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BRICS Business Forum: selected highlights
President Xi Jinping's address: Keeping abreast of the trend of the times to achieve common development
We are witnessing major changes unfolding in our world, something unseen in a century...The next decade will be a crucial one in which new global growth drivers will take the place of old ones. A new round of revolution and transformation in science, technology and industries featuring artificial intelligence, big data, quantum information and bio-technology are gaining momentum. They are giving birth to a large number of new industries and business forms and models and will fundamentally change global development and people's work and lives. We must seize this important opportunity to enable emerging markets and developing countries to achieve leapfrog development.
The next decade will see faster changes in the international landscape and the international alignment of forces. Emerging markets and developing countries already contribute 80% of global economic growth. Based on exchange rate calculation, these countries account for nearly 40% of the global economic output. Growing at their current rates, these countries will see their economic output approach half of the global total in a decade. The collective rise of emerging markets and developing countries is unstoppable, and it will make global development more balanced and global peace more firmly based.
The next decade will see a profound reshaping of the global governance system. The world is moving toward multi-polarity and greater economic globalization amid setbacks...The international community has reached a new crossroads; and we are facing a choice between cooperation and confrontation, between opening-up and a close-door policy, and between mutual benefit and a beggar-thy-neighbour approach.
Business cooperation is the most important and fruitful aspect of BRICS cooperation. Thanks to our joint efforts, new advances have been made in this cooperation this year. We BRICS countries will forge a partnership on the new industrial revolution, which involves more coordination of macro-economic policies, closer cooperation on innovation and industrialization and joint efforts to accelerate economic upgrading and the replacement of growth drivers. Our five BRICS countries have also made good progress in cooperation on trade facilitation, service trade, e-commerce, intellectual property rights and in other fields. These steps will enable us to seize opportunities and meet challenges in a changing world and enrich the BRICS Economic Partnership Strategy.
President Cyril Ramaphosa's address: There is also much scope to expand the value of trade between BRICS countries. As a country that is primarily an exporter of commodities to its BRICS partners, South Africa supports a shift towards complementary and value-added trade. Linked to the trade agenda, we need to increase investment between BRICS countries, particularly in the productive sectors of our economy. We also require a strategic roadmap regarding the opportunities presented by the fourth industrial revolution and the measures required to mitigate its disruptive effect on industry...It is imperative that we collectively navigate the risks and leverage the opportunities that arise from the new digital age.
BRICS export, credit agencies to strengthen trade ties: The heads of export credit agencies of BRICS countries on Wednesday reaffirmed cooperation among each other, deepening of partnerships, creating a favourable external environment, actualizing cooperation and crafting a shared vision of the future. This comes after the 4th BRICS export credit agencies meeting on Tuesday, attended by all five heads ECAs of BRICS countries, including Kutoane Kutoane, the head of Export Credit Insurance Corporation of South Africa.
Energy transition may rock politics in BRICS countries - Brian Dames. The move towards renewable energy will impact politics within many countries, particularly BRICS member states, as the need for skills and labour shift, according to CEO of African Rainbow Energy and Power, Brian Dames.
US can't change global trade alone, BRICS panel hears: Standard Bank SA CEO Lungisa Fuzile said he thinks globalisation is “here to stay, it doesn’t matter who resents it”. The former Treasury director general warned that a trade war between the US and China will affect African countries as the continent relies on economic growth within the Asian superpower to generate demand for its commodities.
SA plans to sue US over import tariffs on cars: Trade and Industry Minister Rob Davies says import tariffs breach South Africa’s African Growth and Opportunity Act rights.
SA supports a rules-based trading system, but current rules are not ideal, Rob Davies says: On Tuesday, SA made a submission to the general counsel of the WTO on behalf of the Africa group. This was also in response to several proposals that have been submitted by advanced nations calling for reform of the multilateral trading system. The minister said SA had not been able to interrogate proposals from the developed nations but had indicated that it would be applying three tests before deciding whether to support these proposals:
China’s trade with Africa surges to $100bn in first half of year: China and African countries traded goods worth $99.84bn from January to June, according to customs data released by China’s Ministry of Commerce. The trade volume increased 17.3% year-on-year, slightly faster than China’s overall trade growth during the period. China’s exports to Africa grew 8.1% to $50.37bn in the first six months while imports increased 28.6% to $48.47bn, resulting in the trade surplus falling 78.6% year-on-year to US$1.9bn.
Africa-India trade value yield over $42bn per annum: Between 2016-17, India’s exports to Africa had gone up to $23bn, from $14bn recorded in 2007-08. Imports from Africa stood at $28bn in 2016-17, up from the previous $20bn in 2007-08. The top five African countries that record high exports to India include Nigeria, Kenya, Tanzania, Egypt and South Africa.
Related: (i) Daniel Silke: SA needs more than just China; (ii) Government has trumpeted China's pledge of R193bn: but South Africa has invested much more than that in China
A new growth model for Botswana: mining the future (IMF)
On the other hand, the recovery in South Africa, as you may have seen in the latest forecast of the Reserve Bank, is not expected to be strong enough. At 1.2% this year and around 2% in the coming years, revenues that SACU countries get – Botswana included – are likely to be affected. Given these developments, we are cautiously optimistic about Botswana’s prospects. We expect a rebound in growth this year and next to about 4.5% – rising further to 5% over the medium term. Botswana needs to ‘mine’ a new growth model: one where the role and size of the state is different and where the private sector takes the lead. So allow me to offer a few thoughts on the contours of such new model – in light of our own experience and research. I can see four key dimensions. [Remarks by Tao Zhang, IMF Deputy Managing Director]
Mauritius as African gateway for the UAE: update (GoM)
Minister of Foreign Affairs, Regional Integration and International Trade, Mr. Seetanah Lutchmeenaraidoo, said the main focus of the meeting was to establish an agenda for the upcoming visit of the Prince Sheikh Abdullah bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation of the United Arab Emirates and on Government-to-Government matters. He underlined that another topic discussed related to how Mauritius can be an ideal platform to channel investment coming from the Middle East and Asia to Africa and the ways in which such a vast cooperation can be undertaken. He indicated that during the visit of the UAE Minister, the possibilities and opportunities to enhance bilateral partnership will be examined, adding that a Business Forum comprising of investors from Dubai, the UAE and Mauritius will be held. [Ethiopia, Eritrea, UAE Tripartite Summit: statement]
COMESA to set up team on Digital Free Trade Area (Business Daily)
The Common Market for Eastern and Southern Africa plans to set up a team to oversee the implementation of the Digital Free Trade Area (DFTA). The council instructed the secretariat to finalise DFTA gap analysis in member states by the end of this year. The DFTA will require both technological and legal inputs, especially in the fields of intellectual property, competition, data privacy and protection, and cyber security. The sub-committee will be made up of members of trade, ICT, and other relevant ministries in member states.
IGAD launches community-level cross-border dialogue for Karamoja (IGAD)
The Karamoja Cluster encompasses cross-border areas of four IGAD Member States, namely: Ethiopia, Kenya, South Sudan and Uganda. Areas in the cluster share a history of socio-economic and political marginalization and under-development primarily due to their remote location – in relation to national capitals - and inaccessibility. On the other hand, the Karamaoja Cluster holds a lot of promise for the region’s development particularly in light of recent natural resource discoveries, and intensified national and regional infrastructure projects that are set to transform the face of the cluster. The dialogue will conclude with a ministerial meeting today which will consider the proposals of the cross-border dialogue. The ministers will also inaugurate a cross-border development facilitation unit in Moroto, Uganda.
WTO's Trade Policy Review Body: remarks by DG Azevêdo (WTO)
Director-General Roberto Azevêdo: For this current mid-year report, 71 members replied to my initial request for information. This represents about 43% of the membership and covers about 92% of world imports. While this is a slightly higher participation compared to the last mid-year report, I continue to believe that we can do better. We should aim to make this exercise as inclusive as possible. Participation in the verification process continues to be uneven. An increasing number of delegations have recently requested specific measures to be omitted from the Monitoring Report, despite the fact that they refer to official sources. This is of serious concern. The commitment to this transparency exercise should not be selective...Now allow me to turn to the substance of the report:
A Quartz commentary, by Andrew Alli: Here are some of my thoughts on Chinese investment in Africa, based on my interactions with various Chinese companies as chief executive of Africa Finance Corporation, which invested over $4.5bn in 30 African countries during my decade-long tenure.
Two new African trade and investment research projects to note:
(i) HSRC project on the catalytic role of tradable services in Southern Africa’s growth and development: The study will investigate the detailed flows of service-related imports and exports within the sub-continent. In-depth interviews will also be undertaken with senior executives in business and industry associations to explore the opportunities and obstacles facing increased trade in knowledge-intensive services. The study is funded by UNU-WIDER, in collaboration with the National Treasury and the Department of Trade and Industry.
(ii) Development Impact Evaluation project of Ethiopia’s Hawassa Industrial Park: Ethiopia is making a major investment in light manufacturing, with a focus on industrial parks. This has the potential to make Ethiopia a leader in export-oriented manufacturing in sub-Saharan Africa, yet relatively little is known about the impact of industrial employment on workers, or on complementary interventions that could increase the benefit of industrial jobs for workers. In the Hawassa Industrial Park Community Impact Evaluation, we will use a unique large-scale government-led industrialization project in Southern Ethiopia to study the impact of factory employment on workers and the rural communities from which they originate, and the impact of interventions to support workers on their labour market trajectory and well-being.
SA's MTN is considering pulling out of Guinea, Guinea Bissau and Liberia
Resilient Waters: USAID project aims to improve water security in Limpopo, Okavango River Basins
Neocolonialism or balanced partnership? The state of agricultural trade between the EU and Africa (pdf)
Joint US-EU statement following President Juncker's visit to the White House
WEF, Chatham House: How international law is being reshaped and the challenges it faces
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Comesa to set up team on digital free trade area
The Common Market for Eastern and Southern Africa (Comesa) plans to set up a team to oversee the implementation of the Digital Free Trade Area (DFTA). The DFTA is an online platform for trade facilitation comprising three segments namely electronic trade (e-trade,) e-logistics, and e-legislation. The e-trade aims at promoting electronic commerce by providing a platform for traders in the Comesa bloc to conduct business online.
The e-logistics segment uses ICT as a tool to improve transportation of goods to customers, while e-legislation looks at the preparedness of countries to put in place laws that enable them to carry out e-transactions and e-payments. “The DFTA platform will enable duty-free and quota-free trading and provide an online regional market. Hence, it will empower cross border traders to do business using ICT thereby minimising physical barriers,” said the Comesa in a statement.
The sub-committee, which will be made up of members of trade, ICT and other relevant ministries in member states will be charged with the responsibility of ensuring that Comesa realises the dream of achieving a digital free trade area. The decision was reached during a council of ministers meeting in Lusaka, Zambia, last week. The ministers also allowed the including of other stakeholders in the committee, including the private sector, to hasten implementation.
The council instructed the Comesa secretariat to finalise DFTA gap analysis in member states by the end of this year. The DFTA will require both technological and legal inputs, especially in the fields of intellectual property, competition, data privacy and protection, and cyber security.
