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Rwanda AGOA exit signals era of reciprocal trading
Last week, the Trump administration announced the withdrawal of benefits for Rwanda to export apparel duty-free to the US under the African Growth and Opportunity Act (Agoa). This is largely seen as a response to Kigali’s decision to ban second-hand clothes in its market.
However, there is a larger trend at play here. We are in an era of trade wars and serious global disagreements as to what is deemed fair, or not, in trade practice and agreements.
Economic nationalism has found a new lifeline. The nationalism here refers to a situation in which a country tries to protect its own economy by reducing, for example, the number of imports from other countries.
The largest proponent is of course the US, where Trump has made clear that his America First policy means the introduction of targeted protective trade measures against countries seen to be taking advantage of the US ‘generosity’ in trade.
However, the US is not alone – there is upsurge of nationalistic pride in the Global North aimed at safeguarding national economic sovereignty. The Harvard Gazette makes the point that Trump’s election and Britain’s exit from the European Union are very encouraging to nationalist groups across Europe, because for the first time, there is a shift away from international cooperation, sharing sovereignty, to addressing the sovereign rights of specific countries.
This is exemplified in the rise of Marine Le Pen and other European nationalist party figures in the Netherlands, Hungary and Greece who touted Trump’s win as a positive sign of things to come.
Intermingled with nationalism is anti-globalisation and anti-immigration policies, and economic nationalism that place the economic welfare of the country above all, especially above African nations.
Washington and Europe seem tired of ‘babying’ the continent and being ‘soft’ on sovereign African states. They are acutely aware of the problems and suffering in their own countries and communities, and wonder why these issues remain unaddressed while their governments give Africa generous aid and trade packages.
Africa needs to read the signs and prepare for the future.
In an era of growing economic nationalism, Africa can expect fewer trade deals that are non-reciprocal where Africa gets access to massive external markets while the other party does not benefit from penetration into African markets.
This is not to say there is no concern with the economic nationalist movements.
A KMPG survey revealed that two-thirds of UK CEOs are most worried about the growing use of protectionism, which includes measures such as tariffs and quotas on imports and view populist politics as the greatest threat to growth.
That aside, Africa must read the signs and note that the era of non-reciprocity is ending.
Sadly, and frankly, this trend is emerging during a time when Africa is not prepared either in terms robust trade negotiation teams nor industrialised economic structures that can compete with foreign nations demanding access to African markets.
This movement risks relegating Africa to the eternal provider of raw materials as foreign nations push manufactured goods into African markets.
It is important that both African governments and private sector begin to address the imminent era of non-reciprocity.
Anzetse Were is a development economist.
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Annual meetings of African Caucus for the World Bank, IMF kick off
Annual meetings of the African Caucus for the World Bank (WB) and the International Monetary Fund (IMF) kicked off on Sunday in the Red Sea resort of Sharm El Sheikh under the patronage of Prime Minister Moustafa Madbouli.
The two-day meetings, organized by the Ministry of Investment and International Cooperation and the Ministry of Finance in collaboration with the Central Bank of Egypt, are attended by representatives from 40 countries from inside and outside the African continent.
Ministers of Investment and International Cooperation and Finance Sahar Nasr and Mohamed Maeit respectively will chair the annual meetings of the African Group, in the presence of representatives of the major international institutions, the Investment Ministry had said in a statement on Friday.
The meetings will bring together a number of international cooperation and finance ministers, as well as governors of central banks, along with high level officials from the WB and the IMF, the statement said.
The investment minister said Egypt's hosting of these meetings comes within the framework of President Abdel Fattah El Sisi’s directives to support issues related to the African continent at all international gatherings.
She further asserted that Egypt will exert utmost efforts to back interests and priorities of the African development plan during her chairmanship of the African Caucus for 2018, the statement added.
For his part, the finance minister said that hosting the international event reflects the deeply-rooted ties between Egypt and its fellow African countries.
The Egyptian-African relations have witnessed unprecedented development over the past few years, mainly after Egypt’s membership in the African Continental Free Trade Area (AfCFTA), he added.
He asserted Egypt’s keenness on engaging in the development efforts of the African continent and boosting economic ties with African countries.
The list of attendees at the annual meetings includes First Vice President of the World Bank Mahmoud Mohie Eddin, Vice President of the International Finance Corporation (IFC) for the Middle East and Africa Sergio Pimenta and Chief Executive Officer of the Multilateral Investment Guarantee Agency (MIGA) Keiko Honda.
The event will be attended by ministers of international and financial cooperation and central bank governors from the following African countries: Algeria, Sudan, Libya, Morocco, Mauritania, Comoros, Angola, Botswana, Burkina Faso, Cameroon, Côte d’Ivoire, Eritrea, Ghana, Guinea, Equatorial Guinea, Lesotho, Madagascar, Malawi, Mali, Mozambique, Namibia, Nigeria, Congo, Senegal, South Africa, South Sudan, Tanzania, Togo, Uganda, Zambia, Zimbabwe, the Sao Tome and Principe Islands.
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tralac’s Daily News Selection
Afreximbank has posted its Annual Report 2017 (pdf)
Regional spillovers in Sub-Saharan Africa: exploring different channels (IMF)
In addition to bringing together findings from a broad array of existing research, this note identifies countries that are the most likely sources of regional spillovers and those that are most likely to be impacted, and provides estimates for the size of these channels. It finds that intraregional trade and remittance flows are an important channel for growth spillovers, while banking channels are less important but will remain a risk going forward. Finally, the note documents other important spillover channels through financial markets contagion, revenue-sharing arrangements in fiscal unions, commodity-pricing policies, corporate investment, and forced migration. Extracts (pdf):
Foreign direct investment constitutes an important channel of regional integration in sub-Saharan Africa. For some countries, inward FDI from sub-Saharan Africa constitutes the largest share of total inward FDI. This is the case in Togo, Rwanda, Guinea-Bissau, and Botswana, where the share of regional inward FDI positions is more than 40% of their total stock of FDI (Figure 27). Firms from South Africa, Kenya, and Nigeria have the largest presence in other sub-Saharan markets. South African firms are the most visible, with more than 2,400 subsidiaries in other African countries (Box 6), but other hubs are growing fast, such as Kenya (with an important presence in East Africa) and Nigeria (in West Africa). Other sub-regions, such as central Africa, have limited cross-border corporate ownership.
Extract from Box 6: About 75% of investment from South Africa to the continent is in the services, trade, and financial sectors. Outward FDI from South Africa is increasing. The total stock of FDI from South Africa to sub-Saharan African countries was equivalent to 6.8% of South African GDP in 2015, up from 4.9% of GDP in 2010 (Figure 6.1). In receiving countries, South Africa’s investments represented as much as 3.2% of GDP (in Mauritius), with an average of 0.4% across all sub-Saharan African countries in which it invested in 2015.
Nigeria’s fuel subsidies are a quintessential example of negative fuel pricing spillovers, which had serious fiscal impacts on Benin and Togo. Benin and Togo set about reforming their fuel pricing policies from 2008 through 2012, while Nigeria continued to provide subsidies. Inevitably, a significant price differential arose between official fuel prices in these countries and those in Nigeria, leading to increased operating margins for smugglers and more fuel smuggling (Figure 29). The level of fuel sold on the formal (taxed) market declined precipitously in Benin to only 15% of total consumption and was much less than it should have been in Togo. This led to a smaller fuel tax base for legally consumed fuel in these two countries.
Table of contents: (i) Introduction and summary (ii) Regional trade links gaining strength (iii) Banking interdependence becoming more subregional (iv) The dominant role of South Africa sovereign spread spillovers (v) The changing pattern of remittance flows (vi) The foreign direct investment channel: South Africa rules the roost (vii) The fiscal channel: the role of unintended consequences (viii) The rising socio-economic impact of forced migration (ix) Concluding remarks. [Related IMF analysis: Trade and remittances within Africa]
African Leadership Forum 2018: Africa needs the right mindsets, rather than more funding – Kagame
The third way to reach a turning point, is to continue making it easier for African businesses to grow, and create jobs for young people. This is about improving the regulatory climate for enterprise and trade, on the one hand. It also means building deeper capital markets, and lowering the high cost of sending remittances. But it is also about changing the mindset of our youth from one of dependence and “poverty reduction”, to one of prosperity and wealth creation. In my view, the definition of “illicit flows” should be expanded to include the habit of importing things, that we already have right here in our countries, and our region. Certainly, even if the definition of illicit doesn’t include this, it is wrong, there is no doubt about it. Later on, I may have you time to tell the story that lies behind this point. We have to be mindful of the huge financial losses our continent incurs, as a result.
Dig deep, think local, go digital: UNCTAD head to African leaders (UNCTAD)
South African updates
South Africa: Country Strategy Paper 2018-2022 (AfDB)
In the longer-term retrospective, South Africa’s imports and exports increased from 17% and 21% of GDP respectively in the early 1990s to about 30% in 2016 for both imports and exports, which demonstrates that the country’s trade linkages have steadily increased over the past decades. Today, South Africa is the 36th largest export economy in the world. Key destinations in 2016 were Asia (30% of total exports); Africa (29%); Europe (24.6%); and America (9%). The Southern Africa Development Community (SADC) alone accounts for about 27% of South Africa’s export market. In contrast, imports from SADC (and actually Africa as a whole) accounted for less than 10% of South Africa’s total imports, translating into a strong trade surplus with the other countries of the southern African region. About 30% of total imports are from Europe, followed by Asia with about 25%.
South Africa’s ranking in the Doing Business Index has deteriorated in recent years, from 39th, 41st, 43rd and 73rd, to 74th (out of 190 countries) during 2013 to 2017. The main reasons for the deterioration are counterproductive reforms that created more obstacles to doing business, such as the introduction of regulations making access to credit information more difficult, an increase in property transfer taxes making the registration of property more expensive, and higher vehicle taxes. In 2017, South Africa’s least favourable Doing Business indicators are “Trading across Borders” (139th), “Starting a Business” (131st), “Enforcing Contracts” (113th), and “Getting Electricity” (111th). On the positive side, the country performed well in “Protecting Minority Investors (22nd) and “Resolving Insolvency” (50th).
South Africa has a high potential to reindustrialize if the right policy decisions are made. Re-industrialization in South Africa faces several key shortcomings including weak policy, planning and program coordination in government; legislative and regulatory delays and burdens; and concentration of manufacturing firms, among others (Annex 6). Promoting reindustrialization requires a well-tailored policy mix, consisting of measures to further improve the general business environment, notably through infrastructure development, but also spatially balanced, targeted support at micro-economic level to specific industries with the potential for competitive advantage and higher-value added job creation. This needs to be accompanied by skills development: [Download: pdf South Africa Country Strategy Paper 2018-2022 (2.41 MB) ]
Cape Town’s tech SMEs outshine their African peers in job creation (Business Day)
AfDB EOI: Consultancy services for mapping existing incubators and accelerators across Africa. The mapping exercise has to cover all African countries but with a particular focus in Kenya, Ghana, Nigeria, South Africa and Côte d’Ivoire.
“Trade liberalisation bureaucracy frustrating Nigeria’s export to ECOWAS” (The Guardian)
Bureaucratic bottlenecks in the registration of products under the ECOWAS Trade Liberation Scheme, currently being managed by the Foreign Affairs Ministry are impede export goods from Nigeria to other West African countries, the Lagos Chamber of Commerce and Industry says. According to the Chamber, the fusion of the Ministry of Integration and Economic Cooperation, which had responsibility for facilitating trade with other African countries, into the Ministry of Foreign Affairs, has further increased the officialdom in the region. LCCI President, Babatunde Ruwase, said the administration of ETLS should be moved from Ministry of Foreign Affairs to the Ministry of Industry, Trade and Investment, specifically, the Nigeria Investment Promotion Commission, to improve the administration of trade protocol and serve exporters better. The Chamber has also aligned with the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture on the ratification of the AfCFTA, saying the country should sign the agreement, since signing is the first step in the negotiation process.
Wilbur Ross, Chris Coons: China is “pouring money into Africa.” Here’s how the US can level the playing field (CNBC)
As a Cabinet Secretary and a Democratic Member of the Senate Foreign Relations Committee, respectively, we agree that the United States must do more to present our African partners with better alternatives to state-led economic models, promoted by countries like China, so Africa can assume its rightful place in the global economy. We oppose opaque investment and development initiatives that impose undue costs and burdens on recipients, limiting their options for determining their own future. Passage of the Better Utilization of Investments Leading to Development Act of 2018, better known as the BUILD Act, would change this unsustainable situation. This bipartisan legislation would reform and modernize government development finance by establishing the US International Development Finance Corporation.
Trinidad and Tobago strengthening links with Africa (The Guardian)
Between 2014 and 2017, T&T’s average exports and imports with the African continent were $1.4bn and $7.5bn respectively, resulting in a trade deficit of $6.1bn. The top export markets in 2017 were Morocco, Senegal, Liberia, Ghana and South Africa, while the top import partners were Gabon, the DRC, Congo, South Africa and Morocco. The figures were revealed by Trade Minister Paula Gopee-Scoon when she spoke at the Emancipation Support Committee’s 18th Annual Trans-Atlantic Trade and Investment Symposium.
