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COMESA searching for solutions to transform and sustain competitive businesses
The COMESA-Connect Industry Dialogue set for June 21st to 22nd, in Kigali, will bring together high level technical expertise from the public and private sector to provide common solutions that will prepare, protect, revolutionize and sustain competitive businesses, organizers say.
Formed in December 1994 to replace the Preferential Trade Area, the Common Market for Eastern and Southern Africa (COMESA) is a free trade area with 19 member states stretching from Libya to Swaziland.
The dialogue themed “Smart Technologies for Sustainable Businesses” will seek to establish collective understanding and strategic focus on the potential of blockchain and other technologies for supporting trade and trade facilitation as well as the other business and industry within the African region and address constraints that affect business competitiveness in the region and promote positive interaction between industry and IT to promote the use of technology and growth of African private sector among others.
Geoffrey Kamanzi, the Private Sector Federation Director of Trade and Business Development, said more than 200 private sector players are expected to attend the event which is co-organised by PSF and the COMESA Business Council (CBC), a private sector institution of COMESA that represents interests of businesses sectors at a regional level.
“It’s majorly aimed at understanding the potential of blockchain and other technologies for supporting business. So, members from various sectors including ICT, manufacturing, finance, Agro- processing, textile and garments and others are expected to attend,” Kamanzi said, further explaining that blockchain is “a modern way of doing business using IT tools – basically, transacting business without using paper money.”
Asked what the PSF especially hopes to again from the dialogue, he said: “Our members will be introduced to modern and secure ways of carrying out businesses and engaging with their partners regionally and internationally than the usual way. So, new trends should be introduced and adopted by our members to facilitate trade generally.”
During the event, the private sector; industry leaders, investors, entrepreneurs, SME businesses and innovators from sectors such as manufacturing, agro-industry and services industries will dialogue with captains of industry in ICT and understand the importance of ICT across many sectors.
Speaking prior to the dialogue, Dr Amany Asfour, the CBC Chairperson, is quoted saying that Information and Communications Technology (ICT) is a canopy term that highlights all communication activities as well as other technological services in various sectors in industry that enhance business productivity.
“The importance of ICTs in industry cannot be over emphasized because it has the ability to create greater access to information that help businesses to operate efficiently,” Dr. Asfour said.
COMESA Secretary General, Sindiso Ngwenya, said: “Globally the ICT sector continues to be a key pillar in terms of digital transformation across many other sectors in the modern economy. The competencies in ICT largely contribute to competitiveness of many industries and services in the economy. Therefore, industry must harness and get bulk benefits of the ICT revolution.
It is noted that over the years, trends in ICT keep evolving and its importance on industry effectiveness has had positive impact on various sectors of the economy.
“African economies are also well within the technology playing field. Countries have just grasped the magnitude of importance for systems, units and organizations to collaborate to ensure efficiency and effectiveness. Smart synergies are now seen as a tool to eradicate poverty, increase intra- trade, establish strong cross border alliances and increase the continent’s overall trade facilitation systems,” reads part of a press release by the organisers.
As noted, from smart phones to smart homes to smart cars to artificial intelligence, technology is making these tools indispensable for man in every aspect of life. In 2017 alone, the number of mobile phone users across the globe was estimated to be 2.5 billion and in 2018 the number is expected to go higher.
“The number of smart cars been sold annually is rising steadily. Manufacturing and other processing industry is quickly adopting the technology of Industry 4.0 which allows for more efficient business operations and higher quality goods to be produced at a lower cost. This revolution in the manufacturing industry will foster industrial growth and enhance economic development of the sector across the globe.”
The dialogue will also aim to structure policy recommendations to ensure the use of technology address digital financial inclusion, industry competitiveness and revolutionary innovations for competitive sustainable enterprises; address the ideal structures that to ensure data protection policies in the region; and increase awareness and strengthen intellectual property framework.
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Ad hoc Expert Group Meeting on the implications of ECOWAS potential expansion and the AfCFTA
The Sub-Regional Office for West Africa of the United Nations Economic Commission for Africa (ECA) and the Government of Benin are organizing an ad hoc expert group meeting, under the theme “Implications of ECOWAS potential expansion and the African Continental Free Trade Area (AfCFTA)”, in Cotonou, on June 25-26.
This Ad-hoc Meting, which will hold upon the signing of the AfCFTA by 44 countries of the 55 Member-States of the African Union, and with the intention manifested by some North African countries to join the Economic Community of West African States (ECOWAS), aims to carry out further in-depth reflection on the likely economic and socio-economic implications of these major projects.
Mr. Dimitri Sanga, Director of the ECA Sub-Regional Office for West Africa, holds that, “As Africa is firmly committed to implementing the AfCFTA, we are taking a step forward towards establishing the African Economic Community as advocated for by some of the founding fathers of the Organization of African Unity (OAU).
“This move has to come along with dispassionate discussions and reflections on the real implications of these commitments, so as to lift the barriers and overcome the relevant challenges. This is the case for on-going requests for the possible expansion of ECOWAS. We are convinced that the Experts from West Africa will provide possible solutions for completing all these projects, which have the potential of leading us towards the integration of the Sub region and the continent at large.”
The ad hoc Experts Group Meeting will help participants examine economic implications relating to trade flows and public revenues, identify and discuss the main challenges and stakes for ECOWAS, and also for the candidate-countries vying for membership. They will also make recommendations for an economic and socio-economic expansion that is beneficial for the different parties and especially for an effective AfCFTA.
This two-day meeting will include plenary sessions during which participants will discuss the major implications, challenges and stakes regarding the expansion of ECOWAS through the membership of new countries, both for the different parties and for the implementation of the AfCFTA.
The meeting will be attended by experts from ECOWAS Member States, representatives of regional economic communities and intergovernmental organizations in West Africa. Representatives of the private sector and civil society actively engaged in development efforts to promote integration in West Africa will also be present. Experts in foreign trade, customs and integration issues at the ministries of trade and economy and finance are the main targets at the country level.
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tralac’s Daily News Selection
Profiled African trade and regional integration events:
(I) The 24th ARSO General Assembly starts today in Durban on the theme: One Africa One Market – the role of standardisation in attaining sustainable development within the context of regional integration
(ii) Joint UNECA/AU-convened discussions start today in Gaborone on the theme of Corruption and the challenge of economic transformation in Southern Africa. The keynote address at the regional conference (18-20 June) will be delivered by Professor Amos Sawyer, the former President of Liberia. The three-day event (18-20 June) will be marked by robust discussions on the problem of corruption including the scourge of illicit financial flows in Southern Africa, its sources and dimensions, the role of key actors in addressing it, and how national policies can be strengthened in addressing it. These discussions will be followed (21-22 June) by a meeting of National Anti-Corruption Institutions in Southern Africa, to share experiences, lessons and challenges, discussing anti-corruption strategies, and the way forward, and tp establish a network of national anti-corruption institutions in Southern Africa through which the capacity of those institutions can be enhanced and better performance promoted.
(iii) Launching tomorrow, in Addis: the inaugural Africa SDG Index and Dashboards 2018 Report. “The Africa Index and Dashboards aim to help tackle three key problems by addressing the urgent need for comparable data, resolving issues between international and national level statistics, and raising awareness of the SDGs as a shared framework.”
(iv) Joint UNECA/UNCTAD-convened discussions start on Thursday in Geneva on Achieving accelerated structural transformation in Eastern Africa. “Eastern Africa is one of the fastest growing regions in the world but it is also one of the poorest. Yet the emphasis on structural transformation arises from concerns that the recent growth pattern in the region is neither sufficiently inclusive nor sustainable.”
(v) IGAD will convene a meeting of ministers in-charge of trade in Mombasa on 21 June to consider and adopt a regional policy framework on leveraging informal cross-border trade to promote cross-border security governance. The draft policy framework is aligned with important gains made in formulation and harmonization of trade policies at regional and continental levels through COMESA, as well as the recent milestone achievement of the AUC in gaining broad support towards the realization of the AfCFTA.
(vi) The theme of next month’s COMESA Summit is Towards Digital Economic Integration. The choice of theme is designed to rally member States towards the full adoption of digital technologies to reduce the disparities in the state of digitization across sectors in the COMESA region, particularly between high-tech and more traditional areas, and between countries and regions. Among the key issues in this year’s Summit Agenda is the consideration of membership to COMESA by Tunisia and Somalia. The Summit is also expected to appoint a new Secretary General of COMESA to take over from Mr Sindiso Ngwenya whose tenure of office is coming to an end. The Summit timetable:
African trade news:
SA traders urged to focus on neighbours (IOL)
South Africa has lost more than half of its capital-goods share of the market over the last decade, losing out to aggressive competition in markets such as the mining-rich Copperbelt region. This is according to Nigel Gwynne-Evans, chief director for African integration and industrial development at the Department of Trade and Industry’s industrial development division. Gwynne-Evans was one of the guest speakers at an event hosted by The Exporters Club Western Cape in Cape Town last week focusing on the topic: Where to Invest in Africa 2018 - How the Africa landscape has changed since 2017. Highlighting a few key aspects impacting investment into Africa, Gwynne-Evans’ presentation covered key market opportunities, issues of country data, and South Africa’s geographical position in relation to the region.
