Search News Results
tralac’s Daily News Selection
A Tripartite Consultative Workshop starts tomorrow in Arusha, ending on 17 July.
China’s trade policy review started yesterday at the WTO: the reports submitted by the WTO secretariat and from Beijing can be downloaded here. From the review: US says China’s trade policies are ‘too big for WTO to tackle’
African Trade Report 2018: Boosting intra-African trade – implications of the African Continental Free Trade Area Agreement (Afreximbank)
The report is organized in eight chapters. After this Introduction and Executive Summary, Chapter 2 covers the thematic research on “Boosting intra-African Trade: Implications of the African Continental Free Trade Area Agreement”. Chapter 3 reviews global and African economic and financial developments, while Chapter 4 discusses trade and the trading environment pertaining to both the global and African space. Chapter 5 reviews the dynamics of commodity markets. Chapter 6 discusses intra-African trade while Chapter 7 provides a comprehensive analysis of the potential implications of the AfCFTA for intra-African trade. The concluding chapter 8 reviews the prospects for global and African economic and trade developments in the near term. pdf Lengthy pertinent extracts (3.81 MB) :
2.2 Africa’s export structure and the AfCFTA. The export concentration index, estimated by the Herfindahl-Hirschmann Index, for each country in Africa for selected years shows considerable heterogeneity in the export concentration of individual countries (Table 2.1). Many countries have reduced their export concentration indices in recent years. Examples are Egypt (0.23 in 2005 to 0.15 in 2016), Lesotho (0.39 to 0.28) and South Africa (0.14 to 0.12). Yet, many countries, especially highly commodity and natural resource-dependent economies still had very high export concentrations in 2016. These include Botswana (0.88), Guinea-Bissau (0.88), Gabon (0.76), Angola (0.93) and Nigeria (0.73). These high export concentrations make these countries extremely vulnerable to adverse external economic shocks.
Examination of the similarity in the sectoral structure of exports across African countries, estimated by the Export Similarity Index (ESI), reveals the dynamics of the shares of each sector in the total exports of a given country and enables comparing them with those of partner countries. The index measures the similarity between exports of any two countries or country groups to a third country’s import market. At the aggregate level, the export structure of African countries is generally dissimilar, as evidenced by the relatively low ESI—below 12.5% percent across all the countries under review (Figure 2.1). All the same, export similarity gradually increased from 1995 (with an average similarity index of 11.3%) to 2016 (12.3%), although it declined in 2010 (11.5%).
There is a wide variation in the ESI at the country level, ranging from 1.8% for Sudan to 23.2% for South Africa (Table 2.2). The list of countries that dominate the ESI remains fairly stable over time, with South Africa, Kenya, Côte d’Ivoire, Tanzania and Cameroon in the top five positions much of the time. These countries appear to be driving intra-African exports. Countries that appear mostly in the lower ESI rankings include Sudan, Comoros, Equatorial Guinea, DRC, Algeria and, surprisingly, Nigeria. The relatively low average ESI values in Africa support the view that there is ample scope for expanding intra-African trade within the context of the AfCFTA framework. Generally, cross-country variations in export structure tend to be a manifestation of mutually beneficial exchange of products in line with country-specific comparative advantages.
2.3 Economic impact of the AfCFTA. Table 2.3 summarizes the economic impact for African countries under the four policy scenarios for the AfCFTA. Under Policy Scenario 1 (complete removal of all tariffs), total welfare gains amount to $3.58bn, GDP increases by 0.65% and per capita household utility by 0.41%. The volume of exports grows by 2.94%, imports increase by 3.13% and terms of trade improve by 0.39%. Under Scenario 2 (complete removal of tariffs on all agricultural trade), all these economic gains are considerably lower, an indication of the sensitivity of agricultural goods to tariffs in African trade. The economic gains under Policy Scenario 3 (complete tariff removal on all trade and a reduction in NTBs, or iceberg cost, based on a 10% positive improvement shock) consist of a welfare gain of $17.95bn, 3.15% growth in GDP, 1.94% increase in per capita household utility, export growth of 5.25% and import volume growth of 6.59%, in addition to a terms of trade improvement of 1.35%. That these gains are higher than in Policy Scenarios 1 and 2 can be attributed largely to the technological effect of reducing the cost of NTBs. The economic gains under Policy Scenario 4 (complete tariff removal on all trade and a lesser reduction in NTBs based on a 5% positive improvement shock) reflect similar trends as that of Scenario 3 but with smaller gains. The distribution of GDP and per capita household utility effects for the four policy scenarios are shown in Table 2.5.
6.1 Intra-African trade champions. The champions of intra-African trade remained largely the same in 2017 as in 2016, with South Africa, Namibia and Nigeria contributing over 35% of intra-African trade. This compares with ten other countries - Zambia, Côte d’Ivoire, Swaziland, Botswana, Zimbabwe, DRC, Mozambique and Kenya, Morocco and Ghana - which also account for 35% of intra-African trade (Figure 6.2). South Africa remains by far the leading intra-African trade nation and its trade with the rest of the continent rose 8.6% to $31.92bn, accounting for over 24.9% of intra-African trade. Oil continues to account for the largest share of South Africa’s trade account with Africa - despite the shutdown of some refineries for maintenance, which reduced crude oil imports in 2017 - with Nigeria and Angola being the top two suppliers (Figure 6.3). The second largest import item from the rest of Africa into South Africa was textiles - mainly from Swaziland, Mauritius, Madagascar and Lesotho. Prepared foodstuffs accounted for 6.6% percent of total imports, indicating a market opportunity for other food exporters in Africa. Zambia, Côte d’Ivoire and Swaziland all grew their share of intra-African trade, collectively accounting for almost 14% of intra-African trade in 2017, from around 13% in 2016.
Nigeria and the AfCFTA: Cautious Nigeria agrees to sign African continental free-trade agreement
2018 AGOA Forum: opening statements by USTR Robert Lighthizer
One-way tariff preferences can only do so much to drive trade and investment. When corporations decide where to invest and do business, much more goes into the equation. US companies value clear rules of the road and a sound business environment. With the renewal of AGOA until 2025, we have a unique opportunity to use the next several years to build on and go beyond this one program. To be clear, the United States is not abandoning AGOA for either the short term or the long term. But there are compelling reasons to pursue a comprehensive and more permanent trade and investment framework to govern trade between the United States and Africa. I hope this Forum and my discussions with many of you will help inform our approach. Our current thinking is based on three core objectives: (1) pursue a bilateral agreement with a willing partner; (2) ensure that this agreement is crafted so that it can serve as a model that can be rolled out to other willing partners in sub-Saharan Africa in the future; and (3) ensure that the model agreement will reinforce regional and continental integration in Africa. [Enterprise Florida plans trade mission to Africa]
AfDB’s Africa Energy Marketplace: update
Energy sector stakeholders from Côte d’Ivoire, Egypt, Ethiopia, Nigeria, and Zambia met (5-6 July Abidjan) for the inaugural meeting of the Africa Energy Marketplace. The scope of their discussions targeted up to 200 projects at various completion stages, with an estimated total investment value exceeding $50bn. The heart of Ethiopia’s action plan includes capital mobilization for capacity building and reforms in its Ministry of Water, Irrigation, and Electricity; developing off-grid energy solutions, and measures to mitigate currency risks. Ethiopia is also looking to ratify the New York Arbitration Convention to fulfill international lender’s bankability requirements. For Côte d’Ivoire, key recommendations proposed for the next two to three years include tax holidays and tariff rebates for solar equipment makers and importers. The country is also looking at establishing a phased program of environmental impact assessments and collaborating with development partners to strengthen the financial viability of the power sector. Nigeria will assess its gas-to-power value chain and develop robust franchising regulations for mini-grid systems in under-served areas as part of its nation-wide integrated multi-modal electricity generation and distribution system. Zambia plans to create an off-grid working group to improve stakeholder communications and coordination in the domestic off-grid market.
Related energy research reports:
-
Hogan Lovells report on Africa and renewables: wholesale change or short term surge?
-
KAPSARC report on identifying the roadblocks for energy access: a case study for Eastern Africa’s gas (pdf)
-
SAIIA research paper on Tanzania’s energy dilemmas
Tanzania receives $400m boost for SGR, natural gas projects (IPPMedia)
The Trade and Development Bank, formerly PTA Bank, will give Tanzania $400 million (900 billion/-) to help finance the ongoing standard gauge railway project and a liquefied natural gas project in Kilwa, Lindi Region.
Tax evasion in Africa and Latin America: the role of distortionary infrastructures and policies (World Bank)
This paper examines the impact of the quality of the business environment as well as the monitoring capacity of the tax agency on firms’ tax evasion and production decisions. First, the paper uses firm-level data for 30 African and Latin American countries to show that tax evasion and distortions stemming from the business environment are positively and significantly correlated, while sales not reported for tax purposes and institutional quality are negatively and significantly correlated. Second, the paper develops a general equilibrium model where heterogeneous firms make tax evasion decisions based on their assessment of the quality of their business environment as well as the monitoring capacity of the tax agency.
Thursday’s Quick Links: Download: AU/OECD’s Africa’s Development Dynamics 2018 report Download: pdf AU’s Revised Strategy for the Harmonization of Statistics in Africa (SHaSA II) (1.97 MB) Equatorial Guinea keen on economic diversification dialogue with ECA Afreximbank disburses $8bn from intra-African trade facility Towards an IGAD Regional Migration Fund ECOWAS Mediation and Security Council makes wide-ranging recommendations Brazil’s Petrobras nears $1.3bn sales of African venture stake IMF-Africa updates: Madagascar, Tunisia, Benin, Equatorial Guinea EU ‘aid for trade’ deals to be replicated with UK after Brexit Jim Yong Kim: What will be the future of work? SDG 11 Synthesis Report 2018 on Sustainable Cities and Communities |
Related News
Boosting Intra-African Trade: Implications of the African Continental Free Trade Area Agreement – African Trade Report 2018
The 2018 edition of the African Export-Import Bank’s annual flagship report – the African Trade Report – titled “Boosting Intra-African Trade: Implications of the African Continental Free Trade Area Agreement” has been prepared at a time when concerted efforts are being made across the continent by both sovereign and corporate entities to deepen economic integration and boost intra-regional trade and cross-border investments.
The report provides an important insight on the potential benefits of the AfCFTA Agreement in terms of growth, diversification of sources of growth and exports, development of global value chain, but also in terms of integration of African countries into the global economy. In particular, the analysis carried out shows that a complete tariff removal coupled with significant reduction in non tariff barriers could lift economic growth and raise the volume of exports and imports while significantly improving the terms of trade across Africa.
The Report also undertakes a review of policy options and measures that could ensure a successful implementation of the AfCFTA Agreement and enhance the bargaining power of African sovereign entities in international trade negotiations. In particular, it is argued that transcending institutional and non-tariff barriers associated with national constructs to embrace shared institutions will enable countries to draw on economies of scale to increase efficiency and competitiveness while internalizing the costs emanating from negative externalities.
At the same time, achieving higher growth and a trade development impact under the AfCFTA will depend on the commitment and steps taken by countries to eliminate non-tariff barriers, speed up the development and modernization of infrastructure, especially trade-enabling infrastructure, and raise the level of resources allocated to the financing of intra-African trade.
The 2018 edition of the African Trade Report also provides a comprehensive analysis of the state of global and African trade in 2017. After falling below parity in 2016, the lowest in 15 years, the ratio of trade growth to GDP growth rose to 1.5 in 2017, reflecting the strengthening of global trade. In the midst of that favorable environment of growth acceleration and global trade expansion, Africa’s total merchandise trade gathered momentum growing much faster than the world average, driven by a recovery in commodity prices and strengthening cross-border investment.
Furthermore, the Report provides a comprehensive analysis of the dynamics of intra-African trade, both at a regional and national levels as well as the composition of intra-African trade byproducts and sectors. Industrial products and manufactured goods continue to account for the lion’s share of intra-African trade. At the same time, and interestingly, manufactured products traded within the continent are increasingly dominated by medium to high-skill technology intensive manufactures.
Looking ahead, Africa is expected to remain on a strong economic growth path, with improving trade performance in 2018 and beyond, riding on the global momentum of synchronized global growth led by increased investment and fiscal expansion. However, in the medium term, downside risks to global growth and trade include a contraction in global demand, especially if the ongoing transition and re-balancing in China leads to acute growth deceleration; sharp tightening of financial conditions could further stress highly-indebted sovereigns and corporates and, in the process, affect business confidence and investment decisions;and the rise of protectionist policies, most notably reflected in the escalating cycle of trade restrictions and retaliations, could derail the current growth momentum.
Trade and the Trading Environment: Africa’s Trade
Africa’s total merchandise trade gathered momentum, growing by 10.6 percent in 2017, to US$907.63 billion, up from US$820.76 billion in 2016. The recovery and expansion of African trade was in line with global trade and reflected continued tightening of trade links between developing economies in the South and Africa, the resilience of intra-African trade, and dynamics in the commodity market. In effect, the sustained recovery in commodity prices, especially those with export interests to Africa, were also key factors behind the remarkable turnaround in Africa’s merchandise trade in 2017.
Intra-African trade
The promotion of intra-African trade is the first pillar of the Bank’s Fifth Strategic Plan, informed by the view that intra-African trade offers tremendous potential as a mitigant against adverse external shocks and global volatility. The potential is evidenced by the experience of countries such as Kenya, where greater intra-African trade intensity has cushioned the country from exogenous shocks. Informed by these developments, but also by the still low level of intra-African trade, there is a growing awareness on the continent of the transformational impact of intra-regional trade, with a number of strategic initiatives championed by the region’s business and political leaders and development finance institutions, including Afreximbank.
