Search News Results
South Africa’s investment climate is improving, says Minister Davies
The Minister of Trade and Industry, Dr Rob Davies, says foreign investment if targeted and nurtured can drive economic growth and in turn contribute to much needed job creation and economic inclusion for all.
Davies was addressing the South African Investment Seminar on the margins of the 1st China International Import Expo (CIIE) in Shanghai, in the People’s Republic of China.
The purpose of the Investment Seminar was to expand on the investment opportunities that exist in South Africa with a particular focus on the manufacturing sector. The seminar was organised jointly by the Department of Trade and Industry (the dti) and China Chamber of Commerce for Import and Export of Machinery and Electronic Products.
Minister Davies told the Chinese investors that South Africa’s investment pitch is based on “active improvement of the investment climate, active solving of any problem that investors may have, active presentation of the opportunities that exist, and building partnerships with investors.”
Minister Davies indicated that the country’s investment climate is also improving.
“We have made in-roads to improving our investment environment, we have been working diligently towards ensuring policy certainty and consistency, improving the performance of state owned enterprises and consolidating fiscal debt. South Africa is energised and government together with its social partners, business, labour and civil society is moving towards an inclusive economic growth path. The work of government, business, labour and civil society is progressing well,” stated Davies.
Currently there are 58 Chinese companies who have invested in South Africa with a capital expenditure of R69,4 billion between January 2003 and January 2018. These investments are mainly in the automotives, electronics, metals, building and construction sectors, financial services.
China’s first major investment took place in October 2007 when China’s largest bank, the Industrial and Commercial Bank of China (ICBC), purchased a 20% stake in Standard Bank. The majority state-owned ICBC paid cash for the stake, estimated at R36.7 billion.
However, over the period, the trade surplus is in favour of China. The trade deficit is due to the imbalances in the composition of trade between the two countries where South Africa continues to export primary products and commodities to China, and import manufactured and high-tech products from China. Minister Davies said that events such as the China International Import Expo will create opportunities to address the imbalance.
“Exhibitions like China International Import Expo give us an advantage in that we can display products, goods and services that we can supply the Chinese market. We look forward and hope that our exhibitors will be able to find a way to enhance the relationship with procurers from China,” added Minister Davies.
Minister Davies is leading a delegation of 27 South African organisations which include provincial investment agencies, Special Economic Zones, Export Councils, as well as private companies. The delegation is being funded by the Department of Trade and Industry through the Export Marketing and Investment Assistance (EMIA) Scheme.
South Africa is participating in the 3 main platforms of the 1st China International Import Expo (CIIE), namely Country Pavilion for Trade and Investment, Enterprise and Business as well as Fair International Trade Forum. These platforms will enable us to promote South Africa’s trade and investment capabilities. Minister Davies also visited the South African businesses that are showingcasing at the International Import Expo.
Related News
tralac’s Daily News Selection
SADC Business Council foundational meeting: @SthrnAfrcaTrust updates
Tomorrow, 7 November, at the Holiday Inn Hotel, Johannesburg Airport, @SthrnAfrcaTrust and @TheNBF will host the founding meeting of the SADC Business Council. The meeting will be attended by representatives of all national and regional apex bodies of the private sector. The aim to officially found the SADC Business Council, establishing the structure, roles and responsibilities of organs, membership and future resourcing work.
Botswana: Trade policy issues extracted from President Mokgweetsi Masisi’s State of the Nation address (GoB)
On the TFTA: Tariff negotiations with Egypt and the EAC are on-going, once the Agreement enters into force we can have preferential access in these markets for our beef, salt and plastic tubes among other products. It goes without saying that our output and efficiency will have to improve to serve such a big market. And here once again, Mister Speaker, is where I place my conviction on the jobs that we will create. On the AfCFTA: It is envisaged that the outstanding issues will be resolved at the December, 2018 African Ministers of Trade meeting, thus paving the way for Botswana to sign the AfCFTA at the AU Assembly of Heads of State and Government in January, 2019. On SACU + Mozambique EPA with the UK: In view of the importance of the United Kingdom market for our goods and services, together with the fact that it has hitherto been the point of entry for our goods into the EU, it was imperative that we conclude the Agreement with the UK to ensure that there are no trade disruptions. Negotiations for the Agreement are at a very advanced stage and it is envisaged that the SACU + Mozambique and the UK EPA will be signed sometime in December, 2018 in Botswana.
On SEZs: Preparations for operationalisation of the Special Economic Zones is nearing completion with Regulations and Incentives for the SEZs being finalised for consideration by Government this financial year. SEZs are a key component in advancing our goals towards export-led economic growth. It is also worth noting that we will rollout PPPs in the development of infrastructure in the SEZs. I would like to take this opportunity to inform you that the first company to operate in one of our SEZs will start production during the fourth quarter of this financial year with the potential of making Botswana the largest exporter of processed poultry meat in the whole of Africa. The initial setting up investment capital of the company amounts to P200m. This investment together with many others will have downstream linkages with local industry and service providers such as in transport and logistics, financial and other related services. [Download: pdf Botswana State of the Nation Address 2018 (699 KB) ]
Mauritania and AGOA: President Trump terminates trade preference programme eligibility (USTR)
President Donald J. Trump, Monday, announced on Friday his intent to terminate the eligibility of Mauritania for trade preference benefits under the African Growth and Opportunity Act (AGOA), as of January 1, 2019, due to forced labor practices. The President notified Congress and the Government of Mauritania accordingly. Based on the results of the required annual AGOA eligibility review, the President determined that Mauritania is not making sufficient progress toward establishing the protection of internationally recognized worker rights. Consequently, Mauritania is out of compliance with eligibility requirements of AGOA. Specifically, Mauritania has made insufficient progress toward combating forced labor, in particular the scourge of hereditary slavery. In addition, the Government of Mauritania continues to restrict the ability of civil society to work freely to address anti-slavery issues.
“The continent’s premier investment marketplace”: AfDB’s Akinwumi Adesina previews the Africa Investment Forum
Africa has also become the world’s second-most attractive investment destination. According to the United Nations Conference on Trade and Development, inward foreign direct investment (FDI) is expected to increase by about 20% this year, to $50bn, from $42bn in 2017. Finally, Africa’s pension funds, insurance funds, and sovereign wealth funds are collectively valued at more than $1 trillion dollars. If Africa could leverage this wealth to attract just 1% of all global assets under management, estimated to total more than $131 trillion, the continent’s need for $130-170bn in annual infrastructure investment could be met. As matters currently stand, Africa faces an annual financing gap of $68-108bn. Africa has a huge population to drive consumer demand, a rising middle class, a dynamic youth population, and rapidly reforming governments that are keen to attract these investments. The Africa Investment Forum will provide what has been missing so far: a safe, stable marketplace to accelerate deals.
US corporates made more investments in Africa in 2017 than businesses from any other country (Quartz Africa)
United States businesses and investors made more foreign direct investments in Africa than counterparts any other country last year. These US entities increased the number of American FDI projects in Africa by 43% to 130 in 2017 nearly twice the next country, according to EY Global’s 2018 Africa Attractiveness report. Overall, African countries saw FDI number rise by 6% to 718 projects up from the previous year’s 676, which was the lowest in 20 years. It is the latest metric that seems to contradict the idea that US corporate sector losing interest in Africa as China’s influence rises and president Trump focuses elsewhere. The US remains Africa’s largest investor, says EY after the continent saw the expansion in FDI projects after two consecutive years of decline.
Zimbabwe as a new gateway into Africa: commentary by Finance Minister Professor Mthuli Ncube
On Friday afternoon of 2 November 2018, I visited Surface Wilmar based in Chitungwiza. The company is owned by one of the largest companies in the world in the production of edible oils, based in Singapore. The factory floors are most impressive and world class, and it was not lost to me that this was right in the middle of Chitungwiza. To see this modern plant operated by automated robotic systems, making it one of the most efficient companies in Africa in the edible oils sector, was uplifting, as the last time I have visited a robot-controlled factory was in Hyundai in South Korea a few years ago. The futuristic robotic systems controlled factor floors at Surface Wilmar are testimony to the aspirations of Vision 2030, and the Transitional Stabilisation Programme, that Zimbabwe can become the gateway to investment into Africa.
Turning Zimbabwe into a gateway into Africa means establishing an Offshore Investment Centre with strong links to the Zimbabwe One-Stop-Investment Shop, which processes investments. This needs to be seriously explored for Zimbabwe to continue to attract global investors such as Surface Wilmar from Singapore. This means all new foreign investment into Zimbabwe, going forward, could be registered in the Offshore Centre, giving foreign investors similar benefits as are enjoyed in centres such as Mauritius, Guernsey and Isle of Man. There are many reasons why Zimbabwe could be a successful gateway into Africa, through the Offshore Centre:
Uganda’s Kampala-Jinja Expressway Project approved by AfDB
The African Development Bank has approved a sovereign loan of $229.5m to Uganda to finance phase one of the Kampala-Jinja Expressway project. Approved by the Board on Wednesday, 31 October, the loan supports the Government’s Vision 2040 agenda. It will co-finance, with the EU and Agence Francaise de Developpment, $400m which will pave the way for private sector financing of the remaining $800m. Total project cost is estimated at $1.55bn, with financing from sovereign and non- sovereign facilities. Scheduled to be managed over the next 30 years (including a five-year construction period) under a concession-based PPP arrangement, the project comprises of two phases:
AfDB to finance second phase of road linking Mozambique to Tanzania (Club of Mozambique)
The African Development Bank is available to finance the second phase of asphalting of the Mueda to Negomano road, a stretch of 95 kilometres, said bank official João Mabombo. The AfDB’s availability was expressed a few days ago in Pemba by a team from the bank that worked in Cabo Delgado, where it met with the provincial governor, Júlio Parruque and visited that section of road. The Mueda-Negomano road, work on which is due to start in 2020, connects the Mueda district to the border with Tanzania over the Unity Bridge, which was built about seven years ago.
Tanzania: Government to seek TAZARA Act amendments to ‘go with the times’ (IPPMedia)
The government has said it intends to push for an amendment to the Tanzania Zambia Railway Authority Act to remove the clause which reserves the position of managing director to Zambian nationals. Speaking to reporters during the 42nd TAZARA commemoration trip to the Selous Game Reserve on Saturday, deputy minister for works, transport and communications, Atashasta Nditiye, said after the draft has been passed through all ministerial procedures, the document will be formally forwarded to other relevant authorities for further action. Despite its challenges, TAZARA last week announced improved performance figures for the past financial year. Head of public relations Conrad Simuchile said that in the financial year ending June 30, 2018, the firm transported 220,818 tonnes of freight, an improvement of 29% compared to the financial year ending June 30, 2017 when it transported 171,405 tonnes. The interstate passenger train conveyed 543,194 passengers between Dar es Salaam and Kapiri Mposhi during the year, surpassing the planned target of 500,000 passengers by 8.6%.
Nigeria: South-West govs ask FG to link Apapa port with railway (Punch)
The South West Governors’ Forum has tasked the Federal Government to create a railway line from Apapa for transportation of goods from the ports in order to ease the permanent gridlock on the roads in the area. The governors of the six states in the region said this in a communiqué read at the end of a meeting they held at the Osun State Government House in Osogbo on Monday. The governors expressed concern at the devastating effects of the traffic jam in Apapa on the economy of the region and Nigeria as a whole. They also charged the Oodua Investment Company to champion the food security in the region, saying the region should not be dependent on food imported from outside because there was a large expanse of arable land which could support agricultural production.
Dubai’s DP World sues China over Djibouti trade zone (Vanguard)
The lawsuit was filed in the High Court of Hong Kong for unlawfully procuring and inducing the Republic of Djibouti to breach various agreements between the African country and DP World. In the lawsuit, DP World sought damages, interest, and a declaration that China Merchants unlawfully procured and/or induced Djibouti’s breaches of its agreements with DP World. DP World said its concession agreement over the terminal “remains in force” and warned that the “illegal seizure of the facility does not give the right to any third party to violate the terms of the concession agreement.” DP World Limited, operates 78 ports in more than 40 nations.
France grants help to Gambia and Central Africa: pushes regional clout (Reuters)
France flexed its muscles in West Africa on Monday granting millions of euros in aid to Gambia to support its democratic transition amid fears of regional instability and took aim at Russia over its “opportunist” role in Central African Republic. France’s Foreign Minister Jean-Yves Le Drian said Paris was also looking at investment opportunities for its firms, including at Banjul’s port and airport. Companies including Bollore and energy group Total are among those vying for contracts in Gambia. “If Gambia is a success it sets an example for the region,” said a French diplomatic source. [Enhancing relations between Nigeria and France]
Kenya wooing oil and gas investors at London bourse (The East African)
Kenya has stepped up efforts to tap global investors at the London Stock Exchange to raise capital to fund projects in the oil and gas sector. The country, which is seeking resources to finance upstream, midstream and downstream projects held the inaugural Kenya Energy & Petroleum Capital Markets Day at the London bourse last week. The open day that comes five months after Kenya signed a memorandum of understanding with LSE to unlock opportunities to mobilise resources for the capital intensive sector, a move that is critical in accelerating the pace of infrastructure development.
Mozambique to share gas revenue in ‘tuna bond’ restructuring (Reuters)
- - -
Related News
Botswana State of the Nation Address 2018
Delivered by Dr. Mokgweetsi E.K. Masisi, President of the Republic of Botswana, to the First Meeting of the Fifth Session of the Eleventh Parliament, 5 November 2018
Mister Speaker, Honourable Members, this being the first time that I come before you to report on our country’s progress over the last twelve months, is an apt opportunity to also update this House and the nation about our roadmap that seeks to take this country to greater heights.
During my Inauguration Speech on 1st April, 2018, I made several policy pronouncements which are primarily meant to address, as a matter of urgency, the twin problems of poverty and unemployment particularly amongst our young people who constitute sixty per cent of this country’s population.
In pursuit of these noble development objectives, we continue to be guided by the pillars of our pdf National Vision 2036 (2.97 MB) which provide for broad based, inclusive, comprehensive and complementary National Development.
In order for us to achieve our overarching objectives, Government is in the process of developing a National Transformation Strategy whose key objective will be to unlock the tremendous potential of our human and financial resources. It will also broaden and deepen the beneficial participation of citizens in all sectors of the economy.
Underpinning the National Transformation Strategy will be the national value system that will promote the spirit of entrepreneurship and commitment to development. In addition, our public institutions will be revitalized and they in turn, will renew their commitment to serve effectively with purpose and agility.
In this regard, a National Monitoring and Evaluation Framework is also in place to ensure that we achieve the targets that we have and will continue to set for ourselves.
Our current pdf National Development Plan 11 (NDP 11) 2017-2023 (4.47 MB) , is due for its Mid-Term Review in the next financial year. It is during this process that most of our transformative adjustments will be effected.
Performance and Outlook of the Domestic Economy
Growth in the Real Sector
After recording a moderate growth rate of 4.3 percent in 2016, the domestic economy slowed down to 2.4 percent in 2017, mainly as a result of the weak performance of both the Mining and non-Mining sectors. In terms of the domestic outlook, the economy is expected to strengthen in the medium-term, driven by positive growth in both Mining and non-Mining sectors. Among the non-Mining activities where such positive growth is expected are the services, in particular the tourism and retail sub-sectors.
Merchandise Trade, Balance of Payments and Foreign Exchange Reserves
The merchandise trade balance continues to be driven by trade in diamond, mainly from De Beers Global Sight-holder Sales, which includes a substantial re-export trade for rough diamonds. During 2017, total exports were valued at P60.15 billion compared to P80.34 billion recorded in 2016. The decrease was largely due to weaker global demand, which restricted diamond sales from Botswana. Total imports were valued at P54.9 billion, representing a decline of 17.9 percent from P66.86 billion in 2016. As a result, the trade balance was in surplus of P5.25 billion in 2017.
Balance of Payments
The balance on the current account was a surplus of P22.23 billion in 2017, attributed to improved revenue inflow from the Southern African Customs Union (SACU), which increased by 35.5 percent from P12.8 billion in 2016 to P17.3 billion in 2017, as well as a modest surplus in the merchandise trade account.
Overall, the balance of payments was in deficit of P3.3 billion in 2017, compared to a surplus of P2.8 billion recorded in 2016. The deficit was mainly attributable to Government’s financial obligations, including: funding of Botswana’s Diplomatic Missions in various countries, payments for imports and external loan repayments, resulting in withdrawals from foreign exchange reserves. Foreign currency revaluation losses, which resulted from the appreciation of the Pula against the US Dollar, also contributed to the overall deficit balance.
Foreign Exchange Reserves
As at December 2017, foreign exchange reserves amounted to P73.7 billion, a decline of 4.0 percent from the P76.8 billion recorded in December 2016. The foreign exchange reserves have since increased to P75.1 billion, as at the end of July 2018. Of this amount, the Government Investment Account amounted to P34.75 billion, which represented 46.3 percent of the country’s total foreign exchange reserves.
Financial Inclusion Strategy
Financial Inclusion is achieved when consumers across the income spectrum in a country can access and sustainably use financial services that are affordable and appropriate to their needs. To achieve this, Government has developed a National Financial Inclusion Roadmap and Strategy that runs from 2015 to 2021. The strategy provides a holistic outlook of the financial needs of the society, and indicates how the financial sector should be improved to provide better services and financial products that promote financial inclusion. The Strategy is being implemented by various stakeholders including Ministries, Regulators and Financial Institutions, among others, under five priority areas namely: Improvement of Payments Eco-System; Facilitation of Low Cost, Accessible Savings Products; Development of Accessible Risk Mitigation Products; Improvement of the Credit Market and Consumer Empowerment and Protection.
Small and Medium Enterprises (SME) Development
The development of SMEs remains central in Government’s development agenda. To this end, Government is undertaking initiatives that will facilitate development of SMEs. Such initiatives include, establishment of Centres of Excellence country-wide, where SMEs productive capacities and competitiveness will be developed.
Furthermore, Government is collaborating with Development Partners on the implementation of Enterprise Development Programmes. Some of these include, Tokafala, which is a collaboration with Debswana, De Beers and Anglo American. The Programme is budgeted for Eight Million United States Dollars (US$8 million) of which, Government’s contribution is Four Million United States Dollars (US$4 million). The Programme will be implemented in three years, commencing in 2019 targeting SMEs across all sectors of the economy.
The other initiative is the Supplier Development Programme (SDP), whose objective is to strengthen citizen-owned enterprise competitiveness. The aim of the Programme is to connect small-scale producers/suppliers to local markets as well as abroad. The Programme is anticipated to start in 2019 and will target five (5) priority Sectors of Mining, Agro processing, Leather, Infrastructure projects and Textile, as well to develop their associated value chains.
Economic Diversification Drive (EDD)
We remain committed to using Government purchasing power to boost local productive capacity and help build competitiveness for our industries in the regional and global markets. To this end, Government through the support of the United Nations Development Programme (UNDP) is undertaking a comprehensive review of the Economic Diversification Drive (EDD) Strategy with a view of making it more relevant and impactful. The review is taking into consideration the institutional capacities to effectively implement strategy project policies, programmes and initiatives. The review is expected to be concluded by end of this year.
As part of sectoral development and efforts to develop the Leather Sector, preparatory work for the construction of the Leather Industry Park in Lobatse is at an advanced stage. All the preliminary works including, the establishment of Special Purpose Vehicle; approval of the Environmental Impact Assessment and Environmental Management Plan; and the appointment of the Project Management Team and the Technical Advisor have been completed. The Leather Industry Park Business Model is currently being updated in line with the current industry landscape. The construction of the Leather Industry Park is expected to take off in 2019.
Investment Promotion
We have recognised investment promotion as key to economic growth and job creation, as it leads to expansion of existing, and establishment of new industries. We have since embarked on a transformation agenda to lure investors to our country through a revamped investment promotion drive which I am leading. These missions are to ensure Botswana’s visibility and position us as an investment destination. We are building the goodwill in the global village through Brand Botswana initiatives including investment booths, marketing our arts and culture, cuisine, dance and song.
In addition, we are also working on stimulating domestic investment by ensuring that the same red carpet in offer for FDI is also available for domestic investment. Further, plans are advanced to establish the Economic and Investment Board, which I shall Chair, and which is expected to be operational in 2019. As part of this work, prior key milestones include establishment of an Investment Clearing House to ensure facilitation of ease of investment.
In the year 2017/18, through the Botswana Investment and Trade Centre (BITC), generated One Billion Eighty-Two Million Pula (P1.082 billion) worth of Foreign Direct Investment (FDI) and Two Billion Nine Hundred and Twenty Million Pula (P2.92 billion) from domestic investment and expansions in the country. This points to a notable increase in domestic investment, which underscores the increasing confidence of local investors in the economy. The new investments made in 2017/18 resulted in creation of an additional 3 050 jobs, of which 2 008 jobs were created from FDI inflows and 1 142 from domestic investment and expansions.
