers, Benin can become a regional hub for the supply and distribution of petroleum products,” the statement said. To this end the Beninese government intends to make investments, particularly in the context of a public-private partnership, to expand its current storage capacities and develop means of transport, the statement noted.
Regional MoU for the importation and storage of natural gas to be signed next month in Mauritius (GoM)
A regional Memorandum of Understanding pertaining to the importation and storage of natural gas will be signed next month between the countries of the Indian Ocean. This announcement was made yesterday by the Deputy Prime Minister, Minister of Energy and Public Utilities, Mr Ivan Collendavelloo, at the inauguration of a Photovoltaic solar plant in Solitude. The Southern African Development Community, he recalled, is developing a Master Plan for natural gas in the region.
Siddharth Chatterjee (UN Resident Coordinator to Kenya): The Blue Economy as the new frontier for Africa’s growth (Pulse)
In addition to the issues raised above, we expect TICAD 7 to promote Africa’s blue/ocean economy to enhance sustainable use of marine resources, developing port facilities and facilitating marine transport. Furthermore we expect the issue of Africa’s infrastructure and connectivity to be high on the TICAD 7 Agenda as this will unlock the construction and management of quality transport infrastructure, such as ports, maritime corridors, airports, railroads, bridges and trunk roads that are efficient in view of life-cycle cost, reliable, safe, resilient against natural disasters and environmentally friendly, to strengthen connectivity in Africa, utilizing state of the art infrastructure technology.
Today’s Quick Links: Free movement of African citizens: an imperative for Continental Free Trade in Africa AU summit 32: Beyond the hype of Africa’s free trade deal Cotonou successor: EU-Africa relations at the crossroads Buhari assents to Federal Competition and Consumer Protection Act, 2019 Brexit is nine days away for exporters sending ships to Asia |
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Africa making encouraging progress in the ratification of the African Continental Free Trade Area, says AUC Chairperson
Chairperson of the African Union Commission (AUC), H.E. Moussa Faki Mahamat, has described the progress made in the ratification of the African Continental Free Trade Area (AfCFTA) as “particularly encouraging”.
“At the current pace of ratification, we can anticipate the entry into force of the agreement in the coming weeks. I hope that the six countries that have not yet signed this instrument will do so in the shortest possible time and that those who have already taken this step will quickly conclude the ratification procedures,” Mr Faki Mahamat said, as he addressed the opening ceremony of the African Union’s (AU) Executive meeting in Addis Ababa on 7 February 2019. The AfCFTA is one of the AU’s priority projects under Agenda 2063.
The attainment of the objectives of the Free Trade Area also implies the need to quicken the ratification of the Single Air Transport Market and the Protocol on the Free Movement of Persons, and the African passport, as part of the integration process. The Chairperson added that the establishment of the financial institutions of the Union namely the Central Bank, the investment bank and the African Monetary Fund, must be accelerated.
The African Union’s theme of this year is devoted to the issue of refugees, returnees and internally displaced persons. In this regard, Mr Faki Mahamat noted that this illustrates “the renewed commitment of our leaders to find sustainable responses to the prevalent issue of forced displacement”.
Chairperson Faki Mahamat recalled the imperative of ending conflicts and crises, another major pillar of Agenda 2063, and which he termed “the primary cause of forced displacement of persons.” Under the Agenda, Africa has set itself the target of ending conflicts by 2020, a target that the Chairperson of the Commission described as “ambitious, but its realisation is not impossible if there is political will.”
In ensuring that there is progress in achieving the set commitments of Agenda 2063, the Chairperson recognized the need to fully maximize the potential of women and youth and recalled the appointment made last November of a youth envoy, Aya Chabi of Tunisia, as well as the establishment of a youth advisory council.
“An Africa in search of growth cannot afford the luxury of camps of unproductivity, with its kids out of schools and women living in a state of entrapment,” said United Nations Under Secretary General and Executive Secretary of the UN-Economic Commission for Africa (UNECA), Dr. Vera Songwe in her opening remarks to the ministerial meeting.
She noted that “Africa has the second highest burden of displacement, hosting about 37 percent of the world’s 19.6 million refugees and having 39.1 million internally displaced people”.
She urged the Ministers not to overlook the importance of the conventions and frameworks that the African Union has put in place, notably, the Kampala Convention in 2009, and the adoption of the Protocol on Free Movement, Right of Residence and Right of Establishment in January 2018 which, if implemented, can boost regional integration.
Dr Songwe also pointed out that prolonged conflicts are a major contributing factor of the displacements on the continent, resulting from broken institutions, governance and leadership.
H.E. Dr. Richard Sezibera, Chairperson of the Executive Council, in his opening address pointed out the importance of the Executive Council meeting, as the Union is undergoing institutional reforms which will ensure the efficient running of the AU Commission.
“The new scale of assessment for the contribution of both the regular budget and the peace fund are paramount in the quest to self-financing of the Union and continental leadership, hence there is need to ensure its speedy implementation and follow-through,” said Dr. Sezibera.
The opening ceremony of the Executive Council, took place in the presence of the Foreign Affairs Ministers of AU Member States, AU Commissioners, Heads of the Regional Economic Communities (RECs), AUC senior officials and staff, as well as other invited guests.
Over the next two days, they will prepare for the 32nd meeting of the Assembly of the AU, which will be held on 10-11 February 2019. They will also consider and deliberate on the draft agenda, and the draft decisions and declarations that came out of the meeting of the Permanent Representative Committee (PRC) from 15th-16th January 2019.
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AUC calls for a strong public-private collaboration in the mineral resources sector for the attainment of the AfCFTA
The Department of Trade and Industry of the African Union Commission (AUC) participated in the Mining Indaba 2019 from 4-7 February 2018 in Cape Town. The Mining Indaba is the world’s largest mining investment conference and trade show, the world’s third largest mining conference, and Africa’s largest mining event.
The AUC, jointly with the African Minerals Development Centre (AMDC) and African Union Leadership Academy (AULA), and in partnership with Association of Chambers of Mines and other Mining Associations in Africa (ACMMAA), participated and organized side events including the 7th Ministerial Symposium and a Technical Session under the theme “Public Private Collaboration and Responsible Investment in Africa’s Mineral Resources Sector”.