Solving Africa’s currency illiquidity problem (World Bank)
Some 41 currencies serve the African continent. Many of these are characterised by their illiquid and rarely traded status on the global financial market, as well as their volatility. So for those wishing to do business with Africa, these currencies - as difficult and expensive to source - can pose a real problem. From the Namibian dollar to the Seychellois rupee, it is vital that organisations are able to source emerging market currencies reliably, on time, and at competitive prices. Yet such necessities often elude those trading with Africa, who view currency concerns as one of the biggest barriers to the development of Africa as an emerging - and therefore high growth - opportunity for international investors. So what are the potential solutions? [The author, David Bee, is Head of Global Markets at Crown Agents Bank] [IMF: 2018 Review of Facilities for Low-Income Countries]
As African economies gain momentum, air travel is booming (The National)
The emergence of new airlines, as well as a diversifying of intra-African routes, is beginning to make itself felt. Uganda Airways is the latest, having agreed to acquire four Canadian Bombardier CRJ900 aircraft and two Airbus A330-800neo last month, which will form the basis of its fleet. Uganda is also the first African customer to acquire the Airbus Neo. The DRC has also just re-invigorated itself after being dormant for years. It, too, has two Bombardiers and two Airbuses, and began flights in June. Congo Air has two A320 aircraft it uses to service internal destinations. Its only international stop as yet is a regular flight between the capital Kinshasa and Johannesburg, South Africa.
What happens where: A new integrated geospatial information framework (UN)
The Overarching Strategic Framework (pdf) is a forward-looking blueprint built on national circumstances, and priorities. The Framework aims to assist countries to move towards e-economies, e-service and e-commerce to improve services to citizens, build capacity for using geospatial technology, enhance informed government decision-making processes, facilitate private sector development, take practical actions to achieve a digital transformation, and to bridge the geospatial digital divide in the implementation of national strategic priorities and the 2030 Agenda for Sustainable Development. [Downloads: UN-GGIM 8th session]
Friday’s Quick Links: The World Bank has posted a series of country opinion survey reports: Tanzania, Mali, Senegal, Gabon, Togo, Zimbabwe, DRC, Algeria, Morocco, Sierra Leone, Ghana,Liberia, Madagascar, Central African Republic, Equatorial Guinea, Burundi Rwanda: Energy access diagnostic report Ethiopia: Energy access diagnostic report World Bank approves $100m IDA credit to support Ethiopia’s efforts to build a green economy Shoreline, Mota-Engil agreement sees emergence of new entity to drive trade-enabling infrastructure International trade community preps for packed autumn agenda, eyeing 2018/2019 deliverables |
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Dig deep, think local, go digital: UNCTAD head to African leaders
African nations need to mobilize their continent’s resources to finance development, and ease the way for small business to trade, UNCTAD Secretary-General Mukhisa Kituyi said on 2 August 2018.
Speaking at the African Leadership Forum 2018 alongside host nation Rwanda’s President Paul Kagame and the former head of state of Somalia, Hassan Sheikh Mohamud, Dr. Kituyi, took stock of the steep challenges posed by the current climate in international trade.
“Today, we’re living in a very hostile environment, with rising levels of protectionism,” he said at the two-day forum in the Rwandan capital Kigali, the focus of which is how to finance Africa’s transformation to sustainable development.
“Projected sources of development finance are drying up,” he warned.
The annual forum is organized by former Tanzanian president Benjamin Mkapa’s office and the Institute of African Leadership for Sustainable Development, also known as the UONGOZI Institute.
Finance is a key issue for the delivery of the 2030 Agenda for Sustainable Development, the core of which are 17 global goals that seek to alleviate poverty and rein in inequalities while protecting the planet and its people. Achieving the targets means going beyond international assistance, trade and investment to leverage resources within national boundaries.
“The global dynamics are such that every region of the world will have to dig inside itself to find the resourcefulness to adjust, to grow. Nobody’s going to grow Africa other than Africans,” Dr. Kituyi said.
Illicit financial flows
He highlighted the continent's "collective responsibility” to mobilize its own resources, including by tackling illicit financial flows – a catch-all term for tax evasion, capital flight, trade mispricing, drug trafficking, money laundering and other manoeuvres that rob the continent of billions each year.
The money drained out of Africa through illicit financial flows has become a matter of major concern because of the scale and negative effects on social and economic development on the continent, where the majority of the world's least developed countries are located.
UN estimates put the annual loss at around $50 billion. To put this amount in perspective, it's roughly double the official development assistance that Africa receives, and also outweighs the $42 billion that the continent received in foreign direct investment in 2017, according to the latest edition of UNCTAD’s World Investment Report.
The estimate may well fall short of reality because accurate data doesn't exist for all transactions and for all African countries, leading UNCTAD and its partner organizations to launch the “Better Data, Better Lives” statistics project earlier this year.
Rules made for big business
Dr. Kituyi also said it was vital for African nations to do more for the small businesses that are the foundation of the continent’s economy, particularly the small-scale operations in border zones.
He cited his own experience working on the nexus between politics and economics in Kenya, where he was first elected to parliament in 1992 and served as minister of trade and industry from 2002 to 2007.
“A man from Nairobi with a container drives through and takes merchandise to Uganda or Rwanda and it’s called regional trade. A woman at the border between Uganda and Kenya with 20 kilograms of maize, trying to sell on the other side of the border, is called a smuggler,” he recalled.
“And it is still the case today,” he said.
“The rules are made for the convenience of big business. The small-scale border communities […] are not seen as part of the equation of regional trade. They’re smugglers. They are an inconvenience. I am not asking for anybody to organize the informal sector. I am saying they are the main drivers of our enterprise. Give them an address to so that they receive electricity. Give them the physical convenience and security so that they can absorb technology and innovate their production processes.”
UNCTAD spotlighted the role of women cross-border traders in Africa earlier this year in its “Borderline” project.
The power of e-commerce
Dr. Kituyi also highlighted the burgeoning importance of e-commerce for Africa, saying, “If we are talking about financing sustainable development we cannot wish away the critical role of the digital economy.”
Last month, Dr. Kituyi took part in African Union talks on crafting an e-commerce strategy for the continent, which came after the landmark adoption in March of the African Continental Free Trade Agreement.
E-commerce will be in focus at a high-level event next week in South Africa, where Dr. Kituyi will join President Cyril Ramaphosa and Jack Ma, the founder and head of China-based e-commerce giant Alibaba, who serves as a special adviser to UNCTAD on young entrepreneurs and small business.
In December, UNCTAD will organize its first-ever Africa E-Commerce Week in December in the Kenyan capital, Nairobi, building on the success of its global editions in Geneva.
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President Kagame attends African Leadership Forum
President Kagame on 2 August 2018 joined a panel discussion on “Financing Africa’s Transformation for Sustainable Development” alongside former Presidents Benjamin Mkapa of the United Republic of Tanzania and Hassan Mohamed of the Federal Republic of Somalia, as well as Dr Mukhisa Kituyi, the Secretary-General of the United Nations Conference on Trade and Development.
The President who was attending the African Leadership Forum also delivered a keynote address. The forum, which brings together former Heads of State, heads of regional organizations, government and business leaders, runs from 2-3 August 2018.
Discussions at the forum focus on the prospects of increased, improved and effective financing for Africa’s transformation.
In his remarks, President Kagame highlighted that Africa can finance the biggest part of its development agenda. African leaders have to take responsibility for the misallocation of Africa’s resources and take steps to correct it, he added.
The forum is organized by the Office of the Former President of the United Republic of Tanzania, Benjamin Mkapa in conjunction with the Institute of African Leadership for Sustainable Development, UONGOZI Institute.
Remarks by President Kagame at the African Leadership Forum
A good morning to you, and welcome here to Rwanda. It is our pleasure to have you here.
I am very pleased to join you, for the fifth edition of the African Leadership Forum. I would like to thank President Mkapa, and the Uongozi Institute for affording us the opportunity to host and have this forum convened in Rwanda.
I also wish to say a word of special thanks to the former Heads of State for taking the time to be here. Excellencies, it is an honour to host you and you are most welcome.
This year’s very pertinent topic, is “financing Africa’s transformation”. Africa can finance its own development, at least a big part of it. There is no doubt about it. We know this because Africa finances other people’s development, and always has.
The value of illicit financial flows, evaded taxes, and commodity extraction greatly exceeds that of foreign aid, as a matter of fact. But we have to take responsibility for the misallocation of Africa’s resources and take steps to correct that.
I would rather argue, that we need to mobilise the right mindsets, rather than more funding. After all, in Africa, we have everything we need, in real terms. Whatever is lacking, we have the means to acquire. And yet, we remain mentally married to the idea that nothing can get moving, without external finance.
We are even begging for things we already have. That is absolutely a failure of mindset.
So, how do we reach a turning point?
First, through accountability. Take domestic tax collection. Once again, this is not only about technical capabilities, but much more about building the trust that public funds will be spent on the right things. This is the foundation of good politics, that is effective and citizen-focused.
Second, through regional integration. Working together across our continent. The success of the financial reform of the African Union, adopted in 2016, shows that Africa has the will and ability to fund common priorities. So we should build on this.
Contributions to the Peace Fund have never been higher, the African Union budget has been reduced, while Member State contributions have become more stable.
The entry into force of the African Continental Free Trade Area is set to significantly increase trade within Africa, and consequently improve tax collection.
These are very important developments, which show real momentum toward African unity. This lays the basis for more effective public-private partnerships, as well. In critical fields, such as renewable energy, private sector investors require big, multi-country markets to be viable.
We gain immeasurably by trading with each other, and lose so much, when we don’t.
Once again, technical explanations are inadequate. These are political problems, and mindset issues Earlier, the moderator talked about mental emancipation. Absolutely this has to do with the mindset issues.
For example, railways and roads are undeniably important. Yet, even where rail is not an obstacle, we don’t trade. You find citizens sneaking through forests, across borders, to do business with each other, because the politics is so toxic. There may even be a nice, new road built to facilitate commerce, but people avoid it, for the same reasons.These are choices that get made every day, not by our words, but through our actions, that keep too many of our people poor and dependent.
The third way to reach a turning point, is to continue making it easier for African businesses to grow, and create jobs for young people. This is about improving the regulatory climate for enterprise and trade, on the one hand. It also means building deeper capital markets, and lowering the high cost of sending remittances. But it is also about changing the mindset of our youth from one of dependence and “poverty reduction”, to one of prosperity and wealth creation.
In my view, the definition of “illicit flows” should be expanded to include the habit of importing things, that we already have right here in our countries, and our region. Certainly, even if the definition of illicit doesn’t include this, it is wrong, there is no doubt about it. Later on, I may have you time to tell the story that lies behind this point. We have to be mindful of the huge financial losses our continent incurs, as a result.
Young Africans are going to have to make these necessary changes. To really lead, at the level of new attitudes and norms in Africa. These are the changes that have to be looked at. To see the value that lies all around us. To behave like people who know our continent has a future. To change the world, rather than waiting for it to change us.
Why should we be willing to give up, and succumb at the outset? No. We should try and give it a fight. It’s worth it. Each of us can make a difference. Everyone has the option to strive to do his or her work with excellence, and a good heart.
Let me conclude here and say thank you very much for your kind attention, and I look forward to our further discussion.
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Regional spillovers in sub-Saharan Africa: Exploring different channels
After close to two decades of strong economic activity, overall growth in sub-Saharan Africa decelerated markedly in 2015-16 as the largest economies experienced negative or flat growth. Regional growth started recovering in 2017, but the question remains of how trends in the economies stuck in low gear will spill over to the countries that have maintained robust growth.
This note illuminates the discussion by identifying growth spillover channels. The focus is on trade, banking, financial, remittance, investment, fiscal, and security channels, which are the most prominent and most likely to transmit growth trends across borders.
In addition to bringing together findings from a broad array of existing research, the note identifies countries that are the most likely sources of regional spillovers and those that are most likely to be impacted, and provides estimates for the size of these channels.
It finds that intraregional trade and remittance flows are an important channel for growth spillovers, while banking channels are less important but will remain a risk going forward.
Finally, the note documents other important spillover channels through financial markets contagion, revenue-sharing arrangements in fiscal unions, commodity-pricing policies, corporate investment, and forced migration.
Summary
Regional Trade Links Gaining Strength
Regional trade links are steadily gaining strength. Countries that absorb most intraregional exports and hence have the highest potential to generate regional spillovers are identified, as well as countries that are more exposed to spillovers from other countries in the region. The note also discusses the following findings:
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Intraregional trade has steadily increased in intensity over time. It represented 6 percent of total exports (1 percent of GDP) in 1980 before taking off in the early 1990s and eventually reaching 20 percent (4 percent of GDP) in 2016.
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The key players in the total demand for intraregional exports (that is, the countries with the potential to generate the largest regional spillovers) are highly concentrated. Ten countries account for 65 percent of total regional demand.
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Some countries are highly exposed to intraregional demand. Exports to the top 10 destinations represent between 5 percent and 10 percent of source-country GDP.
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Subregional trade accounts for most of sub-Saharan African regional trade. Southern Africa Customs Union (SACU) subregional trade alone represents half of total sub-Saharan Africa intraregional trade. Moreover, in the cases of the Southern Africa Development Community (SADC) and the SACU, subregional trade represents more than 80 percent of their member countries’ intraregional trade.
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Econometric analysis shows that bilateral trade is more likely to be hindered by distance and sociocultural differences in sub-Saharan Africa than in the rest of the world, which explains why most regional trade occurs within subregions. Moreover, econometric estimates suggest that about half of the growth in regional trade over 1980–2016 stems from subregional trade integration, in particular within the East African Community (EAC) and the SADC.
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The growth of regional trading partners has a significant effect on individual countries’ growth, even after controlling for variables capturing co-movement at the global and regional levels. Econometric estimates suggest that a 5 percentage point increase in the export-weighted growth rate of intraregional partners is associated with about a 0.5 percent increase in the average sub-Saharan African country’s growth.