With a view to enhance export competitiveness of local companies to enable them to compete regionally and internationally, Government is reviewing the Botswana Exporter Development Programme (BEDP). In 2018/19, BEDP will enrol twenty (20) companies to assist them to develop their export marketing plans to enhance their export readiness and competitiveness. The Programme will build capacity for companies to supply both the local and international retail chain stores.
Meanwhile, following the launch of the Botswana One Stop Service Centre (BOSSC) in October 2017, investors continue to be facilitated through shortened and simplified administrative procedures and guidelines for issuance of business approvals, permits and licences. The approval rate for BOSSC authorizations for the year under review stood at 81 percent, a significant improvement when compared with previous rates. I therefore, wish to urge the Business Community to take advantage of the streamlined business processes provided by the BOSSC.
Implementation of the SPEDU Revitalization Programme is underway. We have approved a set of incentives for this region which include a 5 percent corporate tax rate for the first five (5) years and 10 percent thereafter. Seven (7) of the eight (8) companies assessed have been approved. The revitalization program in total has resulted in sixteen (16) projects which have created seven hundred and eighty-one (781) jobs in the following Sectors, Agri-business one hundred and ninety-two (192); Manufacturing three hundred and ninety-nine (399); Infrastructure Development one hundred and thirty-seven (137); and Information Communication Technology fifty-five (53). Besides these, a total of eleven (11) potential investors are being facilitated by SPEDU for business start-ups and land acquisition. The number of jobs to be created from these will increase investor confidence, and should itself attract others to follow.
Special Economic Zones
Preparations for operationalisation of the Special Economic Zones is nearing completion with Regulations and Incentives for the SEZs being finalised for consideration by Government this financial year. SEZs are a key component in advancing our goals towards export-led economic growth. It is also worth noting that we will roll-out Public Private Partnerships (PPPs) in the development of infrastructure in the SEZs.
On another note, I would like to take this opportunity to inform you that the first company to operate in one of our SEZs will start production during the fourth quarter of this financial year with the potential of making Botswana the largest exporter of processed poultry meat in the whole of Africa. The initial setting up investment capital of the company amounts to Two Hundred Million Pula (P200 million). This investment together with many others will have downstream linkages with local industry and service providers such as in transport and logistics, financial and other related services.
Doing Business and Business Facilitation
In an effort to continuously improve the doing business environment and the economy’s competitiveness, Government continues to monitor and evaluate all the processes and procedures as well as the regulatory instruments. Government has therefore reviewed the Doing Business Reforms Roadmap to take into account emerging issues at home, in the region, and beyond. Implementation of the revised Roadmap should complement our reinvigorated efforts of attracting and retaining meaningful, sustainable and impactful investment. Treat this, Mister Speaker, if you will, as one of the numerous elements in my Road Map to enable and ease investments which will lead to jobs, and more jobs, being created.
This year we have passed a number laws which will enhance the ease of doing business environment in Botswana. Worth noting in terms of completed reforms, is the introduction of the new Customs Management System (CMS) which has improved trade across borders where business can pre-declare their goods and make payments online. The same online system forms the basis upon which a Single Electronic Window tool would be built to further enhance cross border trade.
Furthermore, Parliament has passed four (4) Bills on Companies Amendment; Companies Registration; Registration of Business Names; and Registration of Business Names Re-Registration) which have enabled the development of an Online Business Registration System under the Companies and Intellectual Property Authority (CIPA). At the initial stage, this System will allow for integration with online systems from BURS and PPADB, thereby facilitating information exchange between these tripartite institutions. This is anticipated to limit unnecessary physical interactions with these institutions.
To improve the regulatory framework, Government has engaged an expert to guide implementation of the Strategy for regulatory impact assessment, with a view to remove all regulatory hurdles to business and reduce the cost of doing business in the country.
In our endeavour to support innovation, we will do all in our power to ensure that youth owned enterprises are assisted to harness their potential. This, we intend to do through, among others, making affordable the process of registering patents as a way of utilising intellectual property to grow our economy.
It is the intention of my Government to enable and ease patent development and protection as pre-requisites to growing and trading on our knowledge capital. To this end, specialized training will be offered by Government to train lawyers to qualify in the specialities of patent and copyright law. Furthermore, in our quest to enhance our job creation potential and innovative, productive outputs, we shall find a job for our top achievers in their fields of study, through a strategically managed talent and young professionals programme. Efficiency, productivity and competitiveness shall be the guiding values of such a programme.
As Government continues to work towards a more conducive business environment, it is expected that the private sector will align their investment with key priority areas as well complement efforts to build local productive capacity for SMEs. For instance, Government is working with the Retail Sector to develop the Retail Charter to ensure that Batswana benefit from the retail value chain. Government will also continue to implement sector specific interventions and initiatives to stimulate investment and job creation. This will include deliberate interventions to promote manufacturing of goods in Botswana.
Export Development
During the year 2017/18, export development and promotion efforts yielded a total of Two Billion Three Hundred and Sixty Million Pula (P2.36 billion) in export revenue against Two Billion Two Hundred and Thirty Million Pula (P2.23 billion) generated in the previous period. This gives comfort that we are moving in the right direction as we strive to being an export-led economy. To this end we will vigorously promote the export of meat and fresh produce to new markets, and in so doing, utilize existing meat export channels to export fresh produce. Furthermore, we continue to negotiate Trade Agreements which will guarantee us preferential access to third party negotiating partner states.
Tripartite Free Trade Agreement (TFTA)
Botswana signed the Tripartite Free Trade Area (TFTA) on the 30th January 2018. The Tripartite Negotiating States are the twenty-seven (27) members of the three (3) regional groupings of SADC, the Common Market for East and Southern Africa (COMESA) and the East African Community (EAC). The Agreement offers potential access to a market of a population of around six hundred and twenty-five (625) million people. To date, twenty-two (22) States have signed the Agreement, while only three (3) have ratified from the fourteen (14) required ratifications for it to enter into force. Tariff negotiations with Egypt and the EAC are on-going, once the Agreement enters into force we can have preferential access in these markets for our beef, salt and plastic tubes among other products. It goes without saying that our output and efficiency will have to improve to serve such a big market. And here once again, Mister Speaker, is where I place my conviction on the jobs that we will create.
African Continental Free Trade Agreement (AfCFTA)
Flowing from the TFTA and in pursuance of the Vision 2063 of the African Union and Boosting Intra-Africa Trade (BIAT) Initiative, we are nearing the conclusion of negotiating a Continent-wide Trade Agreement. This is expected to make the movement of goods and services easier across the continent. The AfCFTA will present opportunities to markets of over one (1) billion people living on the Continent with potential value of over 1 trillion US dollars in trade across the Continent. It is envisaged that the outstanding issues will be resolved at the December, 2018 African Ministers of Trade meeting, thus paving the way for Botswana to sign the AfCFTA at the AU Assembly of Heads of State and Government in January, 2019.
SACU + Mozambique Economic Partnership Agreement with the United Kingdom
We are currently, together with the rest of SACU and Mozambique, negotiating an Economic Partnership Agreement (EPA) with the United Kingdom. This Agreement is necessitated by the impending exit of the United Kingdom from the European Union (EU) which means that the former can no longer be a party to the SADC-EU Economic Partnership Agreement. In view of the importance of the United Kingdom market for our goods and services, together with the fact that it has hitherto been the point of entry for our goods into the EU, it was imperative that we conclude the Agreement with the UK to ensure that there are no trade disruptions. Negotiations for the Agreement are at a very advanced stage and it is envisaged that the SACU + Mozambique and the UK EPA will be signed sometime in December, 2018 in Botswana.
Review of the SACU and European Free Trade Association Free Trade Agreement
Botswana is also part of the negotiations to review the Free Trade Agreement (FTA)) we have with the European Free Trade Association (EFTA) states of Switzerland, Norway, Liechtenstein and Iceland. Of particular importance to us is the need to increase the current quota of 500 tonnes of beef and 500 tonnes of lamb that we enjoy together with the Republic of Namibia through our bilateral agricultural agreement with Norway. We are also working at convincing our Norwegian counterparts to transpose the additional quota of 2700 tonnes for beef that we enjoy under the Generalised System of Preference (GSP) into the FTA so as to offer us certainty that will allow us to plan ahead.
In this respect, projects such as the Lobu Farm Cluster Development, for small stock production, in Kgalagadi District will benefit immensely from this guaranteed market once fully operational. Indeed, it also offers an opportunity for all small-stock farmers across the country to expand and grow their production in the knowledge that they will have an all but guaranteed market. It is the intention of Government to replicate the Lobu model, however, to be lead by the private sector, in other parts of Botswana.
Declaration on Trade and Women’s Economic Empowerment
The Government of Botswana and the International Trade Centre (ITC) recently signed the Buenos Aires Declaration on Trade and Women’s Economic Empowerment to adopt initiatives that support women participation in trade.
International Relations
On the international front, Botswana continues to pursue an active and influential role in the advancement of various issues of national interest at bilateral, regional and multilateral levels. Our foreign policy seeks partnerships and fosters international cooperation to advance the national development agenda. Equally, in line with my pledge, we endeavour to do our part to contribute to finding solutions to the global challenges that afflict humanity.
I must further affirm that in seeking to achieve these goals, Botswana’s policy shall remain fully anchored on the ideals and values of peace, democracy, equality, and good governance. I have thus committed Botswana to vigorously engage with the international community by among others, participating at fora that promote those fundamental principles and values, as well as, issues of strategic interest such as trade and investment, environmental issues, wildlife conservation, and trade and investment, among others.
Immediately after taking office, I advanced our foreign policy objectives by paying courtesy calls on my counterparts in our regional organization, the Southern African Development Community (SADC). While these were mostly introductory visits, they served to affirm the importance we attach to our relations with our most vital and critical partners, with whom we share borders, deep historical, political, cultural and socio-economic ties.
I am pleased to report that we continue to make headway towards making Botswana a business destination. This is demonstrated by among others, the numerous strategic regional and international meetings that Botswana has hosted thus far since April, 2018. I was therefore honoured to host the 6th SACU Summit during the Botswana’s chairmanship, in June, 2018. This afforded us an opportunity to provide strategic leadership towards advancing the SACU Work Programme. Regarding SADC, Botswana as both the founding member and the host of the SADC secretariat, attaches great importance to the work of our regional organisation and continues to contribute to the regional integration agenda. 80
On the continental front, Botswana will continue to play an active role in advancing the transformational agenda as envisioned in Agenda 2063, advocating for a transparent and inclusive institutional reform process of the African Union. In that regard, Botswana has initiated the process to join the African Union Peer Review Mechanism.
At the global level, we will continue to actively participate in the work of the United Nations in pursuit of sustainable development, as well as the maintenance of international peace and security. The Human Rights Council remains significant in the promotion and protection of human rights and fundamental freedoms, which we strongly support. With regard to the International Criminal Court (ICC), its work will remain relevant to Botswana, as we believe it has a paramount role as the only international criminal tribunal for war crimes and crimes against humanity.
In a nutshell, Botswana’s foreign policy will continue to be guided by the principles of: democracy; development; self-reliance; unity; botho (humility); peaceful resolution of conflicts; peaceful co-existence and good neighbourliness; territorial integrity and sovereignty of nations; respect for human rights and rule of law; good governance; a rules-based world order, and adherence to principles of international law. Based on these enduring values, Botswana’s foreign policy document is being compiled, and will, once completed, serve as an authoritative point of reference.81
Conclusion
Batswana are all aware that the transition from the previous administration has not been as smooth as expected. However, it ought to be noted, I have in my attempt to smoothen the process engaged senior citizens namely; His Excellency Dr. Festus Mogae, His Honour Dr. Ponatshego Kedikilwe, Honourable Ray Molomo, Honourable Patrick Balopi and Honourable David Magang to assist and lead in smoothening the transition. I regret to announce that their efforts have not borne fruit up to this point.
In the true tradition of Botswana, such mediation should be managed, for the benefit of everyone. Worth noting, however, is that there is in place legislation that governs the benefits and entitlements of Former Presidents. I have no intention whatsoever of breaking the law. I intend to apply the law to the letter. The search for a lasting settlement shall continue.
Let me conclude by once more reiterating the fact that my Government places its citizens at the centre of its socio economic development agenda. To this end, we have to ensure that citizens continue to enjoy the economic prosperity of this country as well as their individual and collective freedoms and rights, as enshrined in the Constitution.
As a nation that is well known for peaceful coexistence and tolerance for diversity of cultures, we have to continue to work together to achieve our common goals. This is the only practical way we can achieve the aspirations of our National Vision 2036 which are aimed at “Achieving Prosperity for All”.
Finally let us seek guidance from the Lord in our efforts and commitments to contribute to the development of this great country. I urge you, Fellow Citizens, to register for elections honestly to enable us to vote for our sustained peace, tranquillity, and sober prosperity as a nation and a people.
Ke kopa Batswana gore ka Sontaga yo o tlang reye dikerekeng gongwe le gongwe fa re tlaabong rele teng go rapelela Pula, ka gore ke yone, e re e solofetseng go lema, go nosa leruo, le diphologolo tsa naga le go tlatsa matamo a rona.
Ke le leboga ka Pula.
Related News
President Trump terminates AGOA trade preference program eligibility for Mauritania
President Donald J. Trump on Friday announced his intent to terminate the eligibility of Mauritania for trade preference benefits under the African Growth and Opportunity Act (AGOA), as of January 1, 2019, due to forced labor practices. The President notified Congress and the Government of Mauritania accordingly.
Based on the results of the required annual AGOA eligibility review, the President determined that Mauritania is not making sufficient progress toward establishing the protection of internationally recognized worker rights. Consequently, Mauritania is out of compliance with eligibility requirements of AGOA.
Specifically, Mauritania has made insufficient progress toward combating forced labor, in particular the scourge of hereditary slavery. In addition, the Government of Mauritania continues to restrict the ability of civil society to work freely to address anti-slavery issues.
“Forced or compulsory labor practices like hereditary slavery have no place in the 21st century,” said Deputy U.S. Trade Representative C.J. Mahoney. “This action underscores this Administration’s commitment to ending modern slavery and enforcing labor provisions in our trade laws and trade agreements. We hope Mauritania will work with us to eradicate forced labor and hereditary slavery so that its AGOA eligibility may be restored in the future.”
The United States will continue to monitor whether Mauritania is making continual progress toward the protection of internationally recognized worker rights (including with respect to forced labor) in accordance with the AGOA eligibility requirements.
Background
Mauritania continues to have the highest prevalence of hereditary slavery in the world. At a public hearing held on August 16, 2018 for the annual AGOA eligibility review, a representative of the American Federation of Labor & Congress of Industrial Organizations (AFL-CIO) assessed Mauritania’s record of combatting hereditary slavery and concluded that it has failed to meet AGOA’s eligibility criteria with respect to internationally recognized worker rights, including a prohibition on the use of any form of forced or compulsory labor, the right of association, and the right to organize and bargain collectively. Public comments and hearing testimony related to the annual AGOA eligibility review can be accessed on AGOA.info.
In order to qualify for AGOA trade benefits, partner countries must meet certain statutory eligibility requirements, including making continual progress toward establishing internationally recognized worker rights, which includes a prohibition on the use of any form of forced or compulsory labor.
Other criteria include not engaging in gross violations of internationally recognized human rights and making continual progress toward establishing the rule of law, political pluralism, and the elimination of barriers to U.S. trade and investment.
Related News
tralac’s Daily News Selection
Profiled African trade and investment conferences:
(i) Starting today
In London: ODI’s Africa’s rising debt conference. Conference agenda, Briefing paper (pdf), Twitter hashtag: #AfricasRisingDebt
In Johannesburg: The Corporate Council on Africa’s US-Africa Infrastructure Conference. For Twitter updates: @CorpCnclAfrica
(ii) Later this week
In Arusha: EAC Sectoral Committee on Investment (6-7 November)
In Johannesburg: Africa Investment Forum (7-9 November)
Today’s media briefing: All set to tilt the tide of investments into Africa
The Africa Investment Forum kicked off on Monday with a media briefing in the South African capital. The game changing event, aimed at attracting multi-billion-dollar deals across the continent, is set to usher in a new era for Africa’s investment landscape. Dubbed by the African Development Bank President Akinwumi Adesina as the “collective deal of the century for investment in and the development of Africa,” the forum will focus on advancing projects to bankable stages, raising capital and accelerating the financial closure of deals.
Nigeria and the AfCFTA: speech by Nigeria’s VP, Prof Kemi Asinbajo, to the Africa Trade Forum
As a metaphor for the purpose of our gathering, Lagos demonstrates that economies, cities and countries that are open, grow faster and prosper more than those that are closed. And Lagos is one such example, becoming very quickly, we are told, climbing up to the 5th largest economy in Africa. Permit me to speak briefly on the value of a rigorous domestic process of stakeholder engagement for trade agreements. It is well over seven months since the agreement establishing the AfCFTA was signed in Kigali, on 21 March 2018. My principal focus, therefore, is to share with you the stage of the on-going internal process in Nigeria and the results of outreach, sensitization and consultations with stakeholders, because everybody has been asking: so, what is Nigeria doing? So, I think it might just be very helpful to fill in the gaps. So, what have we done? What have we learned? What are the current state-of-play and envisaged next steps? [Dangote urges African countries to get foundation right for AfCFTA signing]
Uganda: 9th Annual Trade, Industry and Cooperatives Sector Review Conference
Chairmanship of the continental FTA negotiations. During the 6th meeting of the African Union Ministers of Trade that took place in Dakar, 3-4 June 2018, Uganda was unanimously elected to chair the AfCFTA Forum for African Ministers of Trade. Uganda is expected to champion the AfCFTA for a period of one year, which commenced in June 2018. The election is in recognition of Uganda’s active participation in the Continental Free Trade Area negotiations that started in 2016 with the aim of creating an African single market. During this tenure, Uganda will lead the conclusion of the AfCFTA negotiations.
Promotion of cross-border export zones. The informal cross-border export earnings in the financial year 2017/18 were estimated at $595.51m, representing 17.08% of Uganda’s exports. The main informal commodities included beans, maize, sugar, other grains, bananas, fish, among others. DR Congo was the main informal partner of the country with total informal export trade amounting to $291.48m in 2017/18. It was followed by Kenya at $149.94m; Rwanda at $54.41m; South Sudan at $54.17m and Tanzania at $45.52m, in the same period. [Various downloads available]
Why importers could derail SGR’s Kampala journey (The Standard)
China-Africa updates
China plans to sell off its African infrastructure debt to investors (The East African)
Regional governments could soon get access to more Chinese debt if a plan by a leading Chinese banking conglomerate to buy African infrastructure debts from the government starting next year, repackage them into securities and then sell them to investors, comes to fruition. The plan will see Hong Kong mortgage insurer Hong Kong Mortgage Corporation buy a diverse basket of infrastructure loans next year and explore the idea of “securitising” or repackaging them into securities for sale to investors, allowing it extra liquidity that it can loan out to finance more infrastructure projects. “This initiative we believe will help ‘recycle’ commercial banks’ capital to be redeployed into other greenfield infrastructure projects, besides enabling wider capital markets participation in infrastructure development under the Road and Belt initiative,” said HKMC Greater China chief executive Helen Wong.
UNDP-China case studies: Experience and innovation of China’s agricultural assistance in Guinea-Bissau, Mozambique
With both African countries working to expand agriculture production - a challenge heightened by climate change - the two programmes linked local farmers and officials with Chinese knowledge, technology, and market-inclusive systems to boost food production. The reports assess the two partnerships - the Agricultural Technical Cooperation Project in Guinea-Bissau and the Agricultural Technology Demonstration Center in Mozambique - as examples of what South-South collaboration can achieve. ”UNDP welcomes these joint assessments, which illustrate China’s commitment to partnerships that support the achievement of national development goals and the aspirations of Africa’s Agenda 2063 and 2030 Agenda. We will continue to facilitate increased South-South cooperation to help address the Global Goals’ financing gap, supporting the full national ownership of partnering African countries in the process,” said Ms Ahunna Eziakonwa, UNDP Assistant Administrator and Regional Director for Africa. [International Forum on Reform and Opening Up and Poverty Reduction in China: consensus statement]
China silk giant to set up base in Kenya (The East African)
The world’s largest producer of silk, Guangdong Silk-Tex Group, has announced its plans to set up shop in Kenya. Top officials of the government-owned company met President Uhuru Kenyatta in Shanghai, Sunday during which they confirmed plans to set up business in Nairobi. The company will not only setup a silk processing factory at the Export Processing Zone in Athi River, but will also establish a silk farm. The Guangdong Silk-Tex Group will establish a cocoon farm on an estimated 8,237 acres of land, with capacity to handle the entire silk value chain covering cocoon procurement, silk reeling, weaving and trading. The venture is expected to create over 300,000 jobs for Kenyans.