Speaking during the meeting, outgoing Comesa Secretary-General Sindiso Ngwenya emphasised the significance of embracing technology in regional integration and trade facilitation. “The digital applications will see the 21 century moving from national processes and controls to virtual regional and global processes that eliminate fragmented national border controls through the application of the block chain technology,” Mr Ngwenya said. “This is a distributive ledger for sharing information between and among different parties,” he added. This year’s summit was themed Comesa Towards Digital Economic Integration.
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Nigeria: How quality infrastructure will aid trade barriers’ reduction
The development of internationally accredited metrology systems and infrastructure in Nigeria would go a long way in reducing Technical Barriers to Trade (TBT) and enhance the country’s exports for regional and global markets, the United Nations Industrial Development Organisation(UNIDO) has said.
Similarly, the UNIDO also reaffirmed its continued partnership with the Federal Government to support industrialization in Nigeria through the development of necessary metrology systems and infrastructure.
UNIDO Representative to ECOWAS and Regional Director, Nigeria Regional Office Hub, Jean Bakole, stated this during the opening ceremony of the Intra- Africa Metrology System (AFRIMETS), in Enugu. He said: “UNIDO will continue to partner with the government of Nigeria to promote and support the development of metrology systems and infrastructure in the country as well as the ECOWAS sub-region to enhance the impact of industrial development and economic growth in the country.
“Metrology is essential for trade, innovation and emerging technologies, technical cooperation, or even simple exchange of information. In a rapidly growing world, there is continuing increase in the requirements for improved measurement standards, and for adoption of metrological concepts in new areas such as chemistry, nanotechnology, biosciences, medicine, food and environment.
“It is in recognition of the importance of metrology for, trade and economic industrial development that in year 2013, UNIDO decided to support the establishment of National Metrology Institute for Nigeria in Enugu through UNIDO EU-Funded National Quality Infrastructure Project.”
Bakole explained that the organisation’s vision to address today’s economic, social and environmental challenges is enshrined in the Lima Declaration towards Inclusive and Sustainable Industrial Development (ISID) adopted by UNIDO’s member states in December 2013, adding that it is on this basis that UNIDO provides support and promotes to harness industries’ full potential to contribute to lasting prosperity for all.
“Maintaining strategic partnership and technical cooperation, together with the use of standards and compliance related activities, forms an important part of UNIDO’s approach. The relationship between UNIDO, the International Bureau of Weights & Measures (BIPM), and the International Organization of Legal Metrology (OIML) is one such strategic partnership that extends up to the regional and sub-regional metrology forums”, he added.
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SA supports a rules-based trading system, but current rules are not ideal, Rob Davies says
The global trade war has now escalated into a full-blown trade war that requires greater co-operation especially between Brics member nations, Trade and Industry Minister Rob Davies says. At the start of the Brics Summit on Wednesday, Davies said: "It's moved beyond the phoney war. We are now seeing the actual shots being fired."
On Tuesday, SA made a submission to the general counsel of the World Trade Organisation on behalf of the Africa group. This was also in response to several proposals that have been submitted by advanced nations calling for reform of the multilateral trading system. Davies said of SA's submission: "The gist of it was to say that while we are in support of the rules-based multilateral trading system, it doesn't mean that the rules as they currently exist are ideal. There is a big, unfinished agenda about trade and development called for in the Doha round, particularly in the form of agricultural trade, that has not been concluded."
The minister said SA had not been able to interrogate proposals from the developed nations but had indicated that it would be applying three tests before deciding whether to support these proposals: whether the proposals advanced the objectives of developing nations regardless of the current policy space in these nations; whether the proposals addressed the fundamental issues of a lack of inclusivity, widening polarity and inequality in the world economy; and whether they allowed for participation of the caucus of developing countries (and if they enhanced interests for larger economies).
Discussions during the plenary and thematic sessions at the start of the first day of the Brics Summit largely centred on greater participation between the developing world and the five Brics nations, in the face of change to the global trading order and a move towards protectionist policies particularly by the US.
"This means that we need to find our solutions in the African continent and in our strengthening of regional integration," Davies said during a panel discussion on the role of Brics in trade and investment facilitation amid a changing global political economy.
SA was recently a signatory to the African Continental Free Trade Agreement, which has also been signed by other members of the African Union and is awaiting ratification. Davies said the agreement, when it reached full maturity with all the tariff schedules in place, would create a market of 1.07-billion people and a GDP of just over $3bn.
Aloysio Nunes Ferreira, Brazil's minister of external relations, said investment and commerce between Brics countries constituted about 5% of total commerce investment in each of the Brics member countries. "We would like to create rules that would stimulate investment in the commerce field."
He said Brazil was currently focused on creating conditions for investment in the major sectors such as oil, and it was working to reduce red tape for foreign firms seeking to invest in Brazil while also establishing rules that would apply to both foreign and domestic investors equally.
Russia intends to raise $1bn from the New Development Bank. Maxim Oreshkin, Russia's minister of economic development, said it would use the funds to facilitate more investment into other Brics countries.
Zhang Shaogang, director-general for the ministry of commerce in China, said trade and investment co-operation between Brics countries had to become more pragmatic and institutionalised. On Monday, China committed $14.7bn in investment to SA. President Cyril Ramaphosa aims to attract $100bn in investment over the next five years.
The summit’s theme is Brics in Africa: Collaboration for inclusive growth and shared prosperity in the fourth industrial revolution. It kicked off with the Brics Business Forum on Wednesday. Ramaphosa is expected to deliver a welcome message later on Wednesday, while heads of state will meet on Thursday.
Iqbal Surve, chairman of the Brics Business Council, said among the outcomes the council wanted to see was visa-free entry for businesses from Brics countries, intraBrics technology transfer, agricultural seed banks to reach finalisation and a national payment system to facilite an easier process among Brics countries.
SA took over presidency of the council in March. The business council's role is to facilitate trade and investment between businesses in the five Brics nations and to build bridges with the governments of these countries.
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tralac’s Daily News Selection
tralac's new short course: Applications for our new blended (combining online and residential learning) short course Trade Law and Policy for Africa’s Development have opened. This course provides a comprehensive coverage of International Trade Law and Policy in the 21st Century, from an African development perspective. The deadline for applications is 31 July 2018.
Who should attend the course? Mid-level and senior trade policy officials from Africa’s national governments, regional and continental organisations and experienced trade policy and law practitioners from non-state organisations, including the private sector. Download the course outline (pdf).
The WTO's Public Forum 2018 takes place on 2-4 October on the theme: Trade 2030 (pdf)
The BRICS Business Forum took place today in Johannesburg: tomorrow's selection will carry a comprehensive set of postings from the discussions
Logistics Performance Index: Connecting to Compete (World Bank)
Utilizing surveys of logistics professionals, the LPI offers two perspectives on a country’s performance: (i) The domestic LPI offers quantitative and qualitative assessments of a country’s services from logistics professionals working inside the country. This component offers detailed information on a country’s infrastructure, quality of service providers, border procedures, and supply chain reliability; (ii) The international LPI provides evaluations of a country’s services by logistics professionals located outside the country. This component provides qualitative information of how a country’s trading partners perceive the efficiency and quality of its logistics services. Extract (pdf):
Overall, the score profile of the entire set of more than 160 countries has remained similar since the 2007 edition, an indication of the robust nature of underlying data. The modest convergence of scores from 2007 to 2014 was explained in the 2014 edition by a perceived improvement in the trade-supporting infrastructure of low- and middle-income countries and, to less extent, in their logistics services and customs and border management. This explanation appeared largely valid for most countries being ranked. In 2016, however, the gap seemed to widen between the top and the bottom, with the highest average scores ever for the top 10 countries (4.13 on a scale from 1 to 5) and the lowest scores since 2007 for countries at the bottom (1.91; table S.1).
In 2018, the gap between top and bottom performers narrowed again. The average score for the top 10 countries dropped to 4.03, whereas the bottom 10 countries scored an all time high of 2.08 (figure S.1). High-income countries occupied the top 10 rankings in 2018, eight in Europe plus Japan and Singapore - countries that have traditionally dominated the supply chain industry. Germany is at the top, scoring 4.20. The scores of the following nine countries are in a tight interval, with Sweden in 2nd with a score of 4.05 and Finland in 10th with a score of 3.97.
The bottom 10 countries are mostly low income and lower-middle-income countries in Africa or isolated areas. Some are fragile economies affected by armed conflict, natural disasters, and political unrest. Others are landlocked countries naturally challenged by geography or economies of scale in connecting to global supply chains. Afghanistan ranks 160th with a score 1.95, preceded by Angola (2.05), Burundi (2.06), and Niger (2.07).
Among the lower-middle-income countries, large economies such as India (44th with a score of 3.18) and Indonesia (46th with a score of 3.15) and emerging economies such as Vietnam (39th with a score of 3.27) and Côte d’Ivoire (50th with a score of 3.08) stand out as top performers. Most of these countries either have access to sea or are located close to major transportation hubs.
The composition of the top-performing upper-middle-income economies has changed marginally, with China (26th with a score of 3.61), Thailand (32nd with a score of 3.41), and South Africa (33rd with a score of 3.38) leading the group. Romania, Croatia, and Bulgaria also improved their rankings. Among low-income countries, those in East and West Africa lead in this year’s edition.
Policy-making after the WTO Trade Facilitation Agreement: towards a broader trade logistics approach? (UNCTAD)
This article presents two trends related to policy-making in trade and transport facilitation, namely the related increased importance of the hard infrastructure dimension and new governance schemes based on public-private partnerships. [The authors: Céline Bacrot, Luisa Rodriguez. This article was posted in the latest Transport and Trade Facilitation Newsletter]
Related trade facilitation updates:
(i) Mozambique launches National Trade Facilitation Committee
(ii) @WCO_TFAWG: Congratulations to Uganda for the ratification of the WTO TFA
(iii) WTO TFA ratifications database
Kenya: Govt downplays job losses in Mombasa over SGR cargo trains (Business Daily)
The government has asked container freight stations to set base in Nairobi while downplaying reports that a rise in railway cargo transport had caused job losses in Mombasa. Transport Principal Secretary Paul Maringa said ferrying of cargo through the SGR offered more gains to the economy, ensured efficiency at the port and saved roads from overloaded trucks. “We cannot continue having conversation about Mombasa and Nairobi. We must look at the bigger picture. We are encouraging the CFS owners to come and open their stations in Nairobi and other parts of the country as well as the SGR will keep on moving as part of the larger milestone,” Prof Maringa told this writer on phone. Some seven trains ferrying 752 containers leave the port daily for Nairobi. About 1,300 containers arrive at the port every day. A ship that used to take up to 12 days to clear cargo at the port, he said, is now taking a day and a half. In the last two months, he said, the port has handle at least 17,000 containers. [Related logistics updates: Ethiopia-Eritrea handshake renders Lapsset obsolete; Uganda in single customs exports via Mombasa; Financial Times: China’s ‘Belt and Road’ court to challenge current US-led order; Bloomberg: Goodbye, China Deleveraging. Onward Belt and Road?]
Zambia will not relax its rules on the importation of wheat flour from other SADC countries (Lusaka Times)
Commerce, Trade and Industry Minister Christopher Yaluma says Zambia has expressed reluctance to relax its rules on the importation of wheat flour from other SADC. Mr Yaluma, says Zambia’s decision to maintain the status-quo concerning wheat importation was in the best interest of the country as it would benefit the local economy. Speaking on the side lines of the SADC 30th meeting of the committee of Ministers of Trade held in Pretoria [this week], Mr. Yaluma said Zambia’s decision has since been accepted by the SADC Secretariat.