The Changing Pattern of Remittance Flows
Remittances from within sub-Saharan Africa are becoming relatively more important. The key players in terms of regional remittance outflows (with the potential to generate the largest regional spillovers) are identified, as well as the countries most exposed to remittance spillovers. In further analysis, the note also finds:
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Growth in regional remittances has outpaced the growth of other external sources of financing such as aid, foreign direct investment (FDI), and remittances from the rest of the world.
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Remittance flows are rather concentrated in a few corridors, and in some countries regional remittance inflows represent a substantial share of income. In particular, Côte d’Ivoire and Ghana are important sources for West Africa, and South Africa is an important source for Southern and East Africa.
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Recent reductions in the cost to send money across borders are associated with the development of mobile money and explain part of the observed increase in regional remittances. The cost of sending remittances in sub-Saharan Africa are the highest in the world, implying that there is room for further cost reductions and increases in regional remittances.
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Growth in countries that send remittances is found to be significantly associated with growth in receiving countries. A 5 percent increase in the growth of remittance partners is estimated to raise growth by 0.5 percent, although this is partially outweighed by trading partners’ growth spillovers.
The Foreign Direct Investment Channel – South Africa Rules the Roost
South Africa is the dominant source of regional FDI. This note analyzes the corporate sector and discusses the following:
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Firms from South Africa that are searching for diversification opportunities in relatively faster growing regional African markets dominate the landscape.
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The lion’s share of investment is in services, trade, and the financial sector. Significant unintended spillovers exist from fiscal policies in the largest countries. The note covers how these fiscal channels develop via large fluctuations of tax receipts in customs unions and via negative externalities arising from different fuel pricing policies in neighboring countries.
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The SACU revenue-sharing formula ties member countries’ fiscal revenues to economic developments in South Africa. While providing certainty for current revenue, the formula leads to high levels of volatility over the medium term. As a result, it complicates fiscal management in the smallest countries (Lesotho and Swaziland).
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Subsidized fuel in Nigeria leads to widespread smuggling and to the erosion of the tax base in Benin and Togo. For instance, for Benin, only about 15 percent of the fuel consumed is purchased on the formal (taxed) market.
This paper has been prepared by Francisco Arizala, Matthieu Bellon, Margaux MacDonald, Montfort Mlachila, and Mustafa Yenice as part of the IMF’s Spillover Notes series. Read more in the accompanying blog, Trade and Remittances Within Africa, also available in French and Portuguese.
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Madagascar Economic Update: Inclusive growth is essential for poverty reduction
Overall, the economy has been performing well, with growth estimated at 4.2% in 2017 and projected at 5% in 2018, according to the latest edition of the World Bank’s Madagascar Economic Update, released on 31 July 2018.
The report looks at the recent economic developments and presents medium-term outlook for the country. It indicates that there are numerous drivers of growth, including increased demand for transport services, a profitable banking sector and strong performance of goods and services produced in economic processing zones, contributing to solid export earnings and the accumulation of reserves.
However, despite this rather robust macro-economic performance, the poor were hit by unfavorable weather conditions which resulted in a contraction in the agriculture sector, where the production of domestically produced rice fell, and prices soared. These events contributed to an increase in food inflation in 2017, directly eroding the purchasing power of the poor. Year-on-year inflation peaked at 9% at end 2017. Inflationary pressures have started to ease in the first quarter of 2018, largely due to improvements in the supply of domestically produced rice.
“While the economy is projected to continue expanding over the medium-term, focusing on inclusive growth is essential for poverty reduction,” said Coralie Gevers, World Bank Country Manager for Madagascar. “This positive macroeconomic outlook, conditioned by the pursuit of economic and fiscal reforms and a stable political environment, provides opportunities to reduce poverty.”
The projected growth of the economy means that the proportion of the Malagasy population living under the poverty line is likely to decrease. The poverty headcount, based on $1.90 a day line is projected to lower from 75% in 2018 to 73% in 2020.
A special focus section of this Economic Update discusses financial inclusion. Over the past years, mobile money has been expanding to increase access to financial services for individuals and firms. These opportunities provide a means for safely storing money, as well as increasing access to other services such as credit in times of crisis and insurance to prepare for bad days.
A new National Strategy for Financial Inclusion (2018-2022) is under preparation with the objective of increasing the number of adults with access to formal financial services from 29% in 2016 to 45% in 2022.
Sustained Growth Needs to be More Inclusive to Benefit the Poorest
Madagascar has enjoyed sustained economic growth over the last four years.
Increasing from 2.3% in 2013 to an estimated 4.2% in 2017, GDP growth has steadily improved and is projected to reach 5% in 2018. Since 2015, the most important driver of growth has been the services sector, which is characterized by a small but dynamic private sector. Year-on-year growth of the services sector was estimated at 5.2% in 2017, and is projected at 5.4% in 2018. One component of the services sector that is performing particularly well is trade, which increased by 4.1% in 2017 and is projected to grow by 4.5% in 2018.
The agricultural sector is struggling to develop.
Approximately 80% of the population is engaged in agricultural activities. Between 2014 and 2017, the agricultural sector contracted by an average of 0.8%, suggesting that the positive benefits of recent economic growth is not being felt by the rural population and that are not experiencing significant improvements in their living conditions.
The agricultural sector is constrained by low productivity due to the minimal use of modern farming techniques, lack of connectivity to markets to facilitate the transportation of goods, and high vulnerability to climatic fluctuations. Rural households have minimal off-farm income generating activities to help buffer the impact of weather shocks.
Madagascar’s climatic conditions can be both a blessing and a curse for agricultural performance. The country’s unique climate has led certain cash crops such as vanilla, cloves and other spices to thrive. The significantly higher prices of vanilla boosted export earnings in 2017, which in turn allowed the Central Bank to accumulate more foreign exchange reserves than expected. On the other hand, the severe drought in 2017 combined with cyclones reduced the supply of locally produced rice by an estimated 20% and contributed to the agriculture sector contracting by an estimated 6.6% in 2017.
Positive macroeconomic outlook provides opportunities to reduce poverty.
Projected at 5.4% in 2019, growth remains on the upswing over the medium term. Monetary policy should continue working to control inflation which is estimated at 6.4% in 2019 and is projected to average around 5.4 to 6.0% over the 2020 to 2022 period. Over the medium-term, public expenditures are expected to remain steady, but with a tendency to evolve toward lower current spending and higher capital expenditures.
While the economy is projected to continue expanding over the medium-term, focusing on inclusive growth is essential for poverty reduction. The projected growth of the economy means that the proportion of the Malagasy population living under the poverty line is likely to decrease. The poverty headcount, based on $1.90 a day line is expected to decrease from 75% in 2018 to 73% in 2020. Higher fiscal revenues and a reduction in transfers to poorly performing state-owned enterprises mean that there are more resources available to deliver public services such as education, health and public infrastructures in rural areas.
Increased access to financial services will improve economic inclusion and allow the poor to benefit from growth.
A special focus of this report explores the various aspects of financial inclusion in Madagascar. The country has one of the lowest rates of financial inclusion in Africa. Increasing access to the financial system for 41% of the population who are currently unbanked will allow individuals to save and transfer money more securely in the future. It will also provide opportunities for greater access to credit to start or grow a business for those who previously were unable to do so. A rapid expansion in mobile money is also offering opportunities to increase financial inclusion. The newly released Findex data show that the percentage of adults with an account at a financial institution or mobile money service in Madagascar has doubled over the past three years (from 9% in 2014 to 18% in 2017) but it is still far below the Sub-Saharan Africa average of 43%.
Around 40% of the Malagasy population currently have access to a mobile phone. As the country develops, the demand for mobile phones and the potential customer base to be served by a financial system also increases. The report highlights that a lack of available income to purchase a mobile phone does not necessarily present a barrier to using mobile money. A solution for clients who aren’t able to buy a phone is the purchasing of a less expensive SIM card. Customers can then use cash-in-cash-out services through the use of a mobile phone owned by a mobile money agent.
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tralac’s Daily News Selection
Starting today, in Addis Ababa: AfCFTA negotiations on Rules of Origin (1-11 August)
Diarise: 38th Ordinary Summit of the Heads of State and Government of SADC (17-18 August, Windhoek)
tralac’s July newsletter is posted: it focuses on the SADC-EU Economic Partnership Agreement
ECOWAS Multi-stakeholder Dialogue calls for concerns on AfCFTA to be addressed (TWN-Africa)
The dialogue (26-27 July, Dakar) brought together over 50 participants comprising policy officials from the AUC, ECOWAS Commission, senior government officials from ECOWAS member countries, the private sector, civil society organisations, research institutions, academia, trade unions, women groups and the media across West Africa. There were other representatives from Central and Southern Africa. The regional dialogue recognized that the AfCFTA could make a positive contribution to Africa’s economic integration and help correct the structural deficiencies facing African countries in world trade. They, however, noted that several challenges need to be addressed in relation to the AfCFTA to make it appropriate for Africa’s development.
First and foremost, the tariffs liberalisation should provide enough space for policies needed in the context of the African Union’s Policy Framework and Vision defined by Agenda 2063 and pillars such as Boosting Intra-Africa Trade, the Accelerated Industrial Development of Africa, and the Comprehensive Africa Agricultural Development Programme among others. Without this the AfCFTA could undermine Africa’s development.
Related to the above is the ability to accommodate the different levels of development of the countries of the ECOWAS region, comprising 4 developing countries and 11 least developed countries. Participants also called for flexible rules of origin with a view to ensuring priority access for African companies to the continental market, development of productive capacities and creation of regional and continental value chains. The rules of origin should also give protection to sectors to ensure linkages within sectors and thereby ensuring that industrialisation takes place.
In relation to services, participants underscored the importance of services sectors such as infrastructure, finance, and energy to Africa’s integration. However, they noted that the liberalisation of services is not necessarily the most appropriate way to realise the potential of the sector. Regional cooperation for building local regional companies could be explored. This is particularly so since most of the areas targeted for liberalisation are dominated by foreign companies as a result of years of Structural Adjustment Programme. [Note: various downloads are available; AFCFTA: A poisoned chalice for the continent?]
South Africa: A R12bn trade surplus for June (SARS)
South Africa’s trade statistics for June 2018 recorded a trade balance surplus of R12bn. The year-to-date (1 January to 30 June 2018) trade balance deficit of R1.79bn is a deterioration on the surplus for the comparable period in 2017 of R25bn. Exports year-to-date increased by 1.5% whilst imports for the same period showed an increase of 6.6%. Top 5 countries for exports in June: United Kingdom (9.1%), China (7.9%), United States (7.0%), Germany (6.5%), India (5.1%). Top 5 countries for imports in June: China (17.5%), Germany (10.6%), United States (6.0%), Saudi Arabia (5.1%), Nigeria (4.3%). [Download: SARS statement, pdf]
SADC Industrialisation Week: We have failed for 28 years – Tweya (The Namibian)
Namibia’s Trade and Industrialisation minister Tjekero Tweya says the government has dismally failed to deliver on industrialisation of the country since independence. Tweya said the government had also failed to put policies in place to facilitate easier trade between Namibia and other countries in SADC and the rest of the world. Instead, he said the government has been making policies and laws to “lock everyone out”, which he said hinders regional integration and industrialisation. “As policy makers, we make policies and we forget about regional integration. We go and make policies to lock out everybody else except ourselves,” he said, adding that the government has also failed to implement SADC policies for regional integration, that “we adopted a couple of years ago” and they have done little to solve the youth unemployment problem, “which is a ticking time bomb”. At the event the minister also mentioned the example of Namibia’s inability to produce toothpicks as testimony of the government’s failure to foster manufacturing.
Rwandan government ready to support apparel industry without US trade benefit (Xinhua)
Kenya Trade Week (and other) updates
Uhuru picks 5 envoys in China, India trade quest (The Standard)
Deputy President William Ruto said yesterday in Nairobi the country had appointed five ambassadors to the two Asian economies with the aim of growing its exports. Speaking at Trade Week 2018, the Deputy President said Kenya’s trade balance was highly skewed in favour of the two Asian giants. He noted that while China and India contribute about 40%of Kenya’s imports, combined exports to the two economies made up a measly 4% of the country’s total exports. “That will have to change; we will have to turn it around. And that is why we are enhancing our diplomatic footprint to support our export strategy,” said Mr Ruto on a day that the Government also unveiled three export strategies. These are the integrated National Export Development Promotion Strategy, the Second National African Growth Opportunity Act Strategy and the Action Plan for 2018-2022 of the Made in Kenya Grand Vision.
The export strategy that was unveiled identifies eight sectors with the potential to triple Kenya’s exports from 8% to 25% of GDP by 2022. Some of these sectors include manufacturing, agriculture, livestock, fisheries, trade and services, and emerging sector such as oil and gas. With the Second AGOA strategy, the country aims to increase the volume of exports to the US and widen their reach. President Kenyatta also announced policy changes to enable the achievement of these goals. “We have agreed to establish the export promotion sub-committee of Cabinet to spearhead the execution of this strategy to diversify and grow our exports.”
Kenya Trade Week: Extract from speech by Peter K. Biwott (CEO, Export Promotion Council)
The realisation of the 15% share of the manufacturing sector would require massive investments in the production of raw materials and value addition and fully taking advantage of the infrastructure to reach the world with the ‘Made in Kenya’ brand. Kenya has signed and ratified the AfCTA, signifying its interest to deepen exports to the continent. Economic history shows improving productive capacity and enhancing market access to neighbouring countries builds a nation’s or region’s base for economic transformation. The history of the EU, where about 28 countries created a monetary union, invested in massive infrastructure such as SGRs and affordable energy, can be emulated. [Related: ‘Made in Kenya’ label to be added to all export products; Ruto: Merge Export Promotion Council with Brand Kenya]
Download: pdf Integrated National Export Development and Promotion Strategy (4.44 MB)
Stimulating a reliable market for maize through public-private partnerships (Global Communities)
With this challenge in mind, Global Communities and Cargill partnered to identify and link Cargill to suitable farmers’ groups that can supply good quality – and sufficient quantities – of grain. In the 2017/2018 harvest season, the partnership facilitated the sale of 6,200 bags (90 kg) of maize to Cargill. This volume came from the sale from just nine farmer organizations that were ready to sell at that time. Preparations are already underway to expand this group up to 150 groups for next harvest season which begins in October 2018. In an effort to scale up the volume, to date, Global Communities has identified and profiled a total of 143 farmer organizations based on their production capacity and potential to be a reliable supplier to Cargill.