There was also an AUC/AMDC booth in the Exhibition Hall where AUC/AMDC and AULA displayed the works of AUC especially concerning Agenda 2063, Africa Mining Vision, Accelerated Industrial Development for Africa and the African Continental Free Trade Area (AfCFTA).
The African Union Commission’s presence at Mining Indaba has been a priority in recent years, and provides an opportunity to connect with leaders in the Mineral resources sector and provides a platform for a high level public- private dialogue while encouraging continent-wide developmental growth through mineral resources.
Adopted by African Union Heads of States and Governments in 2009, the pdf Africa Mining Vision (1.82 MB) calls for a structural transformation of the minerals sector in Africa through enhanced linkages with the local economy, increased value addition, promotion of local content and empowerment of Artisanal and Small Scale Miners, and a well governed sector to ensure optimization of value among the value chains and to avert illicit financial flows that are depriving Africa of over $100 annually more that Africa receives in ODA.
The Africa Mining Vision serves as a blueprint for a transparent, equitable and optimal exploitation of African mineral resources, including liquid, solid and gas minerals, for a broad-based, socio-economic development of the continent.
Prior to the start of the Mining Indaba 2019, the African Union Commission, together with ACMMAA and AULA, hosted the sixth Annual African Ministerial Symposium on Sunday 3 February as part of the Africa Mining Vision (AMV) Day. As Keynote Speaker, the Commissioner for Trade and Industry of the African Union Commission, H.E. Amb. Albert Muchanga, invited Mining Companies to closely monitor developments in the establishment of the AfCFTA which will be launched in July in Niamey, Niger.
He indicated that it will be a market of 1.27 billion people offering large economies of scale, and with them, enormous opportunities for long-term and large scale investment. According to him, Africa has to meet some key challenges; among others, the challenge of reducing over dependence on mining as is the case now in many African countries. Another key challenge, he said, is to ensure that the people and countries of Africa fully benefit from their natural resources, including mining.
Commissioner Muchanga emphasized that the most critical challenge is environmental sustainability of mining operations as environmental threats always seem so far into the future, humanity has conveniently shifted the burden of securing environmental sustainability to future generations.
He informed the symposium that the African Union has created the AMDC to be transferred to the Republic of Guinea as a Specialized Agency to coordinate implementation of the African Mining Vision. The Commissioner made a decision to have an MoU between AUC and ACMMAA to be signed during the Ministerial Symposium in 2020.
The Commission made this decision while reiterating a need for a strong collaboration between the Public and Private Sector in order to demystify the resource curse paradox and take advantage of the wide market and industrial base that will be provided by the AfCFTA to ensure that mineral resources contribute to social and economic transformation through regional value chains.
The Commissioner reiterated later on 5 February during a Special Session of Mining Indaba, that the Africa Mining Vision is a shared responsibility whose implementation requires the collaboration of many actors, including private sector, civil society, parliaments, funding partners and governments.
He outlined some of the African Union programme activities including the Geological and Mineral Information Systems Strategy (GMIS), the African Minerals Governance Framework (AMGF) and the AMV Private Sector Compact aiming at building transparency, mutual accountability and mutual trust between the public and private sectors vis-a-vis mining.
Before he concluded his keynote speech, the Commissioner underscored the fact that the private sector has the responsibility to come up with investments that generate benefits to shareholders, national governments, communities and workers; among other mining stakeholders. He specified that once a memorandum of understanding is concluded between AUC and ACMMAA, there will be a channel for continuous and genuine dialogue between AUC and the Mining Private Sector.
In her statement, the African Union Leadership Academy (AULA) Manager, Dr. Muna Abdalla pointed out that some of the challenges to manufacturing-led development in the continent include poor governance, non-transparency and lack of enabling environment. She indicated that a Culture of Social Responsibility (CSR) and ethical leadership can help both building of collaboration with stakeholders and boost market value while contributing to the wider societal good as well as improve their reputation and minimize risks.
She concluded by emphasizing the role of leadership in mining sector. “Leadership in mining industry is in the best position to influence CSR strategies and projects and deepening partnership and trust with all stakeholders”, she mentioned.
On the margins of the Mining Indaba 2019, Commissioner Muchanga also engaged with African Ministers responsible for Minerals Resource Development, and Private Sector Leaders including Chief Executives operating in the Minerals Sector and Chambers of Mines.
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tralac’s Daily News Selection
Economic Partnership Agreement between the Eastern Southern Africa (ESA) States and the UK: documentation downloads
pdf Explanatory memorandum (99 KB)
pdf Parliamentary report (209 KB)
African trade policy events (all in Addis):
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Today’s livestream: Promoting factor marketing integration through the AfCFTA – press briefing by Mr Albert Muchanga (Commissioner for Trade and Industry)
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Tomorrow: AUC high level side event Corruption and the illicit exploitation and trade of Africa’s natural resources – the case of fisheries, forestry and wildlife
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Next week (12 February): US-Africa Trade and Investment Forum, hosted by Corporate Council on Africa and US Mission to the AU
UNSC debates global challenge of transnational maritime crime (UN)
Crime on the high seas is becoming increasingly sophisticated, endangering human life on land, the economic growth of entire regions and global safety, the head of the UN anti-crime agency warned the Security Council, underscoring the vital role of international legal treaties in combating the scourge. Yury Fedotov, executive director of the UN Office on Drugs and Crime, told the council that maritime crime involved vessels, cargoes, crews and illicit money flows from many regions. “These crimes pose an immediate danger to people’s lives and safety, they undermine human rights, hinder sustainable development, and as this Council has recognized, they threaten international peace and security,” Mr. Fedotov stressed. He urged member states to ratify and effectively implement the relevant international legal framework to curb maritime crime, stressing the critical role of various UN instruments, including the Convention on the Law of the Sea, the Convention against Transnational Organized Crime and its protocols, the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation.