Related: Uhuru takes on China, demands ‘mutually beneficial’ trade deals. The Star understands that during the bilateral talks, Uhuru expressed concern about the trade imbalance and demanded access to the Chinese market for Kenya’s produce. “Access to the Chinese market will have a positive impact on the lives of common people and this will help counter any negative propaganda peddled by detractors of our strong Sino-African relations. As a nation we look forward to an open Chinese market for Kenya’s exports,” Uhuru said in a tweet after the meeting. [Xi Jinping pledges to cut Chinese import tariffs]
China International Import Expo updates: Kenya, Ethiopia, South Africa
Kenyan exporters scouting for deals at Shanghai trade fair. “The China International Import Expo is set to attract about 90 firms from Kenya which will be showcasing their products for six days at the National Exhibition and Convention Centre in Shanghai,” said Export Promotion Council CEO Peter Biwott. “We are looking forward to showcase agriculture related products such as tea, flowers, coffee and nuts. These are areas where we have competitive advantage.”
Ethiopian coffee producers, exporters eye vast Chinese market
Deutsche Bank and Standard Bank sign deal to finance US agri exports to Africa (GTR)
Deutsche Bank and South Africa’s Standard Bank have agreed to co-operate under a US-led guarantee programme to promote US agricultural exports. The GSM-102 programme, which applies to US exports exclusively, seeks to encourage commercial financing of agricultural commodities exports to countries where credit is necessary to sustain and increase US sales. [SA’s champion in the US, Congressman Ed Royce, takes a bow]
Ghana: Textile workers demand border monitoring to check smuggling (Ghanaweb)
Leadership of the Textile, Garment and Leather Employees Union are demanding that the borders at Aflao and other entry points be strictly monitored to stop pirated goods from entering the country. Their demand follows the decision by the Ministry of Trade and Industry and the Ghana Revenue Authority to make the Tema port the only entry point for textiles into the country. According to the Ministry of Trade and Industry, it is prudent that there is a designated point of entry for textiles in order to prevent the influx of pirated goods onto the markets.
Indonesia: Expanding palm oil exports without neglecting existing markets (Jakarta Post)
Speaking at the 14th Indonesian Palm Oil Conference on Thursday, Trade Minister Enggartiasto Lukito cited potential export markets the government is targeting in Africa such as Mozambique, Morocco, Tunisia and Algeria. He hoped palm oil businesses would follow suit. Opening new markets, however, is always easier said than done. According to Association of Palm Oil Producers chairman Joko Supriyono, palm oil businesses faced tough challenges in opening new markets. First, a new market has no strong demand. Second, new markets have their own barriers. Iran, for example, is cut off from the international financial system as a result of United States sanctions and therefore, trading with it has to go through a third party. African countries, meanwhile, have no storage infrastructure for palm oil, and therefore, exports to Africa have to be delivered in packages, resulting in higher costs.
India: Government working on road map to promote India as auto export hub (Mint)
The Union government is planning to draw up a long-term road map to promote India as a major hub for exports of automobiles and spare parts with a focus on Africa and Latin America. The commerce ministry is in consultations with industry body Society of Indian Automobile Manufacturers and leading auto makers to help prepare the plan, two people directly aware of the development told Mint. A key focus of the commerce ministry is to drive exports to countries such as Nigeria, Algeria, Egypt, South Africa and Kenya in Africa, and to Chile, Peru and Colombia in Latin America. Also discussed were ways to drive exports to West Asian countries such as Saudi Arabia and Southeast Asian nations such as Indonesia, Philippines, as well as Australia. [Nigeria imports 1.2m vehicles in six years]
Measuring competitiveness in a world of global value chains (IMF)
This paper explains how and why assumptions about the nature of global value chains can have major implications for such competitiveness calculations going forward. In particular, we argue that accounting for global value chains lowers the importance of countries that export components in global value chains, which generally involve trade with close neighbors, and increases the importance of exports of final goods, which tend to go to countries that are further away. As the weight of neighboring countries linked to each other through regional supply chains fall, more weight is placed on countries further away. We also find that the distinction between the new and the traditional indexes has not had significant implications because of how key bilateral exchange rates have behaved in the past. Going forward, assessments of the relatively roles of major currencies in competitiveness calculations will become more important.
Today’s Quick Links: Diarise: Addis Ababa to host Ethio-Ghana trade conference, April 2019 Collins Odote: Lessons from Kenya’s Ease of Doing Business rating World Bank’s $293m for East Africa’s technical schools Posted: The AfDB’s Governors’ Digest Capital outflows force Nigeria’s external reserves down to $41.995bn Laurent Gonnet: Toward a deep transformation of the banking industry in Africa Dubai group seeks to enhance Nigeria’s agriculture exports |
Related News
Africa Investment Forum: All set to tilt the tide of investments into Africa
Forum to advance projects to bankable stages, raise capital, and accelerate financial closure of deals
The Africa Investment Forum kicked off on Monday with a media briefing in the South African capital. The game changing event, aimed at attracting multi-billion-dollar deals across the continent, is set to usher in a new era for Africa’s investment landscape.
Regional and global investors and institutional investors, private sector leaders, prominent government officials, and representatives of State are converging in South Africa, for what is billed as an unprecedented gathering to mobilize and crowd in global investment capital for the continent’s ambitious development agenda.
Dubbed by the African Development Bank President Akinwumi Adesina as the “collective deal of the century for investment in and the development of Africa,” the forum will focus on advancing projects to bankable stages, raising capital and accelerating the financial closure of deals.
“This is the beginning of a new conversation, a new way of doing things,” Victor Oladokun, the African Development Bank Director of Communications told reporters, a day before the Forum, which will be held at the Sandton Convention Centre in Johannesburg.
South African Deputy Director of the National Treasury Vuyelwa Vumendlini said the Africa Investment Forum provides a continental complement to the country’s recent investment forum which successfully attracted more than 200 billion Rand in investments.
The Government of South Africa, the African Development Bank and several multi-lateral development partners are hosting the Forum expected to become a key springboard for investment and an annual event.
Global financial institutions such as Africa Finance Corporation, Development Bank of South Africa, Africa 50, Afreximbank, European Investment Bank, Trade and Development Bank and the Islamic Development Bank, have come together to form solid strategic alliances around this new venture.
The Africa Investment Forum, is a unique platform where already curated projects, advanced and de-risked and are brought in front of investors. This innovative partnership of key global and continental players will focus on transactions and deals, Oladokun said.
Between US$130-170 billion a year is needed to finance infrastructure for Africa’s growing population, according to the African Development Bank’s Economic Outlook 2018. While global assets under management amount to an estimated US$131 trillion dollars, most of that is not invested in Africa; even one percent of that could provide the investment gap Africa needs.
“There is an urgent need to close the gap and for that to happen ‘it has to be business unusual. This is the first and biggest African investment market place, nothing like this has even been done before,” Oladokun, told reporters.
Gauteng Province officials and government representatives in attendance included Muzi Mathema, of Gauteng Growth and Development Agency, Ms Vumendlini and Ayanda Holo, Director of Media engagement for the South African government. African Development Bank Executive Director Mmakgoshi Lekhethe was also in attendance.
Ronnie Ntuli, Executive Chairman THELO, described the Forum as “a unique opportunity for Africans to partner with global capacity and the private sector. “It is an investor market... where all these partners converge to take advantage of tremendous opportunities,” he said.
Africa Investment Forum moving Africa’s investment agenda forward
African businesses are rapidly growing in number and sophistication, presenting excellent investment opportunities with relatively high returns, but the challenge of positioning themselves for consideration in front of institutional investors and global corporates remains.
The Forum has curated a total pipeline of 230 projects worth over US$208 billion spanning several sectors – energy, infrastructure, transport and utilities, industry, agriculture, ICT and Telecoms, water and sanitation and health and education.
Twenty-eight boardroom sessions will curate, screen and ensure the projects are bankable and reach financial close. A total of 61 deals estimated at more than US$40 billion will feature in Boardroom Sessions, while another US$28 billion worth of deals will be showcased to investors at a marketplace Gallery Walk.
The Forum also includes a co-guarantee platform that will develop and deploy innovative instruments to de-risk private sector investments at scale, thus boosting investor confidence.
Discussions will focus on specific projects, sectors, investors, and themes. Others will have country or regional focus. Co-financing and collaborations between investors will also be a key focus area at this event.
The inaugural Africa Investment Forum will feature a session on Championing Investments − an investment conversation with African Heads of State to highlight concrete and transformative actions for a new business landscape in Africa, including collective efforts to facilitate private investments.
The Africa Investment Forum takes place from November 7-9, 2018 at the Sandton Convention Centre, Johannesburg.
Related News
Uganda: 9th Annual Trade, Industry and Cooperatives Sector Review Conference
Enhancing Competitiveness of Micro Small and Medium Enterprises for National Export Development
Speech by Hon. Amelia Kyambadde, Minister of Trade, Industry and Cooperatives
I welcome you to this 9th Annual Sector Review Conference of the Trade, Industry and Cooperatives Sector under the theme; “Enhancing Competitiveness of Micro Small and Medium Enterprises for National Export Development”.
The theme emphasizes the contribution of Micro, Small and Medium Enterprises (MSMEs) towards reducing the balance of payment deficit in Uganda.
At this Conference; we will highlight the achievements of the Sector for the previous Financial Year 2017/18, the challenges in implementation of policies and programs in the Sector and the planned key interventions for FY 2019/20. Actionable resolutions to inform policy formulation and implementation are expected to be made at the end of this conference.
Achievements of the Sector
In the Financial Year under review, the sector received UGX 77.302 billion. The received funds enabled the undertaking of the following activities;
Trade development
Exports in the Financial Year of 2017/18 increased by 7.23%, to US$2,890.86 million from the previous Financial Year of US$2,696.00 million; as compared to imports that increased by 16.42%, to US$ 5,489.97 million from the previous Financial Year of US$4,715.51 million; in the same period. The individual countries with which Uganda had high trade deficits in 2017/18 were: China amounting to US$ 854.82 million (representing 32.89% of the deficit); India for US$ 596.96 million (22.97%); Saudi Arabia for US$384.07 million (14.78%); United Arab Emirates for US$277.74 million (10.69%) and Japan for US$247.83 million (9.54%), out of a total deficit of US$2,599.10 million in that year. Therefore, the above five countries were responsible for approximately 80% of Uganda’s trade deficit.
The COMESA trading bloc remained the main destination for Uganda’s formal exports with the share in total export earnings of 51.32% (US$ 1,483.72 million) in 2017/18, showing an increase of 17.48% from US$1,262.94 million in 2016/17; of which Kenya and South Sudan constituted 63.34% (US$939.81 million) of the Uganda-COMESA export earnings. The EU market ranked the second main destination for Uganda’s goods and services with 19.68% (US$568.96 million) of total formal exports in 2017/18, posting a 12.26% increase from 2016/17 value of US$ 506.83 million. The Middle East bloc followed accounting for 14.32% (US$414.06 million) of the total market share in 2017/18, as compared to 18.72% (US$504.71 million) the previous year; and of which United Arab Emirates contributed 92.37% (US$382.46 million) of the Uganda-Middle East exports in 2017/1018. Asia; Rest of Africa; Rest of Europe; The Americas, group categories followed in that respective order.
For the first time in history, Uganda had a surplus/favorable balance of trade with Kenya in the Financial Year 2017/18 of US$122.78 million (exports of US$628.47 million against imports of US$505.70 million) and also registered a record highest trade balance in the EAC region of US$413.86 million (exports of US$1,220.63 million against imports of US$806.77 million), in the same period. That is credited to the good integration and multilateral efforts spearheaded by the Ministry of Trade, Industry and Cooperatives in the region. However also deficit with Tanzania has increased in the recent years which is a policy concern.
Overall, coffee remained the main merchandise foreign exchange earner of the country. In the recent period, its share to total formal exports slightly reduced from 18.19% in 2016/17 to 17.04% in 2017/18. It was followed by gold and gold compounds whose earnings highly increased in the recent periods, then fish & its products, among others. However, the country’s merchandise exports are still dominated by unprocessed and or primary products.
The export to import ratio in the Financial Year 2017/18 was 52.66%! In other words, today Uganda is spending US$100 on imports when it has earned an income of only US$52.66 from exports. In that effect, the country is living on borrowings. It is vitally important to halt this escalation by making reduction of the trade deficit a top national priority and galvanizing all efforts by key MDAs to expand exports on a sustainable basis.
The increase in imports would be desirable and sustainable if most of the imports were used as inputs/capital into the production process. However, most of our imports are consumables rather than industrial/production inputs. Uganda’s imports have been mainly fuelled by; the construction boom (imported inputs such as cement, plumbing materials, interior décor and furnishings, etc.); exploration for and development of minerals notably oil and gas; and growing incomes that demand consumer and other investment goods that the local economy is unable to fully supply.
The major formal imports were Machinery equipment, Vehicles & Accessories with an import bill of US$1,081.48 million in 2017/18 representing 23.02% of imported goods composition, which was an increase of 20.08% compared to 2016/17 import bill of US$900.61 million representing 22.83% of imported goods in that year; Petroleum products closely followed at US$911.04 million (19.39%) in 2017/18, for which it was an increase of 31.31% from US$693.80 million (17.59%) in 2016/17; followed by Chemical & Related Products; Vegetable Products, Animal, Beverages, Fats & Oil; Base Metals & their Products; among others in the respective order.
The Asian Continent was the main origin of Uganda’s imports throughout the period depicted below (2005/06 – 2017/18), but its market share in Uganda’s import bill slightly declined by 6.14% from 45.01% in 2016/17 to 42.25% in 2017/18.
China is the leading source of Ugandan imports from Asia in the Financial Year 2017/18, accounting for 38.31% of imports from the region. The import value from China was US$888.44 million (equivalent to 16.18% of Uganda’s total imports) in the same year, which is an increase of 18.22% from US$751.53 million (35.41% of Asian import bill) in 2016/17. It was followed by India, which also contributed largely (equivalent to 11.66% of total imports) to the country’s import expenditures. India’s bill totaled to US$640.18 million (27.60% of Asian imports) in 2017/18 up from US$ 607.87 million (28.64% of Asian imports) paid in 2017/18, which was a 5.31% increase. Japan (US$262.75 million), Indonesia (US$175.15 million), followed in that order among others in 2017.18.
Interventions to address the deficit
The Sector is employing several strategies to ensure increased value of exports while reducing import values. These include:
1. Implementation of the National Export Development Strategy (NEDS)
The Strategy was approved by Cabinet on 25/08/2017. The main objective of NEDS is to increase the value of Uganda’s exports of the specified products and services to the targeted markets over the next five years. It intends to narrow the trade deficit as a percentage of total exports from the current annual average of negative 96% to at most negative 35% over the next five years. The NEDS also intends
-
To increase the value of priority products exported to the negotiated preferential markets by an average of 25%, for the regional markets (EAC & COMESA) and 40% for the EU annually over the next five years
-
Increase the value of priority products exported to the selected unilateral preferential markets (US, India and China) by an average of 40% annually over the next five years
-
Increase the value of priority products exported to the selected non preferential markets (Singapore, UAE and Hong Kong) by an average of 35% annually over the next five years
-
Provide a two-way communication mechanism between the productive sectors and export markets with a view to fostering export oriented investment and production
2. Restructuring of the Inter Institutional Trade Committee (IITC)
Section 11 of the External Trade Act requires the Ministry to restructure the IITC in order to create a new and stronger framework for cooperation to strengthen consultation between the Ministry and the relevant stakeholders in the Trade Sector. The restructured committee will be given a new name – the National Trade Sector Advisory Council (NTSAC).This council shall consist of five, carefully selected eminent persons from both public and private sector.
Functions of the NTSAC
-
Review and advice on key National Trade Policy implementation priorities,
-
Operate as a national consultative body for developing the country’s negotiating positions for regional and multilateral trade arrangements,
-
Provide guidance on the commissioning of studies and consultations relating to implementation of the National, Regional and international Trade Policy.
-
The NTSAC shall advice on the other trade supporting aspects, which are critical in the growth and development of the trade sector.
3. Promotion of Trade in Services
A National Policy on Services Trade was approved by Cabinet on 19/07/2017 which is aimed at boosting trade in services and cause a reduction in the trade deficit. Successful implementation of the policy is expected to contribute significantly towards incremental growth of export values by US$500 million, annually over the next five years. The growth is expected to be realized through the implementation of the policy in the following priority sectors: tourism, transport/distribution, education, business services, construction and related engineering services, insurance, among others.
4. Implementation of Buy Uganda Build Uganda Policy
Impact of Implementing BUBU
-
On July 12, 2017, Hima Cement signed an MoU with China Communication Construction Company (CCCC) to supply 120,000 tonnes of cement for three major projects: expansion of Entebbe Airport, MubendeKakumiro-Kagadi road project and Soroti-Moroto highway
-
Standard Gauge Railway (SGR) Project has apportioned USD 750 Million to local producers and manufacturers. Hima Cement will supply 830,000 tonnes of cement towards SGR and 3 steel companies (Steel & Tube, Madhvani and Roofings) which will supply 850,000 tonnes of steel. MTIC is to work with the project to ensure that other local companies form consortiums to take advantage of the offer
-
Sinohydro Corporation Ltd which is undertaking the construction of Karuma Hydro Power Project is now procuring all cement and iron bars from local producers
-
MDAs have commenced procuring office furniture from Uganda Prisons
-
Picfare signed a contract with National Medical Stores to supply uniforms to all Government hospitals
-
The Shoprite Supermarket launched a week-long sales promotion of local products. The campaign will run monthly
5. Strengthening Commercial Extension Services in the Local Governments
The Ministry has continued to support District Commercial Officers (DCOs) through the Commercial Services Conditional Grantto facilitate commercial extension services at the Local Governments. In FY 2017/18, a total of UGX 2.3 billion was released as conditional non-wage grant to all districts and municipalities countrywide. The Ministry has continued to undertake trainings for DCOs to enhance their capacity to deliver commercial services.
6. Market Expansion through Regional and International Trade Agreements
The COMESA trading bloc has been the main destination for Uganda’s formal exports for the last decade, with the share in total export earnings increasing on average throughout the years from 26.58% in 2005/06 to 51.32% in 2017/18. Among the COMESA member states that contributed significantly to export earnings in 2017/18 were Kenya, South Sudan, Rwanda and D.R. Congo accounting for US$628.47 million, US$311.34 million, US$197.44 million and US$196.87 million respectively (90% composition of Uganda-COMESA trade).
Other Regional Trade Arrangements
Uganda is a signatory to a number of trade and trade-related agreements through which market opportunities have been achieved;
The Africa Continental Free Trade Area (AfCFTA)
On 21st March 2018, during the 10th Extraordinary Session of the Assembly of AfCFTA in Kigali, Rwanda, Uganda signed the agreement establishing the African Continental Free Trade Area. The AfCFTA involves the 55 Member States of Africa, and the world’s largest free-trade area, by number of countries. It establishes a single market of 1.2 billion people, with a combined Gross Domestic Product $3.4 trillion. How Uganda stands to benefit from the AfCFTA
-
It provides expanded markets for our growing economic operations;
-
attracts cross-border investment;
-
creates employment opportunities for our young populations domestically through expansion in production of goods and services that will be demanded by the expanded markets;
-
improves the interstate infrastructure interconnectivity to enable us harness our productive capacities; and
-
Enhances peace and security in the continent through engaging people in gainful economic activities. Within the CFTA, the regional markets of EAC and COMESA will remain Uganda’s flagship market.
Chairmanship of the Continental FTA negotiations
During the 6th meeting of the African Union Ministers of Trade that took place in Dakar, Senegal from 3rd to 4th June 2018, Uganda was unanimously elected to chair the African Continental Free Trade Area (AfCFTA) Forum for African Ministers of Trade. Uganda is expected to champion the AfCFTA for a period of one year commencing in June 2018. The election is in recognition of Uganda’s active participation in the Continental Free Trade Area negotiations that started in 2016 with the aim of creating an African single market.