Zambia: 25 South African investors arrive in Zambia (Lusaka Times)
The delegation, whose main focus sectors are steel, energy, rail and mining, will hold meetings with government ministries and the private sector. The mission is organised by the Trade Invest Africa, a division of South Africa’s Department of Trade and Industry. It also comprises the Export Credit Insurance Corporation, the DBSA and the IDC.
EAC executive decries high number of East Africans seeking health services in India (EAC)
The Executive Secretary of the East African Health Research Commission, Professor Gibson Kibiki, has decried the high number of East Africans going to India to seek medical services which can be accessed in hospitals in the region. Prof Kibiki attributed the huge exodus of patients to India to the lack of information on health services that were available at referral hospitals in the region. He revealed that East Africans may soon be able to access treatment across national borders in addition to enjoying portable health insurance across the region, adding that the Commission would soon undertake research to gauge the feasibility of a regional health insurance scheme before piloting the scheme. He described as counterproductive the tendency by health researchers and medics in the Partner States to work in silos since the region was one and that diseases did not know national borders.
Ghana: Government to review paperless port system – Bawumia (GhanaWeb)
Vice-President Mahamudu Bawumia has announced government’s decision to review operations of the paperless port system to bring about more efficiency, improve revenue collection and rein-in corruption. He said from 1 July, the number of agencies undertaking joint inspections at the ports will be reduced from 16 to three – Ghana Standards Authority, Food and Drugs Authority and Customs Division of the Ghana Revenue Authority. Officers from the National Security or Narcotic Controls Board will join, based on intelligence. The Vice-President, speaking at the launch of ‘Mobex Africa Tech Expo’ – a technology trade show in Accra, said he found reports that some officials at the ports had been demanding documents from importers for stamping to be shocking.
Ethiopia seeks to legitimise port deals with Somalia (Daily Nation)
Ethiopia has agreed on a joint investment in Somali ports in what could be seen as Premier Abiy Ahmed’s move to legitimise logistical deals initially questioned by Mogadishu. After a meeting in Mogadishu on Saturday, President Mohamed Abdullahi Mohamed ‘Farmaajo’ and PM Ahmed said they will be investing in major infrastructure projects including ports and roads. “In an effort to attract and retain foreign investment to the two countries and the Horn of Africa Region, the leaders agreed on the joint investment in four key sea ports between the two countries, and the construction of the main road networks and arteries that would link Somalia to mainland Ethiopia,” a communiqué from the meeting said. The two said they will constitute a designated joint technical team to craft the details and timelines for the project.
New rail treaty will save South Africa over R20bn (pdf, Rail Working Group)
Speaking at AfricaRail, Howard Rosen, chairman of the Rail Working Group, told delegates that the Luxembourg Rail Protocol will save R20bn for South Africa. This assessment comes from an independent study by economics consultancy Oxera and commissioned by the Group, published today, that estimates the direct microeconomic benefits of the Luxembourg Rail Protocol. “The Oxera study does not measure the wider benefits of the Protocol, such as the environmental, social and economic advantages for the community as a whole,” said Rosen, “nor the potential benefits for the South African economy from new African markets for South African locomotive and wagon manufacturers, financiers, operators and service providers”. The protocol is expected to enter into force in 2019. South Africa has already ratified the Cape Town Convention and the equivalent protocol for aircraft. [Download: Luxembourg Rail Protocol – estimated impact on rolling stock financing cost in South Africa, pdf)
Lesotho looks forward to post-Cotonou ACP-EU agreement (IDN)
Lesotho’s finance minister, Dr Majoro attended the ACP-EU Council of Ministers’ meeting in Lomé. “It is production capacity that ensures that Lesotho has things to sell. Our considerable potential in primary and processed agricultural crops has not materialized into actual production, exports and trade with Europe,” he explains. This is where Lesotho investors should focus on, Dr Majoro adds. He says his government is working on global trade standards that would make it possible for crops such as asparagus to find their way into European markets. “Likewise our trade capacity on garments has focused mainly on AGOA, devoting little capacity to the high-value textile needs in Europe.”
Kick-starting economic transformation in Rwanda: four policy lessons and their implications (pdf, ODI)
Conclusions and implications, in summary: (a) Wise specialisation, in the Rwanda context, means giving clear priority to niche manufacturing that is employment-intensive and geared to global markets; (b) This implies clustering closely related industries in SEZs and supporting them preferentially with infrastructure – buildings, roads, power and water – and high-grade, responsive organisation; (c) As well as attracting foreign investors linked to global value chains, GoR should use its demonstrated ability to mobilise domestic private capital to encourage local entrepreneurs to support export manufacturing; (d) RDB should be authorised and resourced to follow the best Asian models in learning how to coordinate government action well and support the ‘discovery’ processes of firms in selected value chains. These conclusions point to four practical questions for the GoR and organisations wanting to support NSTP1:
Uganda maize influx prices Kenyan farmers out of market (Daily Nation)
Traders trucked in 3.28 million bags of cheaper maize from Uganda in five months through May, fresh official statistics indicate, helping price out maize farmers from Kenya’s food basket regions. Data released by the Kenya Revenue Authority shows 295,200 metric tonnes of staple maize was imported from the neighbouring country in the period, which was 47,610 tonnes more than what was bought in the whole of 2017 and 2016. Uganda accounted for 70.36% of the nearly 419,548 tonnes of maize, an equivalent of about 4.66 million 90-kilo bags, which was shipped into Kenya in that period. The rest of the maize was bought from Zambia (64,800 tonnes), Tanzania (56,245 tonnes), Mozambique (3,300 tonnes) and United Arabs Emirates (1.45 tonnes), KRA Commissioner for Customs and Border Control Julius Musyoki said in a report to legislators.
Regional Trade Agreements in Africa (pdf, FREIT)
By using a wide period of analysis, we find that RTAs were trade promoting over the period 1955-1990 but less successful more recently. To explain this result, the aim of this study has been to take into account the heterogeneity of the RTAs and of the countries involved. A “home-market effect”, beneficial to large countries but detrimental to small ones, has not been detected; but countries that are well connected to international markets were clearly the winners in RTAs in the first era of integration (1955-1990). It may be interesting in the future to pursue this analysis in order to quantify the cause of the gains erosion found here. The proliferation of RTAs between African countries and the numerous preferential trade agreements signed with developed countries have certainly contributed to make RTAs less meaningful, but to what extent? Based on current estimates it is also possible to use simple models of international trade to quantify whether more ambitious RTAs can be more efficient than the current ones. [The authors: Fabien Candau, Geoffroy Guepie, Julie Schlick], [Catch me if you can: Trade mis-invoicing and capital flight revisited in Ethiopia (pdf, FREIT)]
Today’s Quick Links: Goals set for upcoming Forum on China-Africa Cooperation Beijing summit South Africa: download the new pdf draft Mining Charter – comments are invited (956 KB) Chairman of the World Trade Centre Accra, Togbe Afede XIV: The biggest threat to African Free Trade Agreement is ourselves WTC, Accra embarks on 2nd trade and investment mission to Zimbabwe Egypt: Suez Canal revenues rise to $503m in May ISS: Food security under threat in Kenya Ruth Stewart: The benefits of African countries stepping up their use of data and evidence to inform policy IDN: Experts debate digital media’s role in tackling global inequalities |
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Experts and anti-corruption Chiefs to deliberate on corruption and the challenge of economic transformation in southern Africa
The Economic Commission for Africa, Southern Africa Office (ECA-SA) in partnership with the African Union, Southern Africa Office (AU-SARO) are organising two major anti-corruption meetings from 18-22 June 2018 in Gaborone, Botswana.
The first is a regional conference on the theme “Corruption and the Challenge of Economic Transformation in Southern Africa” from 18-20 June 2018, and the second is a “Consultative Meeting of National Anti-Corruption Institutions in Southern Africa” from 21-22 June 2018 in Gaborone, Botswana.
The keynote address at the regional conference will be delivered by Professor Amos Sawyer, the former President of Liberia, and forty-five (45) academic papers will be presented at the conference. The conference will be attended by scholars, policymakers, research institutions, civil society organisations, regional and international institutions and the media.
The three-day event will be marked by robust and intense discussions on the problem of corruption including the scourge of illicit financial flows in Southern Africa, its sources and dimensions, the role of key actors in addressing it, and how national policies can be strengthened in addressing it.
The Consultative Meeting will be attended by heads of national anti-corruption institutions in Southern Africa, selected civil society organisations and experts, development partners and regional and international institutions.
The objective of the meeting is to provide a platform for anti-corruption institutions in the region to share knowledge and experiences, lessons learned, best practices, and discuss challenges, opportunities and prospects.
The meeting will consider establishing a network of national anti-corruption institutions in Southern Africa through which the anti-corruption institutions can effectively network, strengthen their capacity and enhance their fight against corruption in the region.
Corruption no doubt retards the socio-economic progress of Africa countries. It increases the cost of doing business, discourages potential investors, leads to misallocation of scarce resources, affects the delivery of social services, and promotes rent-seeking behaviour that is not productive in African countries.
Reflecting on this background, the AU 30th Assembly of Heads of State and Government held in Addis Ababa from 22nd – 29th of January 2018 launched 2018 as the African Anti-Corruption Year themed “Winning the Fight against Corruption: A Sustainable Path to Africa's Transformation”.