Food safety in Africa: past endeavors and future directions (GFSP)
More than half of donor funded food safety initiatives in sub-Saharan Africa are focused on overseas markets, with less than half on domestic consumers, a new report from the Global Food Safety Partnership has found. An analysis of more than 500 projects and activities in sub-Saharan Africa since 2010 found most focused on food safety for exports. While exports are crucial for economies, the African continent suffers the world’s worst levels of food safety, causing human capital losses of an estimated $16.7bn a year in Africa. The Partnership called for more investment into programs focusing on public health after finding less than 5% of donor investments addressed specific health risks, such as Salmonella and E.coli, that local consumers face when purchasing from informal food markets. The report was launched ahead of next week’s first International Food Safety Conference in Addis Ababa. A key finding: Current donor investments in food safety in sub-Saharan Africa largely focus on access to formal markets and regional and overseas exports. Among those projects for which a target market was indicated, more than half were directed towards overseas markets and another 16% concern regional exports. Only 5% of projects focused on microbiological hazards for consumers in sub-Saharan Africa. Specific microorganisms (such as Salmonella or E. coli) are rarely targeted for food safety investments. All countries in sub-Saharan Africa had at least one donor-funded food safety project between 2010 and 2017. However, the 518 projects were largely concentrated in 10 countries in East and West Africa and less than 3% addressed the informal markets used by most consumers.
Nigeria develops five new standards for indigenous food products (BrandSpurNg)
In furtherance of the Federal Government’s quest to promote agriculture as the bedrock of the economic diversification agenda, the Standards Organisation of Nigeria has coordinated the drafting of five new standards on indigenous foods. The ongoing development of the Standards also promotes the application of research and technology to boost the production of foods for local consumption and export. Disclosing this view at the first technical committee meeting on food technology standards in 2019 held in Lagos, SON Director General, Osita Aboloma Esq. stated that the development is to further the Nation’s quest to be at the forefront of promoting indigenous production of food.
Tweets by Ethiopia’s Attorney General, @BerhanuTsegaye: The Attorney General is determined to defend Ethiopia’s legal rights related to Teff. What was reported recently on Teff has to do with a dispute between two private companies. Ethiopia has already deployed a law firm to fight the Teff case internationally. The information released about Teff is misleading and not accurate. The dispute was between 2 private partners and the judgement that was passed in the Netherlands has nothing to do with Ethiopia’s right. That said, Ethiopia has just finalized its preparation to defend its right.
Egypt: Trade Ministry holds first meeting to formulate upgraded version of Export Support Programme (MENAFN)
Kenyan trade updates
State to establish one stop office for exporters (KBC)
The government will establish a one stop office for exporters in the next two weeks as it seeks to streamline policies in efforts to boost exports. Industry and Trade Cabinet Secretary Peter Munya says, the new agency will also help SMEs involved in exports get their tax refunds on time and also access external markets. “The Kenya Export Market Development programme documents key promotional events that will guide export market development activities, Developed through a consultative process involving both public and private sector stakeholders”, said CS Munya. The Kenya Export Market Development programme is aimed at consolidating and enlarging Kenya’s traditional export markets: EAC, COMESA, EU and diversifying into new and emerging export markets of Eastern Europe, North America, Asia and the rest of Africa.
Import-export deficit narrows to 11-year low (Business Daily)
The current account deficit, mainly the gap between imports and exports, fell to the lowest level in 11 years due to rising exports and remittances. The Central Bank of Kenya said in its latest weekly bulletin that other factors pushing the deficit down to 4.9% of GDP were an increase in tourism receipts and a decline in food imports. The deficit was previously lowest in 2007 when it hit 3.8% of GDP but has since been above that level as the amount of imports increased and exports rose at a slow pace. Renaldo Desouza, head of research at Nairobi-based investment bank Sterling Capital, said the big change in the current account was not surprising after the more than 30% increase in diaspora remittances and improved earnings from agricultural exports and tourism. “In addition the relative strength of the Kenya shilling in the year reduced import (even when taking into consideration rises in crude prices) and external debt repayment costs,” said Mr Desouza.
China fish imports hit record high of Sh1.7bn (Business Daily)
South Africa: African steel demand boosts ArcelorMittal SA (Business Day)
The group managed to grow the overall volume of steel it sold thanks to demand from the rest of Africa offsetting a 4% drop in SA consumption, CEO Kobus Verster said in the results statement. “SA and key African markets continue to face the threat of steel imports, mainly from China. Although there was a 20%, or 190,000 tons, decrease in imports, 769,000 tons of primary carbon steel were still imported into SA in the year, despite import duties, selective safeguarding and the designation of local steel,” Verster said. “In Africa, steel markets remained positive due to the drive towards infrastructure investments, especially in rail, roads and energy projects, notably in the west and east sub-Saharan regions.”
Why Zimbabwe’s trade deficit matters (Tutwa)
A relatively restrictive stance on trade, combined with Zimbabwe’s geographical isolation, has severely concentrated the country’s trade profile. More than half (51.7%) of Zimbabwe’s $4bn worth of exports in 2018 went to South Africa; with the United Arab Emirates (18%), Mozambique (9,7%), Zambia (1,6%) and goods of Unspecified Origin (14,7%) accounting for more than 40% of Zimbabwe’s remaining share of exports. That’s more than 80% of Zimbabwe’s exports going to just 4 countries. The data on imports is very similar with South Africa accounting for 40.3% of Zimbabwe’s total imports for 2018. However, beyond South Africa, the remaining top five sources of imports account for only 34% of total imports for 2018, compared to 36 percent for 2017. [The author: Heinrich Krogman; Related analysis by Elisha Tshuma: Understanding Zimbabwe’s fuel crisis and its implications for intra-regional trade]
Airlines in all regions, with the exception of Africa, reported an increase in air freight demand in 2018 (IATA)
African carriers’ saw freight demand decrease by 2.2%, in December 2018, compared to the same month in 2017. This was significantly less than the 9.4% decrease the previous month. Capacity increased by 4.9% year-on-year. It’s worth noting that seasonally-adjusted international freight volumes, despite being 7.7% lower than their peak in mid-2017, are still 50% higher than their most recent trough in late-2015. Annual growth in freight demand among Africa carriers in 2018 decreased by 1.3% and capacity grew by 1%. African airlines saw 2018 passenger traffic rise 6.5% compared to 2017 (pdf), which was an increase compared to 6.0% annual growth in 2017. The strong performance took place in spite of the mixed economic backdrop of the continent’s largest economies, Nigeria and South Africa. Capacity rose 4.4%, and load factor jumped 1.4 percentage points to 71.0%.