Obligation
During this tenure, Uganda will lead the conclusion of the AfCFTA negotiations. The outstanding work relates to the following;
-
Liberalization of trade in goods and services
-
Opening negotiations on competition
-
Investment and intellectual property rights
Other Agreements
-
East African Community Customs Union;
-
The African, Caribbean and Pacific European Union (ACP/EU) Partnership Agreement (Cotonou Agreement);
-
World Trade Organization (WTO);
-
African Union (AU);
-
Uganda is also a beneficiary of non-reciprocal unilateral trade preferences such as Everything-But-Arms (EBA) by the European Union;
-
EAC-SADC-COMESA Tripartite Agreement;
-
The African Growth and Opportunity Act (AGOA) of the United States and offers by Canada, Japan and China under the Generalized System of Preferences (GSP); and
-
The ongoing EAC-EU Economic Partnership Agreement (EPA) negotiations among others.
7. Promotion of Cross Border Export Zones
The informal cross-border export earnings in the Financial Year 2017/18 were estimated at US$595.51 million, representing 17.08% of Uganda’s exports. The main informal commodities included beans, maize, sugar, other grains, bananas, fish, among others. DR Congo was the main informal partner of the country with total informal export trade amounting to US$291.48 million in 2017/18. It was followed by Kenya at US$149.94 million; Rwanda at US$54.41 million; South Sudan at US$54.17 million and Tanzania at US$ 45.52 million, in the same period.
8. Electronic Single Window System (ESWS)
This is a trade facilitation initiative aimed at reducing the time it takes to clear goods. With support from the Danish International Development Assistance (DANIDA) through TradeMark East Africa, we are working to rollout the system to the following MDAs;
-
MoFA – For clearance of diplomatic cargo and registration and certification of diplomats
-
Ministry of Finance, Planning and Economic Development – For issuance of tax exemptions
-
NITA (U) – For single sign-on and fully integrated egovernments systems
-
Atomic Energy Council of Uganda – For licensing and certification services
-
Posta (U) – For postal services and clearances
-
Chamber of Commerce – For issuance of nonpreferential Rules of Origin certificates
-
Uganda Registration Services Bureau – For e-SW system integration with One Stop Shop
-
UIA – For e-SW system integration with the One Stop Centre system
-
Ministry of water and Sanitation – For licensing of timber and timber products (regulated product in the EAC)
-
CAA – For issuance of cargo manifest
-
Department of Immigration – For immigration clearances
9. The Trade Information Portal
Government with support from TMEA is set to launch a one stop portal for export, import and transit information in Uganda, expected to be launched in 2018/19.
-
It is an online platform where all the information regarding export, import and transit of goods, in Uganda will be availed to traders, government agencies and all interested parties.
-
While the Electronic Single Window allows traders to clear their goods online, the Trade Information Portal will provide the traders with all the necessary information to enable them undertake the transaction on E-Single Window. The two platforms are therefore complementary.
-
Establishing the trade information portal is provided for within the WTO Agreement on Trade Facilitation, which Uganda ratified and came into force on 22 February 2017.
10. Development of One Stop Border Posts(OSBPs)
-
With Support from TradeMark East Africa, construction of three OSBPs was completed; these include; Mutukula OSBP with Tanzania, Busia OSBP with Kenya, and Mirama Hills OSBP with Rwanda. All the border posts are operating under one stop control which means that a transporter or travelling clears only once, on one side of the border.
-
Construction of OSBPs coupled with other trade facilitation programs like customs modernisation has reduced the clearance time from 8 days in 2010 to 2 hours in 2018.
-
Construction of Elegu border post with South Sudan is underway.
11. NTB Reporting System
-
My Ministry has continued to implement a web based Non-Tariff Barrier Reporting System that has helped in easing and enabling the reporting and resolution of NTBs among trade facilitating institutions. This, in turn has reduced on the delays and costs of moving goods in and outside of Uganda across trading member states.
-
86% resolution of all NTBs reported through the system reducing movement of goods from Mombasa to Kampala from 21 days in 2011 to 4 days in 2018
-
To report by mobile phone, the user dials USSD Code *201# and follows instructions to select the appropriate NTB to report, and then submits a complaint. The system can be accessed using any type of telephone handset on any network registered in Uganda from anywhere in the world on roaming facility.
Industrial development
The growth rate of the industrial sector stood at 6.2% in the Financial Year 2017/18 compared to 3.4% registered in 2016/17; and the sector contributed 19.8% of GDP in 2017/18, which was a slight increase from 19.6% registered in 2016/17.
Major industries: sugar, tea, Beverage, cement, steel, cotton textiles production
Potential industries: Oil and gas, Iron & Steel, gold refining, fertilizer and leather.
Manufacturing Composition
In particular, Manufacturing alone contributed 8.2% to GDP with a growth rate of 4.4% in the Financial Year 2017/18, as opposed to 2.2% growth registered in 2016/17. The improved performance is on account of good performance in chemical & pharmaceutical products, drinks, sugar, cement, tobacco and iron & steel. However, there was also decline recorded in the manufacture of leather & foot wear, textile and garments in 2017/18.
Manufacturing value added in the country increased by 2.15% in 2017 as compared to 0.59% registered in 2016; and was valued at US$2,170.94 million in 2017 as compared to US$2,125.28 million in 2016.Manufacturing value added is a key indicator in assessing the manufacturing intensity as it captures net output from the manufacturing sector after adding up all outputs and subtracting intermediate inputs.
Manufactured Exports in Total Exports
Uganda’s share of manufactures exports in merchandise exports has been gradually increasing. In the periods of the NDP II (2015-2017), the ratio averaged 25%. According to the requirement of the National Development Plan, manufactured exports in total exports should be increased by 25% from 2015 to 2020. However, projections based on current growth show a figure of 26.26% by the end of 2020, which will be below the target of 31.45%, in the same period.
Micro, Small and Medium Enterprises (MSMEs)
The MSMEs Policy provides a regulatory and institutional framework for Micro Small and Medium Enterprises development activities with a theme “Sustainable MSMEs for wealth creation and socio-economic transformation” as aligned with the objectives of the National Development Plan II (2015/16 – 2019/20). MSMEs account for 95% of the business establishments in Uganda, with a majority (57%) of these operating in the Trading sector. They also account to 42% of the country’s total employment i.e. over 3.5 million people.
Key planned activities for FY2019/20
The budget for the Financial Year 2019/20 stands at shillings UGX 103.66 billion and the Sector plans to undertake the following key activities for the Financial Year:
-
Enhance value addition and industrialization to support job creation;
-
To revitalize the Cooperative Movement by mobilizing collective resources through cooperatives;
-
Continue to improve the Regulatory Framework for creating an enabling environment for Trade that enhances wealth creation;
-
Ensure implementation of the National Development Export Strategy (NEDS) and;
-
Continue undertaking Technical Guidance, Inspections & Compliance monitoring Field Visits aimed at enhancing implementation of Industrial Development Initiatives.
Sector challenges
The Ministry still has challenges largely due to budget constraints. Other challenges facing the sector are;
-
Lack of enough human resource capacity and physical infrastructure affects development at the Border Export zones.
-
Under capitalization of UDC to be able to embark on a number of strategic projects that would lead to industrial and economic development of the country.
-
UNBS – Low staffing levels which has limited UNBS capacity to decentralize its services to other regions and strengthening standards and quality infrastructure, Low consumer education and public awareness on quality and standards. This affects consumers in making informed choices in order to reject substandard goods and services in the market place.
-
UNBS – Inadequate Laboratory space required to respond to increasing samples submitted for testing and analysis, limited Budget ceiling to fund core quality monitoring operations.
-
Limited storage (warehouse, silos) capacity for effective post-harvest management and structured grain trade that would enable us to address the challenge of the volatility of the prices of agricultural products.
-
High import taxes on the primary packaging material for the locally produced goods which hinders the competitiveness of Ugandan business persons to fully exploit the vast opportunities.
-
MTAC – Lack of adequate funds to meet necessary rehabilitation of the Centre’s infrastructure, settle long-outstanding statutory obligations and develop market outreach.
Related News
AfCFTA: Nigeria’s process of consultations is through systemic and robust stakeholder engagement
Keynote address by Prof. Yemi Osinbajo, Vice President of the Federal Republic of Nigeria, at the Africa Trade Forum 2018
I am pleased to join The Governor of Lagos State, Mr. Akinwunmi Ambode, and Dr. Okechukwu Enelamah, Honourable Minister for Industry, Trade and Investment of Nigeria, to warmly welcome you all to Lagos, Nigeria. We are pleased to have you here in Lagos, Nigeria’s vibrant and energetic commercial nerve centre and Africa’s sixth largest economy.
As a metaphor for the purpose of our gathering, Lagos demonstrates that economies, cities and countries that are open, grow faster and prosper more than those that are closed. And Lagos is one such example, becoming very quickly, we are told, climbing up to the 5th largest economy in Africa.
Permit me to speak briefly on The Value of a Rigorous Domestic Process of Stakeholder Engagement for Trade Agreement. It is well over 7 months since the Agreement Establishing the African Continental Free Trade Area (AfCFTA) was signed in Kigali, Rwanda, on 21st March 2018.
The AFCTA is probably the most significant Pan African trade agreement in this generation. Its impact on commerce will also arguably be, the most profound of any agreement we have yet agreed to on the continent.
Since establishment, the pace of outreach to improve understanding, build capacity and sharpen expertise has accelerated. The Trade Negotiators have essentially done their job, although we now enter the more crucial business of negotiating the details of tariff offers and what to safeguard in the goods schedules and the specifics for the commitments for the trade and services schedules.
In the meantime, it is time for policy-makers and stakeholders, with the support of regional institutions, across the continent, to do their own job. The objective now is to improve understanding of the stakes in play, the opportunities in the agreement, and to identify the concerns and challenges of stakeholders and how to address these.
My principal focus, therefore, is to share with you the stage of the on-going internal process in Nigeria and the results of outreach, sensitization and consultations with stakeholders, because everybody has been asking: so, what is Nigeria doing?
So, I think it might just be very helpful to fill in the gaps. The AfCFTA is now at the stage, in many senses for us, in a plural democracy like Nigeria, of a rigorous domestic consultative process and we are doing so. We are possibly the largest market in Africa today and most likely to benefit the most or lose the most from the implementation of the agreement.
We have also learned in some cases the hard way, with past international agreements. Also, we have had to bear in mind the on-going changes, particularly on trade, in the global economy.
Consequently, the purpose of Nigeria’s domestic process of sensitization and consultations has been to engage with stakeholders, systemically, robustly and constructively.
We have sought to understand their concerns and, at the same time, to build capacity, broaden the basis of consensus, and, in partnership, identify elements for a plan of engagement.
So, what have we done? What have we learned? What are the current state-of-play and envisaged next steps?
In March this year, we initiated nation and sector-wide stakeholder sensitization, outreach and consultations. In this exercise, the government team, led by Honourable Minister Enelamah engaged with the Decision-Making, Economic Governance and Advisory Institutions, such as the Federal Executive Council, the Economic Management Team, the Nigerian Governors Forum, as you know, we are country with a Federal Government and 36 states. Each of these has a governor.
We have consulted extensively with the governors’ forum, the Industrial Policy and Competitiveness Advisory Council; the National AfCFTA Stakeholder Forum; Industry and Sectoral Groups, Chambers of Commerce, Micro- Small and Medium Enterprises (MSMEs) and, the Nigerian Stock Exchange (NSE); Academia, Think Tanks, Policy Institutes, Civil Society; and stakeholders in all the 6 geopolitical zones of Nigeria, including visits to border communities with historic trade corridors into Central, Northern and Eastern Africa.
The last major grouping was done just a few days ago, at the Nigerian Institute of International Affairs (NIIA) on 31st October. Essentially, we have touched all major bases.
In this 8-month long exercise, approximately 34 groups and associations were sensitized and consulted, 3,500 natural persons were engaged directly, 5 Communiqués were adopted and signed in Nigeria’s 5 geopolitical zones with a Factual Summary issued in Lagos, codifying the substance of the consultations for the South West Geopolitical Zones.
Twelve private sector groups submitted inputs, autonomously, conveying their group positions on the AfCFTA, in response to the nation-wide call for inputs.
The process has been and remains serious, diligent, transparent and the subject of democratic scrutiny of evaluation and thorough assessment.
I should also say that, although the key bases have been consulted, this process of engagement has acquired a constructive and healthy momentum. This is desirable. We consider that for such a signal development on the continent, like the AfCFTA, the process must and should be subject to a democratic engagement to avoid any blowback. There are lessons on this score from the contemporary global economy.
Expectedly, the sensitization made evident diverse views and positions. While most stakeholders support AfCFTA, there are some stakeholders that are concerned, especially, about the impact of the AfCFTA. They take the view that caution should be exercised with thorough preparedness for any process of trade opening and integration.
Stakeholders in support, point to the market opportunities for growth for Nigerian exporters of goods and services and for industrialization through the economies of scale in a single market. They identify the mechanism for resolving trade disputes and the various platforms for trade cooperation. There were many favourable references to the Sub-committee for Customs Cooperation, Trade Facilitation and Transit, to be established and would deal with cross-border trade infractions and injurious practices.
Overall, there is virtual unanimity on the benefits of promoting intra-African trade for development, job creation, poverty reduction and modernization.
Across the board, all stakeholders, both those in favour and those with qualified support, pointed to issues where the policy-makers in Government are required to act and act in coordination, regionally. These specific areas requiring intervention and complementary policy action include:
-
Effective rules-based trade remedy safeguards to ensure that third parties to the AfCFTA shall be prevented from the abuse of origin rules to trans-ship and dump. And this is a very big issue, of course, with a lot of Nigerian businesses, the abuse of origin rules especially where this could lead to dumping. Third parties to trade agreements should not benefit from the trade preferences in agreements to which their governments are not party to. And this is an issue that came up consistently.
-
Predictable, cost-effective power supply. These are more internal issues.
-
Expanding affordable trade finance, including micro-credits and finance for Micro-Small and Medium Enterprises (SMEs).
-
Fostering an Enabling Environment for Business that eliminates:
-
Multiple taxations by government and highway tolls,
-
Internal checkpoints,
-
Improvements in security.
-
Investing in trade infrastructure (seaports, inland dry ports, road and railway networks). You must, of course, understand that many in the business community took the opportunity to give knocks on what they think the government was not doing adequately. So, you will see a lot of what is mentioned here, areas where many feel more needs to be done in order to strengthen local business for what they feel will be competition.
-
Mainstreaming into the formal economy, the informal trade along historic trade corridors. This also is another issue that was considered quite important, of course, along the traditional trade corridors, there is already a lot of trade going on and many felt that should be mainstreamed with the formal economy even as we look at the implementation of the agreement.
-
Empowering women in intra-African trade;
-
Harmonizing the still divergent trade policies between and amongst African countries, starting with the trade practices within Regional Economic Communities (RECs). This is another issue that was emphasized.
I believe that most African policy-makers would accept these feedbacks from Nigeria as having wider validity, especially as having some validity with their own economy as well.
In response to the nation-wide stakeholder engagement last week, on 22nd October, President Buhari at a meeting with stakeholders, inaugurated and established the “Presidential Committee on Impact and Readiness Assessment on the African Continental Free Trade Area”. The Presidential Committee is now at work, in full steam. A final report will be sent up to Mr. President in 10 weeks.
As a Government, we consider that structural reforms should address the legitimate concerns raised by stakeholders. And we think that this is ongoing anyway and should not necessarily be an obstacle to the implementation of the agreement. This should be reflected in the report of the Presidential Committee.
As Chairman of the Nigerian Economic Management Team (EMT), I am pleased to read and hear that fellow African countries consider Nigeria’s domestic consultative process with Stakeholders as an applicable model. We engaged, constructively and robustly, with stakeholders, not only on the AfCFTA, but also on Trade Policy Writ Large. I believe that what emerged is illuminating. It holds lessons with precedential value. The feedback was simple and powerful.
The central message was support for the AfCFTA, based on a clear definition of increasing intra-African trade. The core feedback is to prepare thoroughly and, inter alia, ensure that the preferences of the AfCFTA would neither be abused nor be enjoyed by third parties that were not part of the negotiations.
The role of the AUC and UN-ECA is commendable indeed. Last week, H.E. Moussa Faki Mahamat, AU Chairperson undertook a visit to Nigeria with positive results. The Chairperson’s visit supported efforts at broadening consensus and deepening regional integration.
In closing, let me say that the process of domestic consultations in Nigeria, although stabilized and on a positive momentum, is unfinished. At the inauguration of the Presidential Committee on AFCTA last week, President Buhari emphasized, while commending the AFCTA process, as worthy and commendable, he said that the agreements we negotiate should be properly understood by those that would implement them, and be accompanied with an implementation plan. As the President said, “the AfCFTA is worthy and commendable”.
You have a full programme today and tomorrow. I am hopeful that the outcomes from this Africa Trade Forum will contribute to the process of sensitization and domestic consultations to broaden the base of consensus, not only in Nigeria but also in all countries of the African Union.
I pay tribute to the co-organizers: the UN-ECA, the AUC, the Rockefeller Foundation, and to the Nigerian Team that has contributed to organizing this activity.
Not least, I would like to acknowledge the presence of our own ECOWAS Commission. Nigeria is currently Chairing ECOWAS and I am aware of the efforts and contributions of the Commission, together with ECOWAS Senior Trade Officials.
So, I wish you very robust and fruitful deliberations in the coming days.
Thank you all very much.
Related News
tralac’s Daily News Selection
Tunisia’s Ms Aya Chebbi (31) has been appointed as the AU’s Youth Envoy. A brief bio is available here.
The World Bank has posted 25 Africa country Training for Reform analyses derived from the Doing Business 2019 report released earlier this week. Analyses are posted for: Angola, Benin, Botswana, Burkina Faso, Burundi, Cabo Verde, Cameroon, Central African Republic, Chad, Comoros, Côte d’Ivoire, Eswatini, Ethiopia, Eritrea, Ghana, Guinea, Gabon, Kenya, Lesotho, Liberia, Mali, Mauritius, Madagascar, Malawi, Mauritania
Launch of Ethiopia’s visa-on-arrival, e-visa regime for all African citizens: remarks by AUC’s Chairperson, Moussa Faki Mahamat
EU-Africa trade relations
Economic Partnership Agreements: joint ITUC-Africa/ETUC/ITUC statement
We ask for the EU and African groupings to develop a new mandate for negotiations. This should follow the principles listed below (extract):
-
Before starting trade discussions, the EU and Africa should identify economic activity and sectors where trade opening would be beneficial for the creation of decent jobs, particularly for women, young people and other vulnerable groups. This impact assessment must involve evidence from both employers, trade unions, academia and international organisations, and be transparent. In this regard, we call for the public release of the three sustainability impact assessments conducted by the EU in April 2008, April 2012 and January 2016 and never made public.
-
There must be explicit guarantees that any trade agreement will not affect the current market access provided to all Least Developed Countries with no request for reciprocity in market access as long as these countries remain “least developed” in the UN Human Development Index.
-
Any future agreements must be more asymmetrical in terms of tariff reductions and other concessions than the current EPAs. Countries must retain the ability to vary tariffs and other protections to allow African countries to develop. This must include the ability to exclude sectors where women and vulnerable groups are particularly likely to be disadvantaged by liberalisation.
-
Digitalisation is also a form of industrialisation, so special care must also be taken to avoid any disciplines on the ability of governments to regulate e-commerce and demand local presence.
-
Agricultural products from the EU should be completely excluded from liberalisation because the European agricultural sector is subsidised. Tariffs of 20% are sometimes too low to effectively protect a sensitive market in African countries. African governments must have the ability to vary tariffs to ensure their food security. Special care should be taken not to further worsen Africa’s food deficits, and particular attention should be given to the condition of life and work of rural workers...
Uganda Trade Sector Review 2018: tweeted highlights from the Uganda Export Promotion Board
The country’s merchandise exports are still dominated by unprocessed and or primary products. The export to import ratio in the financial year 2017/18 was 52.66%. In a nutshell today Uganda is spending $100 on imports when it has earned an income of only $52.66 from exports. In that effect, the country is living on borrowings. It is vitally important to halt this escalation by making reduction of the trade deficit a top national priority and galvanizing all efforts by key MDAs like @ugandaexports to expand exports on a sustainable basis.
For the first time in history Uganda had a surplus balance of trade with Kenya in the financial year 2017/18 of $122.78m: exports of $628.47m, against imports of $505.70m. The COMESA trading bloc has been the main destination for Uganda’s formal exports for the last decade with the share in total export earnings on average throughout the years, from 25.58% in 2005/06 to 51.32% in 2017/18. COMESA member states that contributed significantly to the export earnings in 2017/18 were Kenya, South Sudan, Rwanda and DRC, accounting for $628.47m, $311.34m, $197.44m and $196.87m respectively (90% composition of Uganda-COMESA trade).