Both meetings are expected to upscale the fight against corruption in Southern Africa by creating an increased knowledge base, understanding and policy options on the problem, and also strengthening the capacity of national anti-corruption institutions in the region.
The meetings are being hosted by the Government of Botswana.
Project on “Corruption and the Challenge of Economic Transformation in Southern Africa”
Background and context
The African Union has designated 2018 as the year of anti-corruption. This is not only timely but of imperative necessity. Corruption has been the bane of development and a major challenge to the goal of economic transformation in Africa. While the Continent from the 1980s has developed economic development blueprints like the Lagos Plan of Action and the Final Act of Lagos, the African Alternative Framework to the Structural Adjustment Programme (ALF-SAP), the NEPAD Document, and currently Agenda 2063, with national development plans by the different African countries, however, the goal of economic transformation remains quite elusive. Issues of policy inconsistency, governance challenges, leadership inertia, and more importantly, corruption have stalled Africa’s efforts at radical economic transformation.
The Economic Commission for Africa (ECA) in its African Governance Report IV (2016) noted that economic transformation in Africa is being undercut by compromised governance with corruption as a key variable. The report observed that weak governance breeds corruption and corruption is amongst the major costs and obstructions to economic transformation in Africa. In its varied forms (state capture, grand and petty corruption), there is mounting evidence labeling corruption as the root of gross hemorrhage and misallocation of resources in Africa. Reports of state capture in South Africa, political and electoral corruption in the DRC, Zimbabwe and Uganda, mining tender scandals in Guinea, the passport printing tender scandal in Kenya, the Cashgate scandal of Malawi (exchequer lost nearly $15.5 billion) and numerous shady mining deals in mineral and oil-rich DRC and Nigeria are just but a few African corruption incidences. Corruption has delayed growth and socioeconomic development via missed investment opportunity, retarded growth and worsening inequalities in Africa.
Corruption is heinous to development and economic transformation. It weakens the state and its capacity, encourages the misallocation or misapplication of scarce resources, promotes economic rent seeking, rather than productive activities and affects the delivery of social services. It is everything antithetical to socio-economic progress and development (Adejumobi, 2015).
There is a renewed commitment towards the goal of economic transformation in Africa. Backed by the African Union’s Agenda 2063, economic transformation is being progressively adopted by African countries to direct the deployment of factors of production to more productive sectors (industrialization). This shift is a growth strategy meant to accomplish the African dream for integration, inclusive development and prosperous communities in line with the United Nations’ Sustainable Development Goals (SDGs). In this realm, Southern African Development Community (SADC)’s Heads of State and Government endorsed the pdf SADC Industrialization Strategy (2.34 MB) in 2015 – demonstrating their readiness to spearhead economic transformation in the subregion.
Economic transformation in Africa requires massive investment in human capital and infrastructure development. However, Africa’s investment has succumbed to corruption-induced illicit financial flows. Estimates by the African Union (AU) and the ECA in the 2016 Report of the High Level Panel on Illicit Financial Flows from Africa shows that, illicit financial flows in Africa over the past 50 years exceeds $1 trillion (an amount nearly matching the total ODA received by Africa over the same period). Additionally, approximately $50 billion is lost from Africa annually through illicit financial flows. These leakages are worrying given the reduced ODA directed to Africa, sluggish growth and disturbing poverty levels. Notably, research has shown that a surge in corruption by a point on a scale (calibrated 10 (very clean) to 0 (very corrupt)) reduces production by 4% of GDP and lowers net annual capital inflows by 0.5% of GDP. On account of corruption, the average African growth rate of 5% per year since 2000 remains below the 2-digit growth rate which transformed Asian economies. Unfortunately, the poor are afflicted disproportionately by corruption through the diversion of investment resources, limiting governments’ capacity to offer public services, propping inequality and injustice and undermining foreign aid and investment. Currently, about 40 percent of the population of the Continent still lives below the poverty line.
Noting the grievous welfare and economic effects of corruption, the United Nations enacted the United Nations Convention Against Corruption (UNCAC). At a regional level, AU has set in motion a number of initiatives meant to combat corruption (African Convention on Preventing and Combating Corruption (AUCPCC), AU Advisory Board on Corruption (AUBC), the African Charter on Democracy, Elections and Governance (ACDEG)). At sub-regional level, SADC introduced the pdf SADC Protocol against Corruption (31 KB) in 2001 as a way of preventing, identifying, penalizing and stamping out corruption. At national level, nearly all Southern African countries have established bodies, institutions and legislatures meant to eliminate corruption. Despite the concerted effort, corruption in Southern Africa has continued unabatedly.
A 2017 study on the effectiveness of anti-corruption agencies in Southern Africa conducted by the Open Society Initiative for Southern Africa (OSISA) noted that corruption in Southern Africa continues to worsen and is getting sophisticated too. OSISA reports that corruption in Southern Africa obstructs transparency in government revenues and in mining contracts, allows illicit exploitation of minerals and militarization of mining, the smuggling of minerals, political patronage and clientelism, as well as political and electoral corruption. Transparency International’s Perception Index of 2016 shows that Southern African countries have dropped in their corruption rankings. Against this background, average growth for SADC has continued to fall in the recent past (2.3% in 2015 and 1.4% in 2016). Also, the manufacturing sector which is tipped to be the engine behind economic transformation in SADC has been sliding since 2010 (4% in 2010 and 2.6% in 2016). This evidence confirms that endemic corruption in Southern Africa is linked to the poor showing of the economy thus more need to be done to spur economic transformation through addressing corruption.
The war against corruption in Southern Africa requires unified effort from RECs, Governments of Member States, Civil Society Organizations(CSOs) and non-governmental organizations (NGOs), the judiciary and legislature, corruption agencies, political parties, academia, research institutions and the private sector. As such, the two broad dual objectives of the two key activities are; to through the regional conference promote knowledge, policy debate and recommendations on addressing the problem of corruption in Southern Africa; and to through the meeting of national anti-corruption institutions promote the sharing of experiences, lessons, best practices and establish a Network of National Anti-Corruption Institutions in Southern Africa.
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Synergies between the AfCFTA and Tripartite FTA will benefit Africa’s traders and consumers, says ECA Chief
Seventh Meeting of the Tripartite Sectoral Ministerial Committee for Trade, Customs, Finance, Economic Matters and Home/Internal Affairs
Executive Secretary of the Economic Commission for Africa, Vera Songwe has lauded the representative of the Tripartite group comprising COMESA, EAC and SADC for their work on synergies between the Tripartite Free Trade Area (TFTA) and the African Continental Free Trade Area (AfCFTA), signed this year by African Union Member States.
“[T]he negotiated AfCFTA text, the ideas put on paper and signed by our heads of state in March germinated from the good work of the Tripartite negotiators”, she said and added, “The shape and structure of the AfCFTA and many of its solutions, from Non-Tariff Barriers to trade remedies, were formed here in the Tripartite negotiations.”
In taking the synergies forward, she called on the tripartite bodies to work on pooling resources for efficiency gains stressing that where the tripartite has already seen successes, “these can be emulated on the continental scale.”
The Tripartite Non-Tariff Barrier Mechanism is a good example and as elaborated on by Ms. Songwe, over 510 registered complaints in the Tripartite region have been resolved. “This matters because businesses frequently indicate that such barriers are far more burdensome than tariffs.”
“The AfCFTA would gain valuably from the continental roll-out of the Tripartite Non-Tariff Barrier Mechanism, which is already envisaged within the AfCFTA Non-Tariff Barriers Annex,” she added.
There may also be cases where what is agreed at the continental level can be applied within the Tripartite area, said Songwe, noting that the upcoming phase II AfCFTA negotiations on competition, intellectual property and investment and the importance of a well-resourced Secretariat to push the negotiations, provide technical inputs where necessary, lobby at the political level, and lubricate what can be challenging negotiations are examples of critical areas of focus.
“We at the ECA strongly advocate for a robust Tripartite Secretariat,” she stressed.
She informed the meeting that the Tripartite can serve as a valuable platform for aggregating and consolidating negotiating positions. “Rather than a negotiation of 55 parties, this helps rationalize the AfCFTA into one in which 26 members have consolidated positions,” said Songwe.
According to the ECA, this is already evident within the AfCFTA negotiations, however there is clear scope to take such efficiencies forwards. In Rules of Origin, for instance, the Tripartite group might wish to bring to the continental platform, the hard work they have undertaken in identifying common rule positions and in doing so, help to expedite the pace of the AfCFTA work in this area.
“When it comes to implementation we must have in mind the type of synergies that seek our ultimate objective: that is, making the trading landscape in Africa simpler, more affordable and easier for our businesses, traders and consumers. We must therefore take considerable care that such initiatives as the Tripartite and the AfCFTA do not aggravate the infamous “spaghetti bowl” of overlapping REC trade areas and initiatives in Africa,” she stressed.
Underscoring that there are no easy answers and that solutions may come in implementation, and in ensuring that the Secretariats and institutions of the Tripartite, the AfCFTA and the RECs are aligned to work closely. Over the medium term, consolidating the trading regimes in Africa could involve harmonizing what has proven to work well in one context – such as the aforementioned Tripartite Non-Tariff Barrier Mechanism.