Indeed, one of the core tenets of the African Continental Free Trade Area is the Boosting Intra-African Trade (BIAT) initiative, indeed reflecting its tremendous potential for raising intra-regional and cross-border trade and stimulating opportunities for industrialisation, and diversification while creating much needed employment opportunities for the continent’s growing population. More specifically, in 2017, the Bank supported growth of intra-regional trade through increased financing of, and investment in, trade supporting infrastructure to expand light manufacturing industries, transform the structure of African economies and diversify exports.
The Bank’s investment recognises the importance of intra-African trade in driving the process of industrialization and creating a business environment that is more conducive for African entrepreneurs to move up the value chain – by producing and supplying more manufactured goods,Industrial production and manufactured goods largely dominate intra-African trade in contrast to extra-African trade.
The African Trade Report 2018 has been made available to download courtesy of the African Export-Import Bank (Afreximbank).
Related News
Cautious Nigeria agrees to sign African continental free-trade agreement
Nigeria would soon sign up to an African continental free-trade agreement, President Muhammadu Buhari said. Buhari made the comment on Wednesday at a media conference during a visit by President Cyril Ramaphosa. The agreement was signed by 44 countries in March, with SA joining earlier in July. Before leaving Nigeria for the Middle East on Wednesday Ramaphosa urged the Nigerians to join the free-trade agreement.
Ramaphosa said Nigeria should take its time to consult on the agreement before signing up, but shouldn’t "take too long". "The continent is waiting for Nigeria and SA. By trading among ourselves, we are able to retain more resources in the continent," he said in Abuja on Wednesday.
At a joint media conference with Ramaphosa later in the day, Buhari said Nigeria was careful about signing the trade deal to avoid hurting its young industries. "I will soon sign it," he said. Talks to establish the African Continental Free-Trade Area (AfCFTA) with a combined GDP of more than $3-trillion started in 2015, and in May Ghana and Kenya became the first countries to ratify the deal. Ramaphosa signed the agreement in Mauritania last week. SA would ratify it "soon", he said.
The AfCFTA is a project that is driven by the AU to eliminate tariffs on intra-Africa trade of goods and services and create a single continental market with free movement of businesspeople. It will only become effective once the parliaments of at least 22 members ratify it.
Nigeria could not rush signing the deal because it does not want to get things wrong, Finance Minister Kemi Adeosun said at the conference. Her government was talking to stakeholders, including manufacturers, she said. Ramaphosa and Adeosun were speaking at the African Export-Import Bank’s annual meeting being held in Abuja this week.
A free-trade area for the continent, if implemented according to schedule, could increase intra-Africa trade by at least half by 2022, a report by the African Export-Import Bank reads.
Related News
2018 AGOA Forum opens in Washington, DC: Statements by USTR Robert Lighthizer
“I can assure you that this Administration is strongly committed to Africa. We want to deepen our trade ties so that workers and businesses throughout the United States and across Africa can benefit as much as possible,” United States Trade Representative Robert Lighthizer said at the Opening Ceremony of the 2018 AGOA Forum on 11 July 2018.
“As you all know and has been said here already, Africa has some of the fastest growing economies in the world and a rapidly expanding middle class. These trends should result in increased demands for American products and services, and the U.S. private sector has taken notice.
“We’re seeing this play out in many tangible ways. More small and medium-sized U.S. companies are doing business on the Continent – often directly with African businesses, not just with governments and state-owned enterprises. These companies are branching out into new sectors such as information technology and service industries.
“AGOA has provided an important framework for our economic engagement during these last two decades. But by 2025 – when AGOA is set to expire – it will be a quarter century old, and we cannot predict what will happen at that time.
“We should seize the moment by pursuing a new, forward-looking vision for the future of U.S.-African trade. This vision should recognize that sub-Saharan Africa looks very different in 2018 than it did in 2000 when AGOA was first created. We believe that there are countries in Africa that are ready to move from AGOA beneficiary to U.S. free trade agreement partner.
Statement of USTR Robert Lighthizer at the Opening Plenary of the 2018 AGOA Forum
Welcome to this year’s AGOA Forum. I am pleased to be with you all this morning. The theme for this AGOA Forum is “Forging New Strategies for U.S.-Africa Trade and Investment.” I’d like to spend my time with you addressing one very specific new strategy – the Trump Administration’s desire to negotiate a model free trade agreement with a sub-Saharan African country.
It has long been the desire of the United States for AGOA-beneficiary countries to advance to a point where it would be possible to talk about a comprehensive and more permanent framework to deepen our relationship. Indeed, AGOA was designed to encourage alignment around best practices in order to pave the way for a free trade agreement between the United States and sub-Saharan African countries.
Our Congress reinforced this point during the reauthorization of AGOA in 2015 when it expressly instructed the USTR to pursue free trade agreement negotiations with AGOA eligible countries. In part because of AGOA’s success, we believe that many of you are at the point where we could enter into FTA negotiations. If you are willing, we are eager to take this next logical step in our relationship.
Let me start by explaining why I believe the time is right for this initiative and why it makes sense, both for the United States and sub-Saharan Africa.
My trip to the AGOA Forum in Togo last year, the opportunities I’ve had to meet my fellow trade ministers from the Continent, and consultations I’ve had with Congress, business leaders, and others have convinced me that deepening the U.S.-Africa commercial relationship is critical to both American and African interests. It is a goal shared by both sides.
Right now, our trade and investment involvement is centered around AGOA. I know your governments place a strong value on this program. We do as well. Since its enactment in 2000, it has had an important and positive impact on U.S.-African trade. AGOA has also provided incentives for reforms that promote rules-based, market-oriented economies, and it has supported regional integration.
Just two weeks ago, my office issued a report on the implementation of the AGOA program over the past two years. The report highlighted many of these achievements. But the report also confirms what I heard from many of you last year – that while AGOA has brought important benefits, there remains much more to be done to fully realize the potential of U.S.-Africa trade.
One-way tariff preferences can only do so much to drive trade and investment. When corporations decide where to invest and do business, much more goes into the equation. U.S. companies value clear rules of the road and a sound business environment. With the renewal of AGOA until 2025, we have a unique opportunity to use the next several years to build on and go beyond this one program.
To be clear, the United States is not abandoning AGOA for either the short term or the long term. But there are compelling reasons to pursue a comprehensive and more permanent trade and investment framework to govern trade between the United States and Africa.
First, American companies are increasingly recognizing that Africa’s growth presents immense opportunities. Just in the last several years, many U.S. companies that never before had a large footprint on the continent have made major investments there. These companies range from Kellogg’s Cereal to Marriott Hotels to Prudential Insurance to PVH, one of the largest apparel companies in the world. I’m just as encouraged by many U.S. small- and medium-sized businesses also pursuing business across the continent.
Second, as you know far better than I, there is a growing need for infrastructure and other development projects in Africa to support continued economic growth and enable Africa to tap into global markets. The United States – and, in particular, American businesses and the African diaspora in the United States – are well-positioned to assist with these efforts.
Third, many African countries have already signed free trade agreements with some of America’s largest trade competitors, like the EU and China. Many of these competitors are also investing heavily in sub-Saharan Africa. My sense, however, is that many of you recognize the value of diversifying your commercial ties, and I know you recognize what American companies bring to the table, in terms of quality, state-of-the-art products and services, and reputable, reliable business practices.
Fourth, establishing a more stable, permanent, and mutually-beneficial trade and investment framework with the United States could be transformative for Africa. The most tangible benefit for countries that enter into FTAs with us is that they could lock in the benefits of AGOA, bringing the certainty businesses need for long-term business decisions. An FTA with the United States will also send a strong signal of commitment to high standards of transparency and due process, which is critical to attracting business investment.
I hope this Forum and my discussions with many of you will help inform our approach. Our current thinking is based on three core objectives: (1) pursue a bilateral agreement with a willing partner; (2) ensure that this agreement is crafted so that it can serve as a model that can be rolled out to other willing partners in sub-Saharan Africa in the future; and (3) ensure that the model agreement will reinforce regional and continental integration in Africa.
Let me conclude by emphasizing that we are excited about the prospect of entering into a successful free trade agreement with an African country. We believe that this will be good for the United States, the FTA partner, and ultimately Africa.
We do not believe this will be an easy process to be sure, but I think it’s one that is well worth the effort.
We have heard expressions of interest from several of you about this initiative, and I encourage others interested in it to contact my office. We have not made any final decision about which country or countries we will negotiate with to develop a model agreement. But I can tell you this much: We are serious and intend to move quickly. I hope to announce exploratory talks soon.
I will now invite my distinguished co-chair, Minister Adan Mohamed, to share his thoughts and then we will open the floor for discussion. Thank you very much.
Related News
tralac’s Daily News Selection
Launched today in Addis Ababa: The inaugural Africa’s Development Dynamics 2018 report
Africa needs development strategies that are more coherent and that prioritise improved public action to stand up to the challenges of growth, jobs and inequalities prompted by the continent’s remarkable emergence, according to the first issue of a new joint report by the African Union Commission (AUC) produced in collaboration with the OECD.
Tunisia initiates WTO dispute complaint against Moroccan book duties: this is the WTO’s first intra-African dispute and the first dispute initiated by Tunisia at the WTO.
Posted by the WCO: Framework of standards on cross-border e-commerce
The WCO has published the pdf Framework of Standards on Cross-Border E-Commerce (129 KB) , as adopted at the end of June 2018 by the Council, the Organization’s highest decision-making body, together with a Resolution aimed at ensuring its harmonized and effective implementation. Building upon the key principles laid down in the Luxor Resolution adopted in 2017, the Framework of Standards sets out baseline global standards on cross-border e-commerce. It contains 15 Standards that are concise, progressive and focused on the e-commerce environment, with a view to providing pragmatic, fair and innovative solutions whilst taking into account the diverse expectations and concerns of Customs administrations and stakeholders. Going forward, the Framework of Standards will be further enriched with Technical Specifications and Guidelines for its expeditious and effective implementation in a harmonized manner.
The State of African Cities 2018: the geography of African investments (UN-Habitat)
The report focuses on four industrial sectors: manufacturing, services, high-tech and primary resources. It contends that, if “guided wisely” and with the appropriate financial and policy interventions, FDI can help alleviate urban poverty and unemployment by supporting Africa’s transition towards growth led by manufacturing and knowledge-intensive industries, such as services and high-tech, rather than by primary resource sectors. According to the report, high-tech has the highest FDI growth rate in Africa, while manufacturing FDI has the largest share of investment and is the most important in terms of employment generation, with both sectors reducing income inequality if local skills are used.
Country news, updates
Tanzania to shut down loss-making State firms (Business Daily)
Tanzania will shut down loss-making state-owned enterprises and retain only those that post profit annually, the country’s Minister for Finance and Planning Philip Mpango said on Tuesday. Speaking at the official opening of a workshop on the role of SOEs, Mr Mpango noted that there are now more than 400 government-owned firms in the country. “The government will not hesitate to close down loss-making SOEs to reduce the burden of running them. I’m not happy to see State-owned firms failing to pay dividends to the government. These firms have to go. There are no more excuses.” He said he had already directed the Treasury Registrar to audit all the companies and identify those making losses for closure.
Losing to blackouts: evidence from firm level data (IMF)
Many developing economies are often hit by electricity crises either because of supply constraints or lacking in broader energy market reforms. This study uses manufacturing firm census data from Ethiopia to identify productivity losses attributable to power disruptions. Our estimates show that these disruptions, on average, result in productivity losses of about 4–10%.
Better loans or better borrowers? Impact of meso-credit on female-owned enterprises in Ethiopia (World Bank)
The paper investigates the impact of credit to female entrepreneurs in a novel context, by examining larger loans, provided to growth-oriented women entrepreneurs in Ethiopia. These entrepreneurs fall in the “missing middle” or “meso-finance” segment of the financial market because their credit needs are too large for microfinance, but not large enough for commercial banks. [Informing durable solutions by micro-data: a skills survey for refugees in Ethiopia]
What noodles can teach us about Nigeria’s reluctance on free trade (CS Monitor)
If you want to understand why trade is such a contentious topic for Africa’s largest economy, just consider the noodles. The instant noodles, to be precise. Over the last three decades, those iconic bricks of dried wiggly dough – known locally as Indomie after a popular brand – have become a staple of the Nigerian diet. Today, in fact, the country has the 12th largest instant noodle market in the world, with 1.76 billion servings of the starchy stuff sold here each year. And thanks to a government ban on noodle imports, almost all is locally produced – a rarity in a country that imports many of its staples.
Kenya: State imports double despite order on local goods quota (Business Daily)
The value of goods ordered from abroad by State departments and parastatals more than doubled in the first four months of the year, pointing to rising appetite for foreign goods in public offices. Import orders placed by the government hit Sh22.33bn in the January-April period, a 133.17% surge compared to a bill of Sh9.58bn paid in the same period in 2017, data collated by the Central Bank of Kenya shows. That is the largest four-month import order since President Uhuru Kenyatta took the reins of power in April 2013 with a directive to ministries and parastatals to stop importing goods which are manufactured locally. [George Wachira: Proposed local content law will only create regulatory confusion]
Kenya Trade Week: preview (Global Times)
SADC Committee of Ministers of Finance and Investment: remarks by SADC’s Dr Stergomena Tax (SADC)
The SADC Integrated Regional Electronic Settlement System (SIRESS) has made progress, moving from single currency settlement system (Rand settlement) into a multi-currency settlement system, with the US Dollar as the additional currency of settlement. Settlement in US Dollars on the current platform is expected to go live in October 2018, while the whole multi-currency platform is expected to be fully operational by December 2019. Noting that the facilitation of payments remains a key challenge to intra-SADC trade, the addition of the US Dollar, that account for about 60% of intra-SADC cross-border transactions is expected to facilitate greater cross-border trade and investment in the region. Progress has also been made in making SIRESS a more inclusive payment platform, which will also deal with low value cross border payments in the region.