Commodity trading set for October – CS Munya (The Star)
Trade Cabinet secretary Peter Munya has said that the national commodity exchange will be functional by October. He said the exchange will enable farmers sell their produce at real time market prices, helping them cut out middlemen. Munya spoke at a panel discussion at the ongoing National Trade Week at KICC, Nairobi. He said lack of market information poses a major challenge to local traders.
Plan to build 11 new ports kicks off (Business Daily)
Rotterdam-based Maritime and Transport Business Solutions (MTBS) is offering consultancy services for developing a master plan for the ports. The Kenya Ports Authority announced on its website that MTBS will carry out the project together with Nairobi based Runji and Partners. The master plan will facilitate the development of the ports “taking due cognisance of the long term development framework as outlined under Vision 2030. The KPA is responsible for the Port of Mombasa and today’s coastal small ports such as Funzi, Shimoni and Vanga located in the south coast, Mtwapa, Kilifi, Malindi, Lamu and Kiunga further north,” said part of the announcement. KPA said that apart from the 11 ports, an assessment has been made regarding other potential sites along the coast. Two additional potential port sites identified are Takaungu and Ngomeni.
Kenya, Ethiopia electricity interconnector to be ready by mid-2019 (Modern Ghana)
Joseph Njoroge, Principal Secretary of the Ministry of Energy, told an energy forum in Nairobi that the 1045 kilometre line is 70 per cent complete on the Kenyan side and 90 per cent complete on the Ethiopian side. The Ethiopia-Kenya interconnector is a 500 kv High Voltage Direct Current (HVDC) line, with 612 km on the Kenyan side and 433km on the Ethiopian side which is being funded by the African Development Bank. Njoroge said the transmission line was initially meant to evacuate 400 Megawatts of power from Ethiopia to Kenya but negotiations are ongoing to revise the capacity in line with electricity demand in Kenya. [African economic blocs in Sh819m energy pool deal]
Nigerian exporters lose $10bn to Apapa gridlock – union leader (The Sun)
As the Apapa gridlock worsens despite all efforts to ameliorate the sufferings of Lagosians and exporters of agricultural produce are now counting their losses as they have already lost over $10bn to the fracas. According to the National President, Cashew Farmers Association of Nigeria, Tola Faseru, exporters of agricultural produce and other goods are losing about $10 billion on yearly basis. Vice President, Prof Yemi Osinbajo, had last week, given matching orders to relevant authorities to clear all the articulated trucks within two weeks. But a week after the order, the situation has not abated.
West African MPs support Morocco’s ECOWAS membership – survey (North Africa Post)
A survey shows that 75% of West Africa’s MPs support Morocco’s membership in the Economic Community of West African States. The survey, conducted by French institutes, Opinions et Région and IPSE, shows that the majority of MPs considered Morocco’s membership as a factor that will strengthen the ECOWAs while the remaining 25% considered the move as a matter that requires careful thought. 63% interviewees backed Mauritania’s return to the regional grouping. Only 32% of MPs taking part in the survey supported Algeria’s potential ECOWAS membership while 73% of them backed Tunisia.
Wednesday’s Quick Links: Buhari elected ECOWAS Chairman Senior AfDB appointments: Dr Kapil Kapoor (DG, Southern Africa Regional Development and Business Delivery Office); Ms Bajabulile Swazi Tshabalala (VP, Finance and Chief Finance Officer); Dr Mateus Magala (VP, Corporate Services and Human Resources) Afreximbank’s Trade & Development Finance Brief (pdf) War on Indian Ocean piracy cost Sh140 billion last year An introduction to the Federico-Tena World Trade Historical Database IMF: Challenges for central banking – perspectives from Latin America |
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ECOWAS Multi-stakeholder Dialogue calls for concerns on AfCFTA to be addressed
Concerns over the content, process and speed of negotiations of Africa’s Continental Free Trade Area (AfCFTA) persist despite incessant calls for improvement in these areas of the negotiations.
These came up at an ECOWAS Regional multi-stakeholder Dialogue on the issues and implications of Africa’s Continental Free Trade Area (AfCFTA) held in the Senegalese capital, Dakar, from 26 to 27 July 2018. This was a regional follow-up to an Africa-wide consultation held earlier in Accra.
The dialogue brought together over fifty (50) participants comprising policy officials from the Africa Union Commission (AUC), ECOWAS Commission, senior government officials from ECOWAS member countries, the private sector, civil society organisations, research institutions, academia, trade unions, women groups and the media across West Africa. There were other representatives from Central and Southern Africa.
The regional dialogue recognized that the AfCFTA could make a positive contribution to Africa’s economic integration and help correct the structural deficiencies facing African countries in world trade. They, however, noted that several challenges need to be addressed in relation to the AfCFTA to make it appropriate for Africa’s development.
First and foremost, the tariffs liberalisation should provide enough space for policies needed in the context of the African Union’s Policy Framework and Vision defined by Agenda 2063 and pillars such as Boosting Intra-Africa Trade (BIAT), the Accelerated Industrial Development of Africa (AIDA), and the Comprehensive Africa Agricultural Development Programme (CAADP) among others. Without this the AfCFTA could undermine Africa’s development.
Related to the above is the ability to accommodate the different levels of development of the countries of the ECOWAS region, comprising four (4) developing countries and eleven (11) least developed countries. Participants also called for flexible rules of origin with a view to ensuring priority access for African companies to the continental market, development of productive capacities and creation of regional and continental value chains. The rules of origin should also give protection to sectors to ensure linkages within sectors and thereby ensuring that industrialisatation takes place.
In relation to services, participants underscored the importance of services sectors such as infrastructure, finance, and energy to Africa's integration. However, they noted that the liberalisation of services is not necessarily the most appropriate way to realise the potential of the sector. Regional cooperation for building local regional companies could be explored. This is particularly so since most of the areas targeted for liberalisation are dominated by foreign companies as a result of years of Structural Adjustment Programme (SAP).
Moreover, stakeholders raised issues with the lack of availability of data and basic information regarding the actual profile of the services sectors, the types of operators, their interlinkages with strategic sectors of the economies, among others, to inform decision making. In the absence of data currently, the dialogue called for a moratorium on services negotiations to allow for analysis in terms of the political economy of the sector, so that the offers be made based on tangible economic and social data.
Lack of broad and inclusive consultations with all relevant actors at national and regional levels as well as the involvement of the Regional Economic Communities (RECs) also came up. This has been one of the major constraints that still justifies legitimate fears and concerns expressed by actors in many countries. Hence participants called for the elevation of the role of ECOWAS Commission in the AfCFTA negotiations to ensure that coherence is maintained in ECOWAS as a Customs Union. Pre-requisite for this elevation is enhanced CSOs and private sector participation at the national and regional levels. All these are compounded by the accelerated negotiations and tight deadlines.
Finally, participants discussed the threats of external agreements to the AfCFTA. The separate Economic Partnership Agreements (EPAs) by Ghana and Ivory Coast with the European Union portend a formidable threat to ECOWAS integration. So, in the context of the Africa Continental Free Trade Area negotiations and developments in Europe such as Brexit, the dialogue recommended that ECOWAS seize the opportunity to review the EPAs to ensure that the AfCFTA truly serves the Region.
The Dakar dialogue, hosted by the African Centre for Trade, Integration and Development (ENDA-CACID), was jointly organised with TWN-Africa, the African Institute for Economic Development and Planning (IDEP), International Centre for Trade and Sustainable Development (ICTSD), International Organization of Francophonie.
The African Union Commission, ECOWAS Commission, the Economic Community of Central African States (ECCAS), OSIWA Foundation and GIZ also supported the Dialogue.
This summary of discussions from the Dakar consultation was prepared by Sylvester Bagooro at Third World Network (TWN-Africa). TWN-Africa is the Secretariat of the Africa Trade Network (ATN).
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South Africa Merchandise Trade Statistics for June 2018
South Africa records largest trade surplus in 6 months
South Africa’s trade surplus widened to R12 billion in June of 2018 from an upwardly revised R3.84 billion in the previous month and well above market expectations of a R5 billion surplus. It was the largest trade surplus since December last year, as exports rose and imports fell. Considering the first half of the year, the country recorded a trade deficit of R1.79 billion.
Exports increased 7.1 percent month-over-month to R110.1 billion in June of 2018, driven by higher sales of precious metals and stones (38.0 percent); base metals (13 percent) and vehicles and transport equipment (8 percent). In contrast, exports of mineral products fell (-6 percent). The most important export partners were: the UK (9.1 percent of total exports), China (7.9 percent), the US (7.0 percent), Germany (6.5 percent) and India (5.1 percent).
Imports dropped 0.9 percent month-over-month to R98.1 billion, mainly due to vegetable products (-51 percent); base metals (-9 percent) and machinery and electronics (-3 percent). On the other hand, higher purchases were recorded for mineral products (11 percent) and original equipment components (15 percent). Main import partners were: China (17.5 percent of total imports), Germany (10.6 percent), the US (6.0 percent), Saudi Arabia (5.1 percent) and Nigeria (4.3 percent).
Excluding trade with neighbouring Botswana, Lesotho, Namibia and Swaziland, the country recorded a trade deficit of R4.69 billion in June.
The South African Revenue Service (SARS) has released trade statistics for June 2018 recording a trade balance surplus of R12.00 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
The year-to-date (01 January to 30 June 2018) trade balance deficit of R1.79 billion is a deterioration on the surplus for the comparable period in 2017 of R25.00 billion. Exports year-to-date increased by 1.5% whilst imports for the same period showed an increase of 6.6%.
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R12.00 billion trade balance surplus for June 2018 is attributable to exports of R110.15 billion and imports of R98.15 billion. Exports increased from May 2018 to June 2018 by R7.27 billion (7.1%) and imports decreased from May 2018 to June 2018 by R0.89 billion (0.9%).
Exports for the year-to-date (01 January to 30 June) increased by 1.5% from R561.55 billion in 2017 to R570.06 billion in 2018. Imports for the year-to-date of R571.85 billion are 6.6% more than the imports recorded in January to June 2017 of R536.55 billion, leaving a cumulative trade balance deficit of R1.79 billion for 2018.
On a year-on-year basis, the R12.00 billion trade balance surplus for June 2018 is an improvement from the surplus recorded in June 2017 of R8.70 billion. Exports of R110.15 billion are 10.0% more than the exports recorded in June 2017 of R100.14 billion. Imports of R98.15 billion are 7.3% more than the imports recorded in June 2017 of R91.44 billion.
May 2018’s trade balance surplus was revised upwards by R0.33 billion from the previous month’s preliminary surplus of R3.52 billion to a revised surplus of R3.84 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 BLNS:
|
|
Precious Metals & Stones
|
+R6 278
|
+ 38%
|
Base Metals
|
+R1 596
|
+ 13%
|
Vehicles & Transport Equipment
|
+R 964
|
+ 8%
|
Other Unclassified
|
+R 730
|
+229%
|
Prepared Foodstuff
|
-R 108
|
- 2%
|
Chemical Products
|
-R 202
|
- 3%
|
Wood & Articles Thereof
|
-R 239
|
- 32%
|
Plastics & Rubber
|
-R 292
|
- 12%
|
Mineral Products
|
-R1 514
|
- 6%
|
Total
|
+R7 213
|
99%
|
Total Movement
|
+R7 268
|
100%
|
The main month-on-month import movements: R’ million
|
||
Section:
|
Including BLNS:
|
|
Vegetable Products
|
-R1 531
|
- 51%
|
Machinery & Electronics
|
-R 745
|
- 3%
|
Base Metals
|
-R 459
|
- 9%
|
Plastics & Rubber
|
-R 375
|
- 9%
|
Textiles
|
-R 335
|
- 10%
|
Wood Pulp & Paper
|
-R 246
|
- 8%
|
Live Animals
|
-R 232
|
- 13%
|
Animal & Vegetable Fats
|
+R 161
|
+28%
|
Original Equipment Components
|
+R1 194
|
+15%
|
Mineral Products
|
+R1 782
|
+11%
|
Total
|
-R 786
|
89%
|
Total Movement |
-R 888 |
100% |
Trade highlights by world zone
The world zone results from May 2018 (revised) to June 2018 are given below.
Africa:
Trade Balance surplus: R14 427 million – this is a deterioration of R1 142 million in comparison to the R15 569 million surplus recorded in May 2018.
America:
Trade Balance surplus: R 687 million – this is an improvement of R1 477 million in comparison to the R 790 million deficit recorded in May 2018.
Asia:
Trade Balance deficit: R10 099 million – this is an improvement of R 183 million in comparison to the R10 282 million deficit recorded in May 2018.
Europe:
Trade Balance deficit: R149 million – this is an improvement of R4 069 million in comparison to the R4 218 million deficit recorded in May 2018.
Oceania:
Trade Balance deficit: R 189 million – this is an improvement of R1 047 million in comparison to the R1 235 million deficit recorded in May 2018.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for June 2018 recorded a trade balance surplus of R4.69 billion. This was a result of exports of R99.53 billion and imports of R94.84 billion.