It intended to narrow the trade deficit as a % of total exports from the current annual average of negative 96% to, at most, negative 35% over the next five years. The National Export Development Strategy also intends: (i) To increase the value of priority products exported to the negotiated preferential markets by an average of 25% for regional markets (EAC, COMESA) & 40% for the EU annually for the next five years. (ii) To increase the value of priority products exported to the selected unilateral preferential markets (US, India and China) by an average of 40% annually over the next five years. (iii) Increase the value of priority products exported to the selected non preferential markets (Singapore, UAE & Hong Kong) by average of 35% annually over the next five years. (iv) Provide a two-way communication mechanism between the productive sectors & export markets with a view to fostering oriented investment & production. [Uganda’s exports increase by 7%]
Nigeria: MTN issues frightened foreign investors – US, UK envoys (Punch)
The envoys of the UK and the USA in Nigeria have said that the problems being faced by leading telecommunications giant, MTN, have scared investors from both countries from Nigeria, resulting in some of them pulling back and others withdrawing fresh offers and taking them to neighbouring countries. The two envoys spoke in Lagos on Thursday on the sideline of the 2018 International Investment Conference themed, ‘Promoting Investment, Connecting Business’, organised by the Lagos Chamber of Commerce and Industry as part of activities marking the 2018 Lagos International Trade Fair. The Consul General, US High Commission, Mr John Bray, said the message the MTN experience sent was that people could make investments in Nigeria only for the rules of the game to be changed overnight: “Apparently things are being resolved, but once you make an announcement like that (order to repatriate the funds), there are probably guys sitting back there and waiting to get on the plane and fly back to the JFK and say, I am not investing again.” [AFC to finalise N36bn investment in Nigeria’s mining sector]
The role of Mauritius in linking Africa and Asia: seminar highlights (GoM)
REC updates:
Customs Services discuss consolidation of the ECOWAS Customs Union. The Directors-General of Customs Services of the 15 member countries of ECOWAS met in Abuja (yesterday) in a quest to consolidate the ECOWAS Customs Union. They are also deliberating on information exchange and cooperation between customs administrations as a concerted response to the obstacles to the free movement of goods, security challenges and resurgence of illicit trafficking. The ECOWAS Commission’s Commissioner for Trade, Customs, and Free Movement, Mr Tei Konz, said the Commission had made good progress on the construction of a regional automated transit system based on the interconnection of national customs Information Technology systems. He solicited for the necessary support (by the Directors-General) of the ECOWAS Commission’s efforts to consolidate the Customs Union so that all the elements contributing to its smooth realization “are quickly and effectively implemented”. Of particular importance to be taken into account, by the Commissioner’s estimation, is the new role of the Customs Administration in the current security context. He said in this regard: “There is today an expansion of customs missions with emerging missions such as the fight against trafficking, the fight against money laundering and the financing of terrorism”.
EALA enacts the EAC Statistics Bureau Bill. With that, a new institution to be known as the EAC Statistics Bureau is now in the offing should the Heads of State assent to the enacted Bill. The Bill which was deferred at the last Sitting in Arusha, sailed through this afternoon with Members emphasizing its importance as the integration process makes strides and progresses towards the Monetary Union. The Bill provides for the functions, powers, governance and its funding with a view to establishing an institution responsible for statistics in a bid to support the East African Monetary Union. The Bill is now to be forwarded to the EAC Heads of State for assent in line with Article 63 of the Treaty for the EAC. [Download: pdf EAC Statistics Bureau Bill, 2017 (51 KB) ]
Djibouti: Macro-fiscal implications of climate change (IMF)
Most Djibouti’s production capacity is located in coastal and other low-lying areas. Djibouti’s economy is mainly driven by service activities in coastal areas (76% of GDP and 53% of total employment), dominated by port and transport-related services, reflecting the country’s strategic location overlooking the strait of Bab el Mandeb. Djibouti is ranked seventh on the vulnerability to climate change among small developing states. The paper concludes that global warming resulting from climate change may have severe macro-fiscal implications for Djibouti. Extract: The cost of climate change for Djibouti can be relatively high. Estimates based on the PAGE model suggest than in the case of the baseline scenario of a temperature increase by 2°C, the total costs for Djibouti could be linearly increasing from 1 to 3 percent of GDP in 2020-60. In an adverse scenario of a +4°C temperature change, the potential cost for Djibouti of climate change may reach 6% of its GDP. These estimates of climate-related costs for Djibouti should be treated as indicative.
Releasing the 2017 Global Findex microdata (World Bank)
- - -
Related News
ECOWAS Commission restates commitment to strengthening regional customs union and infrastructure upgrade
The President of the Economic Community of West African States (ECOWAS) Commission, Mr. Jean-Claude Kassi Brou, has restated the commitment of the Commission to strengthening regional Customs union and an infrastructural upgrade that can sustain the renewed integration efforts within the community.
Declaring open the 4th meeting of the Ministers of Finance holding on the heels of the convergence of Directors-General of Customs Service of ECOWAS Member States in Abuja, Nigeria on the 2nd of November 2018, President Brou held that the main idea of establishing ECOWAS is to foster an economic union in order to raise the living standards of citizens while maintaining and enhancing the economic stability of the region.
Speaking through the Commission’s Commissioner of Finance Mrs. Halima Ahmed, President Brou noted that the ECOWAS Authority of Heads of State and Government remains unshakeable and resolute in its “determination to make regional integration a potent, viable and appropriate tool for accelerating and achieving the sustainable development of West African countries”.
He maintained that in keeping alive the ECOWAS Vision 2020, what is envisaged is an ECOWAS which has a dynamic regional economy driven by a regionally-inclined business community that operates in an efficient and diversified regional production system.
President Brou stressed that the leaders are working hard for a region that is sustained by modern infrastructural networks. He noted however that the vision may not be easily attainable if the requisite regional economic instruments are not adopted and effectively operationalized in Member States.
The President recalled that the adoption of the ECOWAS Common External Tariff (CET) by the Heads of States and Government of our Community in January 2006 marked an important milestone in the West African integration effort. This, he said is because the ECOWAS revised Treaty, in line with accepted theory of economic integration, has made the creation of a customs union, a critical building block for the achievement of an economic union.
He stressed that while it is imperative to move into the fifth year of the implementation of the ECOWAS CET, appropriate procedures towards the achievement of optimal tariff levels in our fiscal and external trade regime should be put in place “to ensure that this critical integration instrument is not overtaken by the economic realities and aspirations of our region”.
President Brou maintained that the role of customs administrations is central to the success of the regional economic integration agenda while “the level of professionalism exhibited by the administrations in revenue collection, trade facilitation, protection of our industrial sector, and the general protection of our society is a major determinant of their effectiveness in delivering on their mandate”.
He further disclosed to the ministers, participants and experts that following the adoption of the ECOWAS Customs Code by the Heads of State in December 2017, the ECOWAS Commission has begun a capacity building programme of training, sensitization and dissemination of the provisions of the code to the various stakeholders in the trade and fiscal space of the region.
As the Community moves to consolidate its customs union, President Brou stressed the importance of harmonizing tax laws of Member States in order to guarantee equal treatment of economic operators and minimizing the negative effects of tax competition within the Community.
He also made a passionate appeal to the ministers for their support of the Community through the efficient collection and remitting of the ECOWAS Community Levy which he noted, “is the life-blood of the ECOWAS integration process”
The chair of the meeting and Nigeria’s Minister of Finance Mrs. Zainab Shamsuna Ahmed made a detailed presentation on consolidating the ECOWAS Customs union including allied fiscal matters.
She opined that the regional regulations being fashioned out in this regard will also assist in the “deepening of integration of the region with the global strategies to improve public revenue through the elimination of tax malpractices”.
She stressed in this regard that Nigeria’s current economic policies, in several aspects, seek to identify with, and actively participate in the effort to achieve regional economic development through cooperation, hence the country effectively commenced the implementation of the ECOWAS CET in April 2015, with additional measures under the ECOWAS approved Supplementary Protection.
During the meeting, several texts to facilitate the operationalization of the Customs code will be presented for examination and validation. These relate to mutual administrative assistance in customs matters and customs cooperation as well as the harmonization of customs duty reliefs in the ECOWAS region.
The implementation of the ECOWAS CET, which began in January 2015 effectively ushered the Community into a customs union on the road to consolidating the West Africa regional market.
Regional directors-general of Customs meet on the consolidation of the ECOWAS Customs Union
The Directors-General of Custom service of the fifteen member countries of the Economic Community of West African States (ECOWAS) have met in Abuja, Nigeria on the 1st of November 2018 in the quest to consolidate the ECOWAS Customs Union.
The heads of Customs are also deliberating on information exchange and cooperation between Customs administrations as a concerted response to the obstacles to the free movement of goods, security challenges and resurgence of illicit trafficking.
Declaring the meeting open, the ECOWAS Commission’s Commissioner for Trade, Customs, and Free Movement, Mr. Tei Konzi, affirmed that the coming together of senior officials is in line with the current desire of the President of the Commission to strengthen the economic integration process of ECOWAS.
Noting that the Customs service constitute a critical central link in this regard, Commissioner Konzi recalled that since the last meeting in 2017, the ECOWAS Commission “has worked tirelessly to strengthen the regional Customs Union”
He stressed that the efforts of the Commission are translated with the assistance of the experts of the Member States who examined the draft Community texts on the reinforcement of the Free Trade Area (FTA), the application of the Common External Tariff (CET), harmonization of customs procedures, cooperation as well as the establishment of the Tax Transition and Tax Harmonization Programmes.
He further disclosed that the Commission has also made good progress on the construction of a regional automated transit system based on the interconnection of national customs Information Technology systems.
He solicited for the necessary support (by the Directors-General) of the ECOWAS Commission’s efforts to consolidate the Customs Union so that all the elements contributing to its smooth realization “are quickly and effectively implemented”.
Of particular importance to be taken into account, by the Commissioner’s estimation, is the new role of the Customs Administration in the current security context. He said in this regard: “There is today an expansion of customs missions with emerging missions such as the fight against trafficking, the fight against money laundering and the financing of terrorism”
In her keynote address, the Comptroller-General of the Nigerian Customs Service, Colonel Hameed Ali (Rtd) noted that for continuous progress in the fight against transnational crime there is a need to deepen and intensify information exchange cooperation.
Represented by the Deputy Comptroller-General of the Nigerian Customs Service Mrs. Ronke Olubiyi, the Customs boss said this is in consonance with the World Customs Administration publication in 2004 which urges all Customs administrators to collaborate with each other to share sensitive information about enforcement through Customs Mutual Assistance Agreem,ent (CMAAs)
Lamenting that the security challenges of the region have severely affected trade facilitation, he explained that the realisation that no nation can go it alone informed the setting up of intelligence data base among the participating Customs administrations of Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Mali, Niger, Nigeria and soon to join-Burkina Faso.
The Vice president of the WCO (OMD and AOC region) and Director-General of Customs of the Republic of Guinea Brigadier-General Toumany Sangare urged participants to harmonise, as far as possible and necessary the vision of technical issues of the ECOWAS region with that of the African Union “in order to facilitate for our region the continental economic integration that seems more and more inevitable”.
Related News
Launch of visa-on-arrival and E-visa arrangements for all African citizens entering Ethiopia
Remarks by the Chairperson of the African Union Commission, Moussa Faki Mahamat
I am pleased to be here today on the occasion of the official launching, by Ethiopia, of a visa-on-arrival and E-visa regime for all African citizens.
This is a truly historic moment. By taking this decision, Ethiopia is, once again, demonstrating its commitment to the ideals of our Union and the principles which inform pan-Africanism.
I commend Prime Minister Abiy Ahmed and the Ethiopian Government for this landmark step. There is no doubt that the institution of a visa-on-arrival and E-visa arrangement for all African citizens will greatly enhance the status of Addis Ababa as the political capital of our continent. This measure will also boost tourism.
I remember that, when I first met with Prime Minister Abiy Ahmed, he requested me to help increase the number of African visitors to Ethiopia. I challenged him, by responding that he should first ease the travel of all Africans to the country. He committed himself to do so and has, today, fulfilled his promise.
It is now my turn to pledge to redouble my efforts to promote Ethiopia not only as a destination for conferences, but also for leisure. I have no doubt that my task will not be that difficult given that Addis Ababa is one of the key air transport hubs on the continent, thanks to Ethiopian Airlines, a truly pan-African carrier, and that Ethiopia’s beautiful landscape and rich history are outstanding assets.
I would like to take this opportunity to commend all Member States that have already taken measures to ease the travel of African citizens on the continent. I urge those that have not yet done so to follow suit.
Free movement of African people in their own continent is a long-held dream for all Pan-Africanists.
One of the flagship projects of Agenda 2063 is the free movement of people in Africa. In January this year, in Addis Ababa, the Heads of States and Government of our Union adopted the pdf Protocol on Free Movement of Persons, the Right of Residence and the Right of Establishment (3.80 MB) , as well as its Implementation Roadmap.
To date, 32 Member States have signed the Protocol, while only one Member State – Rwanda – has ratified it. It is critical that all Member States become parties to this instrument, as soon as possible.
The Protocol on Free Movement is one of the pillars of the integration process of the continent, along with the pdf Agreement on the African Continental Free Trade Area (4.67 MB) and the Single African Air Transport Market.
As we gather here, I dream of the day when all Africans can freely circulate in their own continent.
This will be the day when Pan-Africanism will assume its full meaning for our citizens.
This will be the day when Africans will no longer experience the indignities and impediments that, more often than not, mark their travels on the continent.
This will be the day when our forefathers – Haile Selassie, Kwame Nkrumah and many others – will rejoice in the progress made towards integration.
I know that the full implementation of free movement of people requires overcoming numerous challenges. But these cannot and should not stand in the way of our dream. What is required is renewed political will.
More than any other group in the world, Africans suffer from the scourge of xenophobia and racism. While we cannot ensure that these injustices will be eliminated anytime soon, it is within our power to make Africans feel at home everywhere on the continent.
I thank you all.
Related News
The Economic Partnership Agreements and EU-Africa trade relations: Joint statement from EU and African trade unions
Joint ITUC-Africa/ETUC/ITUC Statement on the EU Economic Partnership Agreements with Central Africa, Eastern and Southern Africa, the East African Community, the Southern African Development Community, and West Africa, and the EU-Africa trade relations
Trade unions from Africa and Europe have followed with grave concern the negotiation and conclusion of Economic Partnership Agreements (EPAs) between the EU and regional groupings in Africa.
The ITUC-Africa and the ETUC have called for in-depth changes to the content and guiding principles of current EPAs to ensure they promote economic growth and sustainable development, guarantee respect for workers’ rights and universal access to public services and contribute to the full achievement of the UN Sustainable Development Goals.
We are concerned that trade unions have not been adequately involved in EPA negotiations by governments in the EU or Africa through a process of effective and structured social dialogue. Therefore, the EPAs currently under negotiation and those that have been signed pose significant risks to sustainable development, stable employment, labour standards and public services as well as democracy in African countries.
In particular, we share the following concerns relating to sustainable development and industrialisation:
-
According to a study by the South Centre (2016), the removal of tariffs on EU products would kill infant firms by outcompeting them. No country has industrialised without using tariffs to nurture and develop infant industries.
-
Similarly, there is high risk of negative consequences on agro-food production in African countries, as the EPAs are to decrease tariffs on agricultural imports, and therefore protection, over time.
-
Bilateral safeguard measures included in the EPAs are not easy to trigger, and they are subject to decisions made by the Joint Implementation Committee, a body that includes the EU and the African Parties. The use of safeguard measures comes with time limits, making such measures temporary and, indeed, unsuitable for a longer-term protection of infant industry.
-
The EPAs should allow the policy space that African countries need in order to achieve sustainable development and industrialisation. The existing model of EPAs and particularly provisions like the standstill clause, the prohibition of new export taxes, and the Most Favoured Nation clause would severely limit African countries’ policy options.
-
In the long term, the EPAs are not encouraging the emergence of a fiscal space for the African countries to finance their own development and to build and maintain public services and social protection. More to this, African countries have been facing difficulties in building taxation systems and institutions that would curve the colossal tax avoidance by foreign corporations – the total amount of which is bigger than the total amount of foreign aid received. In this context, the loss of tariff revenue will deprive countries of one of the few revenue sources available.
-
Just five years after entry into force, the EPAs’ rendezvous clauses call the Parties to introduce negotiations on investment and services, which could open up public services to further liberalisation and privatisation.
We also note with concern the following issues relating to the EPAs labour commitments:
-
The EPAs contain no enforceable commitments to respect core ILO labour standards and promote the ILO Decent Work Agenda. The EPAs lack instruments that provide for constant assessments of impact on employment and workers’ rights and effective enforceability mechanisms.
-
The EPAs are expected to affect women workers adversely more than men workers. The EPAs’ removal of protections from industries like manufacturing and agriculture is likely to lead to job displacements from the formal economy to informal activities – a trend that usually affects women more than men. There is no gender impact assessment yet, and we feel that the negotiations did not take into account the impact on women workers.
In procedural and design matters, we are worried about the following facts:
-
The negotiations did not take into account regional integration processes in Africa. Negotiations did not take place on a block-to-block basis.
-
The EU has threatened countries such as Kenya with a loss of preferential market access if they did not sign the EAC EPA and not because of social consideration like failures in the respect of ILO Conventions. This is certainly not a fair way of negotiating with developing countries in the interest of their population.
Due to these concerns, among others, the current EPA negotiations, the signed EPAs in their current form and interim EPAs with African regions do not have our support.
We ask for the EU and African groupings to stop the negotiations, withdraw from and reform signed agreements according to the principles below. The EU should ensure African countries that withdraw from EPA agreements do not lose preferential access to EU markets. African countries must continue to have preferential access to EU markets via Generalized System of Preferences (GSP) schemes, including those that have reached middle-income status.
Progressive principles for trade relations between EU and Africa
Trade unions consider free but fair trade to be of great importance for economic growth and sustainable development. Trade, when taking into account asymmetries, can contribute to a fairer, inclusive and socially just global trading system. In this respect, we support the idea of reconciling trade policy and development cooperation.
The EU’s trade policy can be an important instrument for building capacities to support sustainable growth, decent work, economic diversification, and integration in the regional/global economy. It should also provide benefits in terms of better economic and social infrastructure, require good governance and respect for the rule of law and human and labour rights, as well as respect for international environmental agreements and the Paris Agreement goals.
In this regard, the EU’s GSP schemes and potentially other trade policy instruments should contribute to building a just and prosperous economic relationship between the EU and the least-developed countries, a relationship in which exploiting workers and looting the environment are no longer accepted means of international competition. We expect a stronger link between preferential access and the respect of workers’ rights as defined in ILO standards.
The EU should extend solidarity to African countries, promote cooperation, rather than competition, and with a reformed trade policy assist in achieving the Agenda 2030 goals and in shaping globalisation in an economically equitable, socially and environmentally responsible way.
We call for governments to involve trade unions in social dialogue and negotiations to change course and pursue a progressive trade arrangement between Europe and Africa that takes into account the asymmetries in economic relations and market size.
We ask for the EU and African groupings to develop a new mandate for negotiations. This should follow the principles listed below:
-
Before starting trade discussions, the EU and Africa should identify economic activity and sectors where trade opening would be beneficial for the creation of decent jobs, particularly for women, young people and other vulnerable groups. This impact assessment must involve evidence from both employers, trade unions, academia and international organisations, and be transparent. In this regard, we call for the public release of the three sustainability impact assessments conducted by the EU in April 2008, April 2012 and January 2016 and never made public.
-
There must be explicit guarantees that any trade agreement will not affect the current market access provided to all Least Developed Countries with no request for reciprocity in market access as long as these countries remain “least developed” in the UN Human Development Index.
-
Any future agreements must be more asymmetrical in terms of tariff reductions and other concessions than the current EPAs. Countries must retain the ability to vary tariffs and other protections to allow African countries to develop. This must include the ability to exclude sectors where women and vulnerable groups are particularly likely to be disadvantaged by liberalisation.
-
Digitalisation is also a form of industrialisation, so special care must also be taken to avoid any disciplines on the ability of governments to regulate e-commerce and demand local presence.
-
Agricultural products from the EU should be completely excluded from liberalisation because the European agricultural sector is subsidised. Tariffs of 20 per cent are sometimes too low to effectively protect a sensitive market in African countries. African governments must have the ability to vary tariffs to ensure their food security. Special care should be taken not to further worsen Africa’s food deficits, and particular attention should be given to the condition of life and work of rural workers.