He said Zambia will exercise caution to adopt international trade treaties that were not favourable to the country adding that by consensus, the decision was accepted by other countries. Mr Yaluma indicated that government needed sometime in order to make extensive consultation with several local stakeholders before adopting some international trade agreements. Mr Yaluma, said government was actively working towards meeting deadlines given to ensure that it carried out extensive consultation before coming up with permanent position on some international trade agreements, like joining the AfCFTA, which remained suspended.
Ghana: Illicit importation of edible oil killing local industry - OPDAG (GhanaWeb)
The President of the Oil Palm Development Association of Ghana , Mr Samuel Avaala, has made a passionate call for the local oil palm industry to be protected. He said local producers have more than sufficient capacity to refine and bottling crude palm oil to meet local demand. He said investigations have revealed that an average of about 6,000 tonnes of finished edible oil are imported every month, which sell at unbelievably low prices. He said Ghana loses close to $3m a month in illicit importation of vegetable oil through under-declaration, under-invoicing, mis-declaration, smuggling, removal in-bond, removal in transit and corruption at entry points. Mr Avaala stressed that the country’s Palm Oil industry has the capacity to meet the local demand explaining that the existing crude palm refineries in Ghana have a combined capacity of approximately 615,000 million tonnes per annum against a 300,000 per annum demand.
Mozambique to export sugar to Rwanda (Club of Mozambique)
Mozambique is to export sugar to Rwanda and is looking to maximise the business, taking into account the country’s volume of production and potential. Ten thousand tons will be exported in the first phase. Currently, Mozambique produces more than 400,000 tons of sugar – about twice what the country domestic needs – and has the potential to increase production still further. The sugar deal is one of the gains of a three-day state visit by President Nyusi to Rwanda at the invitation of his counterpart, Paul Kagame.
Improving food security in Africa: AUC workshop update (AU)
The African Union Commission, in collaboration with the FAO and Rockefeller Foundation, are engaged in a two-day High-level meeting with key stakeholders to develop policies and strategies for country specific plans to reduce post-harvest losses, in response to the 2014 Malabo Declaration on Africa Accelerated Agricultural Growth and Transformation. The results of the 2018 Biennial Review Report on progress of implementation of the Malabo Declaration commitments on the post-harvest losses indicated that only five countries reported having collected the required adequate data on post-harvest losses in their countries. The countries, Malawi, Mauritania, Rwanda, Togo and Uganda are on track towards achieving the post-harvest loss target by 2025.
This means that only 9% of the countries on the continent demonstrated explicit efforts and reporting on postharvest losses in their countries. 76% of the continent (42 Member States) did not report or avail data on their efforts to reduce PHL. Whilst not reporting on this indicator does not mean that there are no post-harvest losses in those countries, the lack of data on the indicator seems to indicate a major challenge with post-harvest loss management including monitoring and reporting in the majority of the African Union Member States.
Power Africa Gas Roadmap (USAID)
The Power Africa Gas Roadmap provides a comprehensive framework for defining and coordinating gas-to-power activities supported by Power Africa and partners through 2030. This Roadmap is designed to optimize and leverage Power Africa’s key strengths to achieve a discrete and measurable set of objectives. Although constraints and bottlenecks to the development of gas-fired power generation still exist, new gas discoveries–in combination with advances in technology and increasing activity from domestic and international investors–have produced the conditions for an “African Gas Revolution.” It outlines a plan for achieving up to 16,000 megawatts of additional gas-fired power generation in SSA by 2030. Power Africa's Gas Roadmap (pdf) estimates US companies could invest in, or compete for, $175bn worth of gas power projects in SSA, with the potential for at least $5bn of US exports of liquefied natural gas by 2030. [AEI's Emily Estelle: America ignores Africa to its peril]
DG Azevêdo: Now is the time to speak up for trade and the trading system
African Cotton, Textiles & Apparel Monitor: Issue 19, 24 July 2018, is posted
South African Journal of International Affairs: The impact of plurilateral trade agreements on developing countries – to participate or not to participate?
Maersk's Trade Report for India Q1 2018
US-China Economic and Security Review Commission: Trends in trade - US-China goods trade 2012-2017
E-bikes: Up to 83.6% China duties to protect EU sector with rising sales and no job losses
PIIE: Trump's $262bn China tariff threat plays with the bank’s money
Arvind Subramanian: Parting reflections of a CEA
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US can’t change global trade alone, Brics panel hears
Globalisation is irreversible and the US will not succeed in changing the global world order by increasing import tariffs. This was the central message of a high level Brics discussion on Tuesday night, which considered risks for countries and companies in a climate of rising US protectionism.
“Brics cooperation will be a solution to [the] challenge of de-globalisation,” said chairperson of the Bank of China Chen Siqing, according to a translated version of his opening address.
Siqing and other participants at the discussion are in Johannesburg to attend the three-day Brics Summit which starts Wednesday at the Sandton Convention Centre. The threat by US President Donald Trump to impose tariffs on $500bn (about R6.5tn) of Chinese imports is expected to be discussed by the five heads of state from Brazil, Russia, India, China and South Africa during the summit.
Siqing delved into the history of the Asian superpower, saying China had experienced a closed economy for several hundred years and had only reformed 40 years ago which led to the country’s development.
US can’t change the rules alone
Leslie Maasdorp, vice-president and chief financial officer at the New Development Bank headquartered in Shanghai, said that globalisation is irreversible and the protectionist path adopted by the US will only see the country become more isolated. “Brics Plus I think… will be the defining issue of the future [and] become an alternate voice against the current G-7 bloc.”
China in 2017, when it was chairing the Brics, invited several other emerging markets and developing countries to attend the Brics Summit, referring to the grouping as the Brics Plus. Heads of state from Turkey, Argentina and Jamaica will attend the 2018 Brics Summit in Johannesburg as part of Brics Plus, as well as leaders from several African countries in the Africa Outreach programme.
Standard Bank SA CEO Lungisa Fuzile said he thinks globalisation is “here to stay, it doesn’t matter who resents it”.
The former Treasury director general warned that a trade war between the US and China will affect African countries as the continent relies on economic growth within the Asian superpower to generate demand for its commodities.
Indebted countries hardest hit
Deputy managing director at the International Monetary Fund Zhang Tao told the audience in Sandton that countries with higher debt are particularly vulnerable if global conditions tighten, while economic growth prospects are becoming more uncertain.
Zhang advised countries in sub-Saharan Africa to reduce their macro-economic vulnerabilities from debt, saying public debt ratios in the region have increased in the last five years from 30% to 50% of gross domestic product.
Countries in sub-Saharan Africa should also revive private sector investment by improving regulations, deepening access to credit and intra-African trade, according to Zhang.
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US gas roadmap to power and light sub-Saharan Africa
Kenya and Tanzania are among nine African countries set to benefit from an ambitious US-led initiative to invest in gas-powered power plants.
The Gas Roadmap for sub-Saharan Africa, launched in June at the World Gas Conference 2018 in Washington, DC by the United States Agency for International Development’s Power Africa co-ordinator, is an initiative that seeks to add some 16,000MW of gas-fired power in nine countries by 2030.
The roadmap is built on the fact that based on known reserves, there is potential for approximately 400GW of gas-generated power in sub-Saharan Africa. The gas roadmap is part of the Power Africa Initiative launched in 2016, which the US is implementing and whose goal is adding 30,000MW of new generation capacity and 60 million new connections by 2030.
According to the roadmap, US companies supported by Washington will invest $175 billion in gas power projects in Kenya, Tanzania, Côte d’Ivoire, Ghana, Nigeria, Senegal, Angola, Mozambique and South Africa. The countries were selected because of their relatively large populations, high gross domestic product and either because they have local gas resources (in operation or under development) or are planning liquefied natural gas (LNG) import projects.
The US project has potential of generating at least $5 billion annually by exporting LNG into the region by 2030. “A key ingredient in Africa’s energy mix is, and will continue to be, clean natural gas. Natural gas and LNG projects have the potential to generate essential electricity quickly and at reasonable prices,” wrote Rick Perry, US Secretary of Energy, in the “Power Africa Gas Roadmap to 2030” strategy report.
He added that the gas roadmap underscores how the US can help advance gas sector investment in Africa as well as how the export of LNG and related innovations can spur gas-to-power development across the continent. Gas resources have been discovered in 14 countries in sub-Saharan Africa, with Nigeria accounting for 81 per cent of the proven reserves.
It is estimated that several undeveloped fields in Tanzania and Mozambique account for 62 per cent of total contingent resources while other African countries without reserves are developing infrastructure for importation of natural gas to support the demand for power generation.
Tanzania, which has discovered recoverable natural gas estimated at 57 trillion cubic feet, envisages a larger role for natural gas in the future energy mix, with gas-fired power plant capacity anticipated to grow from 1,501MW in 2015 to 4,915 MW in 2040, according to the country’s power masterplan.
In April, the government inaugurated a $345 million natural gas-powered plant on the outskirts of the capital Dar es Salaam, which has a capacity to generate 240MW, and embarked on two other projects with a 600MW capacity. According to the roadmap, the US government interventions will focus on addressing the constraints related to gas projects in sub-Saharan Africa.
These include the availability of gas (both from a source as well as delivery method perspective), financial strength of off-takers of power and gas, lag in downstream infrastructure, such as power transmission and distribution capacity and the various markets’ ability to absorb power and gas. “By focusing on decreasing fuel costs, development costs and the cost of capital, the best possible tariffs for the end user can be realised,” states the roadmap.
Apart from being clean energy, gas is highly competitive as a source of power with studies showing that prices for gas-to-power could run as low as $0.10 per kilowatt hour (kWh) for integrated LNG projects and $0.15 per kWh for small-scale and distributed power projects.
Both projected prices are lower than the $0.18 per kWh average cost of generation in sub-Saharan Africa.
In Ghana, Nigeria and Mozambique, utilisation of local gas resources have yielded tariffs of $0.07 to $0.09 per kW/h.
The roadmap reckons that with the drop in global prices, the use of gas has become more attractive and could replace more expensive fuel sources, thus reducing the cost of energy.With lower prices, businesses can thrive and more people can have access to electricity.
In addition, carbon emissions from natural gas usage is much lower than emissions from coal and oil-based fuels like kerosene, diesel, gasoline and heating oil, as well as burning biomass for cooking.
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DG Azevêdo: Now is the time to speak up for trade and the trading system
At a meeting of the full WTO membership held yesterday, Director-General Roberto Azevêdo outlined the economic and systemic threats posed by the growing tensions in global trade and called on “everyone who believes in trade as a force for good” to speak up in its defence.
The Director-General said:
“Members are well aware of the growing crisis in global trade. Tensions are growing. New measures are being announced with increasing frequency. There is real and justified concern about the escalation we are seeing. Whether or not you call it a trade war, certainly the first shots have been fired. Continued escalation would risk a major economic impact, which would pose a serious threat to jobs, growth and recovery in all countries. There is also a potential systemic impact, which poses a greater threat in the longer term, particularly if countries begin to accept this tit-for-tat dynamic as the new normal.