Today’s Quick Links: Nigeria: Bankers canvass new economic strategies, approval of AfCFTA First big oil and gas discovery made offshore of South Africa Kenya: SA firm pulls out of deal to acquire Nova Academies Mauritius: Blockchain technology and its impact on digital transformation Why stop at plastic bags and straws? The case for a global treaty banning most single-use plastics EU e-waste ‘illegally’ exported to developing countries: Basel Action Network report |
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ESA-UK Economic Partnership Agreement (EPA): Continuing the UK’s trade relationship with the Eastern and Southern African region
The United Kingdom has committed to continue its current trade arrangements with the Eastern and Southern Africa (ESA) States if it leaves the European Union without a deal on 29 March 2019, or at the end of an implementation period.
The ESA-UK Economic Partnership Agreement (EPA) will provide immediate duty-free quota-free access to goods from ESA States into the UK in exchange for more gradual tariff liberalisation from the ESA States.
EPAs are development-focused trade agreements that aim to promote increased trade and investment. They contribute to sustainable growth and poverty reduction in developing countries. The new ESA-UK EPA envisages development support from the UK to ensure that it is effectively implemented, and that the opportunities it offers can be fully realised by the ESA states.
Background
The United Kingdom of Great Britain and Northern Ireland (the UK) participates in a number of international agreements as a result of, or relevant to, its membership of the European Union (EU) and which help underpin the UK’s relationships with third countries and international organisations. The Government is seeking, as far as possible, to continue the effect of its current arrangements as the UK leaves the EU.
In order to transition the trade agreements that the EU has concluded with third countries, the UK has agreed with many third countries that the most appropriate and proportionate form of legal instrument to ensure continuity in the current circumstances is a short form agreement which incorporates by reference the relevant provisions of the underlying EU third country agreement with relatively few necessary modifications; the advantages of this form are set out in the Parliamentary Report.
However, the UK has simply chosen the form that the relevant States agree is the most pragmatic and sensible in the circumstances, taking into account the wishes of partner countries. Accordingly, some agreements have been drafted in long form to reflect these wishes. The UK-ESA EPA is a long form agreement.
The UK’s current trading relationship with the Eastern and Southern Africa States (Madagascar, Mauritius, Seychelles and Zimbabwe) is governed by the Interim Agreement establishing a framework for an Economic Partnership Agreement between the Eastern and Southern Africa States, on the one part, and the European Community and its Member States, on the other part (the ESA-EU EPA). The Agreement establishing an Economic Partnership between the Eastern and Southern Africa States, on the one part, and the United Kingdom of Great Britain and Northern Ireland, on the other part, is based on the ESA-EU EPA.
The Agreement creates an Economic Partnership Agreement between the UK and the ESA countries. It provides duty free and quota free access into the UK for goods originating from ESA countries. It also provides for a gradual reduction of duties in ESA countries for goods originating in the UK. It is intended to provide continuity of the UK’s and the ESA counties’ rights and obligations under the ESA-EU EPA.
The Agreement is intended to take effect when the ESA-EU EPA ceases to apply to and in the UK. It is expected that this date will be at the end of the Implementation Period if the Withdrawal Agreement is ratified or on Exit Day if no agreement between the UK and the EU Withdrawal Agreement is ratified or on Exit Day if no agreement between the UK and the EU is concluded. The purpose of the Agreement is to maintain the effects of the ESA-EU EPA.
Explanation of the Agreement
The existing EPA provides for provisional application, and indeed it is still currently provisionally applied by the EU. Given that the UK is seeking to maintain effects of the existing agreement with Madagascar, Mauritius, Seychelles and Zimbabwe as it leaves the EU, they have retained this provision in the ESA EPA. This provides the UK with the option of a proportionate approach to manage the demands on parliamentary time during this unique period, whilst minimising disruption to businesses and consumers as we leave the EU. Provisional application would allow businesses that use this agreement in the UK and ESA countries to continue to access this agreement.
Goods
Goods chapters in trade agreements set out the treatment and the level of access to the domestic market granted goods from partner countries. This includes setting tariff levels on various products, establishing bilateral safeguards and determining the Rules of Origin.
In the ESA EPA commitments on tariffs for both the UK and ESA countries have been transitioned without changes. This means that tariff preferences applied by the UK to goods from Madagascar, Mauritius, Seychelles and Zimbabwe will remain the same as those applied by the EU under the existing agreement, and likewise those countries will continue to apply the same preferences to goods from the UK that they are currently applying to goods from the EU.
In cases where import duties remain subject to staged tariff reductions, reductions will continue at the same pace as scheduled in the existing EPA.
Rules of origin
In free trade agreements, Rules of Origin are used to determine the economic nationality of a good. To qualify for preferential tariff rates, a good must “originate” in the territory of one of the parties to the agreement. Trade agreements may also allow materials originating and/or
As a member of the EU, all UK content is currently considered as “originating” in the EU and UK exports are designated as being of “EU origin”. This means that materials from, and processing in, the UK and the rest of the EU can be used interchangeably in bilateral trade with existing EU trade agreement partners. This will no longer be the case when existing EU trade agreements stop applying to the UK.
At this point, the designation of UK exports will shift from “EU” originating, to “UK” originating and EU content will (unless specific provision is made in new agreements) no longer count towards meeting the origin requirements for preferential treatment for either party. This would have implications for goods traded between the UK, EU and ESA.
To address these implications and to provide maximum continuity for business, it has been agreed in the ESA-UK Agreement that EU content and processing can be recognised (i.e. cumulated) in UK and ESA exports to one another. The cumulation arrangements are set out in detail in the Title II (Definition of the concept of ‘originating products’) of the Rules of Origin Protocol and subject to satisfying the conditions specified in the agreement.
If cumulation of EU content for the UK and the ESA countries were not permitted under the ESA-UK Agreement, some UK and ESA based exporters might find themselves unable to access preferences as they are currently able to under the ESA-EU Agreement. UK exporters to ESA who rely on EU content might have to revert to paying Most Favoured Nation (MFN) tariff rates, if they continued using EU content, or they might have to review and reassess their existing supply and value chains as a result of this change. The impact would, of course, vary across sectors.
The ESA-UK Agreement provides only for trade between the UK and ESA and does not provide for either party’s direct trade with the EU, including, for example, where UK and ESA based exporters use content from each other in exports to the EU.
The ESA EPA replicates the clause in the existing EPA which lists areas for future negotiations to expand the agreement. These include trade in services, technical barriers to trade, sanitary and phytosanitary measures, procurement, agriculture and intellectual property rights.