“Working closely together means working well,” stressed Songwe adding that as both the Tripartite and AfCFTA negotiations conclude and move towards implementation, the ECA stands ready as a supportive partner with technical advisory services and capacity building, especially in areas with complementarities between the AfCFTA and the Tripartite.
It is our businesses, traders and consumers who trade goods across our borders to whom the Tripartite and AfCFTA should serve. ECA will increasingly speak to this by deepening our collaboration with the private sector in support of trade policies, among other policy areas.
As such, regional integration and trade will remain a vital sub-programme of the ECA, with the objective of supporting our member States in their endeavour to deepen regional markets, boost intra-African trade, accelerate industrialization and tackle the challenges of structural transformation. We remain committed to supporting the Tripartite Free Trade Agreement and the AfCFTA, including through technical support to member-states, technical research and the AfCFTA Business Index that the African Trade Policy Center is currently developing as a monitoring tool to assess how well the AfCFTA is delivering on the expected gains.
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One Africa One Market – The role of standardisation in attaining sustainable development within the context of regional integration
The 24th ARSO General Assembly events, to be hosted by the Government of the Republic of South Africa, through the South African Bureau of Standards will be held on the 18th to 22nd June 2018 at the Hilton Hotel Durban.
The 24th ARSO General Assembly follows the 57th ARSO Council events which were hosted by the Government of the Republic of Sudan through the Sudanese Standards and Metrology Organisation (SSMO) in November 2017. ARSO members and Stakeholders engaged in round table discussions on the Strategies for ARSO Sustainability within the Strategic Plan 2017-2022, and heard a lecture by the Secretary General on the “Role of Quality Infrastructure and Standardisation in facilitating Trade and sustainable Development within the African Continental Free Trade Area (CFTA)”.
The ARSO President Dr. Eve Gadzikwa in her official address to the delegates highlighted the importance of ARSO and its standardisation programmes in achieving the Africa’s Industrialization Agenda and the implementation of the African Continental Free Trade Area (AfCFTA).
Dr. Gadzikwa made reference to the celebrations of African Industrialization Day on 20 November, with the 2017 theme being “African Industrial Development: A Pre-Condition for an Effective and Sustainable Continental Free Trade Area (CFTA)”, which focused on the industrial challenges faced by Africa, with a special emphasis on industrial development as a foundation for the implementation of the AfCFTA.
This also happened at a time when the global focus on Africa’s industrialization with the need for the sustainable industrialization in Africa captured by the unanimous adoption of a resolution proclaiming the period 2016-2025 as the Third Industrial Development Decade for Africa on 25 July 2016 by the United Nations General Assembly and by the initiative by the G20 to include in their Action Plan, support for Industrialization in Africa and Least Developed Countries, upon the proposal by the Chinese Presidency in September 2016.
UNECA, in its Economic Report on Africa 2015, highlights the importance of such institutions as PAQI (ARSO) in addressing the TBT issues: “[S]tringent standards and sanitary and phytosanitary measures, due to Africa’s lack of quality-assurance and easily accessible standard setting and monitoring bodies, increase costs for African producers, particularly in developed country markets. Given these bodies’ large fixed setting-up costs, the case for a coordinated regional action including strengthening the African Organisation for Standardization (ARSO) and PAQI institutions by extension, is self-evident.”
USAID (2016) warns against underestimating the importance of metrology, accreditation, standards, certification, and quality (MAS-Q) in the development of economic policies as understanding the link between global trade, industrialization MAS-Q and export competitiveness is at the forefront of trade policy.
UNIDO (2016) further highlights that “Setting up a Quality Infrastructure System is one of the most positive and practical steps that a developing nation can take on the path forward to developing a thriving economy as a basis for prosperity, health and well-being.
Experts (including Jensen and Sandrey, 2015) have indicated that to benefit from the CFTA, Africa must focus on reducing technical barriers to trade as major inconsistencies among countries’ and Regions’ (RECs) standards, technical regulations and conformity assessment regimes, as a major obstacle for trade, remain, and this can only be underpinned by an effective and better quality infrastructure.
NTMs, especially the Technical Barriers to Trade (TBTs – Standards, technical regulations and Conformity assessment regimes) are still prevalent across Africa´s regional groupings, despite positive efforts made in reporting and monitoring mechanisms.
The 24th General Assembly is scheduled to take place three months after the signing ceremony of the Framework Agreement Establishing the African Continental Free Trade Area (AfCFTA) by the AU Head of States during their Extraordinary Summit on 21st March 2018 in Kigali, Rwanda. The elimination of tariff and non-tariff barriers called for by the AfCFTA, under an effective Quality Infrastructure initiative offers African countries a great long-term opportunity and greater challenge (political, economic, legal and functional – under the WTO TBT/SPS Agreement) to improve industrial capacity and trade.
Due to their mandate and influence on the establishment of the legal and institutional framework, Quality Infrastructure governance structures in Africa, such as ARSO, NSBs and the PAQI institutions have a decisive influence on how the regional economic integration and the challenges of the TBTs presents a stepping stone or rather a stumbling block towards the liberalization of trade within the AfCFTA.
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tralac’s Daily News Selection
AfCFTA Ratification Barometer: Number 4 - Niger; Number 5 - Mali; Number 6 - Swaziland
AfCFTA agreement too narrow and hasty: Yao Graham (Graphic)
The co-ordinator of the Third World Network (TWN-Africa), Dr Yao Graham, has criticised the Continental Free Trade Agreement for Africa, in its current form, describing it as “hasty, too narrowly focused to trade liberalisation without recourse to the other pillars of trade development”. He said the agreement was also “too exclusive” and cautioned that an African trade integration should avoid the mistakes of how trade liberalisation had been done in other contexts. Dr Graham pointed out that any trade integration should be consciously developmental and aligned with other steps which would strengthen the production capacity of the continent.
The other trade war: The US and Rwanda on second-hand clothing (pdf, Afreximbank Research)
Despite being a non-reciprocal US trade assistance programme, interest groups in the United States (such as SMART) have seen AGOA as an opportunity to seek concessions or reciprocity. In this context the 2015 AGOA Act potentially creates a system of structural attrition between the US and AGOA beneficiary countries by leveraging non-reciprocal preferential access into the US to gain increased access into African markets and potentially undermine industrialization ambitions. In terms of the new legislation, the USTR is geared towards supporting US lobbyists and other groups that seek to advance their economic interests in such markets if these US-based lobbies are aggrieved by some economic policies (trade or investment measures, such as IP or local content, environment, labour) adopted by an AGOA beneficiary country or a trade agreement that the beneficiary country has signed with a third country. Such an aggrieved party can petition the President to act against such a country by threatening to withdraw or suspend AGOA benefits or remove the country altogether from AGOA. Thus the new AGOA Act threatens to create increased tension in bilateral relations rather than deepening cooperation, and with the US increasingly recognizing the potential of the African consumer market for US exports it could have serious implications for industrial policy autonomy and diversification efforts in African countries.
EAC states budget 2018/2019 highlights: a quick overview
(i) pdf Kenya Budget Statement 2018-2019 (5.77 MB) . Customs measures: During the EAC Pre-Budget Consultations meetings, we agreed on Customs duties aimed at promoting industrialization, encouraging local investments, and creating incentives in the agricultural and manufacturing sectors. The measures are also intended to make our products more competitive while at the same time protecting local industries from unfair competition. Details of the Customs measures will be communicated through the EAC Gazette and implemented from 1 July this year. I will highlight a few of them. Our iron and steel industry is facing stiff competition from imported cheap and subsidized iron and steel products. In order to protect the local iron and steel industries, I have increased the rate of import duty from 25% to 35% in a wide range of steel and iron products which are available in the region.
Kenya has sufficient capacity to produce some paper and paper products which require protection. To protect manufacturers of these products, I have increased the rate of import duty from 25% to 35% on some paper and paper board produced in the region. Our textile and footwear sector are closing down due to increased unfair competition from cheap imported textiles and footwear as well as second hand clothing and footwear. In order to encourage local production and create jobs for our youth in the sector, I have introduced a specific rate of import duty of USD 5 per unit or 35% whichever is higher. This should guard against undervaluation.
To protect the timber and furniture industry from proliferation of cheap timber products and to enhance the local production, I have introduced a specific rate of duty of USD 110/MT on particle board, USD 120/MT on medium density fiber board, USD 230/M3 on plywood and USD 200/MT on block boards, or an advalorem duty of 35% whichever is higher. Our local manufacturers have adequate capacity to manufacture vegetable oils to meet regional demand. To protect our local manufacturers from imported cheap vegetable oils, I have introduced a specific rate of USD 500/MT of 35% whichever is higher.
(ii) pdf Uganda Budget Speech 2018-2019 (910 KB) . International trade: Export earnings rose by 9.6% to $3.93bn in the period July 2017 to March 2018 from $3.59bn a year earlier. This increase was mainly on account of a rise in the export volumes of beans, coffee, tea and maize. Over the same period, exports to the rest of the EAC grew from $792.3m to $943.5m; while exports to Europe grew from $415.8m to $466.1m. On the other hand imports increased by 16.4% valued at $5.7bn in the period July 2017 to March 2018 from $4.9bn over the same period the previous year. This was attributed to the increase in the prices of oil imports and the increased inflow of capital goods to support domestic investment, particularly in oil and gas, electricity and roads.