“The situation requires an urgent response. We have a duty to help resolve these issues, and to alert people to the potential risks and consequences. That is what I have been working to do. I have been consulting with members on these issues, and I have been meeting with leaders and ministers – urging dialogue and exploring steps to resolve the current situation. But I have also been talking to a wider range of contacts – such as parliaments, business, think tanks and the media – in order to increase awareness and understanding of what is at stake. Trade touches all of our lives. So I am calling on everyone who believes in trade as a force for good to speak up. Now is the time.
“In some ways I actually think we may be seeing some progress. Leaders are increasingly aware and engaged in WTO issues – in a way that I haven’t seen before. There is renewed engagement from many members on systemic issues, bringing more focus on the WTO and how it can be improved. I think that this could be positive – and could potentially help us to find a path out of the current crisis.”
The Director-General also addressed the impasse in appointments to the Appellate Body, stressing the gravity of the situation and the need for members to engage with renewed urgency.
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Trade logistics gap persists between developed and developing countries
Report finds advanced economies remain leaders on trade logistics
Advanced economies remain the global leaders in trade logistics, finds Connecting to Compete, a new World Bank Group report released on 24 July 2018.
Across the board, most countries have pursued logistics-related reforms and investments to build infrastructure, facilitate transportation and trade, or develop modern services. Despite this progress, the sixth edition of Connecting to Compete reveals a mixed picture. High-income countries score, on average, 48% higher than low-income countries when it comes to logistics performance.
“Logistics services are the backbone of international trade,” explains Caroline Freund, Director of the Macroeconomics, Trade & Investment (MTI) Global Practice at the World Bank Group. “As supply chains become more globally dispersed, the quality of a country’s logistics services can determine whether or not it can participate in the global economy.”
“Good logistics reduce trade costs, but supply chains are only as strong as their weakest link. For developing countries, getting logistics right means improving their infrastructure, customs, skills and regulations.”
Connecting to Compete, which contains the Logistics Performance Index (LPI), is a bi-annual report that scores 168 economies on how efficiently supply chains connect firms to domestic and international opportunities. The 2018 LPI highlights emerging concerns with the resilience of supply chains, their environmental footprint, and the need for qualified workers:
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A logistics labor shortage poses a challenge for both developed and developing countries alike. Developing countries seek more managerial-level workers, while developed countries face a shortage of blue-collar workers, such as truck drivers.
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High-income countries are more likely than low-income countries to be increasing their preparedness for cyber threats.
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High-income countries are more likely than low-income countries to seek logistics services that are environmentally friendly. This is important because CO2 emissions from transport are a significant contributor to pollution.
Germany has the highest aggregate score over the past four LPI editions. High-income countries that are dominant players in the supply chain have ranked highest in logistics performance. Countries that rank lowest tend to be those that are low-income, isolated, fragile, or facing conflict or unrest. Among the lower-middle-income group countries, large economies such as India and Indonesia and emerging economies such as Vietnam and Cote d’Ivoire stand out as top performers.
“With international trade becoming more dispersed through global value chains, good logistics are more important than ever. Small disruptions to a supply chain can spread rapidly to other countries and regions,” says Christina Wiederer, Economist with the World Bank Group’s Macroeconomics, Trade & Investment Global Practice and report co-author. “Connecting to Compete and its Logistics Performance Index help governments understand the link between logistics, trade, and growth, and what policies are necessary for success.”
From Parts to Products: Why Trade Logistics Matter
A $4.3 trillion industry affecting nearly every country in the world, logistics is the network of services that supports the physical movement of goods within and across borders. It comprises an array of activities including transportation, warehousing, brokerage, express delivery, terminal operations, and even data and information management. How efficiently goods can move through these systems to their final destinations is a key determinant to a country’s trade opportunities.
Benchmarking Logistics Performance
With trade and logistics touching so many areas of an economy, it can be difficult to get a complete picture of a country’s performance. This is why the Logistics Performance Index (LPI), part of the biennial report Connecting to Compete, evaluates countries across a number of indicators. The index, which takes into account factors such as including logistics competence and skills, the quality of trade-related infrastructure, the price of international shipments, and the frequency with which shipments reach their destination on time, helps governments benchmark their progress over time and in comparison to similar countries.
Utilizing surveys of logistics professionals, the LPI offers two perspectives on a country’s performance:
- The domestic LPI offers quantitative and qualitative assessments of a country’s services from logistics professionals working inside the country. This component offers detailed information on a country’s infrastructure, quality of service providers, border procedures, and supply chain reliability.
- The international LPI provides evaluations of a country’s services by logistics professionals located outside the country. This component provides qualitative information of how a country’s trading partners perceive the efficiency and quality of its logistics services.
The World Bank Group has been scoring countries on these issues every two years since the inaugural edition of Connecting to Compete in 2007. Consistently, high-income countries, particularly those in Western Europe, emerge as world leaders on logistics. In fact, the LPI score of high-income countries is 48% higher, on average, than low-income countries. Among the 30 top performing countries, 24 are members of the Organization for Economic Co-operation and Development (OECD).
“Across the board, we have seen most countries investing in logistics-related reforms, especially in the areas of building infrastructure and facilitating trade,” explains Jean Francois-Arvis, Economist at the World Bank Group and report co-author. “Despite these efforts to modernize services, developing countries face many remaining challenges. This explains a persistent gap between high- and low-income countries in terms of logistics performance.”
But income alone is not the sole determinant of a country’s LPI score. Vietnam, Thailand, Rwanda, China and India all outperform their income groups. These countries tend to have access to sea ports or large international transportation hubs.
For individual countries, logistics performance is key to their economic growth and competitiveness. Inefficient logistics raise the cost of doing business and reduce the potential for integration with global value chains. The toll can be particularly heavy for developing countries trying to compete in the global marketplace. Governments can use the LPI to better understand the link between logistics, trade, and growth, and what policies they can enact to globally compete.
2018 LPI: Key Findings
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The top 10 performing countries have remained relatively unchanged over the past few years and tend to include high-income countries in Europe. Of the top 30 performers, 24 are members of the OECD.
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The bottom 10 countries in the ranking are composed of mostly low-income and lower-middle-income countries. These are either fragile economies affected by armed conflict, natural disasters, political unrest, or landlocked countries that are naturally challenged by geography or economies of scale in connecting to global supply chains.
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The LPI scores of high-income countries, on average, surpass low-income countries by 48 percent.
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Among the lower-middle-income group countries, large economies such as India and Indonesia and emerging economies such as Vietnam and Cote d’Ivoire stand out as top performers. Most of these countries either have access to the sea or are located close to major transportation hubs.
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There is currently a labor shortage of logistics professionals in both developed and developing countries. Developed countries need more blue-collar workers, such as truck drivers, while developing countries seek more managerial-level workers.
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More countries perceive cybersecurity threats a risk to logistics. However, while 78% of high-income countries have increased their preparedness, only 26% of low-income countries have done so.
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Given that 23% of all energy-related CO2 emissions can be attributed to transport, the environmental sustainability of logistics is an important emerging trend. Strong performers in logistics are the most likely to seek eco-friendly shipping options. In the top quintile of LPI performers, 28% of respondents indicated that shippers often or nearly always ask for environmentally friendly shipping options. In the bottom quintile, this percentage falls to just 5%.
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Tomorrow, in Sandton: (i) BRICS Business Forum; (ii) The Africa Investment Forum on the theme of attracting private sector investment into Africa; (iii) BRICS 2018 programme (pdf)
Simon Freemantle: The geopolitical context of the 10th BRICS Summit (Standard Bank)
The BRICS can also use the upcoming gathering to emphasise the primary original purpose of the grouping, which was the need for the collective and rising importance of the developing world to be reflected in the global multilateral institutions that preside over the geopolitical, financial and economic global order. It is in this sense worth emphasising how profoundly the developing world’s contribution to the global economy has lifted since the turn of the century. Indeed, in 2000, the collective GDP of the developing world stood at around USD7tr, compared to almost USD27tr held by advanced economies. Fast-forward to 2017, and the relative gap between these two baskets of nations has narrowed profoundly...:
Internal BRICS imbalances: China looms large. While the BRICS will very likely use the summit to reflect their strong commitment to free trade, the grouping should not ignore the reality that the trade imbalances President Trump laments between the US and China are echoed between China and most of its BRICS partners. Indicatively, last year China ran a roughly $14bn trade surplus with its four BRICS partners, with India being by some margin the most affected by this imbalance (Figure 6). China’s dominant economic role also presents a constant threat to the internal balance of power within the BRICS – as it stands, China accounts for fully two-thirds of collective BRICS GDP, compared to South Africa’s meagre 1.6% share (Figure 8).
BRICS, Africa and Global Economic Governance: achievements and the future (GEG Africa)
This paper explores both the efforts of the BRICS in advancing reforms in international financial institutions), considering specifically how coherent and united the grouping has been in these efforts and the extent to which each member of the group has benefitted. Two surveys of BRICS experts and African stakeholders also assess South Africa’s stated agenda of supporting and advancing African interests in the grouping. The paper recommends that South Africa should push for the development of a dedicated BRICS–Africa strategy, as well as the integration of African developing country concerns in the various BRICS strategies such as the ‘Strategy for BRICS Economic Partnership’ or the ‘Action Plan for Deepening Industrial Cooperation among BRICS countries’ to support regional development chains in Africa. The recently signed African Continental Free Trade Area provides further opportunities in this regard. The paper also proposes that the AUC set up a dedicated unit to provide support on BRICS-related issues to the AU rotating chairs. [The authors: Elizabeth Sidiropoulos, Cyril Prinsloo, Luanda Mpungose, Neuma Grobbelaar]
Africa urged to develop common position in cooperation negotiations with China (TRAFFIC)
African countries have been urged to develop a common position in their engagement with China in the run-up to the Ministerial Conference and Heads of States and government Summit of the Forum on China-Africa Cooperation taking place in Beijing in September. The AUC and Africa's RECs are also encouraged to strengthen their engagement in the FOCAC process to ensure regional and continental development strategies are fully considered and carry the aspirations of the African continent. The call was made by participants of the Regional Awareness and Capacity Building Workshop Towards FOCAC 2018 that was held in Nairobi during June 19th-20th. Organised by TRAFFIC and WWF, the aim of the workshop was to provide a platform for dialogue, exchange and sharing of good practices and lessons learned amongst key government officials, Civils Society Organizations and other relevant stakeholders to inform their preparation for a strategic engagement in FOCAC 2018. Key issues raised during the workshop include (pdf): [Download in French, pdf)
Namibia reviews position on SACU revenue (The Namibian)
Cabinet has approved that Namibia continues consultations to refine the country's position on the Southern African Customs Union revenue-sharing agreement. This was said by deputy information and communication technology minister Engel Nawatiseb at last Thursday's media briefing on Cabinet resolutions taken at Tuesday's meeting. He said Cabinet had noted that the proposed changes to the revenue-sharing arrangement are not consistent with the guiding principles of the union, and may result in an unfair loss to some member states and unfair gains to others.
Nigeria: NACCIMA urges FG to sign Africa Free Trade Area Agreement (Financial Watch)
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has called on the Federal Government to immediately sign the AfCTFA to make the economy more competitive. The National President, Chief Alaba Lawson, made the call at a press conference on Monday in Lagos. He urged the Federal Government to take full advantage of the AfCFTA and eradicate non-tariff and regulatory barriers to international trade. “Currently, while the AfCFTA is entering critical stages and negotiations are going on in priority sectors in member countries, our nation is dithering and still ruminating. Nigeria cannot afford to lose out in the opportunities inherent in a common African market. You cannot negotiate what you are not part of.”