The timetable for these negotiations will be jointly agreed within six months of entry into force of the ESA EPA; this 6-month timetable is a new provision in the ESA EPA which does not have direct precedent in the existing EPA.
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tralac’s Daily News Selection
Underway, in Monrovia: Network of Economic Journalists of West Africa meeting on AfCFTA
Diarise: 3rd German-African Business Summit (11-13 February, Accra)
African Mining Indaba: selected updates
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Opening address by Minister Gwede Mantashe; Keynote address by President Cyril Ramaphosa; Summary of address by Ghana’s President Akufo-Addo
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Reuters: Ethiopia finalizing mining industry reforms says minister; Financial Times: ‘No more debate’ on DRC mining code; Daily Maverick: Mantashe said SA is open for mining business – but it’s not yet quite Nirvana, says mining industry
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Action Aid’s Mining in South Africa 2018: whose benefit and whose burden?; Minerals Council South Africa: National Platinum Strategy for South Africa
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GFI: Handbook for using extractives data; NRGI’s Resource Governance Index: Sub-Saharan Africa highlights; SARW’s Living in a Parallel Universe: First Quantum Mine versus communities in Zambia (copies can be requested from This email address is being protected from spambots. You need JavaScript enabled to view it.)
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Putting the shine back into South African mining: a path to competitiveness and growth. Unless the South African mining industry can improve its cost competitiveness, even sharper declines in its fortunes could be ahead. McKinsey research finds that 47% of South African mining jobs, along with 4% of revenues, are in the vulnerable bottom quartile of global cost competitiveness. Global trends, such as the transition to clean energy and a shift in China’s economic focus away from infrastructure development to new technologies, could dampen demand for South African mining commodities in the years ahead. The seriousness of these issues should not be underestimated. Yet our purpose in this paper is not to dwell on the challenges but to highlight the real potential of the South African mining industry to return to growth. Even in the short term, the industry can achieve global cost-competitiveness if the private and public sectors take concerted action. [The authors: Ziyad Cassim, Stewart Goodman, Agesan Rajagopaul]
Financing the African Union – tweeted updates from @AU_KwesiQuartey
The Joint Sitting of the Ministerial Scale of Assessment and Committee of Fifteen Finance Ministers kicked off at AU HQ. The meeting will deliberate on the revised AU scale of assessment that essentially guides amount each member states pays to budget of the Union and the Peace Fund. The review of the scale of assessment undertaken every three years will provide a scale that improves the burden sharing of the budget appropriations; guided by the principles of the ability to pay; solidarity; and equitable burden-sharing among members to avoid risk concentration. The recommendations of this joint sitting will be considered in the upcoming African Union Summit. The 34th Ordinary Session of the Executive Council opens tomorrow, followed by the Assembly of Heads of State and Government on the 10th of this month.
Great Lakes Trade Facilitation Project: implementation status and results report (World Bank)
During the reporting period, progress was made in the implementation of project activities, including opening of temporary physical infrastructure at two project sites in the DRC and interventions related to training, capacity building and policy reform. There is a marked difference in the organized flow of traders, greater efficiency in the use of the jeton system by small-scale cross-border traders, and the use of the trade information desks officers (TIDOs). Most notably, the DRC successfully implemented new temporary infrastructure at Ruzizi 1 and the Petite Barriere. In Rwanda, contracts were signed for the construction of the Nyamasheke cross-border market, the feasibility study for Kamonyola cross-border market, the design review for Rsuizi 1 OSBP, and contracts for packages 1,2,3 and 4 for Kamemebe airport should be signed before February 2019. In Uganda, the project team has made progress in all 4 project components and will focus on reducing procurement delays for the works contracts for the Mpondwe and Bunugana cross-border infrastructure and the Mpondwe border market. COMESA has made significant progress with the use of Trade Information Desk officers in resolving conflicts for traders, in developing the communications strategy, implementing the Training of the Trainers program and in awareness building of the STR. However, despite these important outcomes, disbursement remains significantly behind schedule. This is mainly due to continuing delays in procurement processes. [See: Project Development Objectives Indicators by objectives/outcomes, pdf]
Abidjan-Lagos Corridor Highway: AfDB, ECOWAS sign agreement
The proposed Abidjan-Lagos Corridor Highway, a six-lane (3-lane dual) 1,000 kilometre highway, will connect the countries via Ghana (Accra), Togo (Lomé) and Benin (Cotonou).The agreement signed Monday for a study on the technical, implementation and operational aspects of the project, comes nearly five years after the presidents of Côte d’Ivoire, Ghana, Togo, Benin and Nigeria, signed a treaty on the establishment of the highway in March 2014. The AfDB has approved a financing package of $12.6m to finance part of the study for project and mobilized a Euro 9.1m grant from the EU Commission, bringing the total financing for this important study, to $22.7m. Extracts from ECOWAS statement: President Brou also called on other partners such as JICA, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), as well as the World Bank, to join the important project by contributing to bridge the traceable financing gap.
Trans-Gambia Corridor Project: environmental and social management plan summary (AfDB)
The Trans-Gambian Corridor (Kaolack-Trans Gambian Highway-Zinguinchor,) having a length of 24 km, is a part of the Cairo-Dakar-Lagos corridor. The Trans-Gambia Road Transport Corridor is an economic and strategic link connecting the northern and southern parts of both The Gambia and Senegal, and by extension ECOWAS countries through the corridor between Dakar and Lagos. The sector goal of the project is to support economic growth of the countries on the Trans-Gambian Corridor (Kaolack-Trans- Gambian Highway-Ziguinchor), considered part of the Trans-West African Highway (from Dakar to Lagos Corridor) and ECOWAS at large by fostering integration through reliable, efficient and seamless transport infrastructure that will increase the competitiveness of the region. This second phase of pavement strengthening of the Trans-Gambia corridor road will be funded by the EU and will support and complement the Trans-Gambia Corridor Project funded by AfDB grant.