(iii) pdf Tanzania Budget Speech 2018-2019 (1.41 MB) . The Government debt has been increasing. Nevertheless, this debt is still sustainable and its growth is aligned with economic growth. The Debt Sustainability Analysis which was conducted in November, 2017 revealed that the debt is sustainable in medium and long term. The ratio of present value of public debt to GDP was 34.4% against the threshold of 56%; the present value of external public debt to export was 81.8% against the threshold of 150%; the present value of external public debt to domestic revenue was 117.1% compared to the threshold of 250%; the debt services to export was 9.3% compared to the threshold of 20%; and external debt service to domestic revenue was 13.3% compared to threshold of 20%. Let me again emphasize that it is not a sin if the country borrows prudently. The most important issue is to ensure that loans are utilized to increase productive capacity and, in turn, that the economy be able to repay loans in accordance with the ability of the economy to sustain the debt burden.
Downloads from this week’s Southern Africa Stakeholder Forum: Private sector and regional integration – opportunities for investment and growth
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Dr Amany Asfour (Chairperson of COMESA Business Council): Towards trade support and business facilitation in COMESA: challenges, opportunities and collaboration areas to be addressed by CBC and partners
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Mr Jamie MacLeod (Africa Trade Policy Centre): AfCFTA Country Business Index – the private sector at the heart of measuring impact
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Mr Snowden Mmadi (NEPAD): Towards expanded investment in regional infrastructure – increasing public-private partnership
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Dr Sofia Cassimo (Vice-President, Femme): Aspectos que mais influenciam na participação da mulher na economia
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Mr Joseph Musariri (Federation of Clearing and Forwarding Associations): Accelerating transborder investment and trade toward greater regional integration in southern Africa
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Dr Janine Chantson (President, Southern African Research and Innovation Management Association): Supporting SMEs and innovation: creating an enabling environment
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Ms Duduzile Nhlengethwa (CEO, Federation of Eswatini Business Community): Supporting SMEs and Innovation: creating an enabling environment for inclusive regional economic growth
Global Forum on Inclusive Trade for Least Developed Countries highlights ‘inclusive trade’ for world’s poorest countries
Speaking at the opening plenary of the 13-14 June event, UNCTAD Secretary-General Mukhisa Kituyi said that LDCs faced falling behind the rest of the world. “We have seen, during the last eight years alone, LDCs’ share of global trade decline from 1% to 0.8%.” But, he said, “it has been demonstrated beyond any doubt that, properly used, trade can be a great enabler for development.” In looking for new routes to inclusive trade, LDCs must prepare to exploit e-commerce and the digital economy, Dr. Kituyi said. “UNCTAD is helping least developed countries fashion their laws and regulations so that they can get on the fast-moving train of electronic commerce.”
The Secretary-General also said that it would be a mistake to leave out the contribution of women in any inclusive analysis of how to boost trade between LDCs. “Most regional traders are women, but most regional integration efforts in least developed countries are structured by men for urban men,” Dr. Kituyi said. “If men are moving containers across borders it’s called regional free trade, if a woman is moving 10 kilos of grain, she’s called a smuggler! So identifying the vulnerabilities and ambiguities in practice and roles is an important area for unlocking potential of women traders, who are going to be major players in this.” [Trade among Least Developed Countries set to be boosted following historic WTO collaboration (Commonwealth Secretariat)]
Moving for prosperity: global migration and labor markets (World Bank)
Helping the losers by taxing the winners (extract): Once the issue becomes adjustment assistance to those who are affected by immigration, we are immediately confronted with the question of financing. The natural answer is that the beneficiaries of immigration should, at least partially, be responsible for the cost. Currently, legal immigration is practically regulated using quotas, that is, restrictions on the number of immigrants of a certain education/occupation/sector category allowed to enter and work in a country. The imposition of quotas by the destination country government causes, as in international trade, several specific problems.
First, bureaucrats, instead of employers or markets, make the assessment of how many immigrants should be allowed to enter the labor market. Generally, little evidence exists about what type of immigration - by skill, occupation, sector, or experience - most benefits a destination country, especially in the long run. And the needs of the labor market change over time. Second, as is well documented in the literature, quota-based systems are subject to rent-seeking and corruption as firms try to sway government officials to issue quota permits to themselves or to their industries. Finally, and this speaks to the issue of finance, quotas do not generate revenue for the government. Instead, they benefit only those firms (that is, the quota permit holders) lucky enough to hire an immigrant by, for example, obtaining an employment visa, or the intermediary firm who does the recruitment. A possible solution, and our next policy recommendation, is that governments should start to replace quota regimes with tax regimes to regulate immigration flows. This might take the form of an additional income tax, a visa fee, or even a visa auction system as proposed by many prominent economists going back to Gary Becker. [Overview, pdf]
OECD: 2018 report on the DAC untying recommendation (pdf)
India and China were the non-DAC countries with the highest successful bids as shown in Table 9 Most represented countries in contract awards, 2008-2016). They also account for 40% of total contract value awarded to developing countries (including LDCs and HIPCs) between 2008 and 2016. Yearly fluctuations aside, they also seem to win an increasing share of DAC Members aid projects.
Today’s Quick Links: Chinese delegation in SA in response to Cyril Ramaphosa’s call for $100bn investment African governments are relaxing visa requirements for Chinese nationals: update On topics pertinent to firms in Sub-Saharan Africa: downloads from the fifth Annual Bank Conference on Africa, finishing today Comoros Poverty Assessment: Inequalities persist despite declining poverty levels Ghana engages South African Airways to commence a new flight to London |
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Forum highlights ‘inclusive trade’ for world’s poorest countries
With a share of global trade of less than 1%, fresh ideas are needed to bring the world’s poorest countries into the international trading system.
Better trade that boosts prosperity in the world’s poorest countries depends on new “inclusive” policies that prioritize women, young people, small businesses, technological upgrading and lowering barriers, a forum hosted by the World Trade Organization has heard.
The first-ever Global Forum on Inclusive Trade for Least Developed Countries (LDCs) brought together representatives from the 42 LDCs that are also WTO members, as well as from countries that have recently graduated from LDC status, heads of government, international organizations, the private sector and non-governmental organizations.
Speaking at the opening plenary of the 13-14 June event, UNCTAD Secretary-General Mukhisa Kituyi said that LDCs faced falling behind the rest of the world.
“We have seen, during the last eight years alone, LDCs’ share of global trade decline from 1% to 0.8%.” But, he said, “it has been demonstrated beyond any doubt that, properly used, trade can be a great enabler for development.”
In looking for new routes to inclusive trade, LDCs must prepare to exploit e-commerce and the digital economy, Dr. Kituyi said.
“UNCTAD is helping least developed countries fashion their laws and regulations so that they can get on the fast-moving train of electronic commerce.”
Vulnerabilities and ambiguities
The Secretary-General also said that it would be a mistake to leave out the contribution of women in any inclusive analysis of how to boost trade between LDCs.
“Most regional traders are women, but most regional integration efforts in least developed countries are structured by men for urban men,” Dr. Kituyi said.
“If men are moving containers across borders it’s called regional free trade, if a woman is moving 10 kilos of grain, she’s called a smuggler! So identifying the vulnerabilities and ambiguities in practice and roles is an important area for unlocking potential of women traders, who are going to be major players in this.”
UNCTAD has pioneered analysis of gender in trade and development through tools such as its methodology for assessing the gender-related impacts on trade agreements.
Joining Dr. Kituyi was Britain’s ambassador to the United Nations in Geneva Julian Braithwaite, Central African Republic commerce and industry minister Hassan Come, and Fatoumata Jallow-Tambajang, vice president of The Gambia.
WTO Director General Roberto Azevêdo spoke by video.
“This event is exclusively dedicated to achieving inclusive trade in LDCs – and therefore it could not be more important,” Mr. Azevêdo said.
“Our aim here is to ensure that more and more people benefit from international trade – especially in LDCs. We must work to strengthen the system so that it is responsive to all of our members. And we must build on the various decisions on LDC issues that WTO members have already taken in recent years.”
Ms. Jallow-Tambajang said: “I am pleased to say that as part of this forum I am announcing a Call to Action – action needed to use trade to fight poverty around the world, action needed to support the global trading system, action needed to foster inclusive trade. Trade action for LDCs is needed now, amid global uncertainties, a growing trade gap and changes in what is traded and how.”
Bright ideas
Other speakers included Princess Abze Djigma of Burkina Faso and Commonwealth Secretary General Patricia Scotland.
On June 14, the forum featured a “Dragon’s Den” business pitching event named after the British television show, which is also known as “Shark Tank”.
Business leaders from Malawi, Bhutan and Samoa – all women – made presentations about their projects, which included examples of adding value to agricultural exports, to an international panel of experts. The winner was Betty Chinyamunyamu, chief executive officer of the National Smallholder Farmers’ Association of Malawi.
Further sessions looked at the African Continental Free Trade Agreement and the WTO’s Trade Facilitation Agreement – relatively new instruments which aim to help LDCs integrate into regional and international trade. All sessions can be viewed on online.
The forum was organized by the Enhanced Integrated Framework (EIF), a multilateral partnership dedicated exclusively to helping LDCs use trade as an engine for growth, sustainable development and reducing poverty.