African Trade Insurance Agency to pay first dividends to shareholders
The African Trade Insurance Agency has announced that its general assembly has approved the first ever payments to shareholders. ATI has earmarked an initial $2.5m in payments to its shareholders which include 14 African member governments. In 2017, ATI recorded gross exposures of $2.4bn and, in the same period, the company covered investment and trade activities across the continent valued at $10bn. ATI also posted a $10m profit, representing a 55% increase over 2016.
Central African Economic and Monetary Community: IMF staff report
While improving, CEMAC’s economic situation remains fragile. Growth picked up slightly but remains well below potential. Governments’ fiscal consolidation efforts, along with BEAC’s tighter monetary policy and stricter enforcement of foreign exchange regulations, have contributed to a significant reduction in the region’s fiscal and external imbalances. However, fiscal slippages in some countries contributed to the underperformance of international reserve accumulation in early 2018. Looking ahead, a further improvement in the economic and financial situation is projected, assuming full implementation of policy commitments by CEMAC member states and regional institutions. This outlook remains subject to substantial risks from possible weaker program implementation, lower oil prices, and insufficient external financing. Extract: The large decline in the current account deficit contributed to the stabilization of external reserves in 2017, but these have levelled off in early 2018. The current account deficit contracted significantly by more than 9% of GDP in 2017, reflecting higher oil exports (+2.5% of GDP) and lower imports (-6.3% of GDP).
Cairo high-level policy dialogue on development planning in Africa (UNECA)
Adam Elhiraika, Director of the UNECA’s Macroeconomic Policy Division: “African countries will need to tap into diverse funding sources for their development programmes, from tax and non-tax public revenues, to public borrowing, to private investments, to innovative sources of finance”. He added that estimates of additional financing Africa needs to achieve the SDGs range from $600bn to over $1.2 trillion annually. “It is also clear that we will need more effective use of the available resources. In particular, public financial management must be improved, including through good budgeting and effective resource allocation towards priority areas,” he told senior government officials from member States (pdf), including Finance and Planning Ministers. These challenges, he said, necessitate a financing framework that can manage the finance mobilised from various different sources.
In 2016, Africa’s tax revenues totalled $500bn, which is around 3 times the level of ODA, FDI and remittances combined. Yet tax to GDP ratios on the continent are around 18%, which is low compared to other regions. Boosting tax collection could significantly increase available finance for development, he said. “There are a number of ways in which tax revenues can be increased, for example by formalising or otherwise taxing the informal sector, which is estimated to account for 50 to 80% of GDP in some African countries and remains largely untaxed,” said Mr Elhiraika. He said tackling illicit financial flows, particularly abusive tax practices of multinational corporations, could mobilise substantial additional revenues needed for Africa’s development.
Wednesday’s Quick Links: Zimbabwe: ED to kick start Beitbridge border post modernisation Understanding the changing global investment policy landscape and its implications on the EAC: Dar es Salaam workshop Nigeria: 6600 containers trapped at Lagos ports Nigeria’s fintech future will be bundled UNIDO: E-commerce development report of the SMEs of BRICS countries (pdf) World Bank: How would cross-border electricity trade stimulate hydropower development in South Asia? Vietnam: 2018 Article IV Consultation World Bank: An update on Vietnam’s recent economic developments Unlocking competitiveness: why invest in rural Vietnam? |
Related News
In Africa, government action is key to overcoming challenges related to growth, jobs and inequalities
Africa needs development strategies that are more coherent and that prioritise improved public action to stand up to the challenges of growth, jobs and inequalities prompted by the continent’s remarkable emergence, according to the first issue of a new joint report by the African Union Commission (AUC) produced in collaboration with the OECD Development Centre.
Africa’s Development Dynamics 2018, the first annual economic report by the African Union Commission since its creation in 1963, was released today at the Commission’s headquarters in Addis Ababa. The report finds that a favourable trend in commodities prices, strong domestic demand, progress in the pursuit of macroeconomic policies and strategies to diversify national economies have been major drivers of the continent’s recent growth, which is forecast to reach 4% annually between 2018 and 2020. The decision by certain countries to increase investment in infrastructure and the growing number of commercial partnerships – with China, India and other emerging countries – have also proved judicious.
Since the beginning of the century, Africa has ranked second behind Asia on the leaderboard of the world’s fastest-growing regions, with average annual growth in gross domestic product (GDP) of 4.7% between 2000 and 2017. This level of growth has, however, been insufficient to trigger fundamental changes. The report focuses on “growth, jobs and inequalities” and highlights the importance of accelerating the structural transformation of African economies. Growth is still inconsistent; between 2016 and 2020, just three of the continent’s 55 countries should reach the targeted average annual growth of over 7% set by the African Union’s Agenda 2063.
This growth has not created enough decent jobs, moreover, and 282 million people are currently working in unstable employment. At the current rate, 66% of jobs will still be insecure in 2022, a figure far higher than the targeted 41% for 2023. And the population of Africa is rising rapidly – a quarter of the global population will be African by 2050. The report also draws attention to the need to increase productivity: African businesses are lagging far behind the rest of the world in sectors with high job-creation potential, such as agribusiness, construction, leather, light manufacturing and logistical services.
Furthermore, growth in Africa has less of an impact than elsewhere in the world on reducing inequalities and improving well-being. If the continent’s Gini coefficient had fallen by seven further points to 35 – the same level as in Asia – growth would have lifted another 130 million people out of poverty between 1990 and 2016. Despite a reduction, extreme poverty still concerns 35% of the African population, or 395 million people.
The report also reveals the mixed performances of different African regions in terms of growth, jobs and inequalities.
-
East Africa has enjoyed stronger and more resilient economic growth than the other regions, at over 4% per year since 1990, on the back of a more diversified economy.
-
In addition to the underemployment and vulnerable employment that characterise most of the African labour markets, some countries in North and Southern Africa face high structural employment.
-
In Central Africa, the number of jobs in the formal economy has been falling since 2015.
-
East Africa and West Africa managed to reduce extreme poverty by 23 and 12 percentage points respectively between 1990 and 2013.
-
Inequality in Africa is most prevalent in Southern Africa, which, in terms of income, contains six out of the ten most unequal countries in the world.
The report stresses that public action is the key to improved performances when it comes to growth, jobs and inequalities. Domestic strategies are more effective when they encourage good inter-sectoral co-ordination of government action, the active participation of economic stakeholders and citizens, and a regional approach to development.
“Africa has significant assets for addressing its issues: a young and enterprising population, regions undergoing fundamental change with growth in the countryside and rapid urbanisation, considerable natural resources, dynamic economies, rich ecosystems, and a solid diaspora. However, far too often, public policies have failed to leverage these assets effectively. The implementation of the reform programme as set out in Agenda 2063 requires an increase in government capacities, greater responsibility, transparency, co-ordination and the promotion of positive institutional action,” stated Victor Harison, Commissioner of Economic Affairs of the AUC, while launching the report.
“Africa also has a vital role to play in the extensive reshaping of the framework of international co-operation as required by the Sustainable Development Goals. The continent is an extraordinary cradle of innovation for development strategies, and it is important that its partners pay it greater attention and better support the implementation of its creative strategies,” added Mario Pezzini, Director of the OECD Development Centre and Special Advisor to the OECD Secretary-General on Development, who was also present in Addis Ababa.
Africa’s Development Dynamics 2018 proposes ten decisive strategic actions in three areas – economic, social and institutional – for reaching the development targets in Agenda 2063.
Related News
WCO publishes global standards on e-commerce
The WCO has published the Framework of Standards on Cross-Border E-Commerce as adopted at the end of June 2018 by the Council, the Organization’s highest decision-making body, together with a Resolution aimed at ensuring its harmonized and effective implementation.
Building upon the key principles laid down in the Luxor Resolution adopted in 2017, the Framework of Standards sets out baseline global standards on cross-border e-commerce. It contains 15 Standards that are concise, progressive and focused on the e-commerce environment, with a view to providing pragmatic, fair and innovative solutions whilst taking into account the diverse expectations and concerns of Customs administrations and stakeholders.
The core essence of the Framework is the exchange of advance electronic data for effective risk management and enhanced facilitation of growing volumes of cross-border small and low-value business-to-consumer (B2C) and consumer-to-consumer (C2C) shipments, and the adoption of simplified procedures with respect to clearance, revenue collection and return, among other things, in close partnership with e-commerce stakeholders. It also encourages the use of non-intrusive inspection (NII) equipment, data analytics and other cutting-edge technologies to support safe, secure and sustainable cross-border e-commerce.
The Framework of Standards is intended for Customs administrations wishing to develop legislative and operational frameworks for cross-border e-commerce. It will be equally useful for those seeking to enhance their existing frameworks in order to effectively meet the requirements of new and evolving business models.
Administrations are expected to implement these standards in close cooperation with other relevant government agencies and e-commerce stakeholders, in accordance with their national priorities, capacity, human and financial resources and internal procedures.
Going forward, the Framework of Standards will be further enriched with Technical Specifications and Guidelines for its expeditious and effective implementation in a harmonized manner.
The WCO also stands ready to support its Members with implementation of the Framework of Standards and associated tools through capacity building activities. Five regional workshops are already planned for 2018/2019 to promote and support implementation of the standards on e-commerce and other relevant tools.
The first such event will take place on 16 and 17 July in India for countries of the Asia/Pacific region.
Related News
SADC Committee of Ministers of Finance and Investment meets in Johannesburg
The SADC Committee of Ministers of Finance and Investment met in Johannesburg South Africa on 11 July, 2018, joined by central bank governors from the region to discuss areas of cooperation and improving regional financial coordination.
The meeting was chaired by the Honourable Nhlanhla Nene, Minister of Finance of South Africa, who is the Chairperson of the Committee of the Ministers of Finance and Investment, and Co-Chairperson of the SADC Macroeconomic Peer Review Panel.
In her remarks at the opening ceremony, the Executive Secretary, H.E. Dr Stergomena Lawrence Tax, expressed commitment by the SADC Secretariat to operationalise the urged the Ministers SADC Regional Development Fund (SADC-RDF) as a way of mobilising adequate and sustainable resources for SADC regional programmes.
Dr Tax informed the Ministers that, through engagement with Partners, the African Development Bank has accepted to support the Operationalisation of the SADC-RDF. She then called on the Ministers to seize this opportunity to move the region forward with speed by signing and ratifying the Agreement to operationalize the SADC-RDF.
Opening remarks by SADC Executive Secretary, Dr Stergomena Lawrence Tax, at the Meetings of the Committee of Ministers of Finance and Investments and SADC Macroeconomic Peer Review Panel
The Protocol on Finance and Investment is an integral pillar of the SADC economic integration agenda, and sets out a legal basis for harmonization and regional cooperation in the finance, investment and macroeconomic policy sub-sectors. The Protocol also provides the framework within which, a conducive and stable macroeconomic environment, and deepening of the financial sector can be enhanced for overall regional economic integration.
It is pleasing to note that there has been notable progress in these sub-sectors. Allow me to highlight progress in the area of crossborder payment, which is being championed by the Central Bank Governors. The SADC Integrated Regional Electronic Settlement System (SIRESS) has made progress, moving from single currency settlement system (Rand settlement) into a multicurrency settlement system, with the US Dollar as the additional currency of settlement. Settlement in US Dollars on the current platform is expected to go live in October 2018, while the whole multi-currency platform is expected to be fully operational by December 2019.
Noting that the facilitation of payments remains a key challenge to intra-SADC trade, the addition of the US Dollar, that account for about 60% of intra-SADC cross-border transactions is expected to facilitate greater cross-border trade and investment in the region. Progress has also been made in making SIRESS a more inclusive payment platform, which will also deal with low value cross border payments in the region. This milestone is important in consolidating progress and catalyzing developments in some of the milestones already attained by the Southern African Development Community (SADC), in particular, the SADC Free Trade Area. Member States are encouraged to learn from these successes, and in doing so, expedite implementation of other SADC programmes.
The operationalization of the Project Preparation and Development Facility (PPDF) was a key milestone for the region, which started with infrastructure development with a number of projects having been evaluated and developed to a bankability stage, ready for investment by public, private sector, and financial institutions. Todate a total of nine projects have been financed under the Facility.
Notwithstanding the achievements made, this milestone needs to be moved to the next level, by operationalizing the pdf SADC Regional Development Fund (316 KB) (SADC-RDF), the first step of which, would be to sign the Agreement and also deposit the respective instruments of ratification. While we all recognize the importance of mobilizing adequate and sustainable resources for our regional programmes, delays in signing and ratifying the Agreement, remains a matter of serious concern. This is the region’s vehicle that will facilitate mobilisation of resources for regional programmes and propel the region out of dependency and poverty, which deserve prioritization.
SADC has embarked on economic and technical transformation through the pdf SADC Industrialisation Strategy and Raodmap 2015-2063 (2.34 MB) , as a long term perspective. The programme will only be sustainable with sustainable financing. The Regional Development fund is aligned to this long term perspective and has prioritized Infrastructure and Industrialisation windows, which are to facilitate industrialisation with infrastructure development aimed to leverage industrialisation. The Regional Development Fund, and other sustainable ways of financing our regional programmes are unavoidable, recognizing the pace of the 4th Industrial Revolution.