@Trade_Kenya: PS Trade, Dr Chris Kiptoo, has been appointed to chair the Inter-Agency Anti-Illicit Trade executive forum. CEO KAM will be the vice chairperson while executive director of the Anti-Counterfeit Agency will be the Secretary.
6th Annual EAC Secretary General's Forum: update
The Executive Director of the East African Business Council, Ms Lilian Awinja, informed the Forum that working together with the EAC Secretariat and the Regional Dialogue Committee, the Parties had analyzed and discovered that out of the previous 5 EAC SG Foras, the level of implementation of the agreed recommendations was still very low. The analysis indicates that only 16% of the recommendations had been fully implemented, 43% partly implemented, 36% not implemented and 5% had no update at all. “These figures are worrying and explain why this forum has been organized as a strategy forum, such that the Dialogue Parties together with the EAC Secretary General brainstorm and agree on a clear path to the realization of the objectives of the Consultative Dialogue Framework as envisaged under Article 127(4) of the EAC Treaty.”
Benefits and challenges of free movement of persons in Africa: statement by Ambassador Minata Samate Cessouma (Commissioner for Political Affairs)
In order to facilitate free movement in Africa, we need a combination of measures undertaken in the short and medium term to speed up the ratification and the implementation process leveraging the rich experiences of the RECs, most notably the EAC and ECOWAS. We do recognize that some of the measures will take time as we seek to harmonize national laws and practices with the Protocol, but a lot also needs to be done now and not tomorrow. It is in this spirit that we, together with IOM, have undertaken and completed this study aimed at highlighting the benefits and challenges of Free Movement of Persons in Africa. We have also highlighted the challenges in this study so that we don’t forge forward blindly, oblivious of potential risk factors. Some of these challenges include National Security concerns such as `transnational crimes’; terrorism and violent extremism, irregular migration, drugs and human trafficking etc. But let me also underscore that these challenges are not insurmountable. Since advantages of free movement of persons far outweigh the disadvantages, free movement of persons should be facilitated while not ignoring the fears, but rather looking at possible solutions to such valid fears.
Kenya-Mauritius Joint Commission: update (GoM)
The Joint Commission between Mauritius and Kenya will be held from 1-3 August 2018 in Kenya. The main issues to be discussed include Ocean/Blue Economy, Fisheries, Export Processing Zone, Special Economic Zone, Financial Sector and Business Exchanges, Maritime Sector, Air Services, Education and Sugar. In the margins of the Joint Commission, various Memoranda of Understanding will be signed.
PM Modi’s Rwanda visit: India extends $200m credit lines (Tehelka)
India has extended $200 million lines of credit to Rwanda as Prime Minister Narendra Modi who is on a three-nation African tour reached Rwanda on July 24 and held talks with President Paul Kagame and discussed measures to strengthen bilateral ties by in defence, trade and agriculture sectors. India and Rwanda also signed MoUs on collaboration in the areas of leather and allied sectors, dairy cooperation, agricultural research and education collaborations between Rwanda Agricultural Board and Indian Council of Agricultural Research. The lines of credit are for the development of industrial parks, the Kigali Special Economic Zone and for three agricultural projects in Rwanda
Rwanda, China reaffirm cooperation (New Times)
The two countries signed 15 bilateral MOUs and agreements. The agreements include visa exemption for diplomatic and service passport holders, culture and scientific operation and Silk Road Economic Belt cooperation. Other agreements signed include those aimed at strengthening cooperation in investment in e-Commerce, cooperation in civil air transport, law enforcement cooperation and human resource development cooperation. [Reuters: Rwanda signs $300m in loan deals with China and India]
A commentary, published in the Washington Post, by Deborah Bräutigam: Xi Jinping is visiting Africa this week. Here’s why China is such a popular development partner.
Nigeria: Only 63% of privatised enterprises performing – BPE DG (Daily Trust)
Speaking, yesterday, at the opening Enterprise Stakeholders and Investors’ Forum in Abuja, Director General of the Bureau for Public Enterprises, Mr Alex Okoh, said 142 enterprises have been successfully privatized from the time the privatization programme started in the 1980s to December 2017. According to him, out of this number, a total of 94 enterprises have been successfully monitored, covering critical sectors of the Nigerian economy from the transport sector to vehicle assembly plants, oil palm, cement, hospitality, fertiliser, bricks and clay, mines and steel, national facilities, oil and gas, ports, power and communication. “This assessment is based on an analysis of the covenants and levels of compliance, challenges and recommendations from 2010 to 2017.”
Macro-financial linkages in shallow markets: experience from the African Department’s pilot countries (IMF)
This paper assesses and disseminates experiences and lessons from low-income countriesin Sub-Saharan Africa that were selected by the Africa Department in 2015-16 as pilots for enhanced analysis of macro-financial linkages in Article IV staff reports. Extracts: The pilot countries show substantial heterogeneity in the level of financial inclusion (access) by households and enterprises. Indicators of access for households are highest in Benin, Tanzania, and Uganda (Figures 3a, 3b, and 4) and lowest in Guinea. However, Benin is also among three pilots in which more than 50 percent of firms identified access to finance as a major constraint (Figure 5). Several countries, mainly in Anglophone Africa, demonstrated the expanding role of mobile payments and banking services in boosting access to financial services. In Tanzania, the nominal value of mobile money transactions and their importance relative to broader monetary aggregates has risen exponentially since 2010, boosting financial access for previously excluded segments of the population. Mobile money platforms are also serving as a gateway to more sophisticated financial products and services; for example, banking in Uganda. The rapid growth of these novel financial services has benefited from efforts to strengthen the regulatory environment. Those few pilot cases also highlighted some of the challenges raised by mobile money services in terms of appropriate regulations and financial sector supervision. [Investigating the financial capabilities of SMEs: lessons from a 24-country survey]
UNCTAD has posted the full text of Botswana's voluntary peer review of competition law and policy (pdf)
Kenya: e-Commerce contributed 6% of all purchases in Kenya in 2017 - UNCTAD
Nigeria's First Bank to promote China-Nigeria ties with currency swap agreement
AU blames lack of information for low intra-Africa trade
Senegal: China's latest trade partner in Africa could help it export to the US
Nigeria: National Policy Dialogue on Job Creation
PM Modi in Africa amid a trade slump
How MENA can escape the middle-income trap?
Outlook for the Americas: a tougher recovery
Maya Forstater: The truth about illicit financial flows
International corporate tax avoidance: a review of the channels, magnitudes, and blind spots
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Namibia reviews position on Sacu revenue
Cabinet has approved that Namibia continues consultations to refine the country's position on the Southern African Customs Union revenue-sharing agreement.
This was said by deputy information and communication technology minister Engel Nawatiseb at last Thursday's media briefing on Cabinet resolutions taken at Tuesday's meeting.He said Cabinet had noted that the proposed changes to the revenue-sharing arrangement are not consistent with the guiding principles of the union, and may result in an unfair loss to some member states and unfair gains to others.
Meanwhile, the union is assessing potential influences of the industrial policy and trade, including the use of rebates, refunds and duty drawbacks within the framework of the Sacu agreement. This would show Namibia's position, once finalised.The objective of the agreement is to facilitate the equitable sharing of revenue arising from trade among member states.Kungo Mabogo, Sacu secretariat spokesperson said in a response to questions by The Namibian that the review of the current revenue-sharing formula (RSF) was initiated in 2010, but had not been concluded yet.
She said the revenue review process was revived as part of the work programme for the ministerial task teams, which was approved on 22 June 2017 by the Sacu council of ministers, and endorsed by the 5th summit of heads of state, held on 23 June 2017 at Lozitha, Swaziland. The work programme is a policy guideline aimed at promoting trade facilitation, and assists the customs administrations in the region to design and implement a comprehensive regional reform programme.
“The review of the current RSF aims to address some challenges which were identified by the member states in the implementation of the current RSF,” Mabogo noted. She added that some of the challenges include volatility in Sacu revenue shares, whereby the current RSF is such that member states' revenue shares are determined and paid based on a forecast, which is subsequently reconciled against actual and audited data. “During years of economic boom, actual revenue collections exceed the forecasts, resulting in excess collections (Common Revenue Pool surplus) and positive adjustment payments to member states. However, in times of low economic activity, actual revenue collections can be below the forecast, which result in negative adjustment (Common Revenue Pool deficit) in the revenue shares to member states.
The weakness in the RSF was more visible post the global financial crisis experienced around 2008, and member states agreed to review it,” she explained. Mabogo added that the review is needed to ensure that the agreement is aligned with the Sacu vision to promote competitiveness, industrial development, intra-regional trade and deepening regional integration.“The review is set to ensure that revenue shares are equitable among the member states, and take into account the socio-economic circumstances of member states, as well as to minimise volatility of the member states revenue shares,” she said.
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AU blames lack of information for low intra-Africa trade
Lack of information of market opportunities among traders across Africa is the biggest cause of low intra-Africa trade, the African Union said on Monday.
Albert Muchanga, the African Union Commissioner for Trade and Industry, told Xinhua in Nairobi that intra-Africa trade is less than 18 percent of Africa's total trade, which is the lowest for any region in the world. "We are therefore going to develop the pan-African observatory to provide the prices of most traded goods and services across Africa in order to spur intra-Africa trade," Muchanga said during the African Union e-commerce conference in Nairobi.
The objective of the three-day conference is to enhance the understanding of recent developments in the African digital economy. Muchanga said that with the right information, the continent will be able to boost intra-Africa trade by 50 percent in the short term and blamed import high tariffs that Africa countries maintain for the low level of intra-Africa trade.
"Our studies indicate that our tariffs are on average 6 percent higher as compared to other regions," he added. In a bid to spur intra-Africa trade, the continent has also signed the Africa Continental Free Trade Area that aims to eliminate all tariffs gradually.
So far six countries have ratified the agreement. A minimum of 24 nations are required to operationalize the trade pact. Muchanga said that the region will initially liberalize tariffs on 90 percent of all products while the remaining 10 percent of tariffs will be eliminated over the next ten years.
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China's latest trade partner in Africa could help it export to the US
Chinese President Xi Jinping visited the West African country of Senegal over the weekend, building trade ties which could bear fruit in terms of China’s access to U.S. markets. Xi met with his Senegalese counterpart Macky Sall, as well as Senegalese Prime Minister Mohammed Dionne, as part of a two-day visit which began on Saturday.
Following bilateral talks, Senegal signed up to be the first West African nation committed to China’s Belt and Road Initiative, a multi-billion dollar scheme to resurrect ancient trading routes centered on China. Senegal, with a population of just 16 million, might seem like a curious stop for Xi given that Nigeria, Africa’s largest economy, is also in the West Africa region.
But according to Ibrahima Diong, who has served as Senegal’s minister of Chinese affairs, the country’s location is particularly attractive. “For any Chinese companies that would like to export to the U.S., you cannot get better than Senegal,” he told CNBC via telephone, highlighting its position on the west coast of the African continent.
China is Senegal’s second largest trading partner after its former colonial power France. Xi’s visit to Senegal was the first stop of a broader tour of the African continent. He landed in Rwanda on Monday and will then attend a BRICS summit in South Africa, before stopping in Mauritius. The Chinese president visited the United Arab Emirates earlier last week.