-
Any trade agreement must involve binding commitments with measurable roadmaps and cooperation programmes and resources to achieve respect of core ILO standards and promote the decent work agenda. There must be independent bodies established to monitor compliance with these commitments and stronger and effective enforcement mechanisms, including possible economic consequences in case of non-respect of ILO standards. Workers’ and employers’ organisations involvement should also be foreseen in the EPAs. The EU should provide financial support to ensure all members of these bodies can fully participate.
-
Any future agreements should be negotiated between the EU and African regional integration communities.
-
The EU should provide development aid that is truly additional to the current aid levels to build up food sovereignty, infrastructure and institutions and to promote decent work and workers’ rights, including social dialogue structures and improving the capacity of trade unions to take part in trade negotiations and monitoring once in place. The EU should provide aid to support African stakeholders to create their own impact assessments so that future negotiations are informed.
-
African and EU countries should require the application of the UN Guiding Principles on Business and Human Rights, including human rights due diligence, by all firms, regardless of where they are based. In this way, corporate behaviours could be held accountable in jurisdictions with a higher rule of law.
-
African governments should develop rules and processes, such as performance requirements, for a foreign investment regime that promotes development, ensures the employment of local workers in decent work conditions, and guarantees that value accrued in Africa stays in Africa. This would help African countries capture more added value as well as defend against harmful and predatory investment, no matter the country of origin. Any trade agreement must not endanger such procedures.
-
Each African regional economic community (REC) should be part of the WTO activities on the same footing as Member States in order to negotiate on behalf of its Member States and to reinforce their voice in the WTO as well as in Free Trade Agreement (FTA) and EPA negotiations.
We commit to continue advocating for a mutually beneficial partnership between Europe and Africa, one that takes into account historical experiences, promotes fair trade based on solidarity and advances respect for labour rights and creates decent jobs in Africa and Europe. We commit our organisations and national trade union centres to improve their cooperation and joint mobilisation with the aim to achieve these objectives and change the EPAs towards a more progressive and fair model.
Related News
tralac’s Daily News Selection
Starting tomorrow, in Lilongwe, Malawi: First Extraordinary Summit of the Committee of Ten Heads of State and Government championing education, science and technology
Our featured tweet: @ICA_Africa flagship annual report, Infrastructure Financing Trends in Africa, will be published on first day of Africa Investment Forum. Will it show a rise or fall in commitments to Africa’s infrastructure development? Find out on 7 November.
Revenue Statistics in Africa 2018 (OECD)
Africa has sustained gains in domestic resource mobilisation made since 2000, as tax revenues remained stable in 2016, according to Revenue Statistics in Africa 2018. Providing internationally comparable data for 21 participating countries, the report finds that the average tax-to-GDP ratio was 18.2% in 2016, the same level as in 2015, which represents a strong improvement from 13.1% in 2000. Revenue Statistics in Africa is a joint initiative between the African Tax Administration Forum, the AUC, and the OECD and its Development Centre, with the support of the EU. The publication, which now covers 21 countries, shows that revenue trends are mixed. Profiled key findings:
Tax revenues as a percentage of GDP: The Africa (21) average tax-to-GDP ratio was 18.2% in 2016, which is 5.0 percentage points higher than in 2000 but unchanged from 2015. In 2016, tax-to-GDP ratios ranged from 7.6% in the DRC to 29.4% in Tunisia. Six countries (Mauritius, Morocco, Senegal, South Africa, Togo, Tunisia) had tax-to-GDP ratios greater than or equal to 20% in 2016. The change in the tax-to-GDP ratio since 2000 is comparable with the increase in the LAC region (4.7 percentage points) and significantly stronger than growth amongst OECD countries over the same period (0.4 percentage points). Between 2015 and 2016, the tax-to-GDP ratios of 11 countries increased while those of 10 countries in the sample decreased. This contrasts with 2015, when the Africa (21) tax-to-GDP ratio increased by 0.5 percentage points from the previous year on average and in 15 of the 21 countries.
Tax structure: VAT revenue as a percentage of GDP in the Africa (21) increased by 2.0 percentage points from 2000, to 5.3% in 2016. VAT revenue accounted for the highest share of tax revenues in 2016 at 29.3%, an increase of 4.9 percentage points from 2000. The share of taxes on trade has fallen from 17.9% of total tax revenue to 11.6% over the same period. Revenue from income taxes contributed the most to growth in the average tax-to-GDP ratio of the Africa (21) between 2000 and 2016, increasing by 2.6% of GDP over this period to reach 6.2% of GDP in 2016. On average across the Africa (21), corporate income tax revenue increased by 1.4 percentage points – from 1.4% to 2.8% of GDP – between 2000 and 2016. [President Nana Addo Dankwa Akufo-Addo’s address at the OECD forum: summary]
Nigeria and the AfCFTA: three updates
-
Repositioning Nigeria in the African Union The Chairperson of the AUC, Moussa Faki Mahamat, undertook a two-day official visit to Nigeria (25-27 October). On 25 October, the Chairperson attended a roundtable, chaired by Foreign Minster Geoffrey Onyeama and attended by the Ministers of Interior, Finance, Budget and National Planning, the National Security Advisor, the Controller Generals of Customs and Immigration, and the Acting Chairman of the Economic and Financial Crimes Commission. The theme of the meeting was “Repositioning Nigeria in the African Union”. The discussion focused on how best to expedite the integration process on the continent, in the light of the AfCFTA, the Protocol on Free Movement of Persons, the Right of Residence and the Right of Establishment, and the Single African Air Transport Market.
The Chairperson of the Commission seized the opportunity to also brief on progress made on the African Union institutional reform, as well as the follow-up to the decision of the July 2018 Nouakchott Summit relating to the negotiations on the post-Cotonou arrangements with the European Union. The Chairperson also met with representatives of the Organized Private Sector, to exchange views on the AfCFTA and the Protocol on Free Movement of Persons. This interaction provided an opportunity for in-depth discussions on the concerns expressed by the private sector and the steps taken in the context of the negotiations on the AfCFTA to address them.
-
African free trade not yet priority – Nigerian government. Nigeria has replied to the African Union Commission and lobbyists that it is not in a hurry to pen the African Free Trade Agreement. The special adviser to the President on economic matters, Dr Adeyemi Dipeolu, said on Wednesday at the 60th anniversary lecture of the Department of Economics, University of Ibadan: “Nigeria’s reluctance in signing the African Free Trade Agreement is based on the commitment to ensure that only what will benefit its economic interest is implemented as a policy.” Dipeolu however said there was the need for Nigeria to diversify into export and increase its revenue base: “We have to look at the current theory to influence our trade policy while our policy on transshipment must be addressed.”
Also speaking, the African Trade Policy Center coordinator, Dr David Luke, said African countries must have a strategy to benefit from the agreement. He said it was important for African countries to open up their economies to encourage intra-regional trade in order to boost their GDP and employment. Luke noted that Nigeria would benefit from intra-African trade as it would become a game changer in stimulating growth and boosting industrialisation. The agreement may well offer better opportunities for African economies to industrialise than African relations with external partners, he said.
-
Nigeria’s Technical Work Group of the Presidential Committee on the Impact and Readiness Assessment for the Agreement establishing the AfCFTA meets. In his introductory remarks, Dr. Okechukwu E. Enelamah, Minister for Industry, Trade and Investment, explained: “The objectives of this Committee are to: (a) conduct a full assessment of the costs and risks inherent in the AfCFTA; (b) identify short, medium and long-term measures to resolve the issues and risks, including but not limited to policy, laws and regulations update, reform programs, infrastructure upgrades and compliance enforcement; (c) define roadmap to prepare Nigeria for the take-off of AfCFTA trading bloc; and (d) finalize and launch plan to enforce the provisions of the ECOWAS treaty as part of the process to validate the practicality of some of the provisions of AfCFTA.”
Tying trade and gender together in southern Africa (UNCTAD)
Over 70 policymakers, academics and equality advocates from SADC are taking a new UNCTAD course on trade and gender. The course participants began their eight-week training programme on 15 October. At its core is a new teaching module, Trade and Gender Linkages: an analysis of the Southern African Development Community (pdf), which complements and enriches the existing teaching material with data, case-studies and in-depth analysis of the connections between trade performance and gender equality in the 16-nation region. “The course contributes to bridging the knowledge gap on the links between trade and gender. Without an in-depth understanding of these linkages, there can be no targeted gender-responsive trade policies,” said Ms. Pamela Coke-Hamilton, who heads UNCTAD’s international trade and commodities division. The SADC course is the final activity under UNCTAD’s 2017-2018 cooperation agreement with Finland.
Women-supporting trade policies need better data, experts say (UNCTAD)
Analysis of global value chains – the complex international supply and manufacturing chains along which modern goods pass – can show the important part played by women in global trade but which is missed by trade statistics alone. “A way to solve this would be to establish a link between exporting firms and their employees to enable better analysis of gender roles across the whole value chain over time,” Nadim Ahmad, chief of the Trade and Competitiveness Statistics Division at the OECD said. “In the absence of this, collaboration with the private sector presents opportunities for filling data gaps.” Mr Ahmad said the OECD and the World Bank Group had recently collaborated with Facebook to survey several firms each month to find out what was stopping women business owners from trading internationally and integrating into global value chains. Barriers included restricted access to finance and inequality in information networks. While the need for better data is clear, the challenges are complex, the gender concerns vary depending on the country, and the different statistical capacities of advanced and developing economies need to be taken into account.
Senegal: IMF completes 2018 Article IV Consultation discussions
Most of the structural reforms for the seventh review have been implemented. But there have been delays in the operationalization of the payment of taxes via mobile phones, and limited progress has been made in implementing the action plan for reducing tax expenditures. The 2019 draft budget is consistent with the WAEMU fiscal deficit target of 3% of GDP. However, achieving this target will prove challenging given the recent weakness of revenue collection and the adverse fiscal impact of persistently high global oil prices. In the medium term, the authorities need to develop a tax policy and revenue administration strategy to reach the WAEMU tax revenue to GDP target of 20% over the medium term. They also need to set up a fiscal framework to manage the oil and gas wealth in line with international best practices that should aim at limiting the procyclicality of fiscal policy.
Lauren Johnstone: The Belt and Road Initiative – what is in it for China? (ANU, Wiley)
Given the scale of the ambition of the BRI, and potential scale of the related spill‐overs, it is increasingly important for the development research and policy community add studies that elucidate how China’s BRI aid‐supported and private‐sector investment patterns and practices fall within the more established growth and development literature – or not – and to understand the consequences. Comparative studies Chinese investment against “traditional” aid and investment projects in developing countries might similarly shed light on the BRI, alongside provide ideas as to how to maximise its offerings toward enhanced opportunity for sustainable global development.
Anecdotally, it is suggested that projects associated with the BRI more readily receive funding from Chinese agencies. If this owes to the greater array of financing pots available for the BRI‐related projects, or to the fact that BRI projects are being explicitly prioritised and different investment criteria, is not known. Greater transparency of BRI‐related data, including the terms and range of funding available, would help toward those goals. Meantime, because the successful advance of the BRI is imperative to China’s own ongoing economic transformation, it is opportune and timely for BRI‐engaged countries to be strategic and proactive in utilising the BRI’s resources for the realisation of their own concurrent sustainable development path.
Knowledge of China’s own use of aid and development finance, as well as the dynamics of China’s own econ omic development, an introduction to which was presented herein, may support the targeting of and negotiations with respective Chinese funding agencies and investors. Implicit to rise of a giant developing country as China is, is also that China’s needs may overshadow, directly and indirectly, the needs of smaller developing countries. Awareness of this risk, and timely and up‐dated knowledge of China’s own economy and how this can strategically complement development elsewhere, may help to alleviate these risks.
International Forum on China’s Reform and Opening Up and Poverty Reduction: speech by WBG’s President Jim Yong Kim
- - -
Related News
African economies sustain progress in domestic resource mobilisation
Africa has sustained gains in domestic resource mobilisation made since 2000, as tax revenues remained stable in 2016, according to Revenue Statistics in Africa 2018.
Providing internationally comparable data for 21 participating countries, the report finds that the average tax-to-GDP ratio was 18.2% in 2016, the same level as in 2015, which represents a strong improvement from 13.1% in 2000.
The third edition of Revenue Statistics in Africa, released on 31 October 2018 in Paris during the 18th International Economic Forum on Africa, shows that tax-to-GDP ratios varied widely across African countries, ranging from 7.6% in the Democratic Republic of the Congo to 29.4% in Tunisia in 2016.
Six countries – Mauritius, Morocco, Senegal, South Africa, Togo and Tunisia – had tax-to-GDP ratios greater than or equal to 20% in 2016. In comparison, the average tax-to-GDP ratio for Latin America and the Caribbean was 22.7% and 34.3% for OECD countries in 2016.
Revenue Statistics in Africa is a joint initiative between the African Tax Administration Forum (ATAF), the African Union Commission (AUC) and the Organisation for Economic Co-operation and Development (OECD) and its Development Centre, with the support of the European Union.
The publication, which now covers 21 countries, shows that revenue trends are mixed. Between 2015 and 2016, the tax-to-GDP ratios of 11 countries increased while those of 10 countries in the sample decreased. Botswana registered the highest increase (1.3 percentage points) followed by Mali (1.2 percentage points). The largest decreases (of over 2.0 percentage points) occurred in the Democratic Republic of the Congo and Niger.
The changes in tax-to-GDP ratios were primarily due to economic factors. Declines in oil prices coupled with lower activity among mining and oil companies contributed to the decreases in the Democratic Republic of the Congo and Niger, while a significant increase in the sale of diamonds in Botswana has increased revenues. In contrast, the increased tax-to-GDP ratio in Mali is partly explained by improvements to tax administration.
African economies continue to rely heavily on taxes on goods and services, which accounted for 54.6% of total tax revenues in the Africa (21) average. Value-added taxes (VAT) alone accounted for 29.3% of revenues. However, the contribution of income taxes is increasing: taxes on income and profits accounted for 34.3% of total revenues across the Africa (21) in 2016 and have contributed the most to growth in tax revenues since 2000, increasing by 2.6% of GDP to reach 6.2% of GDP in 2016. Corporate income tax revenue increased by 1.4 percentage points over this period to 2.8% of GDP, while revenue from personal income tax rose from 2.1% to 3.0% of GDP in 2016, a historic high.
The report also contains data on non-tax revenues, which continued to decline across the 21 countries on average in 2016 but remain an important source of income in certain countries. These revenues, which include income from natural resources and grants, exceeded 5% of GDP in nine of the 21 countries.
Revenue Statistics in Africa is an important part of the African Union’s pdf Strategy for the Harmonization of Statistics in Africa (SHaSA) (1.97 MB) and is aligned with the African Union’s Agenda 2063 and SDG 17.1. This edition contains a special chapter on SHaSA, identifying its approach to establishing an efficient statistical system that covers the political, economic, social, environmental and cultural development and integration of Africa, as well as the role of Revenue Statistics in Africa in this strategy.
Key findings
Tax revenues as a percentage of GDP
-
The Africa (21) average tax-to-GDP ratio was 18.2% in 2016, which is 5.0 percentage points higher than in 2000 but unchanged from 2015.
-
In 2016, tax-to-GDP ratios ranged from 7.6% in the Democratic Republic of the Congo to 29.4% in Tunisia. Six countries (Mauritius, Morocco, Senegal, South Africa, Togo and Tunisia) had tax-to-GDP ratios greater than or equal to 20% in 2016.
-
The change in the tax-to-GDP ratio since 2000 is comparable with the increase in the LAC region (4.7 percentage points) and significantly stronger than growth amongst OECD countries over the same period (0.4 percentage points).
-
Between 2015 and 2016, the tax-to-GDP ratios of 11 countries increased while those of 10 countries in the sample decreased. This contrasts with 2015, when the Africa (21) tax-to-GDP ratio increased by 0.5 percentage points from the previous year on average and in 15 of the 21 countries.
Tax structure
-
VAT revenue as a percentage of GDP in the Africa (21) increased by 2.0 percentage points from 2000, to 5.3% in 2016. VAT revenue accounted for the highest share of tax revenues in 2016 at 29.3%, an increase of 4.9 percentage points from 2000. The share of taxes on trade has fallen from 17.9% of total tax revenue to 11.6% over the same period.
-
Revenue from income taxes contributed the most to growth in the average tax-to-GDP ratio of the Africa (21) between 2000 and 2016, increasing by 2.6% of GDP over this period to reach 6.2% of GDP in 2016. On average across the Africa (21), corporate income tax revenue increased by 1.4 percentage points – from 1.4% to 2.8% of GDP – between 2000 and 2016.
-
The Africa (21) average tax structure is similar to that of LAC countries, although social security contributions in LAC are, on average, considerably higher. The Africa (21) average share of personal income tax (PIT) revenues to total tax revenue was 15.8% in 2016, lower than the OECD average (24.4%) but higher than the LAC average (9.7%).
-
Non-tax revenues were equivalent to at least 5% of GDP in nine of the 21 countries in 2016. Of the 21 countries, all but four had lower non-tax revenues as a proportion of GDP in 2016 than in 2015.
Africa Forum 2018: Africa’s Shifting Boundaries
The 18th International Economic Forum on Africa took place on 31 October 2018 in Paris. The Forum took a closer look at the topics of Growth, Employment, Migration and Development, through the lens of Africa’s latest Milestone – the signature of the African Continental Free Trade Area (AfCFTA) by 44 African countries on 21 March 2018 in Kigali, Rwanda. The following topics were discussed:
Africa’s Development Dynamics
The new Africa’s Development Dynamics (AfDD) report presents a forward-looking Africa that is resolutely open to the world and towards the future. Drawing on the most recent statistics, the AfDD assesses recent economic, social and institutional developments and identifies the megatrends that are influencing Africa and its integration into the global economy. As such, AfDD’s first edition provides prospective analysis to foster more inclusive growth, create employment and reduce inequality. This session also saw the launch of the 2018 edition of Revenue Statistics in Africa.
Session 1: The Promise of Regional Integration
The African continent has experienced strong growth at 5% between 2000 and 2014 thanks to high commodity prices, improved macro-economic management, and economic diversification strategies. This strong performance has led to the “Africa rising” narrative. However, this growth has not sufficiently reduced poverty nor improved social inclusion and well-being. Recent growth has not translated into enough quality jobs. Africa is now facing a slower growth regime (projected at about 4% annually between 2018 and 2022) that will need to have much stronger development outcomes. Reducing inequalities is crucial to make growth more inclusive. To that end, deploying redistributive policies effectively is key.
On 21st of March 2018, African countries created history by signing the pdf African Continental Free Trade Area (AfCFTA) agreement (4.67 MB) in Kigali, Rwanda. At the last AU Summit, five more countries, including South Africa, announced they have joined the AfCFTA; making it to forty-nine (49) signatories. After internal consultations, Nigeria Chief Trade Negotiator has just indicated the continent’s economic powerhouse is now ready to sign. In this new economic context, can the envisioned continental integration foster more inclusive growth, purveying millions of decent jobs? What policies will be necessary to accelerate integration and deliver more and better quality employment?
Session 2: Africa and Migration: Deconstructing Biases
Both policy and public debate on migration often rely more on perception than evidence. Analysis teaches us that the number of migrants relative to the population of developing countries increases as their per capita income rises. Fifty-three percent of African migrants live in another African country. In that context, if emigration from the continent is rising fast, emigration has the particularity of being mostly interregional.
Simultaneously with the AfCFTA treaty and the Kigali Declaration, a pdf Protocol on the free movement of people (3.80 MB) was adopted this spring by 30 African countries. The protocol aims at facilitating the establishment of the African Economic Community by supporting the implementation of free movement of persons, right of residence and right of establishment in Africa. The African Union has launched its continental passport to “realise the dream of visa-free travel for African citizens within their own continent by 2020”. As Africa undergoes these major transformations, can the continent seize the potential of its intra-regional migration flows to benefit its developmental needs?
Closing Session: Engineering Unity
The Regional Economic Communities (RECs) of Africa are the interface between the national and the continental levels for enhanced regional cooperation towards a more integrated continent and a better integration of Africa to the world economy. Africa has long made regional integration a core strategy: the continent is now accelerating efforts to realise the African Economic Community outlined in the 1991 African Union Abuja Treaty. The RECs, by promoting policy harmonization and enabling economies of scale, are de facto the “building blocks” of continental economic development.
After the advent of the Tripartite Free Trade Area – the “Cape to Cairo free trade area”, assembling three RECs together into a single new zone in 2015 – the Continental Free Trade Area was launched in March during an Extraordinary Summit of the African Union. In that context of accelerated integration, what will be the future operational linkages between the RECs and the continental area? How can RECs maximise their contribution to Africa’s integration?