The Secretariat remains committed to this noble cause, and through its engagement with Partners, the African Development Bank has accepted to support the Operationalisation of the SADC Regional Development Fund. Let us seize this opportunity to move our region forward with speed. While appreciating the achievements recorded in sustaining macro-economic fundamentals, the wheels of the integration agenda seem to be loosening. The macroeconomic fundamentals in some of our Member States seem to be slowly diverging from the targets that we had set for ourselves. For the past six (6) years, the Region has experienced dampened economic growth. This has affected other sectors including the financial sector as indicated by rising non-performing loans.
While inflation has slowed down in general, it remains high with some Member States still in the double digit levels. Weak exchange rates and aftermath impacts of weather-related factors, including the drought of 2015-16 continued to influence price movements in some of the Member States. In the fiscal sector, public revenues have remained low and in some instances declining in the face of increasing public expenditures. To this effect, may I call upon Member States to critically analyze these disturbing developments, and take timely corrective measures.
SADC Member States continue to be confronted with a number of challenges that need urgent attention in order to effectively steer the SADC integration agenda in various sectors including those that are under the mandate of Ministers of Finance and investments, namely Finance, Investment and Micro-economic policy. Our people are still faced with abject poverty due to inability to access resources and financial services, that would facilitate their meaningful participation in the SADC industrialization program, which has been prioritized to drive the technological and economic transformation of our economies. This cannot continue unchecked, SADC needs an intensive program that promotes the full participation of the SADC citizens in the integration agenda, particularly the youth and women. The SADC Financial Inclusion Strategy is one instrument that provides a benchmark for the inclusion of Small and Medium Enterprises (SMEs). I would like to encourage Member States that have not yet developed their Strategies to take advantage of the SADC Financial Inclusion Strategy, to do so expeditiously.
Related News
Foreign direct investment key to Africa’s development, UN-Habitat report says
UN-Habitat Deputy Executive Director Dr. Aisa Kirabo Kacyira recently launched a new report that investigates the effect of foreign direct investment on the continent’s cities.
The State of African Cities 2018 report says that foreign firms and investors in African cities can play a catalytic role in the development of the continent.
Speaking during the event, Dr. Kacyira said the report was a ground breaking one because instead of focusing on urbanisation, it was looking at foreign direct investment.
“This report takes us in a new, exciting direction as its subtitle The Geography of African Investment makes clear. Instead of focusing on urban planning, this 2018 State of African cities report explores how Africa can plan to finance its development through attracting foreign direct investment (or FDI) to its cities and guides us through the complex subject of global investment in Africa.
As we know, Africa is urbanizing at an extraordinary rate – with tens of thousands moving to cities every day. Half of the continent is expected to be living in cities by 2030 bringing the familiar challenges – unplanned urbanization, informal settlements, poverty, inequality, unemployment humanitarian crises, conflict, she said.
In his speech, Marcellin Ndong – Lead Economist, the African Development Bank (AfDB) Nairobi Regional Office said the institution had invested some USD 35 billion in infrastructural development across the continent. “We must focus on developing our cities because they generate 55 percent of the continent’s GDP,” he said.
The report’s lead author Prof. Ronald Wall said that Western Europe was the lead investor in Africa. “Some of the things investors look for include domestic market size, trustworthiness available credit are some of the determinants of FDI in Africa,” he said.
The report states that Foreign Direct Investment (FDI) “if guided wisely can provide credible solutions to urban poverty and unemployment alleviation” by supporting Africa’s shift from growth dominated by the primary sector to one led by manufacturing and knowledge intensive industries.
Cities account for around 70 per cent of global GDP and UN-Habitat’s New Urban Agenda (2016) stresses their role as vehicles for inclusive and sustainable economic growth.
“There is a clear and pressing need for increasing foreign investment in Africa. Financial and policy interventions are needed that support Africa’s emerging transformations and strengthen its already unfolding shift from FDI in the primary sector (resources), towards secondary and tertiary sectors (manufacturing, services and hi-tech).
“Such interventions would facilitate structural economic transformation and generate higher value added economic activities. FDI is a key resource to expedite Africa’s growth potential, since it promises to bring not only financial resources but also new technologies, knowledge and expertise. Investment promotes employment, productivity and competitiveness through entrepreneurship in investment destinations,” the report says.
According to the report substantial private capital injections can, for instance, help close Africa’s huge gap in physical infrastructure, improve the quality of the built environment, and make the continent a more attractive destination for global FDI.
Related News
Domestic resource mobilization crucial for Africa to successfully implement SDGs, says ECA’s Elhiraika
Mobilising domestic resources, from both the public and private sectors, is central to Africa’s collective success in achieving the 2030 sustainable development goals (SDGs) and the continent’s 50-year development plan, Agenda 2063, says Adam Elhiraika, Director of the Macroeconomic Policy Division at the Economic Commission for Africa (ECA).
Speaking at the beginning of a three-day High Level Policy Dialogue on Development Planning in Africa that is being held in Cairo, Egypt, Mr. Elhiraika said the 2030 Agenda and the Addis Ababa Action Agenda on financing for development both underscore that countries need to mobilise greater financial resources if they are to achieve the SDGs.
“African countries will need to tap into diverse funding sources for their development programmes, from tax and non-tax public revenues, to public borrowing, to private investments, to innovative sources of finance,” he said, adding estimates of additional financing needs for Africa to achieve the SDGs range from $600 billion to over $1.2 trillion annually.
“It is also clear that we will need more effective use of the available resources. In particular, public financial management must be improved, including through good budgeting and effective resource allocation towards priority areas,” he told senior government officials from member States, including Finance and Planning Ministers.
These challenges, he said, necessitate a financing framework that can manage the finance mobilised from various different sources.
“It also needs to make sure that the allocation of finance to particular areas of spending is done efficiently so that each type of finance is directed towards funding the programmes to which it is best suited,” the Director said.
Tax revenues, said Mr. Elhiraika, are a key part of domestic resources. In 2016, Africa’s tax revenues totalled $500 billion, which is around 3 times the level of ODA, FDI and remittances combined. Yet tax to GDP ratios on the continent are around 18 per cent, which is low compared to other regions.
Boosting tax collection could significantly increase available finance for development, he said.
“There are a number of ways in which tax revenues can be increased, for example by formalising or otherwise taxing the informal sector, which is estimated to account for 50 to 80 per cent of GDP in some African countries and remains largely untaxed,” said Mr. Elhiraika.
He said tackling illicit financial flows, particularly abusive tax practices of multinational corporations, could mobilise substantial additional revenues needed for Africa’s development.
Africa is losing over $100 billion annually through IFFs.
“IFFs not only reduce the rate of taxpayer compliance throughout the economy, they also draw the economy’s factors of production and resources into the illicit economy, which will affect overall economic activity and then undermine important social spending or productive investment programmes,” Mr. Elhiraika said, adding African countries that have used provisions for international exchange of information have been able to recover up to tens of millions of dollars in revenue.
He said the ECA was proud to co-organize this meeting which offers an opportunity for African development planners to discuss key issues facing them as they implement the two agendas.
The theme of the meeting is ‘Financing the Sustainable Development Goals in Africa: Strategies for planning and resource mobilization’.
Professor Alaa Zahran, President of the Institute of National Planning in Egypt, said like other countries, Egypt was experiencing challenges in implementing the SDGs but was conquering the challenges through concerted efforts involving every stakeholder.
He said planning was crucial if the continent was to successfully implement the SDGs and change the lives of ordinary people.
Financing the SDGs in Africa: Strategies for Planning and Resource Mobilization
Background
The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. The 2030 Agenda includes 17 goals, 169 target and indicators that constitute major challenges in terms of technical and institutional capacities. The means of implementation for the Agenda include financing, technological innovation and capacity building.
Achieving the ambitious targets of the 2030 Agenda requires a revitalized and enhanced global partnership that brings together Governments, civil society, the private sector, the United Nations system and other actors and mobilizes all available resources. Indeed, according to a World Bank (WB) and International Monetary Fund (IMF) report, in order to meet the investment needs of the SDGs, the global community needs to move the discussion from “Billions” in Official Development Assistance (ODA) to “Trillions” in investments of all kinds: public and private, national and global, in both capital and capacity. And all funds should be put to the best possible use. UNCTAD estimates that the additional finance required to fund only the infrastructure (physical and social) needs associated with the SDGs for developing countries alone will be at least US$2.5tn per year. Recent estimates of the amount of additional finance that Africa will need to mobilise to achieve the Goals range from $600 billion to $1.2 trillion per year.
Thus, enhancing support to developing countries, particularly Least Developed Countries (LDCs) and Small Island Developing States (SIDS) is fundamental to ensuring equitable progress for all. And a stronger commitment to partnership and cooperation is needed to achieve the SDGs. That effort will require coherent policies, an enabling environment for sustainable development at all levels and by all actors, including effective coordination between public sector organizations and private institutions. This calls for a reinvigorated Global Partnership for Sustainable Development, as well as significant reform to global financial regulations and financial institutions, especially in the areas of equitable taxation of raw material exports from Africa and controlling capital loss through illicit financial flows. A meaningful commitment from all corporations – large and small – to tackle the challenges outlined by the SDGs are also key.
One of the major differences between the MDGs and the SDGs in terms of financing is that while the achievement of the MDGs mainly depended on external financing, in particular on Official Development Assistance (ODA), the SDGs are mainly expected to rely on domestic resource mobilization for their implementation. While recognizing ODA as an important complementary source of development finance, in particular in Least Developed Countries (LDCs), African governments have generally welcomed this shift in emphasis and committed themselves to enhancing domestic resource mobilization to finance their own sustainable development. Overdependence on resources supplied by external development partners is being increasingly considered as compromising African countries’ commitment to pursue the development priorities they have set for themselves. Therefore, it is vital for African member states to assess the level of funding required to realize the SDGs and identify strategies for resource mobilization.
Rationale
In the light of the foregoing, the 2018 High Level Policy Dialogue on Development Planning (2018-HLPD) will deliberate on the theme Financing the SDGs: Strategies for Planning and Resource Mobilization. The theme was proposed by the 2017-HLPD, which was held in Abuja, Nigeria, under the theme Mainstreaming the SDGs into National Development Plans. This was in recognition of the need for effective resource mobilization to meet the financing needs of the SDGs. The high level policy dialogue series was established by ECA in 2014 to serve as a platform for coordination and experience sharing among African planners and Chief Executives of planning bodies. Five events have been organized since its establishment.
The Addis Ababa Action Agenda (AAAA) of the Third International Conference on Financing for Development (FFD) of July 2015 identifies various measures of mobilizing domestic and external resources. Among other things, AAAA identifies strategies for developing countries to mobilize domestic resources through optimal taxation, regulation, good governance and institutional reforms; promotion of safer, faster and cheaper transfer of remittances; encourage the growth of private investment and public-private partnerships (PPPs); foster greater advancement in science, technology and innovation; as well as institutional, national and international assistance in capacity building.
Related News
tralac’s Daily News Selection
COMESA Summit update: The 38th Inter-governmental Committee began on Monday in Lusaka. The committee will review reports on the implementation of regional integration programmes and make recommendations to the Council of Ministers that will meet on 14-15 July.
Outcomes of the EAC’s Sectoral Council on Transport, Communications and Meteorology (25-29 June, Arusha): The meeting agreed on the proposal to develop Phase II of the One Stop Border Posts, as well as the need to fast track the implementation of Vehicle Load Control and One Stop Border Posts Acts. The meeting also approved the EAC Railway Enhancement Study report and the EAC Postal Strategy.
Communiqué of the Second AU-UN Annual Conference: The conference also reviewed challenges to peace, security and development on the continent, including in Burundi, the Central African Republic, the Lake Chad Basin, the Comoros, the DRC, Madagascar, Mali and the Sahel, Somalia, and South Sudan and agreed to jointly increase their support, in close cooperation with Regional Economic Communities, for the peace, security, development and stabilization initiatives in these countries, while cooperating more closely, particularly with respect to political processes.
Joint communiqué of the bilateral trade meeting to address issues affecting trade between Tanzania and Kenya (pdf)
Joint declaration of peace and friendship between Eritrea and Ethiopia
Nairobi meeting on guidelines for issuance of the African Passport: Dr Khabele Matlosa, Director of Political Affairs Department, said the African Passport would be meaningless without the full and effective implementation of the Protocol on Free Movement of Persons. The three day technical meeting which has immigration experts on passports from Member States, which is also being attended by the International Civil Aviation Organisation, will be followed by a two-day meeting of African immigration chiefs.
Nigeria and AfCFTA
Ambassador Chiedu Osakwe: Nigeria now ready to sign Africa free trade deal (Premium Times)
Osakwe: The final thing is that studies have established a baseline on the impact of the AfCFTA on the Nigerian economy different from the multilateral and regional. Current studies have been done in a sense, but by Nigerian researchers largely. These were the feedback we got in terms of the findings. But again I need to be clear about the starting point the significant feedback was this, the agreement establishing the AfCFTA is laudable, commendable, Nigeria should join it, sign it and at the same time scale up the pace activities.
PT: You sound as if Nigeria is now ready to sign the agreement? Osakwe: Almost. But that’s a decision to be made by Mr. President.