“It may not have the catchiest name but the work the EIF is doing is critical to help with trade in the poorest countries in the world,” said Sarah Beeching, a moderator at the event.
Inclusive trade action for LDCs needed now: Call to Action
For the first time, representatives from four Least Developed Countries (LDCs) from diverse parts of the African continent are coming together to lead a call for targeted trade action for LDCs.
Their Call to Action affirms the role of trade as an engine for sustainable growth, reinforces the importance of the multilateral trading system and commits to inclusive trade policies.
Representatives from The Gambia, Burkina Faso, the Central African Republic and Uganda are taking part in the Global Forum on Inclusive Trade for Least Developed Countries (LDCs), a first-of-its-kind event held at the World Trade Organization (WTO) and hosted by the Enhanced Integrated Framework (EIF).
Gambia Vice President and Minister of Women’s Affairs Fatoumata Jallow-Tambajang said, “Action is needed to build synergies and strong partnerships, action is needed to fight poverty around the world, taking into consideration the significant contributions of women and youth entrepreneurs. Action is needed to foster inclusive trade.”
“Following the historic democratic change in government in The Gambia, we have been working tirelessly to make The Gambia a hub for inclusive trade and investments – we know there are challenges in improving the situation for all LDCs, which is why we are calling for more action.”
Today there are 47 LDCs, which are the world’s poorest countries determined by a combination of three factors: per capita income, human assets like education and nutrition, and economic vulnerability. Despite strong efforts to incorporate LDCs into the global trading system, there is a widening trade gap.
“We need to foster trade development in our countries as trade is the best weapon to fight poverty. And, importantly, that action will include women, who are so often part of informal economies,” said Her Royal Highness Princess of Burkina Faso Abze Djigma, who is supporting the Call to Action.
It is a critical time for LDCs, and the group called for concrete steps and joint action for more inclusive trade, including essential support for women and small businesses.
UK Mission to the UN Ambassador and Deputy Permanent Representative Andrew Staines said, “The UK is a strong believer in the power of aid for trade to unlock growth, reduce poverty and create the trading partners of the future.”
“The global debate on aid focuses increasingly on inclusive economic growth, job creation and ensuring that no one is left behind. The UK supports the rhetoric and believes that the EIF is uniquely suited to unlock sustainable trading opportunities for LDCs. For this reason, the UK announced more than £16M of funding for the EIF at the WTO Ministerial conference in Buenos Aires last December.”
The time is now to act to further integrate LDCs into an inclusive trading world, and the LDC representatives call on the global community to work together with them to support trade for development.
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Trade among Least Developed Countries set to be boosted following historic WTO collaboration
Least Developed Countries are set to benefit from an agreement that unites the work of the Commonwealth Secretariat and the World Trade Organization (WTO) to boost commerce.
Commonwealth Secretary-General Patricia Sctoland on 13 June 2018 signed a memorandum of understanding (MOU) with the trade body’s Enhanced Integrated Framework, during a two-day summit at the WTO headquarters in Geneva.
The agreement will support Commonwealth Least Developed Countries (LDCs), many of which also fall within the category of Small and Vulnerable Economies and Small Island Developing States.
The collaboration is one of the first of the communique commitments from the Commonwealth Heads of Government Meeting to be delivered. At the biennial summit in April, leaders of the 53 member reaffirmed their commitment to free trade in ‘a transparent, inclusive, fair, and open rules-based multilateral trading system, which takes into account the special requirements of least developed countries and small and vulnerable economies.
In addition, they welcomed initiatives to ‘strengthen the Commonwealth Small States Office in Geneva through the provision of additional resources and the sharing of technical expertise that enables small and developing states to participate in the multilateral trading system and benefit from trade-related economic growth’.
LDC’s currently only account for less than one per cent of all global trade. While it still represents a tiny percentage, that figure is more than double among Commonwealth countries (two per cent) and is expected to grow further to 2.2 per cent by 2020.
In an effort to break this cycle (the global figure has remained around one per cent for more than a decade) the MOU will see Commonwealth and WTO collaboration on trade-related research, technical assistance, impact assessments and capacity building for LDCs.
Speaking at the signing, Secretary-General Scotland said, “Strategic partnerships are indispensable if we are to deliver on the objectives agreed with our member countries, around a quarter of which are currently classified as Least Developed Countries.
“Our Memorandum of Understanding builds on the collaborative working relationship we have developed with the EIF over recent years, and the intention is that together we will provide broader support to our members through the transition process.”
The MOU will also help countries work towards United Nations Sustainable Development Goal 17.11, which aims to double the least developed countries’ share of global exports by 2020.
It is expected that, between 2021 and 2025, Solomon Islands, Vanuatu, Bangladesh, Kiribati and Tuvalu will have progressed beyond LDC status.
Discussing the importance of supporting Least Developed Countries, Director-General of the World Trade Organization, Roberto Azevêdo said, “The Enhanced Integrated Framework is the driving force behind this forum. The EIF is the only multilateral partnership dedicated exclusively to assisting the LDCs to trade. It plays a vital role in helping these countries use trade as an engine for growth, poverty reduction and sustainable development and it has made a real impact on the ground.”
Commenting on the direct benefit to Commonwealth countries Mr Azevêdo said, “In Malawi, the EIF has stimulated more than US$47m in agricultural exports. And in Samoa the EIF has helped over 650 farmers to achieve certification as organic. This will boost incomes by over US$200,000 annually.”
Secretary-General Scotland also took part in a panel discussion, alongside Uganda’s Trade Minister, Cambodia’s Secretary of State for Commerce, and the Executive Director of the International Trade Centre.
The discussion, titled Forging new paths for LDCs in multilateral and regional trade, focused on ways in which to integrate LDCs into regional and global trading systems amid economic and political uncertainty.
Addressing an audience of more than 300 global trade experts, Secretary-General Scotland said, “Given our Commonwealth advocacy for more effective disbursement mechanisms, we welcome the continued strengthening of the Enhanced Integrated Framework as a central pillar in the architecture for international support and distribution of Aid-for-Trade resources within the World Trade Organization.”
Following the signing of the MOU, the Executive Director of the Executive Secretariat for the EIF, Ratnakar Adhikari, said, “This means a lot for Least Developed Countries. The Commonwealth Secretariat has a good knowledge and the expertise that is necessary to help these countries on issues relating to trade and investment.
“We would like to use this MOU as an opportunity to advance our work in these areas to enable LDCs graduate from the group of LDCs. That graduation is something we want to see in a sustainable manner, which is something for which this partnership will be instrumental.”
Permanent Representative to the United Nations Office at Geneva, Robert Salama, said, “One of the areas the Commonwealth can assist Malawi with is in the development of skills, because we need our people to be empowered. For example, digital skills are becoming very important and it is an area that I think we can benefit from as a member of the Commonwealth.”
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Global migration can be a potent tool in the fight to end poverty across the world
High-income destination countries could realize even bigger gains with efficient labor market policies
Global migration has lifted millions out of poverty and boosted economic growth, a new World Bank report finds. But destination countries risk losing out in the global competition for talent and leaving large gaps in their labor markets by failing to implement policies that address labor market forces and manage short-run economic tensions.
Large and persistent differences in wages across the globe are the main drivers of economic migration from low- to high-income countries, according to Moving for Prosperity: Global Migration and Labor Markets. Migrants often triple their wages after moving to a new country, helping millions of migrants and their relatives at home escape poverty. Destination countries often benefit as migrants fill critical roles, from advancing the technological frontier in Silicon Valley to building skyscrapers in the Middle East.
Despite the lure of higher wages, rates of migrants as a share of the global population have remained mostly unchanged for more than five decades, even as global trade and investment flows have expanded exponentially during this time.
Between 1960 and 2015, the share of migrants in the global population has fluctuated narrowly between 2.5 and 3.5 percent, with national borders, distance, culture, and language acting as strong deterrents.
Highlights of key findings from the report include:
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Migration flows are highly concentrated by location and occupation. Currently, the top 10 destination countries account for 60 percent of around 250 million international migrants in the world.
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Surprisingly, concentration levels increase with skill levels. The United States, the United Kingdom, Canada and Australia are home to almost two-thirds of migrants with tertiary education. At the very peak of talent, an astonishing 85 percent of all immigrant Nobel Science Prize winners are in the United States.
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Education levels of women are rapidly increasing, especially in developing countries, but opportunities for career growth remain limited. As a result, college educated women from low and middle-income countries are the fastest growing group among immigrants to high-income countries.
“The number of international migrants continues to remain fairly modest, but migrants often arrive in waves and cluster around the same locations and types of jobs,” said Shantayanan Devarajan, World Bank Senior Director for Development Economics and acting Chief Economist. “Better policies can manage these transitions in a way that guarantees long-term benefits for both citizens and migrants.”
The report recommends various policy measures to ensure the benefits of migration are shared by host and immigrant communities for generations to come. Key among them:
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Effective migration policies must work with rather than against labor market forces. For example, where there is large unmet demand for seasonal work, temporary migration programs, like those in Canada or Australia, could address labor market shortages while discouraging permanent undocumented migration.
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Quotas should be replaced with market based mechanisms to manage migration flows. Such tools can pay for the cost of government assistance to support dislocated workers. In addition, the most pressing needs of the labor market can be met by matching migrant workers with employers that need them the most.