Xi's Africa visit is his fourth to the continent since he took office in 2013, and his first overseas trip since beginning his second term as Chinese president in March of this year. While Senegal is the first West African country to partner with China as part of its Belt and Road Initiative, Chinese-built infrastructure projects are mushrooming in the region. Last week a railway network was opened in Nigeria’s capital Abuja, helping to address the country’s need for infrastructure.
But, China has been accused of lending to its Belt and Road partner countries under conditions that they will not be able to fulfill. Diong pointed out that Senegal is a favorable place for China to do business given its stable democracy. He added that Senegal is already an established exporter of its oil and gas reserves, enabling China to carve out a different kind of relationship. “While China needs some commodities, (it doesn’t) want a relationship that’s just commodity driven,” he said.
Partnership with Senegal enables China to “make a dent in the francophone world,” added Diong. He said that “Africans are being extremely pragmatic” in their business decisions, and are no longer constrained by colonial ties.That perspective was echoed in an editorial published in several South African newspapers over the weekend, in which Xi wrote that South Africa and China had “forged a deep friendship during our common struggle against imperialism, colonialism and racism.”
It detailed that "China’s direct investment in South Africa has grown by more than 80 times and (now) exceeded $10.2 billion in cumulative terms." For Diong, China's inroads in Africa are symptomatic of a shifting geopolitical order, particularly as global media attention is largely focused on the U.S.' relationship with Russia. “Africans love the Chinese story,” Doing said. “Beyond just money, China is seen by many Africans as a model to aspire towards,” he added.
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Underway, in Nairobi: African Union E-Commerce Conference
The main expected outputs of the conference are: (i) Roadmap for the development of an African e-commerce strategy, which will be recommended for adoption by the relevant policy organs of the AU; and (ii) inputs to inform the development of the Assessing Regional Integration in Africa IX report under preparation by UNECA, which will consider the case for e-commerce and digital trade as a topic for the Phase II negotiations in the AfCFTA.
Underway, in Nairobi: 6th Annual Secretary General's Forum for Private Sector, Civil Society, other interest groups (EAC)
About 100 delegates have confirmed participating in the SG’s Forum. The forum will review the work plan and progress reports on the Consultative Dialogue Framework for Private Sector, Civil Society and other interest groups, which was adopted by the 26th Meeting of the EAC Council of Ministers; consider translating SG’s Forum resolutions to policy; define success stories of the Dialogue Process; and consider sustainability of the Consultative Dialogue Framework by redefining the Roles of the Dialogue Parties.
Launching today, in Addis: A study of the benefits and challenges of free movement of persons in Africa
Imminent trade events to note (courtesy of the AUC Department of Trade and Industry newsletter): 2nd Roundtable on intra-African Trade (24-27 July, Kigali); Stakeholder workshop on the AfCFTA (26-27, Dakar); 7th meeting of the TWG on Rules of Origin (30 July - 11 August, Addis Ababa); Sensitize and support RECs/MS on the ratification and implementation of the WTO Trade Facilitation Agreement (including best practices on border management (30 July - 1 August 2018, Abidjan)
From the recent AU Summit: decisions, declarations, resolutions
A. Profiled decision: On the African Continental Free Trade Area
(i) Mandates the Commission to organize a Civil Society Forum and a Private Sector Forum preceding the June/July 2019 Mid-Year Coordination Meeting in Niamey, Niger in order to enhance stakeholder engagement on the implementation of the AfCFTA;
(ii) Further commits to establish National Committees on AfCFTA to ensure meaningful participation of all stakeholders and come up with national AfCFTA and Boosting Intra-African Trade strategies;
(iii) Reiterates its directive to the AU Ministers responsible for Trade to submit the Schedules of Tariff Concessions, and Schedules of Specific Commitments on Trade in Services in line with agreed modalities to the February 2019 Assembly for adoption; and to conclude the negotiations on Competition Policy, Investment and Intellectual Property Rights, and submit the draft legal texts to the January 2020 Session of the Assembly for adoption through the Specialised Technical Committee on Justice and Legal Affairs.
B. Other decisions to note: Decision on a new agreement on post-Cotonou cooperation with the European Union; Decision on the progress report on the implementation of the institutional reform of the African Union; Decision on the transformation of the NEPAD Planning and Coordinating Agency into the AU Development Agency; Decision on the Dates of TICAD VII Ministerial Meeting and the Summit (28-30 August 2019, Yokohama). [Downloads available in English (pdf) and French ([pdf)]
COMESA Yellow Card: latest dividend in the Ethiopia-Eritrea peace deal (COMESA)
The National Insurance Corporation of Eritrea, which administers the Yellow Card has confirmed that Eritrea, was ready to accept of COMESA Yellow Cards issued to Ethiopian motorists to Ethiopia on the Addis – Assab Corridor and other routes. Following this development, COMESA has pledged full support on the implementation of the Yellow Card Scheme and other COMESA trade facilitation instruments. This includes engaging with the National Bureaux of Ethiopia and Eritrea to provide technical support to ensure the smooth operations of the scheme. The scheme is currently operational in 12 COMESA Member States, namely;
ECOWAS, MIDWA call for improved collaboration on migration in West Africa
The Migration Dialogue for West Africa, in a three-day annual meeting of thematic working groups which ended on 19 July in Abuja, has recommended improved collaboration and synergy between Member States and migration institutions in the areas of border management, immigration data, mixed migration and the return and reintegration of migrants in the region. The experts called for the ECOWAS Commission to provide technical assistance to Member States to facilitate the issuance of the biometric identity cards and data exchange platforms in order to share and analyze migratory flows in the region. They also recommended increased border surveillance through joint border posts and the upgrade and standardization of border posts in the region. This they noted can be achieved by constituting a common fund within ECOWAS to address persisting challenges on border management.
Nigeria Time Release Study: NCS to reduce time of cargo clearance (NAN)
The Nigeria Customs Service says it has embarked on Time Release Study to measure the efficiency of its trade facilitation scheme and reduce the time of cargo clearance. Mr Wale Adeniyi, Deputy Commandant, Customs Training College, Gwagwalada, Abuja, disclosed this in an interview with the News Agency of Nigeria at a workshop on TRS in Lagos on Thursday. The workshop, organized in conjunction with World Customs Organisation, was attended by clearing agents, freight forwarders, terminal operators and government agencies operating at the ports. Adeniyi, coordinator of the study, said WCO had deployed some tools to test the efficiency of customs administration in Nigeria. He said that the group had been able to validate the business process involved in clearance of goods and accessing online tools for conducting TRS. He explained that the group would fix a date to design and test the questionnaire it collected from the data.
Rwanda joins Pan-African infrastructure platform (New Times)
Finance ministry’s Permanent Secretary and Secretary to the Treasury, Caleb Rwamuganza, who signed Rwanda’s membership on behalf of government, said that Africa50 provides Rwanda with a unique opportunity to pursue to key infrastructure projects. “We have several infrastructure projects in the pipeline that we hope to realise in the near future. Joining Africa50 simply takes us another step closer to that objective,” Rwamuganza said. Africa50’s investor base is currently composed of 28 African countries, the African Development Bank, the Central Bank of West African States, and Bank Al-Maghrib, with over $800m in committed capital.
SA's Davies wants BRICS to focus on investment-led trade (IOL)
South Africa’s Trade and Industry Minister, Dr Rob Davies, told participants at a Brazil, Russia, India, China, South Africa business meeting that partner nations should focus on investment-led trade, “instead of it being the other way around”. Davies was speaking at a specially convened investment session on Sunday during the BRICS Business Council meeting being held at the Chief Albert Luthuli International Convention Centre in Durban. “In this global environment, we need to play catch-up on the investment front. We need investment-led trade instead of the other way around,” he said.
Anzetse Were: US-China tariff fallout sets stage for shift in Africa’s international trade (Business Daily)
Keeping track of the back and forth of tariff imposition between the US and China is a task on its own but what is more important is unpacking how these trade tensions will affect Africa. There are three implications of the US-China trade war of which Africa should be cognisant. First, the imposition of tariffs between two of the most lucrative markets in the world may well encourage both countries to diversify their export markets away from each other. Second, the trade feud will deepen the resolve of the Chinese government to diversify away from export to consumption-driven growth. The third implication of the US-China trade spat is that it may provide added impetus for increasing manufacturing investment and activity in Africa, particularly by the Chinese private sector that is already on this trajectory.
Unveiling the potential of blockchain for customs (pdf, WCO)
The World Customs Organization has initiated work to identify possible case studies and uses of blockchain for Customs and other border agencies with a view to improving compliance, trade facilitation, and fraud detection (including curbing of illicit trade through the misuse of blockchains and Bitcoins), while touching on associated adjustments in legal and regulatory frameworks. The objective of this paper is thus to discuss ways in which Customs could leverage the power of blockchain and the extent to which the future of Customs could be shaped by the use of blockchain-based applications. [The author: Yotaro Okazaki]
G20 acknowledges trade as a key engine of economic growth (G20)
The communiqué (pdf) issued at the close of the Third G20 Meeting of Finance Ministers and Central Bank Governors in Buenos Aires this weekend shows support from the world's main economies to international trade and investment as “important engines of growth, productivity, innovation, job creation and development.” The document, agreed by all G20 member countries, reads that “global economic growth remains robust and unemployment is at a decade low.” However, it acknowledges “downside risks over the short and medium term.” The communiqué also covers progress made on the Argentine G20 presidency priorities this year. On the future of work, senior officials endorsed a set of public policies designed to maximize the benefits and overcome the challenges posed by technological transitions.” The document also provides 68 examples of related policies carried out by G20 member countries. As regards infrastructure for development, participants approved a set of pre-investment guidelines for attractive projects for private investors with a focus on efficiency and feasibility. They will also address issues such as data, risk mitigation and capital markets.
Tanzania set to implement EAC vehicle load control regulations from 1 January 2019
Kenya bags COMESA sugar safeguards for another two years, but with conditions
EAC: Regional business leaders call for improved trade partnerships
South African Trade Minister Rob Davies condemns US trade war actions
Egypt hikes gas prices by up to 75% in IMF-backed austerity plan
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Kenya bags Comesa sugar safeguards for another two years, but with conditions
Kenya has been granted a two-year extension – possibly the last – of the sugar safeguards by the Common Market for Eastern and Southern Africa (Comesa), until February 2021.
The decision, which offers relief to Kenyan millers who face competition from cheap imports, was arrived at during the 20th Comesa summit in Lusaka.
Kenya had requested an extension of the safeguard for a maximum of two years, a request that some countries supported while others felt that the possibility of extension be first considered by the Trade and Customs Committee, whose next meeting is scheduled for mid-August in Nairobi, after experts have looked into the matter.
“The Trade and Customs Committee can still discuss this matter, notwithstanding the Council’s decision to extend the safeguard,” said a statement from the meeting.
“The committee will discuss and make recommendations on whether the extension should be the very last one. The Council noted the recommendation to establish a monitoring committee made up of sugar exporting member states, the member state implementing the safeguard, and the Secretariat as an appropriate technical framework for overseeing the implementation of the safeguard.”
Protect farmers
The Comesa Council of Ministers’ decision extends Kenya’s decade-long quest to protect sugar farmers with high tariffs as it seeks “more time” to open up fully its market to imports.