PT: Other interest groups, like the Chambers of Commerce and Manufacturers Association of Nigeria expressed some concerns about the AfCFTA. Are they now convinced about the benefits and no threats to their joining the AfCFTA? Osakwe: Both NACCIMA and MAN support the objectives and ideals of the agreement establishing the AfCFTA. We need to be clear about that. Their concerns are legitimate and need to be addressed. The Nigerian economy is based on goods and services. The goods sector in the Nigerian economy accounts for approximately 9.5% and a little less of the GDP of Nigeria. The services component of the Nigerian economy is approximately 55% plus. So, both the goods and services sector will have to be taken on board with regards how we establish and work out a zone of compromise moving forward.
Chijioke Odo: Is no AfCFTA deal the right deal for Nigeria? (Deloitte Nigeria)
Mauritius-India: Fifth meeting pursues negotiations on CECPA (GoM)
The fifth round of negotiations on the Comprehensive Economic Cooperation and Partnership Agreement between Mauritius and India opened yesterday. Minister Lutchmeenaraidoo outlined the Africa Strategy, which aims at expanding the economic horizons of the country and bringing it to a higher level of cooperation with targeted African States. He recalled that Mauritius is involved in initiatives which include the creation of special economic zones in Madagascar, Kenya, Senegal, Ghana. As regards the CECPA, he underscored that it forms part of a network that is being put in place to develop partnership with Africa at regional, bilateral and continental levels as well as with other emerging countries such as India and China, in line to further enhancing South-South cooperation. The Comprehensive Agreement is to be finalised by December 2018, he underlined.
The Head of the Indian delegation, Joint Secretary for Africa Division of the Department of Commerce, Mr Manoj Kuwar Dwivedi, highlighted that both Mauritius and India are exploring bilateral opportunities which will be beneficial for both countries in terms of trade in goods and services. He pointed out that the two countries have their strengths and they will open avenues of opportunities for liberal trade relations. On one side, Mauritius will learn from a big and consumerist country like India and on the other hand, India will use Mauritius as a platform to reach out to French Speaking African countries for investment.
State of Food and Nutrition Insecurity and Vulnerability in Southern Africa (SADC)
Extract from the pdf Synthesis Report (1.85 MB) : Available data from 10 member states (Table 2) indicates that the dry spells that characterized the 2017/18 rainfall season have resulted in reduced cereal harvests compared to the 2017 bumper crop. The most significant contractions from the previous harvest and the 5-year average were recorded in Lesotho (-68% and -35%), Zambia (-33% and -20%) and Botswana (-30% and -38%). About 29.4 million people are estimated to be food insecure. The number represents about 14.2% of the total rural population in the 11 countries. This is 13% higher compared to the previous year and about 3% higher than the five-year average for the 11 Member States who provided data.
State of Fisheries and Aquaculture (FAO)
On trade: Fish and fish products will continue to be highly traded [to 2030]. It is projected that about 31% of total fishery production will be exported in 2030 (38% if trade within the EU is included), in the form of different products for human consumption or non-edible purposes, traded at various stages of processing. In quantity terms, world trade of fish for human consumption is expected to grow by 24% in the projection period and to reach more than 48 million tonnes in live weight equivalent in 2030 (60.6 million tonnes if trade within the European Union is included). China will continue to be the major exporter of fish for human consumption (followed by Viet Nam and Norway), with its share in total fish exports for human consumption remaining at 20%. [FAO’s State of the World’s Forests 2018: Executive summary (pdf), Full report (pdf)]
Related: 2nd Oceans Forum on Trade-related Aspects of SDG 14 (16-17 July, Geneva). Extract from the background note (pdf): Furthermore, fish and seafood is one of the most traded food commodities. Some 35 to 38% of the world production enters international trade generating $152bn in 2017. Over 50% of this trade originates in developing countries whose net trade income (export – import), valued at $37bn in 2013, is greater than the net income of most other agricultural commodities combined. In Pacific Small Island Development States, fishing can provide between 30 and 80% of exports– an advantage of the large Exclusive Economic Zones and the economic values they are able to capture from fish species such as tuna. Likewise, the share of fish trade flows for some West African countries can represent between 5 to 12% of GDP.
OPIC launches Connect Africa Initiative (OPIC)
The Overseas Private Investment Corporation, the US government’s development finance institution, last week launched its Connect Africa initiative which will invest more than $1 billion to projects that support transportation, communications, and value chains in Africa over the next three years. The announcement comes as OPIC’s President and Chief Executive Officer Ray W. Washburne embarks on his first official travel to the continent where he will visit Zambia, Rwanda, South Africa, Uganda, and Kenya.
Ayodele Odusola: Addressing the Foreign Direct Investment paradox in Africa (Africa Renewal)
Africa’s experience on inward FDI presents a paradox. Conventionally, capital is expected to flow from countries with low to high returns. During 2006-2011, the region experienced the highest rate of return on FDI (11.4%) compared to 9.1% in Asia, 8.9% in Latin America and the Caribbean. The world’s average was 7.1%. Yet Africa’s share of the global net FDI has been very low over the past decade (Figure 1). For instance, sub-Saharan Africa’s share of global net FDI between 2010 and 2016 stood at 1.87%, compared to 30.34% for Europe, 26.45% for East Asia and Pacific, 17.334% for North Africa and 13.25% for Latin America and the Caribbean. Why is Africa experiencing an FDI paradox? [The author is Chief Economist and Head of Strategy and Analysis Team, UNDP Africa]
Public investment efficiency in Sub-Saharan African countries (IMF)
There is significant room to improve public investment efficiency in sub-Saharan Africa. Investment in sub-Saharan African countries is lagging vis-à-vis peers such as emerging and developing Asia as well as Latin America and the Caribbean, and the region’s infrastructure is perceived as being of relatively low quality. Comparing efficiency scores across country groups suggests that investment efficiency in sub-Saharan African oil exporters tends to be lower than in sub-Saharan African non-resource-intensive countries. Additionally, countries in the EAC perform better than those in CEMAC and WAEMU. Stronger institutions could foster more efficient public investment. The regression results in this paper show a positive correlation between public investment efficiency and the quality of institutions, suggesting that developing stronger institutions in sub-Saharan Africa could lead to a significant improvement in investment efficiency.
The WEB of transport corridors in South Asia (ADB/JICA/WBG/UKAID)
The book is aimed at politicians, technocrats, civil society organizations, and businesses. It presents case studies of past and recent corridor initiatives, provides rigorous analysis of the literature on the spatial impact of corridors, and offers assessments of corridor investment projects supported by international development organizations. A series of spotlights examines such issues as private sector co-investment; the impacts of corridors on small enterprises and women; and issues with implementing cross-border corridors. The ‘WEB’ in the title stands for both the wider economic benefits (WEB) that transport corridors are expected to generate and the complex web of transport corridors that has been proposed. [Overview (pdf)]
Tuesday’s Quick Links: The World Bank has appointed Hafez Ghanem as the new Vice President for Africa, effective 1 July. Tunisia’s trade deficit rises to $3.13bn in Jan-June Uganda workshop: Making social protection systems in Africa more responsive to crisis Strengthening strengthen implementation of Uganda’s second National Development Plan: update IMF-Africa updates: Central African Republic, Senegal, Tunisia German firms promised ‘Marshall Plan’ tax breaks for African projects ICTSD: How can the Argentinian G20 Presidency support trade’s contribution to a sustainable food future UNCTAD: Downloads from the Intergovernmental Group of Experts on Consumer Protection Law and Policy |
Related News
German firms promised ‘Marshall Plan’ tax breaks for African projects
Germany plans to use public money to support companies which invest in Africa, part of a new “Marshall Plan” with which it hopes to tackle the roots of the refugee crisis that has convulsed European politics since 2015.
The aim was to reintroduce a scheme from the 1980s which made it easier for companies to write off losses on investments in Africa in order to moderate initial investment risks, Development Minister Gerd Müller told Handelsblatt newspaper.
“I am also going to push for provisions made for African investments to get more favourable tax treatment,” he said on Sunday (8 July) of the plan, being developed by his department, along with the finance and economy ministries.
The ‘Marshall Plan for Africa’, named after the US aid package that kick-started Western Europe’s recovery after World War Two, is the centrepiece of Chancellor Angela Merkel’s scheme to reduce refugee flows by better sharing the costs of humanitarian issues between Europe, the Middle East and Africa.
Few details have been made public concerning the programme, which Merkel has argued is essential if Europe is to win African countries’ support for any policies aimed at stemming migration.
Since 2015, when Merkel, faced with unprecedented migrant flows, opened Germany’s borders to over a million refugees from civil war and poverty, the migration question has dominated European politics, fueling the rise of far-right parties.
Under pressure from her own allies, Merkel conceded tighter border controls last week, but has continued to insist that Europe can only deal with refugee flows multilaterally, in cooperation with its African and Middle Eastern neighbours.
The EU is currently trying to sign deals with North African countries mirroring one signed with Turkey in 2016, under which Ankara was paid to take back many refugees who failed to win asylum in Europe.
Related News
‘Wind blowing in the direction of peace’ in Africa: UN Secretary-General
Recent developments in Africa indicate that the continent is increasingly moving in the “direction of peace” and enhanced security, United Nations Secretary-General António Guterres told journalists in the Ethiopian capital, Addis Ababa, on Monday.
Guterres was there to take part in the second annual UN-African Union conference, part of ongoing efforts to strengthen the relationship between the two organizations. The two-day meeting covers a wide range of topics, and Mr. Guterres spoke about the partners’ close collaboration in areas such as peace and security.
“We feel a wind blowing in the direction of peace,” he said, referring to recent developments such as the historic visit by Ethiopia’s Prime Minister to rival and neighbour Eritrea, as well as peace talks on South Sudan, where conflict has raged since 2013.
“All this gives us hope that the African continent will be moving more and more in the right direction in peace and security,” he added, telling delegates that the UN could not afford to fail in its dealings with the continent.
But the UN chief also focused on what he described as the “dramatic crises” in Africa, where the UN has deployed peacekeeping missions in four countries: the Central African Republic (CAR), the Democratic Republic of the Congo (DRC), Mali and South Sudan.
He said the rise of armed groups and international terrorist organizations such as Boko Haram, means that these operations are not involved in “traditional” peacekeeping, and he cited the need for more funding, particularly in enforcing peace and countering terrorism.
“We need to understand that when African troops are fighting terrorists in the Sahel, they are not only protecting the citizens of the Sahel. They are protecting the whole world. And the world must be in solidarity with Africa, as African forces are protecting us all,” he stated.
The Secretary-General also called for greater support for the UN’s Agenda 2030 and African Union’s Agenda 2063, both of which address long-term economic development.
He appealed to the international community to take action against the flow of illegal funds, money-laundering and tax evasion, which cost Africa $50 billion every year.
He said: “This is a responsibility for the international community to support Africa to make sure that African resources remain in Africa to support African development.”
Communiqué of the Second African Union-United Nations Annual Conference
On 9 July 2018, the Chairperson of the African Union (AU) Commission, Moussa Faki Mahamat, and the United Nations (UN) Secretary-General António Guterres convened the second AU-UN Annual Conference at the AU Headquarters in Addis Ababa, Ethiopia.
The Chairperson and the Secretary-General welcomed the strong collaboration between the AU and the UN, and expressed their commitment to further deepen the strategic partnership between the two organizations. They underscored the importance of multilateral organizations and multilateralism, as instrument for effective international governance and addressing global issues.
The second Annual Conference reviewed the implementation of the Joint Framework for Enhanced Partnership in Peace and Security, and welcomed the progress made. It also endorsed the Action plan on the AU-UN Framework for the Implementation of Agenda 2063 and 2030 Agenda for Sustainable Development.
The AU and the UN undertook to enhance collaboration, cooperation and coordination in the search for sustainable solutions to ongoing and future challenges, based on the principles of complementarity, comparative advantage, burden-sharing and collective responsibility to respond early, coherently and decisively to prevent, manage, and resolve conflicts.
The Conference expressed deep concern over the evolving uncertainties in the international order, the rifts in international relations and the negative impact on the state of global peace and security, noting the need to adhere to established international norms, principles, and rules.
The Chairperson and the Secretary-General called for further strengthening of a comprehensive, integrated and coordinated approach to conflict prevention by addressing the root causes of conflicts, strengthening political processes and respect for rule of law as well as the promotion of sustainable and inclusive development.
The Conference also reviewed challenges to peace, security and development on the continent, including in Burundi, the Central African Republic, the Lake Chad Basin, The Comoros, the Democratic Republic of the Congo, Madagascar, Mali and the Sahel, Somalia, and South Sudan and agreed to jointly increase their support, in close cooperation with Regional Economic Communities, for the peace, security, development and stabilization initiatives in these countries, while cooperating more closely, particularly with respect to political processes.
They urged for robust action by the international community, to alleviate the humanitarian crises, risks and vulnerability in the affected communities. They welcomed continued dialogue towards the implementation of the Sahel Support Plan developed as part of the recalibration of the United Nations Integrated Strategy for the Sahel, and exchange on the AU efforts in the Sahel including ongoing efforts to review its strategy.
The Chairperson of the Commission briefed the Secretary-General on the important decisions adopted by the AU Assembly at its Ordinary Session in Nouakchott on the Western Sahara and Libyan conflicts. As a follow up, these decisions will be formerly conveyed to the Secretary-General and through him to the UN Security Council. The AU looks forward to working closely with the UN on these two issues.
The Chairperson and the Secretary-General paid tribute to the Troop and Police Contributing Countries, and AU and UN peacekeepers for their sacrifice and continued commitment to peace on the continent. They also discussed the Action for Peacekeeping initiative, which aims at making peacekeeping operations fit for the challenges faced today, including on the African continent, by jointly strengthening operations on the ground as well as renewing the political commitment to peacekeeping.