Related News
Nigeria’s Technical Work Group of the Presidential Committee on the Impact and Readiness Assessment for the Agreement establishing the AfCFTA meets
Introductory remarks by Dr. Okechukwu E. Enelamah, Minister for Industry, Trade and Investment
24 October 2018, Abuja
On behalf of His Excellency, the President, I have the honour to welcome you all to this commencement meeting of the “Technical Work Group of the Presidential Committee on the Impact and Readiness Assessment of the Agreement Establishing the African Continental Free Trade Area (AfCFTA)”.
The idea of an integrated African market to industrialize Africa, spur growth, enhance welfare and, create jobs, has been around for a long time. However, with the actual emergence of the AfCFTA in 2018, the decision was taken by the Government to mobilize stakeholders in the Nigerian economy to understand its details, interpret its opportunities and, re-organize our economic system for coherence and coordination, if the opportunities of the AfCFTA are to be realized and maximized.
This is why Stakeholders, in the recently concluded 7-month nation-wide sensitization and consultation exercise, expressed their gratitude, unanimously, to H.E. Mr. President for democratizing the process of awareness building, information-sharing and receiving advice on how best to approach the AfCFTA.
The nationwide stakeholder engagement on the AfCFTA, acknowledged the potential benefits of AfCFTA in terms of improved market access in Africa for Nigerian products, services and businesses and opportunity to formalize the largely informal trade along the historic trans-Saharan trade corridors, amongst other benefits.
I. AfCFTA Technical State-of-Play and Associated Developments in ECOWAS
As you know, the Agreement Establishing the African Continental Free Trade Area (AfCFTA) was signed in Kigali, Rwanda, at the 10th Extraordinary Summit of the African Union (AU), on 21st March 2018. So far, there are 49 Signatories and 7 Ratifications. There is a drive by the African Union (AU), in partnership with the United Nations Economic Commission for Africa (UN-ECA), to sensitize stakeholders on AfCFTA. Twenty-two ratifications are required for the AfCFTA to come into force.
To this end, in Lagos, on 2nd and 3rd November, the African Union Commission (AUC), the United Nations Economic Commission for Africa (UN-ECA) and the Rockefeller Foundation, in collaboration with private and public sector stakeholders in Nigeria are organising the “Africa Trade Forum” (ATF), as a major stakeholder engagement and sensitization FORUM. The Forum will focus on how the implementation of the AfCFTA can be positioned to provide a platform for addressing Africa’s development challenges to industrialize, grow African economies, create jobs and reduce, if not eradicate poverty completely.
In ECOWAS, Nigeria is the current Chairman. Thirteen (13) of the fifteen (15) Members are Signatories to the AfCFTA. The ECOWAS Commission (that is the Executive Secretariat) is moving ahead with ECOWAS Members to prepare the AfCFTA Market Access Offer for Trade in Goods; and, a Market Access Offer for Trade in Services. Because ECOWAS is a Customs Union (CU), these offers shall be deemed binding on all ECOWAS Members. The ECOWAS Market Access Offer shall be submitted to the AfCFTA process at the 13th Meeting of the Negotiating Forum in Addis in November.
II. Nation-Wide AfCFTA Stakeholder Sensitization and Consultative Process
AfCFTA Stakeholder Sensitization and Consultations were undertaken from March to October 2018. In the exercise, approximately:
-
34 groups and associations were sensitized and consulted;
-
approximately 3,017 natural persons were engaged in the various sessions and meetings;
-
5 Communiques were adopted and signed; in 5 geopolitical zones; and in the case of the South West Geopolitical Zone summary was issued in Lagos.
12 private sector groups submitted inputs, conveying their group positions on the AfCFTA in response to the nation-wide call for inputs on all media platforms.
Substantively, the sensitization saw diverse views emerge from the exercise. while many stakeholders support AfCFTA, there some important stakeholders who are concerned about the impact of the AfCFTA.
Those stakeholders in support, point to the market opportunities for growth for Nigerian exporters of goods and services; scope for industrialization through economies of scale in a single market; the mechanism for resolving trade disputes; cooperative mechanisms for regulating and promoting intra-African trade; and, the AfCFTA as a platform for Nigeria’s continued leadership in Africa as Africa remains the centrepiece of Nigeria’s foreign policy.
Stakeholders were also specific in pointing to policy sectors where complementary action is required by the Federal Government, as Nigeria prepares for the AfCFTA. These specific areas requiring intervention and complementing action include:
-
predictable, cost effective power supply. The cost of energy accounted for the major cost of doing business in Nigeria.
-
reducing the cost of money (interest rates) and expanding trade finance/micro-credits and finance for MSMEs;
-
fostering an Enabling Environment for Business that eliminates:
- multiple taxation by government and highway tolls;
- internal checkpoints; and,
- reduces the level of insecurity;
-
investing in trade Infrastructure (seaports, inland dry ports, road and railway networks);
-
re-opening historic Trade Corridors in the North East, South-South and South West for trade and investment facilitation;
-
mainstreaming informal unrecorded trade into the formal economy and developing a programme for Micro- Small and Medium Enterprises;
-
addressing the long-standing problem of trans-shipment and dumping, piracy, smuggling and other injurious trade practices by non-African trading partners, operating through Nigeria’s neighbours in complicity with individual Nigerians;
-
empowering women in international trade; and,
-
establishing a coordinating, implementation and monitoring body for Trade Policy that would cover the AfCFTA, the Commonwealth and the WTO.
It is based on the foregoing challenges, that Mr. President inaugurated the AfCFTA Impact and Readiness Assessment Committee on Monday, 22nd of October, to further study and quantify the impacts of AfCFTA, and develop practical and implementable measures that will prepare and if required, protect Nigerian businesses against them.
III. Objectives of the Committee
The objectives of this Committee are to:
-
conduct a full assessment of the costs and risks inherent in the AfCFTA
-
identify short, medium and long-term measures to resolve the issues and risks, including but not limited to policy, laws and regulations update, reform programs, infrastructure upgrades and compliance enforcement;
-
define roadmap to prepare Nigeria for the take-off of AfCFTA trading bloc; and
-
finalize and launch plan to enforce the provisions of the ECOWAS treaty as part of the process to validate the practicality of some of the provisions of AfCFTA.
IV. Terms of Reference of the AfCFTA Impact and Readiness Assessment Committee
Finally, following consultations, the Terms of Reference for the Presidential Committee on AfCFTA Impact Assessment and Readiness are to:
-
assess the potential costs and impact of the AfCFTA for Nigeria in relation to the benefits;
-
identify the short, medium and long-term measures to prepare Nigerian businesses for the take-off of the AfCFTA trading bloc and a back-up plan that covers selected scenarios; and,
-
review the trade remedy options to safeguard the Nigerian economy from predatory and other unfair trade practices
More specifically, the scope of impact assessment would include, inter alia, the potential impact on government revenue (for weighted and non-trade weighted revenue), coherence between fiscal policy, structural and monetary policies. The assessment would also include impact on Nigerian businesses, domestically and regionally, for both trade in goods and trade in services.
The assessment will review smuggling trends, including the potential escalation of smuggling and abuse of the rules of origin and address specific questions such as how AfCFTA provisions interact with legacy bilateral/multilateral trade agreements.
Also to be considered is the national security implications of AfCFTA especially with the movement of persons.
In assessing Nigeria’s readiness for AfCFTA, the Committee shall evaluate specific measures to prepare Nigerian businesses for export trade, taking into consideration, ongoing programs and reforms.
The measures shall include critical trade enhancing projects, policies, laws, regulatory reforms and compliance actions to be implemented over the next 5-10 years. The measures would include non-tariff and other non-technical barriers and transitional arrangements that if not addressed, will impede export of Nigerian Goods and Services and erode the expected benefits from AfCFTA.
The Presidential Committee will also explore actions to improve and enforce the provisions of ECOWAS and other trade treaties with a view to assessing practical and policy-relevant aspects of implementing the AfCFTA.
The Committee shall also assess and recommend a framework to mainstream trade into national development plans and programmes to assure coordinated and sustained implementation.
Call to Action
As Mr. President clearly stated during the Inauguration of the Steering Committee on Monday, “We are determined to break away from the past practice of committing Nigeria to treaties without definite implementation plan to ensure that expected benefits are realized and risks mitigated.”
I therefore welcome all of you that have been nominated to the AfCFTA Impact and Readiness Technical Work Group.
I enjoin you all to undertake critical assessment of the costs and risks inherent in the AfCFTA and identify short, medium and long-term measures to resolve the issues and risks and hence improve Nigeria’s competitiveness in regional, continental and global trade.
Thank you.
Related News
Women-supporting trade policies need better data, experts say
Women’s economic empowerment is a crucial objective of the international development agenda but designing informed policies means developing better information.
The idea that governments around the world must support women as traders, workers and entrepreneurs to drive international commerce has been recognized in several multilateral agendas in recent years, but experts say that a data gap needs to be filled before the most effective policies can be designed.
The issues were discussed at a session of the World Trade Organization’s Public Forum in Geneva in October, organized by UNCTAD, that brought together leading statisticians and policymakers.
“We know that the impacts of trade policies are not evenly distributed by gender,” the head of UNCTAD’s statistical branch Steve MacFeely said.
“While several agendas – such as the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda on aligning financing flows with economic, social and environmental priorities – signal an international commitment to female empowerment in trade, lack of data and statistical capacity gaps prevent accurate monitoring of the nexus between gender and trade,” he said.
Disentangling the multidimensions of trade policy on gender is notoriously tricky, posing several statistical challenges for defining the variables and linking them together.
“Lack of information makes policies less effective or even ill-targeted which may exacerbate gender disparities,” Mr. MacFeely said.
Trade-gender nexus
The first fruit of this work is a policy brief on developing a statistical framework for the analysis of gender and trade that can support governments to review data gaps and fill them.
“This will be one of many steps in a wider capacity-building programme to strengthen the ability of countries to measure the trade-gender nexus so that they can design more inclusive trade policies in the future,” Mr. MacFeely said.
Panelists at the WTO event, chaired by UNCTAD Deputy Secretary-General Isabelle Durant, asked which data were necessary for formulating gender-responsive trade policies and how to improve their availability.
Marie-France Paquet, chief economist at Global Affairs Canada, said that her country had made some headway by gathering all gender-related statistics in a single online repository.
“In developed economies, opportunities exist to creatively link together various data sources to capitalize on existing information,” Mr. MacFeely explained.
Canada’s experience, for example, revealed how employer data could provide accurate breakdowns of gender composition in economic sectors to give industry-level impact assessments of trade policies, Ms. Paquet said.
By contrast, structurally different African economies, for example, face a different set of challenges complicated by off-the-books economic activity and cross-border financial flows.
Complex challenges
Analysis of global value chains – the complex international supply and manufacturing chains along which modern goods pass – can show the important part played by women in global trade but which is missed by trade statistics alone.
“A way to solve this would be to establish a link between exporting firms and their employees to enable better analysis of gender roles across the whole value chain over time,” Nadim Ahmad, chief of the Trade and Competitiveness Statistics Division at the Organisation for Economic Co-operation and Development, said. “In the absence of this, collaboration with the private sector presents opportunities for filling data gaps.”
Mr. Ahmad said the OECD and the World Bank Group had recently collaborated with Facebook to survey several firms each month to find out what was stopping women business owners from trading internationally and integrating into global value chains. Barriers included restricted access to finance and inequality in information networks.
While the need for better data is clear, the challenges are complex, the gender concerns vary depending on the country, and the different statistical capacities of advanced and developing economies need to be taken into account.
Also taking part in the discussion were Alison Holder, director of Equal Measures 2030, Amelie Kvarnström, trade adviser at the National Board of Trade, Sweden, and David Luke, head of the African Trade Policy Centre of the United Nations Economic Commission for Africa.
“The 2030 Agenda for Sustainable Development emphasizes the importance of equality and human rights, with the primary goal of ‘leave no-one behind’,” Ms. Durant said. “International trade has been criticized for leaving out a large part of the population. And among the 'forgotten', many are women.”
Related News
Visit of the African Union Commission Chairperson to Nigeria
The Chairperson of the AUC, Moussa Faki Mahamat, undertook a two-day official visit to Nigeria from 25 to 27 October 2018. The visit is part of his regular consultations with member states, to advance the African Union agenda.
On 25 October 2018, the Chairperson attended a roundtable, chaired by Foreign Minster Geoffrey Onyeama and attended by the Ministers of Interior, Finance, Budget and National Planning, the National Security Advisor, the Controller Generals of Customs and Immigration, and the Acting Chairman of the Economic and Financial Crimes Commission.
Also in attendance were senior officials of the Ministry of Trade and Industry, the Federal Inland Revenue Service, the Civil Aviation Authority, the Ministry of Transport and Aviation, and the national focal point for NEPAD.
The theme of the meeting was “Repositioning Nigeria in the African Union”. The discussion focused on how best to expedite the integration process on the continent, in the light of the African Continental Free Trade Area (AfCFTA), the Protocol on Free Movement of Persons, the Right of Residence and the Right of Establishment, and the Single African Air Transport Market.
The Chairperson of the Commission seized the opportunity to also brief on progress made on the African Union institutional reform, as well as the follow-up to the decision of the July 2018 Nouakchott Summit relating to the negotiations on the post-Cotonou arrangements with the European Union.
The Chairperson also met with representatives of the Organized Private Sector, to exchange views on the AfCFTA and the Protocol on Free Movement of Persons. This interaction provided an opportunity for in-depth discussions on the concerns expressed by the private sector and the steps taken in the context of the negotiations on the AfCFTA to address them.
On 26 October, the Chairperson was received by President Muhammadu Buhari. He commended President Buhari for his leadership and Nigeria’s longstanding commitment to African unity and advancement. He further commended Nigeria’s role in the operationalization of the Multi-national Joint Task Force, noting the successes achieved in the fight against Boko Haram, and its overall contribution to the efforts to silence the guns on the continent by 2020.
The Chairperson updated President Buhari on the Extraordinary Summit on the African Union institutional reform, scheduled to take place in Addis Ababa from 17 to 18 November 2018.
The Chairperson visited the Independent National Electoral Commission (INEC). He was briefed by the Chairman on the preparations being made for the upcoming General Elections in 2019. The INEC Chairman informed him that, in this exercise, INEC is implementing the observations and recommendations made by the African Union observer team during the 2015 elections.
The Chairperson commended INEC for its efforts to ensure the conduct of peaceful and credible elections, and confirmed that the African Union will deploy observers and avail any other assistance, as may be required, to the electoral process.
The Chairperson also visited the National Defence College (NDC), where he delivered a lecture on “Integration, Good Governance and Democracy: The Africa We Want”. He commended the NDC for its contribution to strategic thinking and policy planning on peace, security and governance, and for housing a Center of Excellence for Peace Support Operations Training in West Africa.
The Chairperson held an interactive stakeholders’ meeting with the Nigerian Film Industry, popularly known as Nollywood. He expressed appreciation for the talent, creativity and dynamism of Nollywood, as a demonstration of the continent’s resourcefulness.
He added that the Nollywood actors were shaping the image of the continent for the better, while at the same time serving as role models for African youth to encourage them to discover and realize their talents and, in so doing, take advantage of the huge opportunities available on the continent. Going forward, it was agreed that the African Union and Nollywood will partner to further popularize Agenda 2063 and related African Union activities.
The Chairperson visited the Headquarters of the Economic Community of West African States (ECOWAS), where he exchanged views with ECOWAS Commissioners on issues of mutual interest, most notably the promotion of peace, security, governance and integration, as well as efforts to strengthen collaboration between the African Union and the Regional Economic Communities, including ECOWAS.
The Chairperson also took advantage of his visit to address the staff of the African Union Scientific, Technical and Research Commission, which is mandated to promote the role of science, technology and research.
During his visit to Nigeria, the Chairperson was accompanied by the Commissioner for Trade and Industry and the Commissioner for Human Resources, Science and Technology, as well as by senior officials of the Commission.
Related News
tralac’s Daily News Selection
G20 Africa Investment Summit: selected updates
Remarks by South Africa’s Cyril Ramaphosa. We are convinced that the impact of the Compact with Africa initiative will be enhanced by the involvement of development finance institutions. Among other things, these institutions have expertise and approaches that could be used to mobilise resources for Africa’s infrastructure. As part of the effort to promote private investment on the continent, South Africa and the African Development Bank will host the inaugural Africa Investment Forum in Johannesburg (7-9 November). The Africa Investment Forum is a transactional platform bringing together international financial institutions, sovereign wealth funds and institutional investors. South Africa, Germany and the African Development Bank will also host the annual Compact with Africa Investor Event on the morning of 8 November.
Remarks by Rwanda’s Paul Kagame. We fully share Chancellor Merkel’s impatience to achieve measurable and sustainable results through new projects. After all, the best way to speed up business climate reform is to attract more global firms to Africa, and small- and medium-sized businesses as well. This produces a demonstration effect, which in turn generates even more productive investment. In other words, a virtuous cycle. The Volkswagen “Moving Rwanda” venture, which Thomas Schaefer will present in the next session, is a very good example of what is possible. Let me share three important features of this project that have broader relevance. First, the supply chain involves multiple countries in East and Southern Africa, in a “hub-and-spoke” system. A regional approach is key to achieving economies of scale in Africa. Continental integration is also making this an increasingly viable strategy, as I referred to earlier. Second, Africa can be a global innovation laboratory. East Africa is a young market for new car sales. But we have a great need for mobility solutions, which raise the productivity of the wider regional economy. Volkswagen is not only assembling vehicles in Rwanda, it is pioneering next-generation business models for shared, environmentally-friendly transport. Third, Volkswagen’s approach has attracted other major players that might not otherwise be in Rwanda, notably Siemens.
Summary of remarks by Ethiopian Prime Minister Abiy Ahmed. “We would like to see similar, more investment from G20 countries and hope this platform continues to play a driving and catalytic role. As I conclude, I would like to assure my government’s commitment and seriousness to take all the necessary measures required to attract and retain investment to Ethiopia.” [Summary of remarks by Ghana’s President Nana Addo Dankwa Akufo-Addo]
IMF’s Christine Lagarde: Realizing the potential of the G20 Compact with Africa. Sixteen months on from the Berlin Summit that effectively launched the initiative, we can, and should, ask ourselves whether Compact countries and their international partners are doing enough to fully implement the initiative, and where we can make further progress. The IMF continues to work closely with Compact countries to build strong macroeconomic, business, and financial frameworks that will encourage a scaling-up of private investment. We maintain a close policy dialogue with all 12 Compact countries, and IMF-supported programs are in place in 10 of those countries. During 2017 and 2018, the Fund fielded 129 technical assistance missions in Compact countries and trained more than 1,700 government officials, in areas including tax administration, public investment management capacity, and financial sector supervision, to name a few. [Germany announces $1.14bn fund for Africa]
DW’s Ludger Schadomsky: New name but same mistakes in Compact With Africa. Once again the IMF and the World Bank are on board. Instead of being called SAP, the investment program has been called the Compact With Africa. The CWA, however, has “missed the point,” according to the German-African Business Association, which is not known for being hostile to commerce. The involvement of private investors in the development programs for – and with – Africa is to be welcomed, and the mode of traditional development aid is rightly discredited. But the mistakes of the SAPs are being repeated: The CWA is very narrowly focused on macroeconomic conditions and neglects UN sustainability targets, as well as the goals set out in the African Union’s Agenda 2063.
Doing Business 2019: main findings
Doing Business captured a record 314 regulatory reforms between 2 June 2017, and 1 May 2018. Worldwide, 128 economies introduced substantial regulatory improvements making it easier to do business in all areas measured by Doing Business. The economies with the most notable improvement in Doing Business 2019 are Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Côte d’Ivoire, Turkey and Rwanda. One-third of all business regulatory reforms recorded by Doing Business 2019 were in the economies of Sub-Saharan Africa. With a total of 107 reforms, Sub-Saharan Africa once again has a record number this year.
Case study: pdf Trading across borders (12.76 MB) : Training has been pivotal when introducing new electronic systems, such as customs management systems or national electronic single windows. Doing Business data show that many economies - including Afghanistan, Grenada and Jamaica in 2016, Cabo Verde and the Comoros in 2017 and Angola and Lesotho in 2018 - have experienced reductions in the time to prepare documentation following training programs or pilot tests when implementing the Automated System for Customs Data World, a customs data management system developed by UNCTAD. Brazil, Brunei Darussalam and Kenya also experienced positive results following the implementation of national electronic single window systems in 2017; by increasing awareness of the new platforms through training and seminars, they reduced documentary compliance time as measured by Doing Business.