The decision will also now see a joint committee to monitor the implementation of safeguards and report back to the business bloc on the progress.
“We have successfully negotiated for a safeguard and we have been given two years extension to implement the required conditions. We hope that we shall have met all the requirements by the end of two years,” Kenya’s Trade Principal Secretary Dr Chris Kiptoo said.
Kenya’s sugar deficit is estimated to have increased from 210 tonnes to 250 tonnes which will increase the shares of sugar exporting Comesa member states.
The Kenyan delegation led by Foreign Affairs Chief administrative officer Ababu Namwamba and Dr Kiptoo presented a report on implementation of the sugar safeguard that highlighted the history, performance and importance of the country’s sugar sector.
On the implementation of the conditions for the current safeguard agreed on in February 2017, Kenya argued that it had achieved several key conditions, including amalgamation, adopting a formula and forming a Safeguard Committee.
“Privatisation is ongoing, though there are legal challenges, which have more or less been resolved,”said the Kenyan delegation. “However, stakeholder consultations are required under the Constitution of the Kenya and these are being undertaken. Co-generation and adoption of an energy policy has been substantially implemented through a number of legislations and policies adopted.”
Nairobi also said that the Sugar Research Institute has released 21 cane varieties since 2002; with testing in all the 11 operating units.
Kenya further reported that exports from Comesa states had been allowed in, and the member states had exceeded their allocated quotas in a number of cases.
“Some of the outstanding challenges include privatisation, introduction of more cane varieties and cane testing units,” the delegation said.
Last weekend’s Council of Ministers meeting pointed out that weather challenges in 2017 resulted in a huge sugar deficit on the market, and Kenya put in place measures to import significant amounts of sugar from the global market on duty- and quota-free basis.
The meeting noted that the 2017 influx of third-country sugar in Kenya impacted the Comesa sugar industry.
Monitoring
The Inter-Governmental Committee said that the safeguard has helped Kenya, but the exemptions are not in perpetuity and come with timelines.
“It is our view that the tariff rate quarter should continue and tonnage be increased. The sugar safeguard formula should continue, but administration should improve,” the committee said.
The team agreed that monitoring should be inclusive, through establishment of a monitoring sub-committee comprising sugar-exporting countries, the member state using the safeguard and the Secretariat.
“Customs duties should be maintained on sugar from third countries when imported into Kenya,” the committee said.
But Kenya’s claim that the increase in domestic sugar production over the years is one of the key milestones of the safeguards could not be further from the truth.
In 2017, Kenya imported more sugar than it produced, a time when production was at its lowest. The 2018 Economic Survey shows that Kenya’s imports almost tripled to 989,600 tonnes in 2017, compared with 376,100 tonnes in 2016.
The total domestic sugar production declined by 41.2 per cent, from 639,700 tonnes in 2016, to 376100 tonnes in 2017. The same year, the area under cane reduced to 191,200 hectares, compared with 220,800 hectares in 2016. In 2013, 22,705 hectares were under cane.
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BRICS must focus on investment-led trade – Rob Davies
South Africa’s Trade and Industry Minister Dr Rob Davies told participants at a Brazil, Russia, India, China, South Africa (BRICS) business meeting that partner nations should focus on investment-led trade, “instead of it being the other way around”.
Davies was speaking at a specially convened investment session on Sunday during the BRICS Business Council meeting being held at the Chief Albert Luthuli International Convention Centre (ICC) in Durban.
“In this global environment, we need to play catch-up on the investment front. We need investment-led trade instead of the other way around,” he said. The biggest recent news on the African continent, he said, was the establishment of the African Free Trade Agreement. “We are a signatory to the framework but there is still lots of work to be done to make it commercially viable,” said Davies.
South Africa signed on to the agreement in early July, about three months after a number of other African countries had done so. Davies said it was important to not only increase trade on the continent, but to ensure quality of trade. When it came to regional integration, “our approach must be developmental,” he said.
“Regional integration must be complemented by regional infrastructure development. This is where the BRICS New Development Bank comes in. We have a significant backlog that has to be addressed.” He said countries were entering a period of turbulence in the global trading system. The US is increasing tariffs in violation of many trade agreements to favour certain nations, which does not assist the global economy.
New technologies were happening in the context of a world with huge levels of inequality where there was a “winner takes all” attitude. The outlook in BRICS was different, he said. “We don’t want masters, we want an inclusive roll-out of new technologies that will create better lives for the citizens of the world. BRICS is an important institution in that connection.”
South Africa was working hard to address policy uncertainties, added Davies. “Since president Cyril Ramaphosa has taken over, there has been a commitment to clean up the challenges facing the country.” The country was addressing uncertainties in the renewable energy sector and had removed “blockages” caused by lack of action. “There is scope for investment now”.
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G20 acknowledges trade as a key engine of economic growth
The communiqué issued at the close of the Third G20 Meeting of Finance Ministers and Central Bank Governors in Buenos Aires this weekend shows support from the world's main economies to international trade and investment as “important engines of growth, productivity, innovation, job creation and development.”
The document, agreed by all G20 member countries, reads that “global economic growth remains robust and unemployment is at a decade low.” However, it acknowledges “downside risks over the short and medium term.” These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances and inequality. It also points to the fact that “although many emerging market economies are now better prepared to adjust to changing external conditions, they still face challenges including market volatility and reversal of capital flows.”
The 57 delegates, including ministers, central bank governors and senior representatives from international organizations, agreed therefore to continue “using all policy tools to support strong, sustainable, balanced and inclusive growth.” Among these tools, the communiqué mentions fiscal measures and monetary policy, the continued implementation of structural reforms, and international trade and investment. Member countries “are working to strengthen the contribution of trade to our economies,” the document adds.
The communiqué also covers progress made on the Argentine G20 presidency priorities this year. On the future of work, senior officials endorsed a set of public policies designed to maximize the benefits and overcome the challenges posed by technological transitions.” The document also provides 68 examples of related policies carried out by G20 member countries.
As regards infrastructure for development, participants approved a set of pre-investment guidelines for attractive projects for private investors with a focus on efficiency and feasibility. They will also address issues such as data, risk mitigation and capital markets.
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tralac’s Daily News Selection
Forthcoming African trade and infrastructure events:
Pre-TICAD energy sector and Africa Investment Forum seminar (2 August, Tokyo)
UNCTAD's The rise of Africa's Digital Lions (8 August, Johannesburg)
The inaugural IAPH Africa Regional Conference: African ports and hinterland connectivity (17-19 September, Abuja)
COMESA Summit: communiqué (pdf)
On the COMESA Free Trade Area: (i) Noted the progress made in preparation of the instruments for the Digital Free Trade Area, such as the electronic certificate of Origin, and encouraged Member States that are ready to implement the instruments for the DFTA to do so on a pilot basis; (ii) Stressed the utmost importance of prioritization of programs that promote small scale cross-border trade, taking into account the aspects of gender empowerment and poverty eradication, and called for extension of these programs to cover both goods and services;
On the COMESA-EAC-SADC Tripartite Arrangement: Commended Libya upon its signing of the COMESA-EAC-SADC Tripartite Free Trade Area Agreement at the Summit
Swore in the new Commissioners for the COMESA Competition Commission:
AfCFTA: Impact on the Nigerian manufacturing sector (The Punch)
Presenting a paper at the AGM of the Manufacturers Association of Nigeria, Lagos branch, Professor Ademola Oyejide drew a comparison between the results of the AfCFTA-induced changes in the real income, tariff, revenues and terms of trade in South Africa and Nigeria. The professor said that while the changes in real income of South Africa would be 0.7%, Nigeria would be -0.4%; for tariff on revenues, South Africa would have 5.9% while Nigeria would have -16.7%; in terms of trade, South Africa would record 1.2% while Nigeria would see a change of -0.2%. He also analysed the result of AfCFTA-induced changes in real wages, stating that in unskilled real wages in agriculture, South Africa would have 0.93%; Nigeria, – 0.54%; unskilled real wages in non-agriculture, South Africa, 0.56, Nigeria, 0.12; skilled real wages, South Africa, 0.80%, Nigeria, 0.42%.
Oyejide linked the results to the differences in the features of the two economies. For instance, he said Nigeria was more protectionist in its trade policy than South Africa. And in order to achieve the post-AfCFTA target, the country would have to reduce its tariff and this in turn would put a downward pressure on the economy. He said that Nigeria’s import-export exposure structure was not the same as that of South Africa, adding that South Africa’s import and export structure was better diversified than that of Nigeria that was heavily dependent on imported food products, in spite of its heavy protection of the agricultural sector. Import bans and tariffs were routinely used by Nigeria to manage this external dependency and any AfCFTA-induced tariff change could destabilise this delicate management process, the don concluded. [MAN moves to combat smuggling: constitutes private anti-smuggling committee]
Namibia: Misgivings over free trade agreement (The Namibian)
Labour Resource and Research Institute of Namibia director Mike Akuupa says the government has not engaged stakeholders enough regarding the implications the African Continental Free Trade Area agreement has on the country. Speaking in an interview with The Namibian, Akuupa said the country did not consider the various protocols contained in the agreement in detail for the country to have a clear understanding of it. “Access to markets is one thing, but what comes with it is another ball game entirely. How is the agreement going to affect the worker, the small businessman, or the manufacturer? What are the finer details on protocols on trade and services, and trade in goods?” Trudi Hartzenberg, Trade Law Centre executive director, said the signing by South Africa and Namibia is important, and that there are no legal consequences arising from this. Hartzenberg added that the longer-term benefits of the AfCFTA will depend on the specific provisions in the agreement, “for example, keeping in mind that South Africa and Namibia are part of SACU, and that they will negotiate the tariff reduction commitments, collectively, is important. There may well be opportunities to enable trade between member states of SACU and the Economic Community of West African States (such as Nigeria).”
Kenya-UK trade and investment relations: taking stock and promoting exports to the UK (SET, ODI)
This paper and briefing discuss the current state of trade patterns and investment flows between the UK and Kenya, develops tools relevant to help identify key products and promising sectors for export, and proposes a range of policy measures to support these sectors. It is undertaken jointly with the Export Promotion Council in Kenya in support of the national export development and promotion strategy for Kenya 2017-2022. It identifies appropriate sectors for UK exports and discusses a range of measures to increase trade and business linkages between Kenya and the UK. Extract (pdf):
Kenya is losing market share in the UK. Kenya’s export share of its top 20 products in UK imports has halved from 26.7% in 2001 to 13.5% in 2016. Especially in areas of black tea and fresh roses, which are Kenya’s main foreign exchange earners. Kenya is facing significant competition in the UK from other East African countries: Rwanda, Ethiopia and Tanzania. This implies that Kenya either has to improve marketing of its existing products or diversify. There are severe data limitations on trade in services, but the data that do exist suggest service exports to the UK increased 3.6 times in value terms between 2001 and 2012. Transportation and travel services make up the largest share of exports (almost 86% of the total) of services to the UK, followed by insurance and then financial and government services, respectively. The growth rate of financial and insurance services, software, and hardware information and communication technology (ICT) is swiftly overtaking transportation and travel. [Download: Briefing paper (pdf); Commentary by ODI's Phyllis Papadavid]
Ghana: Mid-year fiscal policy review of the 2018 budget statements and economic policy (full text, Mof)
External Sector Developments: The provisional trade balance for the period January to May 2018 recorded a surplus of $1,354.89 million, 6.59% higher than the surplus of $1,271.09 million recorded during the same period in 2017. The improvement in the trade balance was as a result of higher export earnings, driven by oil and non-traditional exports which outweighed the value of imports. The value of merchandise exports for the first five months of 2018 was provisionally estimated at $6,910.36 million, indicating an increase of 10.5%, compared with $6,253.46 million recorded in the same period in 2017. High receipts from oil exports accounted for the improvement in export earnings.