They further commended the efforts to harmonize political stances of both organizations in countries where peacekeeping missions are deployed, as illustrated by the recent joint visit of the UN Under Secretary-General for Peacekeeping and the AU Commissioner for Peace and Security in Sudan and the Central African Republic.
The Chairperson and the Secretary-General renewed their commitment towards predictable, sustainable and flexible financing for AU-led Peace Support Operations (PSOs) authorized by the UN Security Council. They further welcomed the significant progress achieved in the revitalization of the AU Peace Fund, the ongoing efforts to the establish its governance and management structure, and agreed to sustain the high-level political engagement and consideration for the financing of AU-led PSOs through UN assessed contributions. In this respect, it was agreed to continue with the ongoing work pursuant to Security Council Resolutions 2320 (2016) and 2378 (2017).
The Annual Conference discussed the need to promote synergy between Agenda 2030 and 2063, through coherent integration of both agendas into national development frameworks as well as building requisite research, analytical, monitoring and evaluation capacities, at both national and regional levels.
In this regard, the meeting stressed the critical role played by the Regional Coordination Mechanism for Africa and the Africa Peer Review Mechanism and urged all international partners to support Africa's efforts to implement the two Agendas as a pre-condition for the achievement of peace, security and development on the continent.
The Annual Conference reviewed the progress in the ongoing institutional reform processes of both organizations aimed at enhancing effectiveness and responsiveness to the needs and aspirations of their Member States, and ensuring that the two organizations are fit for purpose and have the right capabilities to address contemporary challenges. The meeting agreed to continue to share experiences and best practice, including through staff-exchanges and training in support of the two reform processes.
The Chairperson and the Secretary-General briefed the Peace and Security Council (PSC) on cooperation in peacekeeping missions in Africa.
The Chairperson and Secretary-General agreed to convene the next AU-UN Annual Conference in New York in 2019. They also agreed to meet on the margins of the General Assembly and the AU Summit, to take stock of progress in the partnership between the two Organizations.
Related News
Is the planet approaching “peak fish”? Not so fast, study says
Significant production increases foreseen over coming decade; sector faces major challenges
Global fish production will continue to expand over the next decade even though the amount of fish being captured in the wild has levelled off and aquaculture’s previously explosive growth is now slowing, says a new report by the Food and Agriculture Organization of the United Nations (FAO).
The latest edition of the agency’s The State of World Fisheries and Aquaculture (SOFIA) report projects that by 2030 combined production from capture fisheries and aquaculture will grow to 201 million tonnes.
That’s an 18 percent increase over the current production level of 171 million tonnes.
But future growth will require continued progress in strengthening fisheries management regimes, reducing loss and waste, and tackling problems like illegal fishing, pollution of aquatic environments, and climate change, the report adds.
“The fisheries sector is crucial in meeting FAO’s goal of a world without hunger and malnutrition, and its contribution to economic growth and the fight against poverty is growing,” said FAO Director-General José Graziano da Silva.
“The sector is not without its challenges, however, including the need to reduce the percentage of fish stocks fished beyond biological sustainability,” he continued.
Trends in global fish supply
The State of World Fisheries and Aquaculture reports that 90.9 million tonnes of fish was captured in the wild in 2016 – a slight decrease of 2 million tonnes from the year before, mainly due to periodic fluctuations in populations of Peruvian Anchoveta associated with El Niño.
Generally, the amount of fish being captured in the wild plateaued starting in the 1990s and has remained largely stable since.
Despite that fact, the world has for decades been consuming ever greater amounts of fish – 20.3 kg per capita in 2016 versus just under 10 kg/pc in the 1960s – thanks in no small part to increased production via aquaculture, a sector which expanded rapidly during the 1980s and 1990s.
In 2016, production from aquaculture reached 80 million tonnes, according to SOFIA 2018 – providing 53 percent of all fish consumed by humans as food.
While aquaculture’s growth has slowed – it experienced 5.8 percent annual growth between 2010 and 2016, down from 10 percent in the 1980s and 1990s – it will still continue to expand in the coming decades, especially in Africa.
Efforts to reduce the amount of fish being discarded at sea or thrown out post-capture – for example by using discards and trimmings to produce fishmeal – will also help meet ongoing increases in demand for fish products.
The status of wild fish stocks
Some 59.9 percent of the major commercial fish species that FAO monitors are now being fished at biologically sustainable levels, while 33.1 percent are being fished at biologically unsustainable levels – a situation that SOFIA 2018 describes as “worrying.” (The other 7 percent are underfished).
Just 40 years ago, 90 percent of FAO-monitored fisheries were being utilized at biologically sustainable levels, and just 10 percent were being fished unsustainably.
These trends do not necessarily mean that no progress has been made toward achieving Sustainable Development Goal 14, which calls on the international community to effectively regulate fish harvesting end overfishing, illegal fishing, and destructive fishing practices, and to implement science-based management plans aimed at restoring stocks.
But FAO’s report warns that the world has diverged in its approach to sustainable fisheries, with worsening overcapacity and stock status – too many boats chasing too few fish – in developing countries offsetting improved fisheries management and stock statuses in developed ones.
Counteracting this will require building effective partnerships, particularly in policy coordination, financial and human resource mobilization and deployment of advanced technologies (e.g. for monitoring fisheries).
Other challenges
Climate change and pollution are also cause for concern.
While research suggests that climate change might cause overall global fish catch levels to vary by under 10 percent, significant shifts in where fish are caught are anticipated, SOFIA 2018 notes. Catches are likely to drop in many fisheries-dependent tropical regions and rise in temperate areas of the north.
Shifts in the distribution of fisheries will have major operational, managerial, and jurisdictional implications, the report says. Research will be needed to develop strategies for allowing both fisheries and the species they exploit to adapt smoothly to climate change.
Key numbers from The State of World Fisheries and Aquaculture 2018
-
Total global fish production in 2016: 171 million tonnes
-
Share of that from marine capture fisheries: 79.3 million tonnes
-
From freshwater capture fisheries: 11.6 million tonnes
-
From aquaculture: 80 million tonnes
-
-
Amount of production consumed by humans as food: 151.2 million tonnes
-
Amount of production lost to spoilage a/o thrown away after landing and prior to consumption: 27 percent of all landings.
-
First-sale value of all fisheries and aquaculture production in 2016: $362 billion
-
Share of that from aquaculture: $232 billion
-
-
Number of people employed in fisheries and aquaculture: 59.6 million
-
Percentage of those who are women: 14 percent
-
Region with the most fishers and fish farmers: Asia (85 percent of the total)
-
-
Number of fishing vessels on the planet: 4.6 million
-
Largest fleet by region: Asia (3.3 million vessels, or 75% of the global fleet)
-
-
Percent of global fish production that enters international trade: 35 percent
-
Value of fish production exports: $143 billion
-
Net export revenues for developing countries ($37 billion) exceeds revenues from their net exports of meat, tobacco, rice and sugar combined
-
World’s largest fish producer and exporter: China
-
World’s largest import market of fish and fish products: The European Union. Number two: The United States; Number three: Japan.
-
Most unsustainable fisheries: Mediterranean and Black Sea (62.2 percent overfished stocks), the Southeast Pacific (61.5%), Southwest Atlantic (58.8%)
-
Most sustainable fisheries: Eastern Central, Western Central, NE, NW and Southwest Pacific (all <17% of overfished stocks)
Related News
Addressing the foreign direct investment paradox in Africa
Africa’s experience on inward foreign direct investment (FDI) presents a paradox.
Conventionally, capital is expected to flow from countries with low to high returns. During 2006-2011, the region experienced the highest rate of return on FDI (11.4%) compared to 9.1% in Asia, 8.9% in Latin America and the Caribbean. The world’s average was 7.1%. Yet Africa’s share of the global net FDI has been very low over the past decade.
For instance, sub-Saharan Africa’s share of global net FDI between 2010 and 2016 stood at 1.87%, compared to 30.34% for Europe, 26.45% for East Asia and Pacific, 17.334% for North Africa and 13.25% for Latin America and the Caribbean.
FDI inflows (which averaged 4.3% during 2010-16) declined from $71 billion in 2014 to $59 billion in 2016, and is expected to rise to $65 billion in 2017 – compared to about $1.7 trillion globally. The weak primary commodity prices and the fall in consumer demand in Europe explain the declining trends to a significant extent. In 2016, Angola, Egypt, Nigeria, Ethiopia and Ghana were the most attractive FDI destinations.
FDI, which used to concentrate in the extractive sector, is spreading across manufacturing and services sectors. The services sector, for instance, accounted for about three quarters of the greenfield FDI projects in 2016, while manufacturing accounted for about one fifth. In fact, FDI is becoming a major source of financing economic diversification.
In Ethiopia, the focus of greenfield FDI in 2016 was manufacturing (e.g. leather products, pesticide, fertilizers and other agricultural chemicals) and infrastructure projects; and it helped Mauritius to diversify its economy from sugar into textiles and tourism, and recently into luxury real estate, offshore banking and medical tourism.
The existence of business opportunities in the extractive sector (e.g. oil and gas, gold, diamonds, cobalt and copper), shifting of light manufacturing from emerging countries like China, development of special economic zones (e.g. Mauritius, and Senegal), and improved investment policy regimes (e.g. investment promotion in Egypt, tax incentives in Tunisia and Zimbabwe) are among drivers of inflow FDI to Africa.
Why is Africa experiencing an FDI paradox? Africa’s labour and natural resource endowments are insufficient to attract financial capital. Other endowments count. Critical among these include low public capital (e.g. low infrastructure like energy, roads, rails and airports); low human capital (e.g. absence of skilled, educated and healthy labour force); and low institutional capital (weak security and judicial systems, weak property rights, and poor regulatory and standards).
The high quality of these capitals enhances productivity of physical and financial capitals and reduces cost of doing business. When these are directly provided by investors, they serve as taxes on returns on investment.
Other drivers of the FDI paradox include fragmented investment policies; information asymmetry (limited access to investment opportunities by foreign investors); and high sovereign risks (e.g. low absorptive capacity, high corruption, political instability, weak capacity to manage shocks). All these aspects weaken government capacity to optimize social returns on investments that could complement and catalyze financial capital.
Financial intermediation costs (e.g. high brokerage, loan evaluation, and agency coasts, and contract enforcement) often proxied by domestic lending rates (which is as high as 60% in Madagascar and 44% in Malawi) impede FDI inflows. Addressing impediments to public, human and institutional capitals, as well as reducing sovereign risks and intermediation costs, and ensuring investment policy harmonization across African countries, are central to eliminating FDI paradox in Africa.
Dr. Ayodele Odusola is the Chief Economist and Head of Strategy and Analysis Team at UNDP Africa.
Related News
Climate variability accelerates food and nutrition insecurity in Southern Africa
Food insecure population on the increase
The number of food insecure people in the Southern African Development Community (SADC) region in the 2018/19 consumption year is 29 million people, representing 14 percent of the population, according to the State of Food and Nutrition Insecurity and Vulnerability in Southern Africa report.
The report was compiled from results of the 2018 vulnerability assessments and analysis of 11 SADC Member States. The number of the food insecure population is 13 percent higher, compared to last year, 2017/18.
The increasing food insecure population reverses the improvement in 2017/18 when the number fell to 27 million from 38 million in 2016/2017.
Over the past ten years, the food insecure population in the region has remained above 22.7 million.
With increasing climate-induced shocks, there needs to be urgent action and sustained resilience building, or the food insecure population is likely to grow.
Stunting levels declining at a slow pace
The SADC region is off-track in reducing childhood stunting by 40 percent which is the World Health Assembly target by 2025. The proportion of stunted children is increasing in Angola, Botswana, DRC, Madagascar, Mozambique, Seychelles and South Africa. The DRC, Madagascar, Mozambique, and Zambia have a high prevalence of stunting above 40 percent. Stunted children are more likely to fall ill and develop poor cognitive skills and learning. Their labor productivity, employment potential, and socialization are also affected later in life.
The report highlights the critical need to increase the investment in high-impact interventions that address chronic food and nutrition insecurity. It is important for national governments and development partners to use this information to improve planning and design appropriate programmes to respond effectively to food and nutrition insecurity.
At a regional meeting in Maseru, Lesotho which discussed the impact of food insecurity on the regional population, representatives of Member States and development partners said it is important to focus on sustainable strategies that address chronic food and nutrition insecurity which has plagued the region.
“We need to employ new ways of working to address food and nutrition insecurity because it is a threat to the region. We must find a way out of this situation,” said Mr. Haretsebe Mahosi, the Chief Executive Officer, Disaster Management Authority of Lesotho.
Carry-over stock buttresses reduced cereal production
Based on the nine SADC Member States that provided cereal balance sheets for the 2018/19, the region is estimated to have a cereal surplus of 6,294,000 MT compared to 7,513,000 MT for the same countries the previous year. Carry-over stocks and surplus from South Africa, Mozambique, Tanzania, Zimbabwe, and Zambia are compensating for those with deficits, such as Botswana, Eswatini, Lesotho, and Namibia.
Prices for maize grain in the region are generally low. For example, in Malawi, Mozambique and Zimbabwe maize prices are 20-33 percent below the five-year average. However, given the below-normal maize harvest this year, prices are likely to increase earlier than usual as farming households start depending on markets earlier.
Climate change – the primary driver of food and nutrition insecurity
Southern Africa is prone to climate change and variability, which adversely affects the food security and livelihood of the population. Between 2014 and 2016, the region suffered the worst drought in 35 years, caused by the El Niño phenomenon. Climate change continues to manifest as prolonged drought, floods, and cyclones.