African trade, finance updates
Africa Trade Forum 2018: update
The Forum (2-3 November, Lagos) will be hosted by Nigeria’s Ministry of Industry, Trade and Investment, and co-organised by the UNECA, the AUC, and the Rockefeller Foundation. The Forum’s purpose is to look into the challenges and opportunities of the AfCFTA in individual African states, and to better understand how AfCFTA can drive economic development and prosperity on the continent for all of Africa’s citizens.
Angola: Selected policy notes for the incoming administration (World Bank)
The Angolan economy is at a juncture. The current growth model based on oil wealth is nearly exhausted, and has not delivered inclusive growth and shared prosperity. The challenge for the administration is to restore macroeconomic stability and lay the foundations for a new, more inclusive growth model that can support a young and growing population. The objective of these Angola Policy Notes (pdf), written from the perspective of the World Bank, are to support the government in its reform agenda. The 15 concise policy notes, dated 14 March 2018, range from consideration of short-term macro stability to policies in support of economic diversification and long-term inclusive growth. The policy notes reflect the World Bank’s past and current engagement in Angola in several sectors, and provide a short diagnostic of the current situation and present policy options for reforms.
Kenya: China threatens to withhold SGR funds over ‘hostility’ (Daily Nation)
Funding for the next phase of the Standard Gauge Railway could be in jeopardy after China threatened to impose trade sanctions on Kenya in retaliation at a ban on Chinese fish. Acting ambassador Li Xuhang described the ban as a “trade war”, warning that his country could react in the same way it did to US President Donald Trump’s imposition of tariffs on Chinese goods. Mr Li was addressing a group of MPs, academics with links to Chinese institutions and others invited for a familiarisation tour of the SGR at the Chinese embassy in Nairobi Tuesday morning. He revealed that the embassy had a letter from the Fisheries Department cancelling all applications for imports of Chinese fish. Imposition of the ban on Chinese fish follows President Kenyatta’s remarks recently when he publicly wondered why imported fish should be flooding the Kenyan market at the expense of local produce. The refusal to sign the deal was to express displeasure at what China views as an increasingly hostile operating environment, citing negative media reports and public bashing by politicians. President Kenyatta is also expected to sign an agreement during a return visit to China early November, which would ease exportation of Kenyan food and agricultural products to the vast Chinese market.
South Africa: September 2018 trade deficit (SARS)
The South African Revenue Service has released trade statistics for September 2018 recording a trade deficit of R2.95bn. The year-to-date (1 Jan - 30 Sept) trade deficit of R0.33bn is a deterioration on the surplus for the comparable period in 2017 of R44.89bn. Exports year-to-date increased by 5.6% whilst imports for the same period showed an increase of 11.5%. The September trade deficit is attributable to exports of R113.69bn and imports of R116.64bn. Exports decreased from August 2018 to September 2018 by R3.06 billion (2.6%) and imports increased from August 2018 to September 2018 by R8.66 billion (8.0%). The Africa region trade surplus of R14 198 million is a deterioration of R4 624 million in comparison to the R18 823 million surplus recorded in August 2018.
Nigeria: Global Financial Integrity releases new study on trade misinvoicing (GFI)
The report, pdf Nigeria: Potential revenue losses associated with trade misinvoicing (1.79 MB) , analyzes Nigeria’s bilateral trade statistics for 2014 (the most recent year for which sufficient data are available) which are published by the United Nations Comtrade. The detailed breakdown of bilateral Nigerian trade flows in Comtrade allowed for the computation of trade value gaps that are the basis for trade misinvoicing estimates. Import gaps represent the difference between the value of goods Nigeria reports having imported from its partner countries and the corresponding export reports by Nigeria’s trade partners. Export gaps represent the difference in value between what Nigeria reports as having exported and what its partners report as imported. The portion of revenue lost due to the misinvoicing of exports was $1.3bn during the year which was related to a reduction in corporate income taxes. The portion of revenue lost due to the misinvoicing of imports was $880m. This amount can be further divided into its component parts: uncollected VAT tax ($100m), customs duties ($365m), and corporate income tax ($415m). Lost revenue due to misinvoiced exports was $1.3bn for the year which is related to lower than expected corporate income and royalties.
Alibaba founder Jack Ma in Kigali (New Times)
China’s e-commerce billionaire and Alibaba Group founder, Jack Ma, is expected in Kigali today to launch a number of initiatives on which his firm will partner with Rwanda. According to Alizila, Alibaba Group’s news platform, one of the major announcements expected to be made is the launch of the Electronic World Trade Platform (eWTP).
TradeMark East Africa gives Rwanda Revenue Authority $1.5m to upgrade system (Taarifa)
The Rwanda Revenue Authority has received US$ 1.57 million from TradeMark East Africa (TMEA) to upgrade its Electronic Single Window and Authorised Economic Operator Programme. This marks the start of the second phase of the Rwanda Electronic Single Window (RESW). The second phase will be marked by various upgrades which will be implemented up until June 2022.
ODI’s Linda Calebrese has launched a bi-monthly blog of China and international development: six things to read in October
IATA forecast predicts 8.2bn air travelers in 2037: Africa will grow by a CAGR of 4.6%. By 2037 it will see an extra 199 million passengers for a total market of 334 million passengers.
- - -
Related News
South Africa Merchandise Trade Statistics for September 2018
South African trade balance swings to deficit in September
South Africa’s trade balance shifted to a R2.95 billion deficit in September of 2018 from a downwardly revised R8.77 billion surplus and well below market expectations of a R4.0 billion surplus. It was the smallest trade gap since February. Considering the January to September period, the country posted a R0.33 billion gap.
Exports fell 2.6 percent month-over-month to R113.69 billion in September 2018, mainly due to lower sales of vegetables products (-16 percent); machinery and electronics (-7 percent); vehicles and transport equipment (-6 percent) and base metals (-5 percent). Main export partners were: Germany (9.1 percent of total exports), China (7.2 percent), the US (6.8 percent), the UK (5.8 percent) and India (5.3 percent).
Imports jumped 8.0 percent month-over-month to R116.65 billion, boosted by higher purchases of mineral products (75 percent) and machinery and electronics (5 percent). On the other hand, imports dropped for original equipment components (-12 percent); vehicles and transport equipments (-8 percent) and chemical products (-5 percent). The most important import partners were: China (17.7 percent of total imports), Germany (9.8 percent), Saudi Arabia (9.2 percent), the US (6.2 percent) and Nigeria (4.5 percent).
Excluding trade with neighbouring Botswana, Lesotho, Namibia and Eswatini, the country recorded a trade deficit of R11.78 billion in September.
The South African Revenue Service (SARS) today released trade statistics for September 2018 recording a trade deficit of R2.95 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN).
The year-to-date (01 January to 30 September 2018) trade deficit of R0.33 billion is a deterioration on the surplus for the comparable period in 2017 of R44.89 billion. Exports year-to-date increased by 5.6% whilst imports for the same period showed an increase of 11.5%.
Including trade data with Botswana, Eswatini, Lesotho and Namibia (BELN)
The R2.95 billion trade deficit for September 2018 is attributable to exports of R113.69 billion and imports of R116.64 billion. Exports decreased from August 2018 to September 2018 by R3.06 billion (2.6%) and imports increased from August 2018 to September 2018 by R8.66 billion (8.0%).
Exports for the year-to-date (01 January to 30 September) increased by 5.6% from R860.29 billion in 2017 to R908.68 billion in 2018. Imports for the year-to-date of R909.00 billion are 11.5% more than the imports recorded in January to September 2017 of R815.40 billion, leaving a cumulative trade deficit of R0.33 billion for 2018.
On a year-on-year basis, the R2.95 billion trade deficit for September 2018 is a deterioration from the surplus recorded in September 2017 of R 5.27 billion. Exports of R113.69 billion are 10.3% more than the exports recorded in September 2017 of R103.03 billion. Imports of R116.64 billion are 19.3% more than the imports recorded in September 2017 of R97.77 billion.
August 2018’s trade surplus was revised downwards by R0.03 billion from the previous month’s preliminary surplus of R8.79 billion to a revised surplus of R8.77 billion as a result of ongoing Vouchers of Correction (VOC’s).
Trade highlights by category
The main month-on-month export movements: R’ million
|
||
Section:
|
Including BELN:
|
|
Vegetable Products
|
-R1 399
|
- 16%
|
Vehicles & Transport Equipment
|
- R 947
|
- 6%
|
Base Metals
|
- R 747
|
- 5%
|
Machinery & Electronics
|
- R 631
|
- 7%
|
Precious Metals & Stones
|
+ R 837
|
+ 4%
|
Total
|
- R2 887
|
94%
|
Total Movement |
- R3 064 |
100% |
The main month-on-month import movements: R’ million
|
||
Section:
|
Including BELN:
|
|
Mineral Products
|
+R10 971
|
+ 75%
|
Machinery & Electronics
|
+R1 106
|
+ 5%
|
Prepared Foodstuff
|
-R 206
|
- 6%
|
Footwear & Accessories
|
-R 270
|
- 17%
|
Precious Metals & Stones
|
-R 483
|
- 18%
|
Chemical Products
|
-R 635
|
- 5%
|
Vehicles & Transport Equipment
|
-R 832
|
- 8%
|
Original Equipment Components
|
-R1 223
|
- 12%
|
Total
|
+R8 428
|
97%
|
Total Movement |
+R8 657 |
100% |
Trade highlights by world zone
The world zone results from August 2018 (revised) to September 2018 are given below.
Africa:
Trade surplus: R14 198 million – this is a deterioration of R4 624 million in comparison to the R18 823 million surplus recorded in August 2018.
America:
Trade deficit: R1 989 million – this is an improvement of R 221 million in comparison to the R2 211 million deficit recorded in August 2018.
Asia:
Trade deficit: R19 708 million – this is a deterioration of R8 142 million in comparison to the R11 566 million deficit recorded in August 2018.
Europe:
Trade deficit: R 145 million – this is an improvement of R4 035 million in comparison to the R4 180 million deficit recorded in August 2018.
Oceania:
Trade deficit: R511 million – this is a deterioration of R 514 million in comparison to the R 3 million surplus recorded in August 2018.
Excluding trade data with Botswana, Eswatini, Lesotho and Namibia (BELN)
The trade data excluding BELN for September 2018 recorded a trade deficit of R11.78 billion. This was a result of exports of R101.45 billion and imports of R113.23 billion.
Exports decreased from August 2018 to September 2018 by R2.81 billion (2.7%) and imports increased from August 2018 to September 2018 by R9.01 billion (8.6%).
The cumulative deficit for 2018 is R68.21 billion compared to R23.83 billion deficit in 2017.
Trade highlights by category
The main month-on-month export movements: R’ million
|
||
Section:
|
Excluding BELN:
|
|
Vegetable Products
|
-R1 385
|
- 17%
|
Vehicle & Transport Equipment
|
-R 806
|
- 5%
|
Base Metals
|
-R 693
|
- 5%
|
Machinery & Electronics
|
-R 580
|
- 8%
|
Precious Metals & Stones
|
+R 654
|
+ 3%
|
Prepared Foodstuff
|
+R 166
|
+ 5%
|
Total
|
-R2 644
|
94%
|
Total Movement |
-R2 808 |
100% |
The main month-on-month import movements: R’ million
|
||
Section:
|
Excluding BELN:
|
|
Mineral Products
|
+R10 977
|
+ 76%
|
Machinery & Electronics
|
+R1 044
|
+ 5%
|
Prepared Foodstuff
|
-R 182
|
- 6%
|
Footwear & Accessories
|
-R 272
|
- 17%
|
Chemical Products
|
-R 655
|
- 5%
|
Vehicles & Transport Equipment
|
-R 836
|
- 8%
|
Original Equipment Components
|
-R1 223
|
- 12%
|
Total
|
+R8 853
|
98%
|
Total Movement |
+R9 014 |
100% |
Trade highlights by world zone
The world zone results for Africa excluding BELN from August 2018 (Revised) to September 2018 are given below.
Africa:
Trade surplus: R5 370 million – this is a deterioration of R4 724 million in comparison to the R10 093 million surplus recorded in August 2018.
Botswana, Eswatini, Lesotho and Namibia (Only)
Trade statistics with the BELN for September 2018 recorded a trade surplus of R8.83 billion. This was a result of exports of R12.24 billion and imports of R3.41 billion.
Exports decreased from August 2018 to September 2018 by R0.26 billion (2.0%) and imports decreased from August 2018 to September 2018 by R0.36 billion (9.5%).
The cumulative surplus for 2018 is R67.88 billion compared to R68.72 billion in 2017.
Trade Highlights by Category
The main month-on-month export movements: R’ million
|
||
Section:
|
BELN:
|
|
Mineral Products
|
-R 142
|
- 7%
|
Vehicles & Transport Equipment
|
-R 141
|
- 13%
|
Prepared Foodstuff
|
-R 128
|
- 9%
|
Base Metals
|
-R 54
|
- 6%
|
Machinery & Electronics
|
-R 51
|
- 3%
|
Plastics & Rubber
|
-R 23
|
- 4%
|
Chemical Products
|
-R 20
|
- 2%
|
Vegetable Products
|
-R 14
|
- 3%
|
Wood Pulp & Paper
|
+R 182
|
+ 63%
|
Precious Metals & Stones
|
+R 183
|
+ 21%
|
Total
|
-R 208
|
81%
|
Total Movement |
-R 256 |
100% |
The main month-on-month import movements: R’ million
|
||
Section:
|
BELN:
|
|
Precious Metals & Stones
|
-R 273
|
- 38%
|
Live Animals
|
-R 82
|
- 19%
|
Textiles
|
-R 32
|
- 6%
|
Prepared Foodstuff
|
-R 24
|
- 4%
|
Machinery & Electronics
|
+R 62
|
+14%
|
Total
|
-R 349
|
98%
|
Total Movement |
-R 356 |
100% |
Related News
Merkel looks to Africa to cement her legacy undermined by migration crisis
German Chancellor Angela Merkel pledged on Tuesday, 30 October 2018, a new development fund to tackle unemployment in Africa, a problem spurring the mass migration that has shaped her long premiership as it nears its end.
Merkel hosted a summit of African leaders a day after her announcement that she would retire from politics by 2021, which sent shockwaves across Europe and started a race to succeed her.
She needs the Compact with Africa summit to show that progress has been made in addressing the aftermath of one of the defining moments of her 13 years in power: her 2015 decision to open Germany’s doors to more than a million asylum seekers.
The Berlin summit, attended by 12 presidents and prime ministers including Egypt’s Abdel Fattah al-Sisi, South Africa’s Cyril Ramaphosa, Ethiopia’s Abiy Ahmed and Rwanda’s Paul Kagame, was designed to showcase the continent as a stable destination for German investment.
International Monetary Fund Managing Director Christine Lagarde was also there, along with a host of international development officials.
The aim was to create good jobs for Africans, easing the poverty which, along with political instability and violence, has encouraged large numbers to head for Europe. But with Africa’s population growing at almost three percent a year, the task is enormous.
“We Europeans have a great interest in African states having a bright economic outlook,” Merkel said in her opening speech, announcing the fund to help small and medium-sized enterprises from both Europe and Africa to invest on the continent.
The 119,000 Africans who arrived in Europe in 2018, according to the International Organisation for Migration, are the tip of the iceberg. International Labour Organisation figures show that 16 million migrants were on the move within Africa in 2014.
While European Union countries invested $22 billion in Africa in 2017, breakneck economic growth will be needed to help bring down the migrant numbers.
Berlin hopes Germany’s manufacturing-based economy, which drove Eastern Europe’s rapid economic growth after the 1989 collapse of Communism, could turn things round.
Merkel needs results fast if she is to ensure the leadership of her Christian Democrats passes to a centrist ally, such as its general secretary, Annegret Kramp-Karrenbauer.
A Marshall plan for Africa?
Other candidates for the party leadership, including Health Minister Jens Spahn or her old rival, the strongly pro-business Friedrich Merz, are well to her right politically and could be expected to want to challenge much of her legacy.
Merkel has said she will remain chancellor but that her current, fourth term up to 2021 will be her last. A whopping 71% of Germans welcomed Merkel’s decision, a poll released Tuesday by broadcasters RTL and n-tv showed.
Germany has introduced tax incentives for its companies to set up plants in Africa, reflecting her view that state aid must give way to private investment if jobs are to be created in their millions.
This would be part of a pdf “Marshall Plan for Africa” (1.58 MB) – named after the US-funded plan that helped to rebuild European states including Germany after World War Two – that she sees as central to her legacy.
Merkel presented her decision to open Germany’s borders in 2015 as an unavoidable necessity driven by the vast scale of the human tide, that year mostly fleeing the civil war in Syria.
An agreement with Turkey sharply curtailed the arrival of refugees into the EU through Greece. But hundreds of thousands of mainly African migrants continued to travel across the Mediterranean, a flow that finally began to abate in the past year with improved efforts to halt smuggling from Libya.
The crisis has upturned European politics, bringing the far right to power in Italy and Austria, and in Germany revitalising the Alternative for Germany (AfD) party, whose demand that the country shut its borders to migrants helped to fuel its surge into parliament in last year’s election.
A successful outcome to the summit may help to strengthen Merkel’s case for remaining chancellor even after stepping down from the party leadership, and could quieten her coalition partners in Bavaria’s conservative CSU and the Social Democrats (SPD).
All three parties have suffered punishing setbacks in regional elections this month, building internal party pressure for them to switch leaders or break up the coalition.
How Germany and Africa work together
The German government is engaged in many different ways in Africa, where it enjoys close cooperation with equal partners in the interests of sound political and economic development. Many of the worldwide challenges Europe faces can only be resolved by working with its neighbouring continent.
Africa’s potential is enormous. About half of the world’s 20 fastest growing economies are in Africa. By 2035 Africa will have the largest potential workforce in the world.
What is the Compact with Africa?
Last year, the Compact with Africa was launched – under Germany’s G20 Presidency. The initiative is designed to improve the conditions for private investment so as to get infrastructure projects off the ground and create jobs. Eleven countries have so far signed up for individual compacts, including Senegal and Ghana, which Chancellor Angela Merkel is currently visiting.
Key players include the African states, as well as the World Bank, the International Monetary Fund and the African Development Bank. They will negotiate individual reform programmes along with possible additional inputs to be provided by G20 partners, and implement these programmes.
What will the partnerships for reform do?
The individual compacts with Africa represent a voluntary political commitment. They do not involve any financial support. That is why the German government has come to agreements on what it terms “partnerships for reform” in addition. These partnerships are already in place with Tunisia, Côte d’Ivoire and Ghana. Last year a total of 300 million euros were invested.
The three partnerships for reform aim to expand the use of renewable energy, improve energy efficiency and develop the financial and banking sectors. This is designed to improve conditions for national and international investors and make it easier for small and medium businesses to access loans. At the same time, more jobs and trainee places will be created for young people in forward-looking technologies.
How are conditions for investment being improved?
Another part of the German government’s Africa strategy is to improve conditions for investment by extending Hermes export credit guarantees. Since June 2018, the level of risk not covered by Hermes guarantees, i.e. borne by the investor, for investments in the public sector has been reduced from 10% to 5% in Ghana. This will open up new sales and investment opportunities for German industry.
How does Germany work with Nigeria?
German development cooperation with Nigeria focuses on sustainable economic development. Germany is, for instance, supporting the reform of Nigeria’s financial sector and fostering the development of financial services for small and medium enterprises (SME). Germany is also active in the renewable energy and energy efficiency sector and in the health sector, where it is tackling polio.
What is “Successful in Senegal”?
Numerous African states receive support from Germany, for instance in the fields of good governance, agriculture and health, as well as in the education and training sector. The project “Successful in Senegal” is developing genuine prospects of a better future in Senegal for youth, young adults aged between 15 and 35, and returning migrants.
How does Germany promote peace, stability and security?
“The Partnership with Africa is about economic development, but also about promoting peace, stability and security. Development is only possible if security is guaranteed,” said Chancellor Angela Merkel at the G20 Africa Partnership Conference held in Berlin in 2017.
In view of worsening conflicts and the spread of terrorist networks, conflict early warning systems, mediation, peacekeeping and measures to support the fight against terrorism are to enhance security and stability on the African continent. In this context, the German government also supports the Sahel G5 states in the field of infrastructure measures.
What do migration partnerships do?
Within the framework of the European Union, Germany has entered into migration partnerships with individual African states with a view to promoting training, employment and economic development, specifically for young people, thus addressing the root causes of migration.
Germany’s Africa policy aims to foster economic growth in Africa through a wide spectrum of development- and security-policy measures, as well as enhancing security on the ground and stepping up cooperation. This is intended to give the people of Africa long-term prospects.
Date: 29 August 2018