Afreximbank to implement $500m Tunisia-Africa Trade and Investment Promotion Programme
Country updates
Nigeria: FG to ban importation of tomato products by 2021 (ThisDay)
Minister of Agriculture and Rural Development, Chief Audu Ogbeh, who made the disclosure, said the continued importation of tomato paste had resulted in massive job losses to foreign countries, a situation which had further impoverished local farmers and denied them better life. This is coming as the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has also buttressed the need to ban tomato importation, adding that the importation of milk into the country could also be banned in the near future. The duo spoke in Kaduna during an inspection tour of Gino Tomatoes Farm, a subsidiary of GBFoods Africa. Ogbeh insisted that the country would soon achieve self-sufficiency in tomatoes production, and even export and earn foreign exchange. “In a short while, I assure you we will stop anybody importing tomato paste into this country. It is going to happen faster than people think. So, let the smugglers beware; production not smuggling; production not importation – definitely not importation of what we can produce.”
South Africa: PPC talks with authorities again about imports (IOL)
Cement and lime producer PPC has said that it was engaging with government authorities again about cement imports into South Africa, which increased 80% in the 11 months to November last year, compared to the prior corresponding period. The company said yesterday that the engagements were meant to ensure the sustainability of the domestic industry and market stabilisation. It said cement imports into Cape Town increased by 48% to 209 000 tons in this period, but was still substantially lower than the majority of imports into Durban, which increased by 84%. South Africa’s cement industry previously faced a challenge from imports from Pakistan, which dropped significantly after the imposition of anti-dumping duties by the International Trade Administration Commission.
Lesotho: IMF staff completes 2019 Article IV visit
Economic growth is expected to slowly recover this fiscal year, driven by strong production in the diamond mines, higher textile exports, and the initiation of Phase 2 of Lesotho Highlands Water Project. Inflation is projected to remain subdued, reflecting weakened household demand. There are downside risks emerging from a possible El Nino-related drought. The current account deficit widened in FY 2018/19 owing to a decline in SACU revenue and higher imports, which offset increased exports. External buffers have so far been maintained, but pressures will remain in the absence of stronger fiscal consolidation. The government acknowledges the fiscal challenges as it prepares the new budget.
Mauritius: Regional Centre of Excellence for capacity building in fisheries and aquaculture to be established (GoM)
Trade, security top list of Trump’s man in Nairobi (Business Daily)
US President Donald Trump’s new top diplomat to Kenya, Mr Kyle McCarter, has put trade and security at the top of his priority list as he prepares to assume office next week. Trade between the two States has trailed other traditional partners over the last decade while Nairobi has consistently accused Washington’s emissaries of spinning counter-terrorism intelligence to hurt its economy. Mr McCarter, who has strong links with Kenya through charity, said ahead of return to Kenya as a diplomat that security cooperation between the two countries would rank high on list of his priorities.
Landry Signé: France-Africa relations challenged by China and the European Union (Brookings)
As the effects of migration and resource scarcity ripple across both continents, European and African leaders are now coming to terms with needed economic, political, and security reforms. Here are four things you need to know about France-Africa relations given the evolving context with the European Union, China, and other emerging partners.
Today’s Quick Links: Worries about billions SA aims to spend securing African power imports Mozambique: Budget Monitoring Forum calls for creditor guarantees to be written-off SA’s Cosatu in Beitbridge border shutdown over Zimbabwe rights abuses UK’s Africa Minister visits South Africa, Mozambique to deepen partnership Continental results framework for reporting, monitoring on the implementation of the Women, Peace and Security Agenda in Africa (2018-2028) Financing climate change adaptation in transboundary basins: preparing bankable projects |
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African Group statement submitted to the informal WTO Ministerial held during WEF 2019 (WTO)
This statement is circulated by H.E. Minister Rob Davies to the informal WTO Ministerial gathering in Davos on behalf of Benin, as the Coordinator of the African Group: The two most serious and immediate risks to the relevance of the multilateral trading system (MTS): First, the unprecedented challenges of unilateral trade measures that violate WTO rules and principles and that have provoked retaliation. Self-judging national security justification takes us into uncharted areas and may proliferate, creating new sources of instability and uncertainty. Second, the continuing impasse in the Appellate Body selection process threatens the DSM that is the foundation of a functioning MTS. Without a solution here by December, the DSM will be rendered obsolete and all our other work and efforts would be redundant.
Many developing countries, including in Africa, have long reasoned that the system has prejudiced our trade and development interests and that the system needs to be rebalanced for equity and fairness, and in a manner and at a pace appropriate to national circumstances. This is the content of the WTO Reform we need. It beggars belief that those who designed the system and who have been its main beneficiaries now suggest the system is unfair and needs reform. Most of the ideas in the proposals recently submitted in the name of reform do not address the real imbalances in the MTS.
The sanctions element of the proposal on Transparency is one example. The proposals for graduation and differentiation are another. These are divisive and unlikely to yield results. Trying to change the principle of self-declaration is also impractical. A more productive approach would acknowledge that S&DT principles are sufficiently flexible to address differences in the actual negotiating process and to not worsen imbalances. For all their shortcomings, the agricultural and NAMA texts under the Doha agenda were replete with examples of differentiation and flexibility to accommodate real differences in the actual circumstances of Members. Notably, in the fisheries subsidies negotiations, flexibility and S&DT is required to address our capacity constraints and to build our fishing industry capabilities in the future. The African Group will not agree to any proposals disadvantaging any of its Members through a change to the negotiating mandate or by using irrelevant criteria.
We see an unfair contradiction in the call to narrow flexibility on S&DT but demand more flexibility by selectively undermining WTO consensus decision making as a way to advance plurilateral outcomes that will themselves fragment and undermine the MTS. The challenges facing the WTO will not be addressed if plurilateral work is prioritized over multilateral processes or cherry-picking some rules to be preserved and others reformed.
Intra-African Agriculture Trade Improvement Scorecards
The regional trade scorecard compiles publicly available and regularly updated data related to four key trade determinants that are actionable at the national level: production capacity, the cost of trade, institutional efficiency, and trade policies. The indicators align with determinants identified in the Regional Strategic Analysis and Knowledge Support System’s (ReSAKSS) 2018 Africa Agriculture Trade Monitor report and are described in the Intra-African Agriculture Trade Improvement Scorecards Indicator Summary. Regional scorecards: pdf East Africa (353 KB) ; pdf Southern Africa (391 KB) ; pdf West Africa (356 KB) . Country scorecards, for Ethiopia, Uganda, Senegal, Nigeria, Niger, Mali, Kenya, and Ghana, can be downloaded here.