The region’s dependence on rain-fed agriculture has also led to volatile output levels from one year to the next. Only seven percent of the region’s arable land is irrigated, yet 70 percent of the population relies on agriculture for a living.
The first half of the 2017/18 agricultural season was affected by an extended dry spell from late December 2017 to late January 2018 in central parts of the region, causing a significant negative impact on early-planted crops. Although the improved rainfall experienced between February and March 2018 aided crop recovery in some areas, permanent wilting occurred in others. In Madagascar, Cyclone Ava and Cyclone Eliakim made landfall and caused fatalities, displacement, damage to infrastructure and flooding; impacting 330,000 people. Northern Mozambique was also affected by heavy rainfall in January.
The report notes that global models run by international climate forecasting institutions predict an El Niño phenomenon during the 2018/2019 season. El Niño has historically been associated with the more frequent occurrence of below average rainfall in central and southern parts of the region, while the northern-eastern parts of the region have historically experienced a more frequent occurrence of above average rainfall during El Niño years.
Transboundary pests and diseases
The fall armyworm is a hardy pest that now has adapted to local conditions. It is present in 13 SADC Member States and continues to affect crop production, although not too significantly this year. The regional vulnerability report urges the Member States to use integrated pest management approaches and context-specific practices to manage the pest. The report also noted that the cassava brown streak virus was affecting cassava production in Zambia, and maize lethal necrosis diseases were in Tanzania.
Highly Pathogenic Avian Influenza (HPAI) continues to affect poultry production in the DRC, South Africa, and Zimbabwe. Since the outbreak was first reported, up to 32,000 chickens and ducks in DRC, 813,000 breeding stock and backyard chickens in South Africa and 857,000 breeding stock chickens in Zimbabwe have been affected by the virus. Egg production losses in DRC, South Africa, and Zimbabwe totaled the US $ 810 million and caused about 3,000 jobs losses.
Member States also reported the presence of the Foot and Mouth Disease, Peste des Petit Ruminant (PPR), contagious bovine pleuropneumonia, and Newcastle disease.
Resilience-building, a priority
The report makes short-medium and longer-term recommendations to address chronic food and nutrition insecurity and vulnerability, including building the resilience of people, communities, and institutions to prevent, anticipate, prepare for, cope with, and recover from shocks.
“It is evident that the weather influences food security in Southern Africa. When the region receives sufficient rainfall that is well-distributed, the numbers of the food insecure population drop, but when the region experiences extreme weather conditions, the numbers increase.
“Given the increasing frequency and magnitude of extreme weather events that are influenced by climate change, we must employ new ways of sustaining our food security systems and climate-proof our national strategies and plans,” said Clement Kalonga, the Head of Disaster Risk Reduction at the SADC Secretariat.
The report highlights the role of robust social protection systems targeting vulnerable populations, the adopting of climate-smart agriculture practices such as the use of drought-tolerant crop varieties, irrigation, staggered planting and integrated soil fertility management.
It also proposes scaling-up the high-impact nutrition interventions that target children under five years and women of reproductive age as well as encouraging the growing and consumption of diversified diets.
The report calls on the Member States to improve women and girls’ access to nutritious food, education, services and production resources and in ensuring that they participate in policy decision-making processes.
Overall, the report asks Member States to prioritize programmes and response planning that address these key regional issues while building sustainable monitoring and evaluation systems.
This publication was compiled from information presented by national vulnerability assessment committees at the Regional Vulnerability Assessment and Analysis (RVAA) Annual Dissemination Forum, 2-5 July 2018, in Maseru, Lesotho.
Related News
The Continental Free Trade Agreement: Is no deal the right deal for Nigeria?
Should Nigeria have signed the AfCFTA? Yes, if in the present form they are consistent with a clear and robust long term trade strategy! But shouldn’t they already be if we were from the outset, party to negotiating the Agreement?
On 22 March 2018 in Kigali, Rwanda, Heads of State of forty-four African countries, gathered to sign the African Continental Free Trade Agreement (AfCFTA or “the Agreement”), the landmark agreement which amongst others aims to liberalize trade across Africa.
The Nigerian President was among eleven Heads of States who did not sign the agreement, citing the need to consult widely before committing the country to an agreement with significant ramifications on its economy.
It would be recalled that Nigeria also passed up the opportunity to sign the Economic Partnership Agreement (EPA) between the European Union (EU) and the Economic Community of West African States (ECOWAS), also citing the need to consult widely.
The growing pattern of avoiding free trade agreements (FTAs) on the basis that wider consultation is needed is worrying for a country that aims to increase the welfare of its people and diversify from an oil centric economy.
If Nigeria’s reason for avoiding FTAs is the harm they would do if cheaper imports are allowed into its market, what about the harm such avoidance would do to consumers who earn the minimum wage and would be better off with cheaper imports or export manufacturers who need newer markets for survival or growth?
Based on examples from developed nations, FTAs are critical for economic growth and Nigeria should be seeking bilateral or multilateral FTAs that are strategic to its economic growth. Should Nigeria have signed the AfCFTA? Yes, if in the present form they are consistent with a clear and robust long term trade strategy! But shouldn’t they already be if we were from the outset, party to negotiating the Agreement?
What are the popular arguments against Nigeria’s participation in the AfCFTA (or FTAs) and what is my view on these arguments?
The uneven competition argument
Opponents of the AfCFTA have argued that gaping infrastructural deficits (i.e., perennial electricity shortage, high cost of capital, poor logistics landscape etc.) and uncertain business landscape, make it impracticable for Nigerian manufacturers to compete on even terms with their counterparts in other jurisdictions. They specifically argue that open borders would lead to the collapse or relocation of local manufacturers. Whilst this argument is valid, it may not tell the whole story.
Open borders would lead to the availability of cheaper inputs for local manufacturers who would otherwise pay import duties and taxes on these inputs. Cheaper inputs mean cheaper production costs and cheaper production costs potentially allows local manufacturers compete better with their foreign counterparts.
Additionally, local comparative advantages in some sectors would allow some local manufacturers perform better than their foreign counterparts in a liberalized export market that would grow from the circa 186 million population of Nigeria to the circa 1.2 billion population of Africa. Improved exports allow local manufacturers generate more revenues to cover fixed production costs.
Opponents would argue that benefits from cheaper inputs and newer markets does not counteract the effect of the infrastructural deficit and uncertain business landscape. However, if this were true, the appropriate reaction should not be the avoidance of FTAs but a strategic response in line with a clear and robust trade strategy. For instance, how can Nigeria obtain the benefits of the FTAs whilst protecting its fragile or infant industries?
To begin with, AfCFTA does not intend to liberalize all commodities. Only 90% of recognized commodities would be liberalized under AfCFTA, meaning that Nigeria could decide what industries or products it considers fragile and ensure they are effectively protected. Secondly, Nigeria could ensure its manufacturers are properly enabled by resuscitating or ensuring implementation of strategic sectoral incentives.
The market access argument
Opponents of the AfCFTA have argued that the market access rules as currently drafted, would make Nigeria the prime candidate for dumping goods. Specifically, they argue that commodities originating from non-AfCFTA signatories would easily find their way, duty and quota free into Nigeria (via simple processes like labelling, bottling, bagging etc.) if jurisdictions where they originate have free trade agreements with an AfCFTA signatory.
As a case in point, opponents have pointed to the ECOWAS Trade Liberalization Scheme (ETLS) (i.e., ECOWAS’ free trade agreement) where commodities from non-ECOWAS Member States allegedly flood the Nigerian market under the guise of products originating from the ECOWAS region. Whilst this argument is valid, it also does not tell the whole story.
The rules of origin (RoO) as currently drafted do not allow simple processes like labelling, bottling, bagging etc., to attain originating status unless the RoO is not properly evaluated or applied by the relevant authorities. The real issues here are monitoring, enforcement and technical competence; issues Nigeria must address vide shrewd negotiation and not total abandonment of the AfCFTA.
Nigeria has arguably the largest economy in Africa and with a population of about 186 million people (projected to cross the 300 million mark in 2050, becoming the third most populous nation in the world), we must be proactive and begin to define the narrative in Africa.
Nigeria must therefore think long term and define a trade strategy. That is, identifying and leveraging where she has comparative advantages; what the industry value chains are; what she should import and in what form; what she should export and in what form; what industries she must protect; what industries she must develop etc. These are some of the considerations that must drive Nigeria’s approach to trade.
Chijioke Odo is Manager: Global Trade Advisory at Deloitte & Touche.
This article was first published on the Deloitte Nigeria Blog. The views contained herein are those of the author.
tralac’s Daily News Selection: AGOA Forum
The 17th annual US - Sub-Saharan Africa Trade and Economic Cooperation Forum (commonly known as the AGOA Forum) takes place this week in Washington on the theme: Forging new strategies for US-Africa trade and investment
Witney Schneidman, Landry Signé: The 2018 AGOA Forum – a turning point for US-Africa commercial relations? (Brookings)
Africa’s trade ministers will be coming to Washington the week of 9 July, riding the momentum of having adopted the African Continental Free Trade Agreement in March. Once fully implemented, the AfCFTA, as it is known, requires members to remove tariffs on 90% of goods and to allow free access to goods, services, and commodities. The AfCFTA is central to accelerated regional integration and economic development across the region. While Africa is forging new trade relations internally, the Trump administration has a new proposal for future US-Africa trade relations, and wants to establish “a free trade agreement that could serve as a model for developing countries.” Kenya, Côte d’Ivoire, and Ghana are under consideration as partners for developing the first model according to sources in the Trump administration. The question for this AGOA Forum is whether it can forge a common vision between Trump administration officials and Africa’s trade ministers on how to structure a post-AGOA trade relationship. Specifically, can Africa’s continental free trade ambitions, embedded in the AfCFTA, be harmonized with the Trump administration’s model free trade agreement based on a single country?
Related US-Africa trade discussions this week in Washington:
(i) Investing in South Africa’s future: a conversation with Minister Rob Davies (Atlantic Council)
(ii) Re-examining trade with Africa under the Continental Free Trade Agreement (Brookings Institution)
Commentaries, news updates on US-Africa trade dynamics:
(i) Riva Levinson: US steps up its game in Africa, a continent open for business (The Hill)
It seems now that either the early speculation was ill founded, or more likely, that the Trump administration is pivoting towards prioritizing trade and investment, with potentially significant implications Africa and for US businesses looking for more aggressive advocacy from their government. Secretary Ross said during his key-note address at the US-Ghana Business Forum, “We are fully committed to the long-term growth of Africa.” He added that “there can be no national security without economic security.”
He also cited statistics that showed a decline in U.S. exports to Africa, and a reduction in overall US-Africa trade, calling it “an embarrassment” for both the US government and its private sector. Indeed. The lost opportunity cost is staggering when one looks to the future — the continent is likely to present $5.6 trillion in market opportunities and a population of over 1.52 billion consumers by 2025. However, the elephant in the room remains China’s aggressive and sometimes controversial practices in Africa, where it has long surpassed the United States’ as Africa’s largest trading partner. What’s next? What resources will Commerce deploy, personnel and financial, to further the secretary’s ambition? Can we anticipate the allocation of additional Foreign Commercial Service officers in the next budget? If not, how will the mission be achieved given existing resources? What about the development finance institutions?
(ii) Laura Lane: Why the US should bolster its trading relationships with African countries (UPS)
As a point of reference, in 2016, Africa actively pursued 286 infrastructure projects worth $324bn, more than a third of which were in the transport sector. These investments have been critical to meaningful growth on the continent and helping open its countries for business – both within Africa and with the rest of the world. Africa has financed many of these projects with tied aid, and experts disagree on whether this kind of funding is ultimately beneficial or not. Unlike some of Africa’s other trade and investment partners, the US has made clear – through efforts like the PAC-DBIA trip – that it does not seek to exploit the continent’s natural resources or send it diving into debt. Instead, U.S. companies want to undertake projects that can accelerate job growth and bring private sector financing to the table. Public-private partnerships and pro-business policies are two ways African countries could encourage this investment.
Despite huge opportunities on the African continent, many companies are still hesitant to invest or trade there. The No. 1 reason for this hesitancy is corruption. Simply put, foreign direct investment only goes where it is safe and protected. Most companies don’t want to – and, by law, can’t – engage in business in countries where bribery is commonplace. Moreover, governments don’t want to trade with other countries that aren’t upfront about their policies. The only way to increase trust and cooperation between countries is to value the rule of law and ensure that it prevails over corrupt practices. The assurance that companies, their investments and their intellectual property will be protected by law allows trade relationships to flourish. [The author is President, Global Public Affairs, at UPS]
(iii) Commerce Secretary, President’s Advisory Council on Doing Business in Africa, announce $1bn in deals (Commerce Department)
US Secretary of Commerce, Wilbur Ross, and a delegation from the President’s Advisory Council on Doing Business in Africa announced over $1bn in private sector deals during their mission to four sub-Saharan nations. PAC-DBIA members expect to quickly conclude more than $2bn in additional deals in the coming days. “The United States is making real progress in Africa, and we remain a strong, long-term, and stable partner in the continent’s economic development. It’s clear US companies want to grow their businesses in Africa, and these countries can facilitate that by improving their business climates, thereby enabling the growth of the digital economy, agriculture, health care, energy, manufacturing, and service sectors,” said Secretary Ross. “We are finding solutions to transition aid-based economies to trade-based economies by creating new pathways for mutually beneficial long-term partnerships.” Upon its return, the PAC-DBIA will use the collected information and first-hand experiences to develop reliable and actionable recommendations for President Trump to resolve issues related to underdeveloped capital markets, non-transparent and price-based procurement processes, and workforce development.