Exports increased from May 2018 to June 2018 by R7.81 billion (8.5%) and imports decreased from May 2018 to June 2018 by R1.19 billion (1.2%).
The cumulative deficit for 2018 is R45.32 billion compared to R20.91 billion deficit in 2017.
Trade highlights by category
The main month-on-month export movements: R’ million
|
||
Section:
|
Excluding BLNS:
|
|
Precious Metals & Stones
|
+R6 278
|
+39%
|
Base Metals
|
+R1 597
|
+14%
|
Vehicles & Transport Equipment
|
+R1 087
|
+10%
|
Other Unclassified
|
+R 728
|
+232%
|
Wood & Articles Thereof
|
-R 237
|
-41%
|
Plastics & Rubber
|
-R 290
|
-15%
|
Mineral Products
|
-R1 566
|
- 7%
|
Total
|
+R7 597
|
97%
|
Total Movement
|
+R7 809
|
100%
|
The main month-on-month import movements: R’ million
|
||
Section:
|
Excluding BLNS:
|
|
Vegetable Products
|
-R1 521
|
-52%
|
Machinery & Electronics
|
-R 712
|
- 3%
|
Base Metals
|
-R 505
|
- 10%
|
Plastics & Rubber
|
-R 382
|
- 9%
|
Textiles
|
-R 324
|
- 11%
|
Live Animals
|
-R 310
|
- 22%
|
Wood Pulp & Paper
|
-R 249
|
- 8%
|
Original Equipment Components
|
+R1 194
|
+15%
|
Mineral Products
|
+R1 795
|
+11%
|
Total
|
-R1 014
|
85%
|
Total Movement |
-R1 193 |
100% |
Trade highlights by world zone
The world zone results for Africa excluding BLNS from May 2018 (Revised) to June 2018 are given below.
Africa:
Trade Balance surplus: R7 122 million – this is a deterioration of R 295 million in comparison to the R7 417 million surplus recorded in May 2018.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for June 2018 recorded a trade balance surplus of R7.31 billion. This was a result of exports of R10.62 billion and imports of R3.31 billion.
Exports decreased from May 2018 to June 2018 by R0.54 billion (4.9%) and imports increased from May 2018 to June 2018 by R0.31 billion (10.2%).
The cumulative surplus for 2018 is R43.54 billion compared to R45.92 billion in 2017.
Trade Highlights by Category
The main month-on-month export movements: R’ million
|
||
Section:
|
BLNS:
|
|
Chemical Products
|
-R 148
|
- 14%
|
Vehicles & Transport Equipment
|
-R 123
|
- 11%
|
Textiles
|
-R 94
|
- 16%
|
Prepared Foodstuff
|
-R 46
|
- 4%
|
Footwear & Accessories
|
-R 41
|
- 26%
|
Vegetable Products
|
-R 35
|
- 6%
|
Mineral Products
|
+R 52
|
+ 3%
|
Total
|
-R 435
|
80%
|
Total Movement
|
-R 541
|
100%
|
The main month-on-month import movements: R’ million
|
||
Section:
|
BLNS:
|
|
Precious Metals & Stones
|
+R 186
|
+ 42%
|
Live Animals
|
+R 78
|
+ 22%
|
Prepared Foodstuff
|
+R 47
|
+ 11%
|
Base Metals
|
+R 46
|
+ 49%
|
Mineral Products
|
-R 12
|
- 19%
|
Wood & Articles Thereof
|
-R 13
|
- 9%
|
Machinery & Electronics
|
-R 33
|
- 9%
|
Total
|
+R 299
|
98%
|
Total Movement
|
+R 305
|
100%
|
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Kenya: Exports to Africa can spur industry – Biwott
Since the 1980s, the manufacturing sector’s contribution to gross domestic product has been fluctuating, stagnating at 11 percent over the past five years to decline to 8.4 percent last year.
But manufacturing sector value addition outputs has seen continuous growth, meaning as its pie expanded other sectors gained more space.
In 2011-2017, its value grew from Sh438 billion to Sh648 billion and is projected by the Integrated National Exports Development and Promotion Strategy to hit Sh2,235 trillion by 2022 for Kenya to achieve a 15 percent share of GDP as envisaged in the ‘Big Four’ agenda.
President Uhuru Kenyatta on Tuesday launched the export blueprint, an integral part of his administration’s economic transformation plan that would usher Kenya into the 4th Industrial Revolution.
The strategy aims to grow exports by 25 per cent in the medium term, a key talking point at the ongoing Second Kenya Trade Week and Exposition.
Big Four agenda
Industrial transformation would require 60 percent of outputs, especially from manufacturing, to be exported. Africa presents an opportunity of a 17 percent share of the world market for Kenya with others being Asia (60 percent), the European Union (9), Middle East (2.9), Latin America and Caribbeans (8.3) and the Nafta bloc (5.9).
A focus of the pdf 2018/19 Budget (5.77 MB) on the Big Four will boost the country’s quest for industrial transformation.
Improved healthcare, housing and food security are a prerequisite for a productive human capital necessary for a competitive manufacturing sector.
The deliberate focus on manufacturing subsectors such as leather, textile and agro-processing will enable Kenya to achieve targets in manufacturing and, by extension, value added exports, realising the objective of 1.3 million jobs.
A healthy economy anchors exports as an ingredient for manufacturing sector expansion. The public and the private sectors need to partner to foster competitiveness towards an export-oriented economy.
Robust infrastructure
Over the past five years, the government has created a robust infrastructure network including the standard gauge railway (SGR), lowered energy costs, improved customs services and eased the cost of doing business. Kenya is ranked 80th in the ease of doing business index and aims to be ranked below 50 in the medium term.
The government’s commitment to continually improve on the business environment is a show of commitment to improving the wellbeing of Kenyans.
One of the key areas of focus to take advantage of the market access opportunities is to enhance our productive capacity.
The realisation of the 15 per cent share of the manufacturing sector would require massive investments in the production of raw materials and value addition and fully taking advantage of the infrastructure to reach the world with the ‘Made in Kenya’ brand.
Kenya has signed and ratified the Africa Continental Free Trade Area (AfCFTA), signifying its interest to deepen exports to the continent.
Economic transformation
Economic history shows improving productive capacity and enhancing market access to neighbouring countries builds a nation’s or region’s base for economic transformation.
The history of the EU, where about 28 countries created a monetary union, invested in massive infrastructure such as SGRs and affordable energy, can be emulated. In addition, they have created efficient labour and services frameworks.
All these have worked well in wealth creation for the bloc with a population of 515 million, resulting in a robust system of earning foreign exchange, making Europe the most economically transformed continent.
The strong focus by Kenya to realise the AfCFTA is a realisation that such an economic model will transform the continent into an economic giant.
Africa’s world market share, the second-largest after Asia, gives Kenya an opportunity for manufacturing sector transformation.
Free trade area
Africa is Kenya’s leading value-added exports destination, which needs to be ventured into. Realisation of the Africa Economic Community, in line with the 1991 Abuja Treaty, is on course.
Kenya was the first country to ratify the AfCFTA, which envisioned a continental free trade area by last year, customs union by 2019, common market by 2023 and economic and monetary union by 2028.
Faster achievement of the AfCFTA will be a key economic transformation milestone for Africa but the 22 countries have to ratify the treaty.
The African market will grow the small- and medium enterprises.
Hence, the National Exports Development and Promotion Strategy has identified key sectors to take advantage of this opportunity: Manufacturing, handcrafts, livestock, textile and leather.
We must seize the moment and support and contribute to our quest for industrial revolution through the Big Four. The ongoing 2018 Trade Week and Exposition gives us an opportunity.
Mr Biwott is CEO of the Export Promotion Council.
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The 3rd Annual SADC Industrialisation Week began yesterday in Windhoek: an overview
Featured infographic: @AUC_MoussaFaki: As of July 2018, the status of AU member states adherence to the African Continental Free Trade Area Agreement. Help ensure your country signs and ratifies by January 2019 so the AfCFTA enters into force for the #TheAfricaWeWant.
Trump suspends duty-free status for Rwanda's apparel exports to US (Reuters)
US President Donald Trump has suspended Rwanda’s ability to ship apparel products duty-free to the United States due to a trade dispute over Rwanda’s increased tariffs on American used clothing and footwear, the US Trade Representative’s office said on Monday. The ban, ordered by Trump in a proclamation that followed a 60-day notification period, will maintain Rwanda’s other duty-free benefits under the African Growth and Opportunity Act. “We regret this outcome and hope it is temporary,” Deputy USTR C.J. Mahoney said in a statement. He added that the move would affect about $1.5m in annual Rwandan exports, or only about 3% of the country’s total exports to the United States. [Inside Rwanda, China bilateral agreements]
Seifsa’s Michael Ade: Protectionism limits AGOA at a time when its benefits need to be spread (Business Day)
ECOWAS-ECCAS Joint Summit: communiqué
The Heads of State and Government considered the overall security situation in West and Central Africa. They took note of the risks created by the increased number of security challenges, particularly terrorism, human, drugs and arms trafficking, money laundering and cybercrime. In this context, the Heads of State and Government decided to adopt a shared view of the threats and a common approach to the solutions to be provided. Accordingly, they adopted the Lomé Declaration on peace, security, stability and the fight against terrorism and violent extremism in the ECOWAS–ECCAS space.
On the promotion of peace and stability, the Heads of State and Government commit to cooperate in conflict prevention, promotion of peace and stability in the two regions, particularly through the establishment and strengthening of early warning and rapid response to crises mechanisms at the national and regional levels, which involve civil society, opinion leaders, women, young people and state actors. They condemn the violent acts perpetrated particularly during internal crises aimed at destabilising States and calling into question national borders. The Heads of State and Government also undertake to adopt, at their next Summit, a regional framework on the convergence of constitutional principles in ECOWAS and ECCAS. The Heads of State and Government decide to put in place a Ministerial Monitoring Committee for the implementation of the decisions of the joint Summit which shall meet once every year.
South Africa: 2018 Article IV Consultation (IMF)
Full implementation of the reform package would deliver a sustained private investment-led growth recovery (Text Table 2). Informed by historical trends in private investment and estimates of reform impacts, staff projects that real GDP growth could rise to 4% by 2022. A meaningful reduction of unemployment and poverty would follow. Public debt would decline to close to 50% of GDP by 2023 - as much as 10 percentage points of GDP below that in the baseline scenario. Bank lending would rise, creating virtuous macro-financial feedback loops and further financial deepening. Inflation would decline to the midpoint of the band (4.5%) partly as higher competition counterbalances the impact of robust domestic demand. The current account deficit would initially widen as investment-related imports expand, before narrowing as higher competitiveness boosts exports. FDI’s contribution to external financing would increase markedly.
Staff advised the authorities to advance the broad package of reforms urgently (Text Figure 2 and Figure 10). Cross-country experiences hint that the growth payoff of comprehensive reform implementation could be large and followed by a durable decline in unemployment. As many other countries, South Africa could benefit from a social compact to convincingly build trust and secure implementation, particularly when addressing areas that generate short-term costs in exchange for sustainable long-term benefits.
Leveraging digitalization: Digitalization is at the core of the authorities’ and private sector’s agenda (Figure 11). The recently established Fintech Unit (pdf) of the SARB is already seen as a regional model. It is now piloting interbank clearing and settlement using distributed ledger technology. Market players are also modernizing business models, with emerging SME financing, mobile banking, and student financing companies. Companies are exploring ways of leveraging technology to promote financial inclusion. South Africa has the potential to leverage its regional leadership in digitalization. Several multinational corporations manage their African operations from South Africa. However, to compete globally—scalability matters significantly for some market segments—infrastructure and skills constraints need to be addressed. Lowering the cost of data will support digital inclusion. [Table of contents for the SA Selected Issues report: (i) What led to the doubling of public debt in the last decade? Was debt good for growth?; (ii) Inequality in South Africa: trends and the role of fiscal policy; (iii) Vulnerabilities and buffers: how resilient is the South African economy?; National Treasury statement (pdf); @StatsSA: South Africa’s unemployment rate was 27,2% in Q2:2018, up from 26,7% in Q1:2018. 6,1m people of working age in SA were unemployed]
Madagascar economic update: fostering financial inclusion (World Bank)
The external sector - extract (pdf): Exports are increasingly concentrated around a limited number of goods. Export performance has been improving in recent years, where the export-to-GDP ratio has increased from 30% in 2013 to 35% in 2017, also reflecting higher vanilla prices. This upward trend indicates that the economy is increasingly open, access to external markets is widening and that export earnings have improved. However, the export concentration index is trending upward, which means that fewer goods dominate the export basket. Over the past five years, 58% on average of the country’s total exports have been dominated by vanilla, nickel, and garments, which have also been the main drivers of export growth. This export concentration can be a source of vulnerability. An unexpected fall in demand or a sharp change in prices could have a significant impact on export receipts. To mitigate potential risks, measures could be undertaken to diversify exports and strengthen domestic demand. The development in service exports observed recently, including in business process outsourcing, for example through call centres and telecommunications activities, as well as tourism is encouraging (see figures 9-11).