Botswana: pdf 2019/2020 budget speech, proposals (772 KB) (GoB)
Total revenue and grants are estimated at P60.20 billion. Mineral revenue remains the highest contributor at P21.09 billion or 35.62% of total revenue and grants, while customs and excise revenue is estimated at P14.02 billion. Non-mineral income tax is estimated at P11.55 billion, while VAT is expected at P9.12 billion. However, there are downside risks to these revenue estimates, arising mainly from the continued high volatility of the mineral and customs and excise revenues. Total expenditure and net lending for the financial year 2019/2020, on the other hand, is estimated at P67.54 billion, resulting in a budget deficit of P7.34 billion, or minus 3.5% of GDP.
It would be remiss of me to conclude this Budget Speech without highlighting the fiscal constraints facing this country. As indicated under the budget review and proposals sections, the projected deficits for 2018/2019 and 2019/2020 of 3.5% of GDP for each year, are close to the set limit of 4.0% of GDP. These deficits exclude any additional expenditures that may arise from Government decisions during the course of the year, or emergency spending occasioned by natural disasters such as drought and outbreak of animal diseases. I must indicate that the budget deficits experienced in the first three years of NDP 11, were a deliberate effort by this Government to respond to the national needs of: increasing economic activity to create employment opportunities; eradicating extreme poverty and equitable income distribution. The Government is otherwise committed to maintaining fiscal sustainability by achieving moderate surpluses in the last three years of NDP 11. In line with this commitment, I therefore urge for continued prudent management of expenditure by all Ministries and Departments, while scaling-up resource mobilisation efforts through enhanced collections of taxes and user charges, as well as improving on productivity at all levels. [Presented by Finance Minister O.K. Matambo, 4 February]
Businesses smuggling goods through Liberia’s unmanned borders with Guinea and Sierra Leone (Front Page Africa)
High import duties and hefty fees and tariffs including a recently introduced US$175 per container agreement appear to be forcing more and more Liberian businesses and individuals to bypass the Liberia Revenue Authority and the National Port Authority by using poorly-manned borders between Liberia and next-door neighbors Guinea and Sierra Leone to bring goods into the country. Liberia has 176 entry points with neighboring countries. According to the Liberia Immigration Service, only 46 of these entries are guarded.
Trade wars: The pain and the gain (UNCTAD)
A new study by UNCTAD looks at the repercussions of existing US and Chinese tariff hikes, as well as the effects of the increase scheduled for 1 March. “Because of the size of their economies, the tariffs imposed by US and China will inevitably have significant repercussions on international trade,” said Pamela Coke-Hamilton, who heads UNCTAD’s international trade division, as she launched the Key Statistics and Trends in Trade Policy 2018. The study underlines that bilateral tariffs would do little to help domestic firms in their respective markets. “Our analysis shows that while bilateral tariffs are not very effective in protecting domestic firms, they are very valid instruments to limit trade from the targeted country”, Ms. Coke-Hamilton said. “The effect of US-China tariffs would be mainly distortionary. US-China bilateral trade will decline and replaced by trade originating in other countries.”
The study estimates that of the $250bn in Chinese exports subject to US tariffs, about 82% will be captured by firms in other countries, about 12% will be retained by Chinese firms, and only about 6% will be captured by US firms. Similarly, of the approximately $85bn in US exports subject to China’s tariffs, about 85% will be captured by firms in other countries, US firms will retain less than 10%, while Chinese firms will capture only about 5%. The results are consistent across different sectors, from machinery to wood products, and furniture, communication equipment, chemicals to precision instruments. Countries that are expected to benefit the most from US-China tensions are those which are more competitive and have the economic capacity to replace US and Chinese firms. The study indicates that EU exports are those likely to increase the most, capturing about $70bn of US-China bilateral trade ($50bn of Chinese exports to the US, and $20bn of US exports to China). Japan, Mexico and Canada will each capture more than $20bn. Although these figures don’t represent a large slice of global trade – which was worth about $17 trillion in 2017 – for many countries they make up a substantial share of exports. For example, the approximately $27bn of US-China trade that would be captured by Mexico represents a non-negligible share of Mexico’s total exports (about 6%). Substantial effects relative to the size of their exports are also expected for Australia, Brazil, India, Philippines, Pakistan and Viet Nam (see Chart 4: Trade diversion). [Download: Key statistics and trends in trade policy 2018 – trade tensions, implications for developing countries]
Trump’s Africa Surprise (Atlantic Council)
In December, US National Security Advisor John Bolton unveiled a formal strategy for Africa. The document was originally slated for public release but has subsequently been classified, meaning that many details of the strategy will remain hidden from public view. Nevertheless, Bolton’s comments provide some welcome insight into the Trump administration’s philosophy on Africa and establish several benchmarks against which the administration’s practices can be assessed.
When Trump was elected, many predicted that US-Africa policy would suffer, assuming that the continent would recede even further from the attention of US policymakers. The Trump administration has surely surprised these critics by articulating a strategy for Africa so very early on. But the strategy is also, clearly, a shot across the bow, signaling the administration’s intention to challenge long-standing norms in the areas of peacekeeping, humanitarian relief, and development. So far, Trump’s focus on great power competition appears to have raised Africa’s profile and yielded a more business-friendly approach, particularly in the passage of the BUILD Act. In the end, Trump might just surprise us on Africa. [The author: Jonathan Gass]
Today’s Quick Links: Ex-Uhuru adviser says debt may affect growth in Kenya Plans to ramp up Chinese tourism to South Africa Mauritius-Mozambique Business Forum to reinforce economic partnerships Regional research project on migration launched in Dakar World must do more to tackle ‘shadowy’ mercenary activities undermining stability in Africa, says UN chief Export competitiveness – fuel price nexus in developing countries: real or false concern? |
Note: Tomorrow’s tralac daily news selection will carry a comprehensive set of reports from the Africa Mining Indaba in Cape Town.
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African Group Statement: Informal WTO Ministerial gathering at WEF 2019
This statement is circulated by H.E. Minister Rob Davies to the informal WTO Ministerial gathering in Davos on behalf of Benin, as the Coordinator of the African Group.
The two most serious and immediate risks to the relevance of the MTS: First, the unprecedented challenges of unilateral trade measures that violate WTO rules and principles and that have provoked retaliation. Self-judging national security justification takes us into uncharted areas and may proliferate, creating new sources of instability and uncertainty.