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Creating a pathway to permanent residency for migrants with higher-skills and permanent jobs creates incentives for them to fully integrate in the labor markets and make economic and social contributions to the destination country.
“We have to implement policies to address the short term distributional impact of migration flows in order to prevent draconian migration restrictions that would end up hurting everyone,” said Asli Demirguc-Kunt, Director of Research at the World Bank.
The report argues that migration will be a fundamental feature of the world for the foreseeable future due to continued income and opportunity gaps, differences in demographic profiles, and the rising aspirations of the world’s poor and vulnerable.
“The public debate over migration would benefit from recognizing data and research,” said Caglar Ozden, Lead Economist and the lead author of the report. “What this report tries to bring to the debate is rigorous, relevant analysis to support informed policy making.”
Moving for Prosperity: Global Migration and Labor Markets is the latest in a series of Policy Research Reports that comprehensively review the latest research and data on current development issues. The new report presents the key facts, research, and data on global migration gathered from the World Bank, U.N., academia, and many other partners.
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Thursday was East African Budget Day: an initial overview of some highlights
Launching next week, in Mauritius: AfDB’s 1st Electricity Regulatory Index
Next week, in Lagos: 3rd ICC Africa Conference on International Arbitration
Next week’s OECD SWAC Secretariat seminar presents key results of its analytical work for 2017-18: on cities and urbanisation and the food economy, employment and women.
Featured tweet, @snkaringi: After a successful GTAP Purdue Board meeting advancing Africa global agenda, UNECA will be presenting new preliminary simulation results of AfCFTA to an economists audience among leading researchers in global economic analysis at GTAP Conference
Euler Hermes, Allianz Research: Investment flows in Africa peaks over treaty on free trade area (BusinessDay)
We expect African exports to increase by a wide margin, based on two deterrent scenarios. The first one is without AfCFTA, and is driven by current development trends and foreign investor appetite for Africa. After China, Turkey developed a strategic partnership with African economies, and India is about to do so. In this first scenario, African exports would grow but trade would remain quite vertical, as commodity exports would keep the lion share of total exports. Based on our country scenario (on nominal GDP growth, exports and exchange rates), we estimate that African exports of goods and services would increase by +7% per year and reach $1275bn by 2030. But, intra-African exports would stick with their 19% share of the total.
The second scenario adds an AfCFTA impact on exports. Continental exports would grow by about +8% per year and reach $1415bn by 2030. This scenario yields also to very different structures of trade. Intra-African exports would reach 27% of the total, about the current ASEAN intra-regional trade share. Under this second scenario, intra-African exports would grow by about +11% per year (+7% with the first scenario). Manufactured goods would also represent a higher share of total ex- ports in this second scenario, jumping to 28% ($398bn) from 24% ($308bn) in the first scenario. It also means that the trade impact of an AfCFTA would be asymmetric. Manufactured goods and service exporters will make the bulk of additional export gains (South Africa, East Africa), while many oil exporters would not see key divergences, as e.g. Nigeria, Algeria or Gabon. Additionally, food exporters will also be big winners (Ghana, Zambia, and Côte d’Ivoire), since current barriers to food exports are among the biggest barriers to trade in Africa.
TFTA ratification: South Africa’s trade with TFTA countries (DTI)
South Africa’s trade with TFTA countries represents about 16% of SA’s trade with the world; in 2017 total trade with TFTA countries was in the tune of $27,6bn; a bulk of the trade is with SADC countries. After SADC, Egypt, Kenya, Ethiopia and Uganda feature as export destinations of potential; South Africa exports to Kenya account for 3,3% of TFTA exports. South Africa, in turn, receives about 2% of its TFTA imports from Egypt. [Extracted from the dti presentation to the SA parliament: pdf Ratification of the COMESA-EAC-SADC Tripartite Free Trade Area (405 KB) ]
Kenya Africa exports slide continues to new eight-year low (Business Daily)
Kenya’s exports to key markets in Africa fell to an eight-year low in the first four months of the year, official statistics show, continuing a trend that has been reflected in annual data over the years. Latest data by the Central Bank of Kenya show earnings from the continent were about Sh71.44 billion, a 4.5% drop compared to the same period in 2017 and the lowest since 2010. Reduced trade between Kenya and the rest of Africa is in keeping with a trend observed in the 12 months to December 2017.
National Green Export Reviews: Angola project begins work on ‘greening’ country’s trade (UNCTAD)
The workshop (11-22 June, Luanda) is the first step in the process of coming up with a national strategy for building competitive “green” economic sectors in Angola, which will be defined in the National Green Export Review. Opening the workshop (pdf), Angola’s trade minister, Joffre Van-Dúnem Júnior said: “The National Green Export Review is a key factor for the transition from an economy focused on extractive industries and on the export of a single product to an economy focused on the export of more environmentally-friendly products. The dynamic sectors of the green economy can make important contributions to the attainment of national development objectives related to economic diversification, poverty reduction, rural development, job creation and an overall improvement of social welfare.”
Algeria: 2018 Article IV Consultation (IMF)
Extract from Annex V – External Sector Assessment: The current account deficit remains large, dented only by a recent small hike in oil prices. The large drop in oil prices in 2014 and declining hydrocarbon production turned large positive current account surpluses into large deficits. Since then, Algeria has not been able to redress the balance through fostering non-hydrocarbon exports or sufficiently reducing import demand. The recent increase in oil prices has somewhat helped reduce the current account deficit, which is estimated at 12.3% of GDP for 2017, down from 16.6% in 2016. In the baseline scenario, the current account deficit is projected to narrow significantly in the medium term, reflecting the impact of fiscal consolidation as well as hardened tariff and nontariff trade barriers.
Algeria’s external buffers remain sizeable but are declining rapidly. International reserves stood at about $96bn at end-2017 (excluding SDRs), equal to 19 months of imports and 402% of the IMF’s adjusted ARA metric. But reserves are now about half of their peak value in 2013 and are projected to decline over the medium term in the baseline scenario (13bn in 2023, equal to about 3 months of imports). Total external debt stood at just 2.3% of GDP in 2017 and is unlikely to increase in the foreseeable future as the government remains averse to external borrowing and given restrictions on nongovernment external borrowing. [Selected Issues report: Improving public spending efficiency to foster more inclusive growth]
Ghana remains an important gateway to West Africa – Paul Lewis (GhanaWeb)
The Scottish Development International has described Ghana as an important gateway into the wider West and sub-Saharan African market place for business and upstream oil and gas operations. Speaking at the first Ghana Oil and Gas Trade Mission, Paul Lewis, the Managing Director of the SDI, which is the global arm of Scotland’s enterprise agencies, said they agreed on Ghana half a decade ago to establish the SDI’s direct presence due to its unique features. He said Ghana and the rest of Africa have the potential, and while the SDI has just a little presence, the truth remains that “We have great ambitions for Africa’s market place.” Mr. Lewis said the actualization of its ambitions to enter Africa’s market place depended largely on right and trusted partners to work with for mutual benefits. The mission, he said, could be described as a representation of a team, which is collaborating with Aberdeen and Grampian Chamber of Commerce and the UK Chamber of Commerce with the support of the Petroleum Commission.
Help for Singapore firms to enter East Africa (Staits Times)
Enterprise Singapore (ESG) opened a centre in Kenya yesterday - its third in Africa - to help Singapore companies enter the region and boost trade and investment between both markets. The centre in the capital Nairobi will serve as a regional hub for East Africa and complement ESG’s outlets in Johannesburg and Accra. ESG has identified several growth sectors in East Africa where Singapore firms can contribute, including fintech, e-commerce, logistics, light manufacturing and urban solutions and energy. The official opening coincided with a state visit to Kenya and Rwanda by Deputy Prime Minister Tharman Shanmugaratnam, who is also Coordinating Minister for Economic and Social Policies, and Dr Koh Poh Koon, Senior Minister of State for Trade and Industry.
Kenya: Industry minister warns Chinese firms on fake goods (Business Daily)
“As we get a lot of goods coming to our country, we want to make sure that they comply with all the necessary quality standards,” said Mr Mohammed, while speaking at the opening of the fourth annual China Trade Week exhibition in Kenya. The Industrialisation CS further warned Chinese firms against coming into the country under the guise of attending the exhibition and then using the opportunity to set up shops without seeking the necessary licences. This hampers business for small and medium-sized enterprises owned by Kenyans.
South Africa’s Bureau of Standards: Rob Davies calls for suspension of SABS board following serious lapses; SABS fights back against intention to suspend notice; Presentation by dti’s Lionel October on the pdf Eskom Inquiry: Mr Matshela Koko’s Testimony and Matters Related to the SABS (622 KB) ; Status Report on the SABS Inquiry: pdf Background documents (2.21 MB)
Trade between China and Portuguese-speaking countries up 26% in the first quarter of 2018 (MacauHub)
Brazil remained China’s largest partner in the period between January and March with trade estimated at $21.4bn (+27.9%) followed by Angola with $6.804bn (+22.4%) and Portugal with $1.344bn (+15.3%). Mozambique was China’s fourth-largest trading partner among the Portuguese-speaking nations with total trade of $532m (+25%). China’s imports from Portuguese-speaking countries increased by 7.76% compared to February, while exports from China to Portuguese-speaking countries fell by 20.67% over the previous month.