Zambia: June 2018 trade deficit (pdf, CSO)
Zambia recorded a trade deficit of K1,612.8 million in June 2018, against a trade surplus of K245.4 million recorded in May 2018. Imports increased by 13%; this increase is mainly attributed to the increase in the imports of capital goods by 24.6%. Exports decreased by 7.4% which is mainly attributed to the reduction in traditional exports by 9.2%, from K7,314.3 Million in May 2018 to K6,641.2 Million in June 2018. [See: Zambia’s major export destinations by commodity in June 2018; Export market shares by selected regional groupings and major trading partners, June 2018 and May 2018; Zambia’s major import sources, by product in June 2018)
Kenya: Monetary Policy Committee (pdf, CBK)
The foreign exchange market remains stable supported by balanced inflows and outflows, and a continued narrowing in the current account deficit. The current account deficit narrowed to 5.8% in the 12 months to June 2018 from 6.3% in March 2018. It is expected to narrow further to 5.4% of GDP in 2018, with strong growth of agricultural exports particularly tea and horticulture, resilient diaspora remittances, and improved tourism receipts. Although the petroleum products import bill is expected to increase due to higher international oil prices, lower imports of food and SGR-related equipment in 2018 will moderate the impact on the current account. Data for the first quarter of 2018 showed a strong pickup of the economy, with real GDP growth of 5.7% compared to 4.8% in the first quarter of 2017. This outcome was driven by a strong recovery in agricultural activity due to improved weather conditions, a recovery of the manufacturing sector, and resilient performance of the services sector particularly wholesale and retail trade, real estate, and tourism.
Mauritius, Kenya to sign several Memoranda of Understanding (GoM)
A MoU focusing on the development of Special Economic Zones and Export Processing Zones in Kenya will be signed with Kenya. The purpose is to establish a framework for collaboration between the two countries for the development of SEZs and EPZs in Kenya through the setting up of a Joint Technical Committee which would, inter alia, oversee the implementation and viability of SEZ or EPZ in designated sites in Kenya. The Mauritius Standards Bureau will also sign an MoU with the Kenya Bureau of Standards to promote and facilitate bilateral trade between the two countries through the elimination of non-tariff barriers, thereby minimising any adverse impacts on our export industries.
Where is Ghana’s national strategy on manufacturing? (GhanaWeb)
Speaking at the ongoing Business/Stanbic Bank Breakfast forum on manufacturing on the theme ‘Unlocking economic growth through manufacturing - cost quality and competitiveness’, industrialist and former president of the Association of Ghana Industries, Dr Oteng-Gyasi said the country seemed lost on how to replace imports with locally produced goods. "Where is our national strategy on fruit processing, on manufacturing? Ours is just a country where we talk, moan and agonise. We have launched a lot of trade policies where we have fanfare and after that we go to sleep," he said, explaining that the country has failed to keep pace with innovations in industrialisation. He said it is regrettable that Ghana lost its rights as a manufacturer of television sets, electric fans, pressing irons and bulbs due to its inability to invest in research and development.
Customs officers from Togo, Mali, Niger to pitch camp at Ghana ports (GhanaWeb)
Custom officers from Ghana’s neighbouring West African countries will before the end of this year have a presence at the ports of Ghana. This is to ensure effective inspection and monitoring of goods meant for the respective neighbouring countries such as Togo, Mali, Burkina Faso and Niger among others. The Vice President, Dr Mahamudu Bawumia who disclosed this on Monday explained that the new system would be known as the first port duty rule. Dr Bawumia was speaking at the 39th annual council meeting of the Port Management Association of West Africa and Central Africa in Accra.
Imperatives of metrology in intra-African trade (ThisDay)
Stakeholders in the country converged on Enugu, Enugu State, at the 12th AFRIMETS General Assembly in Enugu State, where how to deploy metrology to boost trade in Africa was the focus. The goal of the forum-hosted by the Standards Organisation of Nigeria with over 25 African countries representation was to ensure a significant increase in the assessed low level of trade between African countries through the deployment of metrological infrastructure. Consequently, SON, while announcing plans to boost trade within the region through metrology, also stressed that the imperative of developing, strengthening and upgrading the national metrological infrastructure to facilitate trade, enhance export, accelerate economic development and protect the environment cannot be over emphasised.
Turkish steelmakers eye push into West Africa (Daily Star)
Namik Ekinci, board chair for the Turkish Steel Exporters Association, told Reuters that Turkey was looking to boost its trade with West Africa and sub-Saharan countries, where there is demand for the less capital-intensive steel products that Turkey mainly exports. He said a union of Turkish exporters would jointly start a new firm to penetrate the target markets through time charter shipments, aiming to increase Turkey's market share in West Africa from below 5% to 15% by cutting shipping costs. The project is expected to cut transport costs of steel exported to West Africa to around $30 per ton, from nearly $100, making it significantly more competitive.
UNECA: Inclusiveness and community-level engagement crucial for AfCFTA’s success
Alan Hirsch: The free movement of people is an AU ambition - what’s standing in its way
Nigeria warns Ghana, says Nigerian retailers in Ghana not ‘foreigners’
COMESA: Harmonized regulatory frameworks key to vibrant regional energy market (COMESA)
Caroline Freund: How to measure trade protection
Morocco: Voluntary peer review of competition law and policy (pdf)
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Regional integration and trade highlights at SADC Industrialisation Week
The message from the opening session of the Southern African Development Community’s (SADC) annual regional public-private engagement forum, known as Industrialisation Week, was that regional integration is a necessary precursor to global integration.
The SADC Industrialisation Week commenced in Windhoek yesterday and will run until tomorrow, 1 August, under the theme “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development”.
“We are recommitting ourselves, as a region, to industrialisation; to produce what we can sell to each other and to ultimately increase SADC’s productive capacity. The reality is that Namibia, and other SADC countries, must trade more with neighbouring countries in order to gradually trade more with the African continent,” said Tapiwa Samanga from the SADC Secretariat.
He added that because regional integration is the ultimate goal that member states cannot walk away from, deliberate steps need to be taken to improve every year and the push for regional industrialisation needs to continue.
Another key speaker during yesterday’s official opening was German Ambassador to Namibia Christian-Matthias Schlaga, who reminded delegates that his country places great value on regional integration and therefore fully supports SADC’s integration initiatives.
“Namibian companies can only achieve economies of scale (with large competitors) when they look beyond their borders,” said Schlaga. He cautioned, however, that both regional integration as well as industrialisation take time.
“One of the key aspects of achieving these goals is to develop a mindset of regional and global integration. This is why the slogan of ‘my country first’ does not fit into today’s world and the global objectives,” he added, in an obvious jab at US President Donald Trump’s “America First” philosophy.
Also speaking during the official opening, the European Union’s Ambassador to Namibia, Jana Hybaskova, noted that ‘value chains’ are the buzzwords for this important week. “We have to really consider how we position local value chains to connect to regional value chains to contribute to global value chains,” said Hybaskova.
Officially welcoming the delegates at the event, Namibia’s Minister of Industrialisation, Trade and SME Development, Tjekero Tweya, used an example of toothpicks to drive home the point of industrialisation.
“Twenty-eight years after Namibia’s independence we are still unable to manufacture toothpicks in the country. Even financial institutions would rather give you an overdraft to travel to China to go buy the toothpicks but they would be reluctant to give you the money to buy the machine to make your own toothpicks,” Tweya lamented.
SADC’s Industrialisation Week, which is aimed at fostering new opportunities for intra-regional trade and investment, also entails an exhibitor’s aspect on the side-lines where this year about 150 companies from across SADC are presenting their products.
The 2018 SADC Industrialisation Week is being hosted with the support of the NEPAD Business Foundation, the Southern Africa Business Forum (SABF), the Department of Trade and Industry of South Africa and the Department of International Relations and Corporation (DIRCO) and is being supported by the Barclays Africa Group and the European Union.
The SADC Industrialisation Week is being hosted as a precursor to the SADC Heads of States and Government Summit and its outputs will be reported to the annual SADC Ministers Meeting.
The first SADC Industrialisation Week took place in Swaziland, under the theme “Infrastructure Constraints” while the second transpired in South Africa where a regional gas task force committee was established.
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Inclusiveness and Community-Level Engagement Crucial for Afcfta's Success
The African Trade Policy Centre of the Economic Commission for Africa (ECA), in partnership with Thabo Mbeki African Leadership Institute (TMALI) and the Pan African Strategic and Policy Research Group (PANAGRAF), last week hosted the 2nd Roundtable on Equity in Intra African Trade-Induced Industrialization and Integration.
The roundtable is part of a series launched in 2016, and focused on Public-Private-People-Partnership (4Ps) "Living Labs" in fast-tracking the African Continental Free Trade Area (AfCFTA).
The objective of the Roundtable was to introduce the concept of Living Labs for stakeholders for structured intra/inter stakeholder consultations, and explore the ways in which the concept could be applied to enhance intra-African trade. At the same time, the roundtable served as a Living Lab itself, acting as a platform for informal feedback and advocacy for the stakeholders on questions of intra-African trade, industrialization and regional integration.
Speaking on behalf of Ms. Treasure Maphanga, Director for Trade and Industry at the African Union Commission, Mr. Prudence Sebahizi, head of the AUC's AfCFTA Unit, highlighted the importance of stakeholder consultation platforms, especially to address issues relevant to youth, women and other special interest groups. "The AfCFTA will not succeed unless there is a robust dialogue at national level complemented by regional and continental dialogue sessions," he further added.
Throughout the roundtable, participants emphasized the need for inclusiveness and community-level engagement when discussing trade policy and intra-African trade. A key challenge for policy making in Africa was considered to be the lack of implementation of existing initiatives, and the need to better turn research into policy and innovation on the ground.
It was recommended that roundtable partners use the Living Labs concept to better advocate for intra-African trade and the AfCFTA and strengthen buy-in at national level, regional and continental level. The roundtable contributions will be edited into a book and disseminated as a resource for policy makers, academics, civil society actors and other stakeholders.
Final Communiqué: Joint Summit of ECOWAS and ECCAS Heads of State and Government
Peace, Security, Stability and the Fight Against Terrorism and Violent Extremism
- The Joint Summit of the Heads of State and Government of the Economic Community of West African States (ECOWAS) and the Economic Community of Central African States (ECCAS) was held on 30th July 2018 in Lomé, Togolese Republic. The Summit was jointly chaired by their Excellencies Faure Essozimna Gnassingbe, President of the Togolese Republic and Chair of ECOWAS and Ali Bongo Ondimba, President of the Republic of Gabon and Chair of ECCAS.
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The aim of the Joint Summit was to create conditions for sustainable peace and a secured environment in the common area of the two regions.
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The Heads of State and Government or the duly mandated representatives of the following countries took part in the Joint Summit:
For ECOWAS
Benin, Burkina Faso, Cabo Verde, Cote d’Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
For ECCAS
Angola, Burundi, Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea, Democratic Republic of Congo, Rwanda, Sao Tome and Principe and Chad.
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The President of the ECOWAS Commission and Secretary General of ECCAS also participated in the Joint Summit, along with the following personalities:
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Chairperson of the African Union Commission;
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Special Representative of the United Nations Secretary General and Head of the United Nations Office for West Africa and the Sahel (UNOWAS);
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Special Representative of the United Nations Secretary General and Head of the United Nations Office for Central Africa (UNOCA);
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Representative of the European Union;
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President of the UEMOA Commission;
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President of CEMAC Commission; and
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Secretary General of CEN-SAD.
- The Heads of State and Government considered the overall security situation in West and Central Africa. They took note of the risks created by the increased number of security challenges, particularly terrorism, human, drugs and arms trafficking, money laundering and cybercrime.
- The Heads of State and Government underscored the significant achievements from the already existing cooperation between ECOWAS and ECCAS, in the area of maritime security and safety, in particular within the framework of the Interregional Coordination Centre (ICC) following the conclusions of the ECOWAS-ECCAS Joint Summit held on 25th June 2013 in Yaoundé, Republic of Cameroon.
- In order to better and collectively respond to the security challenges, the Heads of State and Government stressed the need for a more enhanced and effective cooperation between the two Communities.
- In this context, the Heads of State and Government decided to adopt a shared view of the threats and a common approach to the solutions to be provided. Accordingly, they adopted the Lomé Declaration on peace, security, stability and the fight against terrorism and violent extremism in the ECOWAS-ECCAS space.
- On the promotion of peace and stability, the Heads of State and Government commit to cooperate in conflict prevention, promotion of peace and stability in the two regions, particularly through the establishment and strengthening of early warning and rapid response to crises mechanisms at the national and regional levels, which involve civil society, opinion leaders, women, young people and state actors. They condemn the violent acts perpetrated particularly during internal crises aimed at destabilising States and calling into question national borders. The Heads of State and Government also undertake to adopt, at their next Summit, a regional framework on the convergence of constitutional principles in ECOWAS and ECCAS.
- The Heads of State and Government express solidarity with the legitimate authorities and people of Central Africa and support the initiative for peace and reconciliation in the country. They urge the African Union to seek, together with the United Nations, ways to lift the arms embargo imposed on the government of Central African Republic.
- The Heads of State and Government reaffirm their commitment and that of all stakeholders to respect the Agreement of 31 December 2016, the only consensual and inclusive framework capable of leading to transparent and peaceful elections in the Democratic Republic of Congo. They laud the efforts of the government to implement the electoral process in accordance with the timetable of the Independent National Electoral Commission.
- On security, the Heads of State and Government commit to strengthen cooperation in order to effectively check all forms of insecurity. To this end, they instruct the President of the ECOWAS Commission and the Secretary General of ECCAS to immediately open negotiations among Member States of the two regions, to conclude and implement procedures on mutual legal assistance and judicial cooperation. In that regard, a Cooperation Agreement on criminal police matters should be signed by the designated Ministers of West and Central African countries before the end of 2018.
- Seriously concerned by the upsurge in and spread of violent conflicts between herders and farmers due particularly to the adverse effects of climate change, the Heads of State and Government instruct the Ministers responsible for agriculture, livestock and security of the two regions, to hold regular consultations, with the participation of herder and farmer organisations, in order to identify measures for the prevention and peaceful management of these conflicts.