Second, the continuing impasse in the Appellate Body selection process threatens the DSM that is the foundation of a functioning MTS. Without a solution here by December, the DSM will be rendered obsolete and all our other work and efforts would be redundant.
Many developing countries, including in Africa, have long reasoned that the system has prejudiced our trade and development interests and that the system needs to be rebalanced for equity and fairness, and in a manner and at a pace appropriate to national circumstances. This is the content of the WTO Reform we need.
It beggars belief that those who designed the system and who have been its main beneficiaries now suggest the system is unfair and needs reform. Most of the ideas in the proposals recently submitted in the name of reform do not address the real imbalances in the MTS.
The sanctions element of the proposal on Transparency is one example.
The proposals for graduation and differentiation are another. These are divisive and unlikely to yield results. Trying to change the principle of self-declaration is also impractical.
A more productive approach would acknowledge that S&DT principles are sufficiently flexible to address differences in the actual negotiating process and to not worsen imbalances. For all their shortcomings, the agricultural and NAMA texts under the Doha agenda were replete with examples of differentiation and flexibility to accommodate real differences in the actual circumstances of Members. Notably, in the fisheries subsidies negotiations, flexibility and S&DT is required to address our capacity constraints and to build our fishing industry capabilities in the future. The African Group will not agree to any proposals disadvantaging any of its Members through a change to the negotiating mandate or by using irrelevant criteria.
We see an unfair contradiction in the call to narrow flexibility on S&DT but demand more flexibility by selectively undermining WTO consensus decision making as a way to advance plurilateral outcomes that will themselves fragment and undermine the MTS.
The challenges facing the WTO will not be addressed if plurilateral work is prioritized over multilateral processes or cherry-picking some rules to be preserved and others reformed.
Recall outcomes at MC8 and MC9. Recent failures in the negotiating function in the WTO are primarily a function of an inability to negotiate or compromise on unreasonably ambitious demands. Reasonable demands, compromise and flexibility are essential to advance negotiations.
Must also recognize that more trade liberalization and harmonizing ‘behind the border rules’ do not necessarily promote development. We need to accept the diversity of national circumstances, varying policy imperatives and the need for adequate policy space to accommodate those.
The objectives of the AU’s Agenda 2063: The Africa We Want require policy space to pursue integration and industrial development objectives.
African Trade Ministers met in Cairo in December 2018 and issued a pdf Declaration on WTO (116 KB) . The key points to preserve the MTS and ensure it remains relevant to Members include:
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Refrain from WTO-inconsistent unilateral measures.
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Resolve the AB impasse as a matter of priority.
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Advance the longstanding matters of importance to Africa, notably on trade distorting domestic support, cotton, public stockholding, net food importing developing countries, fishery subsidies, and making S&DT more effective.
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Recall and reaffirm previous Ministerial and General Council Decisions.
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Preserve the principles and procedures established in the Marrakesh Agreement, including S&DT, decisions by consensus and the requirement for multilateral mandates for negotiations.
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Ensure WTO outcomes support Africa’s integration and industrialisation objectives.
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Desist from making demands on African countries in accession that are inconsistent with their levels of development and capabilities.
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Discussions on the future of the WTO must promote development and inclusiveness, and includes the common interests of Africa.
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Using Intra-African Trade Scorecards to identify opportunities for increasing agricultural trade
Across the continent, African governments are taking steps to make agricultural trade freer. In June 2014, heads of state of African Union member countries issued a bold commitment to a series of measurable goals related to agriculture-led growth and food security on the continent.
Tripling intra-African agricultural trade by 2025 was among the list of commitments. In 2018, the Regional Strategic Analysis and Knowledge Support System (ReSAKSS) issued a report on performance against this indicator. While overall trade increases were observed continent-wide, performance among countries varied considerably.
Noting these trends, the Feed the Future Enabling Environment for Food Security project has developed a set of trade improvement scorecards for countries in sub-Saharan Africa that capture relative performance on a range of elements that underpin an effective trading system. The Intra-African Agriculture Trade Improvement Scorecards include:
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Three regional trade scorecards reflecting selected countries across Southern Africa, East Africa, and West Africa.
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Eight country-level scorecards covering Ethiopia, Ghana, Kenya, Mali, Niger, Nigeria, Senegal, and Uganda.
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An indicator summary note providing additional information on indicators and data sources.
The regional trade scorecards compile publicly available and regularly updated data related to four key trade determinants that are actionable at the national level, including: (1) production capacity, (2) the cost of trade, (3) institutional efficiency, and (4) trade policies. The indicators align with determinants identified in the ReSAKSS pdf 2018 Africa Agriculture Trade Monitor (3.70 MB) report and are described in the Intra-African Agriculture Trade Improvement Scorecards Indicator Summary.
To make these tools useful as performance snapshots, we restricted our data sources based upon the following criteria:
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Relevance – Data sources were selected to hew as closely as possible to key trade determinants identified by ReSAKSS in the Africa Agriculture Trade Monitor.
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Transparency – Only publicly available data sets with posted scoring methodologies were selected.
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Recent Data – Only data updated biennially factored into the scorecards.
Applying these data, the Project team organized comparative country performance per a three-part ranking system: green for the top-third performers, red for the middle-third performers, and red for the lower-third performers in each indicator.
Looking at the data across the scorecards, common opportunities emerged. For example, many countries do not recognize cross-border document authentication, creating additional steps and costs for traders who must secure double authentication of documents. Additionally, inconsistent standards and metrology regimes preclude reliable and traceable measurements for goods in trade. And in many countries, outmoded legal and regulatory regimes can be upgraded to enable increased use of digital commerce platforms and mobile payment services.
Freer flowing agricultural trade is critical for improved food security. More trade can build resilience in food systems across the continent, as food passes over political boundaries faster and in a less costly manner from areas of plenty to zones of hunger. Producers can gain increased access to lucrative markets across borders, improving conditions for increased rural and agricultural incomes. Consumers stand to gain more selection, opening up opportunities for greater dietary diversity.
But trade system performance gaps pervade in sub-Saharan Africa and limit the potential for increased agricultural trade on the continent. After all, a marketing channel – much like a chain – is only as strong as its weakest link. Through these scorecards, the Feed the Future Enabling Environment for Food Security project seeks to help identify opportunities for governments across sub-Saharan Africa to strengthen their trading systems to make their freer trade commitments work harder for improved food security outcomes.