(iv) USDA Southern Africa trade mission: US agribusinesses interested in growing their exports to Southern Africa are encouraged to join the US Department of Agriculture on a trade mission to South Africa, 29 October - 2 November 2018. While the mission will be based in Johannesburg and Cape Town, participants will have the opportunity to engage with potential customers from a total of 11 countries in the region:
South Africa: Trump sounds mad but his trade war makes sense, says Mchunu (Mail and Guardian)
An increase in customs tariffs might be what South Africa needs to ward off an influx of foreign imports that are threatening the survival of local industries, says ANC national executive committee member Senzo Mchunu. In an interview with the Mail & Guardian, Mchunu raised concerns about what he termed South Africa’s lazy approach to protecting any of its local industries as the country’s economy continues to shed thousands of jobs. “Trump may sound mad but he is hitting the correct note to say, if you don’t protect your industries, they will fall because they will be taken over by imports and so on,” Mchunu said. “We [South Africans] behave like people who do not want to defend any industry.” Last month, sugar cane farmers marched to the trade and industry department’s offices in Pretoria demanding that a higher customs tariff be enforced on sugar imports to regulate the influx. Mchunu agreed with this call and said it was also necessary in other sectors, including manufacturing.
Implementing the AU’s 0.2% levy eligible imported goods: update (AU)
Amb. Kwesi said Africa continues to make noteworthy progress in its quest to mobilise financial resources within the continent through the full implementation of the decision on financing of the Union, adopted by Heads of State and Government in July 2016, in Kigali, Rwanda. At least 14 AU member states are already collecting the 0.2% levy from eligible imported goods to meet their assessed financial commitments to the Union. These include Rwanda, Kenya, Ethiopia, Djibouti, Chad, Guinea, Sudan, Congo Brazzaville, Cameroon, Gambia, Gabon, Cote d’Ivoire and Sierra Leone and Ghana. Another 23 countries are at various stages of implementation.
Mauritius-India: Comprehensive Economic Cooperation Partnership Agreement negotiations resume today (GoM)
An Indian delegation led by the Joint Secretary for Africa division of the Department of Commerce, Mr Manoj Kuwar Dwivedi, will be in Mauritius, 9-11 July, to pursue negotiations on the Comprehensive Economic Cooperation Partnership Agreement. Officials from the Indian Department of Commerce, Department of Revenue, Indian Research and Information System will also form part of the delegation. Mauritius and India resumed negotiations on the CECPA in September 2017 and till now four round of negotiations have been held. The objectives set for the fifth round are to finalise the trade in goods text, comprising text on sanitary and phytosanitary measures, technical barriers to Trade, as well as the Economic Cooperation chapter. Discussions will focus on preferential access for products of export interest to both countries as well as the schedule of commitments in the services sector.
Somalia’s Staff Monitored Programme: IMF review
On the external side, the 2017 drought resulted in a widening of the trade deficit, which was financed through humanitarian relief and increased remittances from the Somali diaspora. However, in 2018–19, the recovery in agricultural exports and easing of humanitarian assistance are expected to narrow the trade deficit. Public external debt, which remains high at 65% of GDP in 2017, is expected to stay broadly stable as the country has no capacity to repay its external debt service obligation and no access to international credit.
Is sub-Saharan Africa ready for the electric vehicle revolution? (WEF)
So, what next? There are unique conditions in SSA that indicate EVs could help solve two fundamental infrastructure challenges, around transport and energy. There are also big question marks around viability and relevance. One thing is clear: this topic warrants further study. There is essentially no data or research on EV potential in SSA. The two major annual EV publications (International Energy Agency and Bloomberg New Energy Finance) do not feature any data specific to Africa. There should be dedicated and objective policy analysis by domestic energy and transport ministries, as well as an increased effort to integrate Africa into international EV research. [The authors: Katie Hill (Omidyar Network), Rose Mutiso (Mawazo Institute), Rebekah Shirley (Power for All)]
Green power for Africa: overcoming the main constraints (IDS Bulletin)
The authors of this IDS Bulletin provide insights from power systems engineering, macroeconomics, microeconomics, and political economy on how to overcome constraints to green electricity in Africa. One of the biggest contributions of this issue is that is allows a dialogue between academics and practitioners that would not normally be published in the same journal. What also emerges as an underlying thread is the essential role of donors to achieve sustainable energy for all in Africa.
How does participation in value chains matter to African farmers? (World Bank)
This paper deepens the discussion about productivity growth and upgrading in agriculture in Africa, and the role of national, regional, and international value chains in supporting such structural change. The analysis in this report is based on quantitative and qualitative surveys undertaken in 2016 in Ghana, Kenya, and Zambia, where 3,935 farmers, 60 aggregators, and 56 buyers in the maize, cassava, and sorghum value chains were interviewed in the three countries.
Monday’s Quick Links: Development Dialogue discussion, tomorrow in Pretoria: Borders in Southern Africa - unlocking an economic development opportunity Getting to the Nacala Corridor through the Great East Road WTO’s Regional Trade Policy course concludes in Mauritius South African envoys targeting $100bn in investments arrive in Dublin this week Prof Richard Mshomba: The EAC - a Customs Union without a Common Voice |
Related News
2018 AGOA Forum: Resource box
Forging New Strategies for US-Africa Trade and Investment
The 17th United States-Sub-Saharan Africa AGOA Forum took place in Washington, D.C. from 9-12 July 2018. The annual AGOA Forum is the premier platform that brings together African Trade Ministers with U.S. counterparts to discuss how they can work together to enhance their trade and investment relationship, including through AGOA Implementation.
The 2018 AGOA Forum Ministerial, held on 11-12 July, fostered discussion of best practices for increasing AGOA utilization, addressing supply-side constraints on trade and investment, and preparing for a more reciprocal trade and investment relationship.
Deputy Secretary of State John J. Sullivan and US Trade Representative Robert E. Lighthizer delivered opening remarks on Wednesday, 11 July. These were followed by plenary remarks from the AGOA Forum Co-Chairs, USTR Lighthizer and Kenyan Secretary for Ministry of Industry, Trade, and Cooperatives Adan Mohamed.
As in previous years, the AGOA Forum included a number of events on the margins of the ministerial. This year’s side events, incorporating private sector, civil society, and African Women’s Entrepreneurship Program (AWEP) stakeholders, will take place on 9-10 July 2018.
AGOA Forum 2018 outcomes
Where to for a future bilateral trade relationship between the United States and Africa?
About AGOA
The African Growth and Opportunity Act (AGOA) was signed into law by United States President Clinton in May 2000. The objectives of the legislation include the expansion and deepening of the trade and investment relationship with Sub-Saharan Africa, to encourage economic growth and development as well as regional integration, and to help facilitate the integration of Sub-Saharan Africa into the global economy.
Related news
US, African officials prepare for post-AGOA trade future (ICTSD)
Davies: Steel and aluminium exports to US no threat to national security (IOL)
AGOA remains critical in developing regional value chains in Africa (dti)
2018 AGOA Forum opens in Washington, DC: Statements by USTR Robert Lighthizer
The 2018 AGOA Forum: A turning point for US-Africa commercial relations? (Brookings)
US steps up its game in Africa, a continent open for business (The Hill)
Commerce Secretary, President’s Advisory Council on Doing Business in Africa, announce $1bn in deals
Africa Matters: Why the U.S. Should Bolster its Trading Relationships with African Countries (UPS)
Trump Administration looks toward the future U.S.-African trade and investment relationship
Tanzania, Uganda survive as Rwanda is removed from Agoa beneficiaries list
U.S.-Africa relations: A new framework (Secretary of State)
Secretary Tillerson’s meeting with African Union Commission Chairperson Moussa Faki Mahamat
US-African trade: Creating common ground amidst policy uncertainty? (ICTSD)
U.S.-African partnerships: Advancing common interests (USIP)
2017 Annual and out-of-cycle AGOA eligibility reviews: Transcripts from the Public Hearings
Reports and publications
pdf 2018 Biennial Report on the Implementation of the African Growth and Opportunity Act (2.18 MB)
Trade in goods between the United States and sub-Saharan Africa increased nearly six percent to $39 billion between 2015 and 2017, according to a report delivered to Congress on 29 June 2018 by the Office of the United States Trade Representative (USTR).
pdf U.S. Trade and Investment with Sub-Saharan Africa: Recent Developments | April 2018 (5.61 MB)
Rising per capita income, growing urbanization, the need for improved infrastructure, and expanding healthcare contributed to growth in U.S. exports in some sectors to sub-Saharan Africa (SSA) between 2010 and 2016, according to the United States International Trade Commission (USITC), an independent, non-partisan, fact-finding federal agency. The report was prepared at the USTR’s request for an investigation examining U.S. trade in goods and services and investment in SSA.
This Recommendations Report from the PAC-DBIA private sector members focuses on some of the obstacles that are of particular pressing concern for US companies in Ethiopia, Kenya, Côte d’Ivoire, and Ghana, and suggests ways to eliminate the obstacles and strengthen US commercial ties with each of these countries.
On 29 November 2017, the President’s Advisory Council on Doing Business in Africa (PAC-DBIA), under the leadership of Secretary of Commerce Wilbur Ross, adopted its Issues Report, identifying the top obstacles US companies face when approaching, competing in, and operating in African markets. The PAC-DBIA advises the President, through the Secretary of Commerce, on ways to strengthen commercial engagement between the United States and Africa.
pdf Fact Sheet: US-Africa Commercial Engagement – Inter-agency commitments | June 2018 (94 KB)
Last month, the PAC-DBIA joined U.S. government leaders on a four-country trip across Africa. The trip underscored the significant partnerships that the United States has with African nations and the potential for shared economic prosperity. Expanding trade, investment, and commercial ties will create jobs and build wealth for Americans and for Africans. On the occasion of the high-level visit, the U.S. government made significant commitments to further deepen US- Africa commercial engagement and to create pathways for long-term trade and economic partnership.
On September 30, 2025, the World Trade Organization (WTO) waiver that allows the United States to extend trade preferences to African countries under the AGOA will come to an end. This symposium examined the possible future directions of U.S.-Africa trade relations in the post-2025 period. The four contributions to this symposium address a range of issues, including:
tralac Analysis
Trump’s Trade War: Are the Brakes failing? tralacBlog by Gerhard Erasmus
Trump’s steel and aluminium tariff action: Putting America first? Trade Brief by Eckart Naumann
Infographic: US tariffs on steel and aluminium
Controversy over American Tariffs on imported Steel and Aluminium tralac Discussion by Gerhard Erasmus
Infographic: AGOA and South Africa
South Africa and AGOA: Recent developments 2015-2016 and possible suspension Working Paper by Eckart Naumann
Related News
US Secretary of Commerce, President’s Advisory Council on Doing Business in Africa announce $1bn in deals during Africa mission
U.S. Secretary of Commerce Wilbur Ross and a delegation from the President’s Advisory Council on Doing Business in Africa (PAC-DBIA) announced over $1 billion in private-sector deals during their mission to four sub-Saharan nations. PAC-DBIA members expect to quickly conclude more than $2 billion in additional deals in the coming days.
The four-nation visit, which included stops in Ethiopia, Kenya, and Côte D’Ivoire, concluded in Ghana where Secretary Ross signed a memorandum of understanding with the Minister of Finance to deepen the commercial partnership between the two nations. On previous stops, Under Secretary of Commerce Gilbert Kaplan signed cooperative agreements with the Ethiopian and Kenyan governments.
“The United States is making real progress in Africa, and we remain a strong, long-term, and stable partner in the continent’s economic development. It’s clear U.S. companies want to grow their businesses in Africa, and these countries can facilitate that by improving their business climates, thereby enabling the growth of the digital economy, agriculture, health care, energy, manufacturing, and service sectors,” said Secretary Ross. “We are finding solutions to transition aid-based economies to trade-based economies by creating new pathways for mutually beneficial long-term partnerships.”
In Ghana, Secretary Ross led the U.S. delegation in meetings with President Nana Akufo-Addo, Minister of Trade Alan Kyerematan, Minister of Energy Boakye Agyarko, and Minister of Finance Ken Ofori-Atta. Under Secretary Kaplan led the delegation in Ethiopia, Kenya, and Côte D’Ivoire, meeting with heads of state, senior government officials, business leaders, and U.S. companies already doing business in those markets.
Throughout the mission, Under Secretary Kaplan met with a number of officials including Ethiopian Minister of Finance Abraham Tekeste, Kenyan President Uhuru Kenyatta, as well as President Alassane Ouattara and Prime Minister Amadou Gon Coulibaly of Côte d’Ivoire.
The delegation also met with officials at the African Development Bank to better understand how and where the bank is providing financing throughout the continent. This financing is a key tool for U.S. companies as they seek procurement contracts.
Cooperation agreements signed during the trip with Ethiopia, Kenya, and Ghana identify priority projects in key sectors that help achieve long-term growth and development. The United States will share that information with U.S. companies that can undertake those projects, as well as identify U.S. Government resources, such as the Overseas Private Investment Corporation, Export Import Bank, the U.S. Trade and Development Agency, and U.S. African Development Foundation, among others to support U.S. private sector participation.
The cooperation agreements also establish a forum for the governments to address and resolve business climate issues that prevent greater participation by U.S. companies seeking to invest or do business in the three countries.
Upon its return, the PAC-DBIA will use the collected information and first-hand experiences to develop reliable and actionable recommendations for President Trump to resolve issues related to underdeveloped capital markets, non-transparent and price-based procurement processes, and workforce development.
Chaired by Secretary Ross, the PAC-DBIA advises the President on ways to strengthen commercial engagement between the United States and Africa.