- The Heads of State and Government express deep concern at the instability prevailing in Libya and its impact on the security situation in ECOWAS and ECCAS Member States. They call on the international community to work towards a quick resolution to the crisis in the country, with the active involvement of countries of the region. In this regard, they express their support to the African mediation led by the President of the Republic of Congo, H.E. Mr Sassou Nguesso
- Furthermore, the Heads of State and Government instruct their relevant Ministers to consider issues relating to migration and climate change in their common space and submit a report in that regard at their next Summit.
- On the prevention and fight against terrorism and violent extremism, the Heads of State and Government strongly condemn the attacks by terrorist groups against civilians, defence and security forces, regional and international forces. They also condemn all kinds of illicit activities and trafficking from terrorist and mercenary groups operating in the Sahel from southern Libya.
- They welcome the commitment of member countries of the Multinational Joint Task Force of the Lake Chad Basin and G5 Sahel Joint Force to the fight against terrorism. To this end, they call on all Member States of the two Communities to provide, in a spirit of inter-Community solidarity, material, financial, technical and intelligence support to Member States’ armed forces in the fight against terrorism in the Lake Chad Basin and the Sahel. They further request the United Nations Security Council to place the G5 Sahel Force under Chapter 7 of the United Nations Charter, to provide it with sustainable and multilateral funding.
- Furthermore, the Heads of State and Government reaffirm their determination to prevent and combat terrorism and violent extremism notably through the involvement of religious and community leaders, women, youth, educational stakeholders, and other relevant civil society groups in the development and implementation of de-radicalization, rehabilitation and reintegration, as well as reconciliation programmes.
- They encourage the appropriate security services of their respective countries to exchange relevant information and intelligence and instruct the Ministers responsible for Security of ECOWAS and ECCAS Member States to propose to the ECOWAS Commission President and the ECCAS Secretary General, before their next Summit, the most suitable mechanisms and procedures for secured intelligence and information sharing among the countries.
- They pledge to mutually reinforce the capabilities of their Defence and Security Forces in the areas of personnel training, joint exercise, intelligence and respect for human rights and international humanitarian law.
- They commit to implement public policies and development programmes in the areas affected by terrorist activities, particularly through the creation of growth and development clusters resulting in income creation for young people. They equally commit to support public and private investment in all productive sectors for inclusive growth, in order to reduce poverty.
- The Heads of State and Government decide to put in place a Ministerial Monitoring Committee for the implementation of the decisions of the joint Summit which shall meet once every year. They instruct the President of ECOWAS Commission and the Secretary General of ECCAS to take necessary measures in that respect, to translate the commitments into concrete actions.
- The Joint Summit calls upon Member States, African Union, United Nations, bilateral and multilateral partners and the entire international community to support the implementation of the decisions thus adopted.
- The Heads of State and Government of ECOWAS and ECCAS decide to meet every two years alternately in the two Communities, to review implementation of the decisions contained in the Lomé Declaration adopted at the Joint Summit. However, they agree to hold consultations in the margins of the ordinary summit of the African Union of January. They decide to convene their next Joint Summit in Ndjamena, Republic of Chad in 2020.
Done at Lomé, this 30th day of July 2018
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Profiled African REC, trade and development events starting today:
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In Lomé: Joint ECOWAS, ECCAS Summit of Heads of State and Government
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In Kigali: African Tax Authorities Forum
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In Durban: IORA's 8th Bi-annual Meeting of the Committee of Senior Officials. It will be followed by the 5th Indian Ocean Dialogue (1-2 August), and the Indian Ocean Rim Academic Group (3 August)
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In Nairobi: 2nd Kenya Trade Week, on the theme Powering Kenya Big 4 Agenda through Trade
A profile of the new ECOWAS Commission President, Cote d’Ivoire’s Jean-Claude Kassi Brou
Trade in services and employment (Unctad)
In this study we examine the link between employment and trade in services by using the WTO-OECD TiVA database on trade in value added statistics. We explore the employment potential of trade in services in comparison with merchandise trade and quantify the employment elasticity of services exports. Extracts (pdf):
Among developing countries, only a few countries have managed to become global suppliers in services: China and India are the leading services exporters among developing countries followed by Singapore and Hong Kong (China). More importantly, the gap between the few successful cases and the rest of the group has been widening. Just ten countries produced about 70% of developing countries’ services exports in 2015, which corresponds to 21.2% of the global total. The gap was much smaller a few years ago: the top 10 accounted for about 61.9% of developing countries’ services exports in 2005.
Developing countries’ rising share in services trade has been asymmetric across product categories. While they account for around 30% of world services exports (figure 2) the share rises up to around 45% in construction and travel services, in which developing countries gained a significant rise in market share during the last decade, falling to 5% in charges for intellectual property and 14.5% in financial services. There are noticeable increases in developing countries’ share in telecommunications, computer, and information services as well as in financial services over the last ten years. Yet, out of a 10 percentage point increase in the telecommunications, computer, and information services exports share, about 8 percentage points is due to rising shares of Chinese and Indian services exports.
Despite this progress, many developing countries are still facing challenges in establishing internationally competitive productive capacities in the services sector. In many developing countries, services imports are increasing faster than exports leading to persistent, and for some countries widening, trade deficits in services trade (figure 3). From 1990 to 2015, the gap between world services imports and exports shares of developing countries widened from about 4 percentage points to 8.2 percentage points. There is also stark contrast between developed and developing countries in services trade balance over the 2010-2015 period (figure 4). While most developed countries compensate their trade deficits in merchandise trade with surpluses in services trade, the opposite is the case in developing countries. Although the persistence of trade deficits in services is present across all regions of the developing world, it is particularly visible in LDCs.
Nigeria launches Coalition of Services Industries (NOTN)
The Nigerian Office for Trade Negotiations has launched the Nigerian Coalition of Services Industries with the strong support of private sector market operators, regulators and competent authorities. The NCSI will function as a lobby group to support trade in services; validate services priorities for Nigeria; and, formulate inputs and advice on positions for Nigeria in domestic, regional, continental and multilateral trade negotiations. The NCIS will identify measures for improving Nigeria’s competitiveness for trade in services. The Director General of NOTN, Ambassador Osakwe said: “The Nigerian Coalition of Services Industries was an overdue necessity to re-balance the national dialogue and exchange of views on trade and economic policy matters relevant to diversification, and accelerating recovery and growth”. He told the meeting that even “at the regional level, in ECOWAS there was no Schedule for Specific Commitments on Trade in Services”. This was a gap that required urgent filling, more so because services accounted for approximately 54% of the Nigerian economy”. [Related: AITCR statement on its AfCFTA research agenda, collaborative relations with NOTN]
ECOWAS establishes regional product certification mark (Leadership)
The ECOWAS Commission has adopted the draft documents for the establishment of the ECOWAS Regional Product Certification Scheme (ECOMark) within the framework of the West Africa Quality System Programme implemented by UNIDO, with 12m Euro funding from the European Union.
Ghana: ‘Don’t sack us from retail markets; we will pay taxes’ - Nigerian traders (GhanaWeb)
Nigerian traders in Ghana have lauded the government for suspending its directive to sack foreign retailers from the various markets in the country. The Trade Ministry last month issued a directive to foreign traders operating in the market to move out by 27 July. But the ministry later suspended the directive, citing low education and inadequate consultations. The Ghana Union of Traders Association has expressed its disappointment over the current development and has asked members to defend their businesses. The Association has accused the foreigners of selling fake and substandard goods to the Ghanaian consumers.
Ghana’s footwear manufacturing industry collapsing - Association (GhanaWeb)
“We have been neglected for far too long as one of the nation’s most lucrative industries which employs more than 300,000 people along the value chain,” Mr Addo Kuffour, spokesperson and an executive member of the Association, said. Addressing a meeting of the Association at the Jubilee Park, Kumasi, he explained that the local footwear industry, which served the needs of countries in the West African sub-Region, including Nigeria, Burkina Faso, Cote d’Ivoire, Togo and Cameroun, had taken a considerable nosedive. “We are no longer able to compete with the influx of imported and inferior products on the Ghanaian market, and this is a worry to all stakeholders,” he noted, adding that this called for prompt intervention on the part of government to save the situation. The Association, amongst others, is advocating the promulgation of comprehensive policies and regulations to revamp the industry.
Mauritius: Greenhouse Gas emissions increase by 3% from 2016 to 2017 (GoM)
Greenhouse gas emissions went up by about 3% from 2016 to 2017, gross emissions increased from 5,403 to 5,572 thousand tonnes of CO2 equivalent, and net emissions, after absorption by forest and land use practices, increased from 5,040 to 5,207 thousand tonnes CO2 equivalent, according to a press communiqué released by Statistics Mauritius on Environment Statistics 2017 (pdf). In 2017, the energy sector accounted for the largest share of emissions (76%) followed by the waste sector (20%). [Mozambique: AfDB, IFAD help build knowledge on climate finance, natural capital]
Seychelles: World Bank's country partnership framework, FY18-FY23 (World Bank)
The first focus area, Sustainable Growth for Shared Prosperity, seeks the retooling of tourism and fisheries, the core sectors of the economy, to open opportunities for local business to generate higher value-added and better paying employment opportunities, especially, among the bottom 40 percent of the income distribution. The second focus area, Fostering Inclusion and Public Sector Performance, supports the government’s efforts to reorient its significant investment in social assistance towards investment in human capital, especially the bottom 40%.
Farmers’ Organizations in Africa (IFAD)
The Support to Farmers’ Organizations in Africa Programme: Main phase (2013 - 2018) is a continental programme which strengthens the institutional capacities, policy engagement and engagement of value chains of African farmers’ organizations. This publication (pdf) highlights the main results achieved with SFOAP, focusing on (i) enhanced institutional capacity; (ii) benefits at farm level; (iii) improved FOs market linkages; and (iv) stronger policy influence. The publication also includes five brief stories on the results achieved in Madagascar, Swaziland, Togo, Uganda, and the East African Community.
Japan mulls asking China to jointly develop infrastructure in Africa (Mainichi)
Tokyo is leaning toward Japan-China joint development in Africa, hoping to add impetus to improving bilateral ties ahead of a visit to China by Prime Minister Shinzo Abe, which Tokyo aims to realize in October. Japan intends to hold a meeting with China on Beijing's participation in a project to build roads across several West African countries before Abe's trip to China, the sources said. Tokyo has pledged more than 35 billion yen ($315 million) in loans and grants for the project, which would construct several roads connecting countries including Ivory Coast, Burkina Faso and Nigeria. The roads will total 4,000 kilometers in length.
WCO publishes 2018 edition of SAFE Framework of Standards
The 2018 version of the SAFE Framework (pdf) augments the objectives of the SAFE Framework with respect to strengthening co-operation between and among Customs administrations, for example through the exchange of information, mutual recognition of controls, mutual recognition of AEOs, and mutual administrative assistance. In addition, it calls for enhanced cooperation with government agencies entrusted with regulatory authorities over certain goods (e.g. weapons, hazardous materials) and passengers, as well as entities responsible for postal issues. The Framework now also includes certain minimum tangible benefits to AEOs, while providing a comprehensive list of AEO benefits.
Global Forum on Remittances, Investment and Development 2018: Asia-Pacific (pdf, IFAD)
One out of every 10 people (senders and receivers) in Asia-Pacific are directly affected by remittances. These private financial flows contribute to the region more than 10 times net official development assistance from all sources combined. Remittances to Asia-Pacific remain the highest in the world, at $256bn for 2017 (53% of worldwide flows).
New IMB report shows persistent piracy risk in Gulf of Guinea (ICC)
Sweden adopts new development strategy with Zambia
Zimbabwe engages SADC over market access
ECOWAS moves to integrate gender into its peace and security architecture
New "smart city" offers glimpse into booming Mauritius-China cooperation
AfDB: Tunisia launches pilot project to use drones for data collection in agricultural sector
IMF on CEMAC: Economic outlook improving, but faster progress needed
Rand Corporation: The US-China trade war - different messages
IMF: Twin deficits in developing economies
OECD: Digital technology diffusion - a matter of capabilities, incentives or both? (pdf)
OECD: Globalisation, intellectual property products and measurement of GDP - issues and proposals (pdf)
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tralac’s Daily News Selection
10th BRICS Summit Johannesburg Declaration
Extracts from Section IV: BRICS partnership for global economic recovery, reform of financial and economic global governance institutions, and the Fourth Industrial Revolution
64. We recall that the WTO Dispute Settlement System is a cornerstone of the multilateral trading system and is designed to enhance security and predictability in international trade. We note with concern the impasse in the selection process for new Appellate Body Members that can paralyse the dispute settlement system and undermine the rights and obligations of all Members. We, therefore, urge all Members to engage constructively to address this challenge as a matter of priority.
65. We acknowledge the need to upkeep WTO’s negotiating function. We, therefore, agree to constructively engage in further developing the current legal framework of the multilateral trading system within the WTO, taking into consideration the concerns and interests of all WTO members, including in particular the developing members.
66. We note the steps undertaken on strengthening and ensuring the operational readiness of the BRICS Contingent Reserve Arrangement and welcome the completion of a successful test run of the de-linked portion of the CRA mechanism. We encourage cooperation between the CRA and the IMF.
73. We welcome the signing of the Memorandum of Understanding on Collaborative Research on Distributed Ledger and Blockchain Technology in the Context of the Development of the Digital Economy. We believe that this work will contribute to our cooperation in adapting to the evolving internet economy.