Gold exports during the review period amounted to $2,316.66 million, compared to $2,668.01 million during the same period in 2017. The fall in receipts was as a result of a decline in the volume of exports, which was moderated by favourable developments in gold price. The volume of gold exported declined by 20.01% to 1,733,243 fine ounces. The average realised price increased by 8.56% to settle at US$1,336.60 per fine ounce. The value of crude oil exported in the review period was $1,908.22 million, compared to $1,033.35 million recorded in the same period 2017. The increase in the value of the oil export was due to both price and volume effects. Earnings from the exports of cocoa beans and products totalled $1,402.72 million, compared to US$1,612.76 million for the same period in year 2017, representing a 13.02% decline.
Total value of merchandise imports for the period January to May 2018 amounted to $5,555.48 million, up by 8.88% compared to $4,982.37 million recorded in 2017. The increase in imports was as a result of an increase in both oil and non-oil imports.
South Africa: AfDB approves Country Strategy Paper 2018-2022
Articulated around two main strategic pillars, namely, promoting industrialization and deepening regional integration, the country support plan will help accelerate South Africa’s economic transformation and re-industrialization agenda for inclusive growth, job creation and social equity. As part of the plan, the African Development Bank will support programs and initiatives with cross-cutting themes that include gender equality, climate change, green growth and assist South African authorities in strengthening governance in public institutions. The Bank will leverage its knowledge and institutional resources to provide policy advisory to the government and attract investments to the country’s private sector. Additionally, it will support reform efforts aimed at repositioning State Owned Enterprises as efficient vehicles for industrialization and economic transformation. The support package comes at an interesting time for South Africa. [Note: the CSP is not yet available for download on the AfDB's website]
Development Compact for Lusophone African countries: AfDB update
The Compact will strengthen the role of the private sector in advancing sustainable and inclusive development in Portuguese-speaking African countries (PALOPs). “The AfDB recognizes that Portuguese-speaking African countries do not form contiguous economic blocks similar to the French- or English-speaking zones. They therefore tend to be marginalized,” remarked Adesina during his speech. While there are similar characteristics binding these countries, “the situations in each of the Lusophone African countries differ from one to another,” said Adesina. “No one size will fit all. The Compact is not going to duplicate existing initiatives.” [Africa50 meeting: Kenyatta and Adesina call for accelerated private sector investment in infrastructure]
Namibia secures R3bn budget support loan from African Development Bank (AfDB)
The program builds on Phase 1 approved last year, which has achieved positive results. These include reduction of the budget deficit from 8.2% of GDP in 2015/16 to 5.4% in 2017/18. It has also helped to improve the country’s liquidity situation at a time when domestic market liquidity was low, occasioned by constrained cash flow; and funding to retire pending invoices in critical ministries, including education and health, which helped to avoid a looming crisis of private credit crunch.
West Africa: Incentives and constraints of informal trade between Nigeria and its neighbours (West African Papers, OECD)
This paper explores (pdf) how policy choices and government actions continue to drive informality and the critical steps that might be taken to create a business environment that is more conducive and supportive of trade between West African neighbours on a formal basis. It goes on to examine the steps that have been taken since 2015 regarding trade promotion by West African states and considers the options for further policy action and public investment. The discourse in this paper will seek answers to two key questions: How has the regional environment been improved to encourage more of Nigeria’s trade with its ECOWAS neighbours to take place on formal terms with more officially recorded transactions? Also, what do current policy choices and government actions by regional decision makers tell us of their understanding informality?
Lagos seeks Buhari’s intervention to end Apapa gridlock (ThisDay)
The Lagos State Government, Thursday, lamented the intractable traffic congestion, which had crippled commercial activities in Apapa and other parts of the state and appealed to President Muhammadu Buhari to save the situation. The state government also set up a joint operation involving security agencies and stakeholders in the maritime sector to remove all trucks and tankers parked along the Oshodi-Apapa expressway with immediate effect. The Commissioner for Information and Strategy, Mr Kehinde Bamigbetan said the state government, at a meeting with stakeholders, blamed the renewed congestion on the recalcitrance of owners and drivers of articulated vehicles to fully comply with the subsisting directive that restricts their movement within the state.
Caroline Freund: Impacts on global trade and income of current trade disputes (World Bank)
Our analysis shows that a tariff escalation, coupled with a shock to investor confidence, could reduce global exports by up to 3% ($674 billion) and global income by up to 1.7% ($1.4 trillion) with losses across all regions. A major concern is that firms will delay investments because of uncertainty over market access, reversing the ongoing recovery in global trade and investment. Looking at the possible impacts of tariff escalations on developing countries, we see that third-party countries can benefit from increased preference margins in the US and Chinese markets when the two trading partners impose tariff surcharges. But, when investor confidence is shaken, these gains are more than offset for all regions by negative income effects. In this scenario, income losses range between 0.9% for South Asia and 1.7% for Europe and Central Asia.
BRIDGES: US, African officials prepare for post-AGOA trade future
S&P Global Ratings: Emerging market sovereign rating trends for mid-year 2018
Ghana’s debt hits GH¢154bn; reaches 63.8% of GDP
Zambia’s external debt swells to over $9bn – Mwanakatwe
Uganda, Egypt trade volume rises
Nigeria: FG to boost intra-Africa trade with metrological infrastructure
Nigeria to need up to $300m for new national carrier - document
Dangote Cement lists N50bn commercial papers in FMDQ
ARM's Nigeria Strategy Report: Nigerian fiscal - déjà vu all over again?
United Capital Report: Nigeria Outlook H2-18 - caught between two stools
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Namibia: Misgivings over free trade agreement
Labour Resource and Research Institute of Namibia director Mike Akuupa says the government has not engaged stakeholders enough regarding the implications the African Continental Free Trade Area agreement has on the country.
Speaking in an interview with The Namibian, Akuupa said the country did not consider the various protocols contained in the agreement in detail for the country to have a clear understanding of it. “Access to markets is one thing, but what comes with it is another ball game entirely. How is the agreement going to affect the worker, the small businessman, or the manufacturer? What are the finer details on protocols on trade and services, and trade in goods?” he asked.
Nigeria has not yet signed the agreement because they decided to consult extensively with stakeholders.Moreover, benefits for small economies are still not clearly known, as there was no proper situational analysis undertaken to have clear projections of benefits and costs. “Even if you ask some large business representatives about the African continental free trade area (AfCFTA), some have no clue. The issue of the red line surfaces from sentiments of the head of state after signing. This issue was supposed to be dealt with before the country went on to sign; that is the lack of consultation we are referring to,” Akuupa stressed. He said it is presently not quite clear what modalities are in place to operationalise the continental agreement, as “such information is either only known by trade ministers, and not the envisaged players of the game. The country can consider the low-hanging fruits if they are easily identifiable and obtainable in this AfCFTA pact. However, what is clear is the lack of consultation and consideration of various stakeholders on the subject matter.”
Trudi Hartzenberg, Trade Law Centre (Tralac) executive director said the signing by South Africa and Namibia is important, and that there are no legal consequences arising from this. “But signing the AfCFTA signals commitment to the negotiating process. There are still issues to be negotiated. Member states will start negotiating tariff reductions, to finalise the negotiations on rules of origin, and also commitments on the priority services sectors. This will complete the first phase of negotiations,” she noted.
The World Trade Organisation defines rules of origin as the criteria needed to determine the national source of a product.
Hartzenberg added that the longer-term benefits of the AfCFTA will depend on the specific provisions in the agreement, “for example, keeping in mind that South Africa and Namibia are part of the Southern African Customs Union (Sacu), and that they will negotiate the tariff reduction commitments, collectively, is important. “There may well be opportunities to enable trade between member states of Sacu and the Economic Community of West African States (such as Nigeria).”
Small businesses might benefit from the AfCFTA, she added, further observing that facilitating trade through more efficient customs and border management, thereby reducing time in transit, will reduce the costs of trade, which is particularly important for smaller businesses.
“Access to new trade opportunities through lower tariffs and simpler rules of origin will also assist small businesses to trade better in Africa. The AfCFTA agreement provides that existing trade agreements (such as the regional economic communities and also the tripartite free trade area) will remain intact,” she stated. Furthermore, Sacu member states are normally negotiating tariff reductions as a collective so that they protect the integrity of the common external tariff. “The Southern African Development Community free trade area will also remain functional, and no further negotiation among the member states will be undertaken,” she added.
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Uganda, Egypt trade volume rises
Speaking at the 66th anniversary celebrations of the National Day of Egypt, Foreign Affairs minister of Uganda, Sam Kutesa said the warm relations has led to a significant rise in the volume of trade between the two countries, contributing to the socio, political and economic development of its peoples.
Driven by mutual interests, both countries, Kutesa noted, are intensifying efforts to scale up trade, tourism and investment.
“Currently, the volume of trade between Uganda and Egypt has reached over US$70m annually,” Kutesa said, at the function held at the Sheraton Kampala Hotel on Tuesday evening, attended by top government officials and members of the diplomatic corps.
National day celebrations
Egypt celebrates July 23 as the national day, which coincides with the annual celebration of the Egyptian revolution of 1952 when a group of soldiers, led by Gamal Abdel Nasser declared the modern republic of Egypt, ending the era of the Kingdom of Egypt.
Egypt’s Ambassador to Uganda, Tarek Sallam noted that the National Day of Egypt is also of huge significance to the African continent, given that Egypt, at the time, provided sanctuary to many of Africa’s leading lights.
“It is our pride to remember that leading figures in Africa such as Nelson Mandela, Kwame Nkrumah and Milton Obote, among many others, resided in Egypt as their second home,” he stated.
Sallam said Egypt under the leadership of President Abdel Fatah El Sisi, is witnessing positive change in key sectors and is currently investing heavily in the development of its African neighbours, Uganda inclusive.
On the issue of regional peace, security and development, both Kutesa and Sallam reiterated the need to find ‘African solutions to African problems’, noting that both Presidents Sisi and Yoweri Museveni share a common stance on this.
“The two leaders are working closely together on achieving stability in the African continent with the devotion of bringing sustainable peace and prosperity to African people, as the two share the concepts of “African solution for African problems”, said Sallam.
Bilateral relations
On the issue of bilateral trade, Kutesa expressed optimism in the potential for trade and investment between the two countries to grow significantly over the next two years and reiterated government’s commitment to this.
“In this regard, Uganda is committed to implementing the initiatives and projects agreed upon in the priority sectors of agriculture and agro-processing, livestock, energy, transport and ICT,” Kutesa said, adding that the agreements were reached during a state visit to Egypt by Museveni in May this year.
“The economic relationship between Egypt and Uganda has promising potential, and we are working together to achieve mutual benefits for our people,” Sallam said.
The Ambassador noted that Egypt is keen on working closely with Uganda during the Egypt’s term of presidency of the African union in 2019, to have “a strong and capable African Union.”