Brand South Africa: The BRICS brand – from economic concept to institution of global governance (pdf)
Benefits and challenges of Free Movement of Persons in Africa (pdf, IOM)
This study demonstrates how intra-African free movement of persons can bring enormous socioeconomic benefits to the continent. It also explores some real challenges and costs in pursuing such free movement, but finds that, if managed well as part of the overall African integration and development strategy, the benefits of free movement of persons in Africa by far outweigh the costs. African States are invested in advancing and developing their economies by fostering greater intra-continental and global trade. The African people are part of that trade – ranging from small border traders, farmers, migrant workers to tourists, students or investors – and form a natural link or bridge between free movement and free trade. Free movement of persons is shown to be an integral part of the African free trade area strategy. Profiled recommendation:
The African Union and RECs have a pivotal role in coordinating synergy, cooperation and harmonization of regional norms and standards, and as such should further enable the phased implementation of free movement of persons by the following actions: In Phase I: Develop, adopt and promote a continental legal instrument to facilitate free movement of persons in Africa (i.e. the Protocol to Facilitate Free Movement of Persons in Africa, Right of Residence and Establishment for consideration by the African Union Assembly in January 2018); Prepare individual REC positions on how to implement free movement of persons in Africa in relation to the ongoing implementation process for REC free movement; Harmonize continental regional standards and norms on free movement of persons in Africa that include the CFTA and migration frameworks; Develop a common mechanism/dashboard/scorecard to monitor compliance and implementation of continental and regional legal and policy frameworks on free movement of persons in Africa.
The Africa Infrastructure Development Index: July 2018 (AfBD)
In general, AIDI scores (pdf) improved for virtually all countries between 2016 and 2018. The global index imputed for the entire continent has risen from 27.12 to 28.44. The range of performance for the top 10 countries, including Seychelles, Egypt, Libya, South Africa, Mauritius, Tunisia, Morocco, Algeria, Cabo Verde and Botswana improved from 35.63-93.92 in 2016 to 36.79-94.32 in 2018 (Table I.1 and Figure 1). Generally, the bottom 10 performing countries made very marginal gains in their performance - less than one percent point on the average, except Ethiopia and Madagascar. It is important to note that most of the countries in this category are fragile states or/and emerging from conflict. Some countries recorded a decline in the overall performance index. They include Cabo Verde, 1.49; South Sudan, 0.34; and São Tomé and Príncipe, 0.24. In terms of ranking, Burkina Faso, Mauritania, Rwanda and Uganda saw the biggest drop, falling two positions.
ICT emerges as the main driver of AIDI improvements: The ICT sector has driven the most improvements in the AIDI ratings over the past decade, compared to all other sectors. Sub-regional rankings remain stable: The ranking of the five regions remain unchanged, with North Africa remaining in the first position, followed by Southern Africa, West Africa, East Africa and Central Africa. The best performing sub-region to emerge is Southern Africa, with an average of 2.0 points, followed by West Africa - 1.55 points. The West African region recorded only 0.36 points - the lowest average in improvement.
Angola and the SADC Trade Protocol: update (dti)
South Africa's Deputy Minister of Trade and Industry, Mr Bulelani Magwanishe, and Angola's Secretary of Commerce, Dr Anadeu Leitao Nunes, agreed that it would be significant for Angola to be part of the SADC Trade Protocol as it would contribute to regional integration efforts. Both agreed during a bilateral meeting in Luanda last week. The meeting took place on the sidelines of a five-day trade and investment mission to Angola. Nunes concurred with Magwanishe and was pleased to pronounce that Angola would accede to the SADC Trade Protocol and that the roadmap was referred to the secretary of SADC. He said it ought to be discussed at the next meeting of ministers. He further said there was no turning back for Angola, as this was an instruction from President João Lourenço.
SADC Regional Development Fund operationalisation imminent? (GEG Africa)
This paper recommends four key capacity-building initiatives that regional infrastructure financing should support. First, technical support should be given to member state-identified institutions that can serve as early stage champions for potential projects. Second, capacity building should support project championing and stakeholder engagement. This entails ensuring that SADC projects secure a dedicated project sponsor/manager (from a DFI or SOE, or a private consultant) and support meetings required to secure buy-in from necessary actors such as governments and SOEs. Third, capacity-building efforts should not neglect ‘soft’ issues such as regulatory and legislative harmonisation and supporting infrastructure (such as ICT connectivity along a transport route). Fourth, as an ongoing effort alongside support for specific projects, financing should also support continuing reviews and restructuring of the RIDMP, to remove unfeasible projects that were either ill-conceived or purely politically motivated, and support the refinement and de-risking of projects with real potential. [The authors: Lesley Wentworth, Chelsea Markowitz, Zinhle Ngidi, Tulo Makwati, Neuma Grobbelaar]
Africa’s continental free trade deal: What did Namibia sign up for? (New Era)
“Will Namibia benefit from the AfCFTA? The answer for the short term is probably no,” opines Wallie Roux, a local researcher and trade analyst. In his assessment, the main reason why Namibia signed the agreement is because the country is part of SACU and SADC. As such, countries with a larger manufacturing base and enabling physical and industrial infrastructure like South Africa are in a better position to gain from the expected benefits of the AfCFTA. “Namibia’s benefits in this regard would most probably be indirectly, except for a few potential export markets for some of our products, like beer for instance. However, Namibia’s logistics sector could benefit immensely due to the country’s strategic location and its already developed corridors to neighbouring countries.”
Nigeria: African free trade agreement splits private sector groups (Vanguard)
The Manufacturers Association of Nigeria, yesterday, dissociated the Organised Private Sector from the call by the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture for the federal government to sign the AfCFTA. President of MAN, Dr Frank Jacobs, said at a news conference, that the position of NACCIMA does not reflect the position of the majority of the members of OPS, urging the government not to bow to pressure into signing the deal without addressing the concerns raised by stakeholders. “The position of NACCIMA is understandable, because it is an organisation of traders as opposed to those of us that are involved in manufacturing. A trader with a billion naira run a business employing less than 10 people but a manufacturer that has a billion naira plant will definitely employ more than 100 people. So, the difference is clear and government realises that. MAN believes that Nigeria may become a big player and key driver of improved volume of intra-African trade in an African Free Trade Area with the right market offer mix, rules of origin, countervailing measures, dispute settlement mechanism, non-tariff and technical barriers provisions, amongst other protocols and annexures. The only way to guarantee this positive proposition is to ensure that our negotiating team is guided by a credible and strategic country specific study. There is no wisdom in signing-on upfront only to end up struggling to find space in the accompanying Protocols and Annexures.” [Related: "MAN added that it has since commissioned a study and expects to have the report in one-month’s time"]
DHL, Ethiopian Airlines launch JV to build logistics infrastructure in Africa (Air Cargo World)
DHL Global Forwarding and Ethiopian Airlines have entered a joint venture, “DHL-Ethiopian Airlines Logistics Services Ltd.,” that will serve the entire continent of Africa based from Ethiopia – with Ethiopian Airlines holding a majority stake in the venture. “With its GDP growth, Africa is stepping into the spotlight as production hub,” CEO of DHL Global Forwarding for the Middle East and African regions, Amadou Diallo said. “Recent moves to open up the economy will continue to boost Ethiopia’s position as the fastest-growing economy in Africa.”
DP World to build and operate new logistics hub in Mali (pdf, DP World)
DP World has signed a 20-year concession with an automatic 20-year extension with the Republic of Mali to build and operate a 1000-hectare modern logistics hub outside of Bamako, the capital and largest city of Mali. The multimodal logistics platform, Mali Logistics Hub, will have inland container depots and container freight stations that will facilitate the import and export of goods. The Mali Logistics Hub will be located on the main road corridor from Dakar, Senegal to Bamako and close to the Dakar - Bamako rail line and will be capable of handling 300,000 TEU (twentyfoot equivalent unit), 4 million tons of bulk and general cargo. The first phase of the project, with an estimated initial investment of $50, will include an inland container depot and container freight station facility that will support the growth of the Malian economy by streamlining the import and export of goods. Construction is expected to start in 2019 and is to take approximately 18 months to complete.
Trade impacts of joining the Commonwealth: evidence from Rwanda (Commonwealth Secretariat)
AfDB: South Africa sees Africa Investment Forum as vehicle for economic growth
Nigeria: FG to decentralise ports to ease Apapa gridlock
Agbiz: Cairns Group Farm Leaders disappointed at new US agricultural subsidies (pdf)
Small–scale farmers of Africa and Denmark reject free trade agreements
ICTSD: EU, US leaders pledge to negotiate "zero industrial tariffs"; set up working group on WTO reform
OECD: Arrangement on Officially Supported Export Credits - updated version (pdf)
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Zim engages Sadc over market access
Zimbabwe is still engaging Sadc on full market access as it has not yet fully implemented the Sadc Free Trade Area due to industrialisation, a government official has said.
In a statement early this week, Industry, Commerce and Enterprise Development minister Mike Bimha admitted that the country had engaged Sadc over full market access.
“Zimbabwe is still engaging Sadc on the full market access offer and has not fully implemented the Sadc Free Trade Area due to de-industrialisation. As a result, Zimbabwe has submitted its application for special dispensation for derogation for its outstanding tariff commitments under the Sadc Protocol on Trade to the Committee of Ministers of Trade,” he said.
“Member states have made preliminary comments on the application and have requested for bilateral engagements as well as additional information so that they can undertake their national consultations before pronouncing themselves on the issues. Member States are expected to accelerate the implementation of value chains in pharmaceuticals, agro-processing and mineral beneficiation.”
Bimha said the objective was to consolidate regional integration, as member states continue processes in the implementation of the Sadc industrialisation strategy and roadmap.This comes as government is seeking to increase trade in the region. Bimha also discussed proceedings at the Comesa 20th Heads of State and Government summit held in Lusaka, Zambia held last week.
“Zimbabwe’s exports to Comesa reduced from $86 million in 2016 to $83 million, representing a 3,4% decrease in domestic exports to the region.” “Zimbabwe’s top exports are cane sugar (15%), fish (8%), and tobacco (4%). In 2017, 69% of Zimbabwe’s exports to the Comesa region were mostly destined for Zambia, Kenya (21%) and Malawi (6%). Other countries in Comesa accounted for 4% of the remaining exports. There are distinct opportunities here and I would like to urge the private sector to target the Comesa region and take up more market share.”
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Kenya, Namibia Committed to Enhance Bilateral Relations
Kenya has reiterated its commitment to continue working closely with other African countries to advance the realization of various programmes and initiatives of the African Union, as envisioned in the Agenda 2063.
Speaking during a bilateral meeting with Netumbo Nandi-Ndaitwah, Deputy Prime Minister and Minister of International Relations and Cooperation of the Republic of Namibia, CS Monica Juma who is on an a three-day official visit, congratulated Namibia on the recent signing of the African Continental Free Trade Area Agreement (AfCFTA) during the 31st session of the African Union Assembly in Mauritania.
The CS noted with that already 49 countries have signed the key agreement and six have already deposited the AfCFTA legal instruments. "This is a clear indication of resolute political goodwill for a more integrated Africa," the CS said adding that "we encourage Namibia to follow through with the ratification process so as to realize the African vision that is integrated, strong, united and influential global players and partners.
The CS stressed the need to enhance and solidify cooperation between the two countries by holding the inaugural session of the Joint Commission for Cooperation (JCC). She invited the Government of Namibia to support and participate in the forthcoming Sustainable Blue Economy Conference (SBEC) scheduled to take place in Nairobi from 26 -28 November 2018, aimed at leveraging the potential of the Blue Economy in Africa.
Kenya-Namibia relations date back to the 1960s and have continued to grow based on the shared aspiration and common principles for continental integration, peace and security and social-economic development through both bilateral and multilateral engagement."Our two countries have continued to cooperate in the health sector, agriculture, air and transport. Other opportunities for cooperation include trade, education, defence and tourism.
CS Juma retaliated that her visit was a clear demonstration of the Government of Kenya's readiness to work with the Government of Namibia and deliver more benefits for the two countries.
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Brics bloc signs declaration reaffirming multilateral trade as per WTO rules
Leaders of the Brics bloc of emerging economies, meeting in the wake of tariff threats by US President Donald Trump, signed a declaration supporting an open and inclusive multilateral trading system under World Trade Organisation rules at their summit in South Africa on Thursday.
Brazil, Russia, India, China and South Africa agreed at the three-day meeting to fight unilateralism and protectionism.
“We reaffirm the centrality of the rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system, as embodied in the World Trade Organisation, that promotes a predictable trade environment and the centrality of the WTO,” the declaration signed by the five leaders said.
They called on all WTO members to abide by WTO rules. The meeting of Brics leaders is the first since the US administration launched a push to rebalance trade multilateralism that Trump has deemed unfair – relationships that the United States once championed.
Earlier on Thursday, Chinese President Xi Jinping called for a concerted effort by global institutions such as the United Nations and the WTO to fight unilateralism and protectionism.
Xi, who leads the world’s second-biggest economy, also called for dialogue to settle disputes on global trade, underlining remarks he made at the opening of the summit the previous day.
‘Reject protectionism’
“We must work together... to safeguard the rule-based multilateral trading regime, promote trade and investment, globalisation and facilitation, and reject protectionism outright,” Xi said.
On Wednesday, Xi said there would be no winner in a global trade war. Russian President Vladimir Putin called for more trade within the Brics bloc.
“We should work to reduce administrative barriers to stimulate trade between our countries,” Putin said.
Indian Prime Minister Narendra Modi called for the bloc’s members to harness technology to develop their economies. A handful of protesters gathered near the conference hall where the summit was being held. Their leader, activist Trevor Ngwane, said “none of these heads of state speak for the working class or the poor”.
He handed a list of complaints to South African Public Works Minister Thilas Nxesi, who said the Brics forum would help attract investment and create jobs. “The forum must not be seen as if it is for the rich or the bourgeoisie,” he said.