Vietnam: Economic Update (World Bank)
The report examines economic developments in Vietnam in 2018, including its strong trade performance, increased FDI inflows, and public debt stabilization, among others. It also includes a special section on the government’s efforts to reduce trade costs and enhance competitiveness. A four-pillar integrated program on trade facilitation and logistics, is outlined. It includes: (i) Promoting trade facilitation by simplifying customs and specialized management regulations; (ii) Enhancing efficiency of trade-related infrastructure and the quality of connectivity; (iii) Building a competitive logistics service sector; and (iv) Strengthening interagency coordination and partnership with the private sector. It is intended to reduce non-tariff costs, thereby further boosting export-led growth, improving the business environment, and enhancing competitiveness.
Today’s Quick Links: Nissan reveals expansion plans for India, Africa and Middle East Texas Wheat hosted Sub-Saharan African trade team The ARC plans to insure 30 African countries against climate risks by 2020 Emirates increases frequency between Dubai, Angola IMF: How to operationalize (i) Inequality issues, (ii) Gender issues in country work |
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EAC states budget 2018/2019 highlights
East African Community (EAC) member states – Uganda, Tanzania, Kenya, and Rwanda – presented the 2018/2019 budgets before their respective parliaments on Thursday afternoon.
The MPs are expected to debate and approve the budget proposals.
The governments’ financial year starts on July 1.
EAC Budget Day’s theme was “Industrialisation for Job Creation and Shared Prosperity”.
Budget Figures
Country |
Finance Minister |
2018/2019 budget |
2017/2018 budget |
Percentage change |
KENYA
|
Henry Rotich
|
Ksh3 trillion ($30b)
|
Ksh2.6 trillion ($26b)
|
15%
|
TANZANIA
|
Philip Mpango
|
Tsh32.48 trillion ($14.3b)
|
Tsh31.71 trillion ($14b)
|
2%
|
UGANDA
|
Matia Kasaija
|
Ush32.7 trillion ($8.5b)
|
Ush29 trillion ($7.5b)
|
13%
|
RWANDA |
Uzziel Ndagijimana |
Rwf2.44 trillion ($2.8b) |
Rwf2.09 trillion ($2.4b) |
17% |
Highlights
Kenya
-
Economy expected to grow by at least 5.8 per cent this year.
-
Fiscal deficit projected to narrow to 5.7 per cent of GDP from estimated 7.2 per cent of GDP in the current financial year.
-
The deficit to be financed by external debt ($2.97b) and domestic debt ($2.72b).
-
Proposed amendment of Employment Act to provide that employers contribute 7.5 per cent for housing while employees to give 0.5 per cent from their pay.
-
Import duty on iron ore and steel, paper and paper products increased from 25 per cent to 35 per cent. The increase is meant to make local products more competitive.
-
Excise duty on private vehicles above 2500cc diesel and 3000cc petrol goes up from 20 per cent to 30 per cent to promote local assembly.
-
Tax on mobile money transfer charges increases from 10 per cent to 12 per cent, proceeds to fund universal health care.
-
Money transactions of $5,000 and above through financial institutions to attract a 0.05 per cent ‘Robin Hood’ tax.
Tanzania
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Economy expected to grow by at least 7.2 per cent this year.
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Budget deficit projected to be 3.2 per cent of GDP in 2018/19 compared to the likely outturn of 2.1 per cent in 2017/18.
-
Tax on sanitary pads removed to make the product available and affordable to women and girls, particularly school girls and rural women.
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Proposed amendment of Income Tax Act to reduce corporate tax to 20 per cent from 30 per cent for new investors in pharmaceutical and leather industries for five years from 2018/19 up to 2022/23.
-
Gaming taxes increased as follows: from 6 per cent to 10 per cent on gross sales in sports betting operations; from $14 to $44 per machine/month on slot machines; from 15 per cent to 18 per cent on gross gaming revenue for casinos.
Uganda
-
Economy expected to grow by 5.8 per cent this year.
-
Budget deficit projected to be 4.8 per cent of GDP this year.
-
Total projected revenue is $4.3 billion with the revenue authority expected to collect $4.1 billion and the rest from non-tax sources.
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Domestic borrowing estimated at $464 million, donor support at $75 million, and external borrowing projected at $2 billion with $1.6 billion to be raised from loans and $412 million from grants.
Rwanda
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Economy expected to grow 7.2 per cent this year.
-
Budget expected to be financed 67.5 per cent through domestic resources, 16 per cent loans and 16 per cent grants.
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Revenue authority estimated to collect $1.6 billion. Non-tax revenue projected at $181 million while grants at $461 million.
-
Recurrent expenditure is expected to increase to $1.4 billion from $1.3 billion.
-
Development budget and net lending is estimated at $1.3 billion.
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African countries urged to support and grow local investors and entrepreneurs
African countries have been challenged to support and grow local investors and entrepreneurs to counter the fickleness of international investment flows.
The Economic Commission for Africa (ECA) Executive Secretary, Vera Songwe noted that the uncertainty wrought by Brexit and an inward-looking United States of America is intensifying the threats of protectionism rather than expanding global trade and thus made the challenge of growing Africa’s private sector more imperative.
She made this remark at the Joint Opening Ceremony of the Malawi Investment Forum and the Southern Africa Stakeholder Forum on the “Private Sector and Regional Integration in Southern Africa: Opportunities for Investments and Growth” read on her behalf by the ECA Regional Director for Southern Africa, Said Adejumobi in Lilongwe, Malawi on 11th June 2018.
Ms Songwe says African countries need to cope with the changing investment climate by building resilience through individual and collective strength, as well as through resoluteness in implementing well-thought out economic and social programmes and agendas.
Ms. Songwe further noted that huge corporations from across the African continent have shown that transborder businesses are possible and desirable and yield better returns. “Examples include the Dangotes, Games, Shoprites, Pick n Pays, Standard Banks, Sanlams, MTNs”.
“Award-winning airlines such as the Ethiopian Airlines and the growing Rwanda Air have proved that they can stand their ground against the very best in the world. New kids on the block such as Choppies, the retailer, are finding their way through the continent and need our support,” she said.
Ms Songwe observed that more needs to be done to support the private sector in our continent and region. While various investment and industrialization protocols and programmes acknowledge the private sector as a key beneficiary and driver of regional integration policy and programmes, necessary efforts have not been made to involve the private sector from the very beginning of these regional policy-making processes. She said a conducive environment in which the private sector can thrive is important to support the private sector.
On his part, President of the Republic of Malawi, Peter Mutharika who was the Guest of Honour at the Opening Ceremony advised delegates that, Malawi has made significant progress in recent years. The economy has stabilized, growth has resumed, inflation rate has gone down remarkably and the economy is showing good signs of progress.
However, different people can choose to see the situation in Malawi differently. Some can simply choose to see Malawi as a poor country, and others may see it as a land of opportunities. For the Government and citizens of Malawi, they do view the country as a land of opportunities for investments.
“Malawi is a rich nation that has poor people; Malawi is a strong, great country. If they see poverty, we see potential riches; if they see challenges, we see opportunities,” Mutharika said.
Regarding energy deficit, President Mutharika told potential investors that government planned to double the current power output from 351 megawatts (MW) to 720 MW in two years towards a goal of 2000 MW within 10 years.
He further expressed optimism that the country’s economy would rebound with a 4.1 percent growth this year, as evidenced by macroeconomic stability maintained in the first half of the year.
And speaking at the same event, African Union Regional Delegate to Southern African Region, COMESA and SADC, Leopold-Auguste Ngomo underscored the importance of the private sector in regional integration and emphasized the need for the private sector to be strongly involved in the Continental Free Trade Area.
“To realize our vision of a prosperous, peaceful and integrated Africa, we must heavily invest in high quality regional and continental infrastructure and human skills. We need also to invest in trade facilitation and financially assist the private sector in trade expansion,” Ngomo, said.
The Malawi Investment Forum was organized by the Government of Malawi from 11-12 June 2018 and the Southern Africa Stakeholder Forum on the “Private Sector and Regional Integration in Southern Africa: Opportunities for Investments and Growth” was organized jointly by the ECA Southern Africa Office, AU Southern African Office and the African Business Group from 11-13 June 2018 in Lilongwe, Malawi.
The Forum was attended by high-level government officials especially from the trade and industry departments, representatives of the private sector in Southern Africa, regional financial institutions including development banks, as well as bilateral and multilateral development partners active in Southern Africa among others.
Presentations from the 3-day Southern Africa Stakeholder Forum have been made available to download courtesy of the UN Economic Commission for Africa Sub-regional Office (ECA-SRO) for Southern Africa.
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South Africa on ratification of the COMESA-EAC-SADC Tripartite Free Trade Area
Presentation to the Portfolio Committee on Trade and Industry on 13 June 2018
The Tripartite Free Trade Area (TFTA) was launched in June 2015 in Egypt. Negotiations of the legal texts (the main Agreement and its annexes) were concluded in May 2017.
South Africa signed the Agreement in July 2017. To date, 22 of the 27 Member States have signed the Agreement. The Agreement will enter into force once it has been ratified by 14 Member States. Thus far only Egypt and Uganda have ratified the Agreement.
Basis for the TFTA
-
Based on the development integration agenda that combines market integration with industrial and infrastructure development.
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Recognizes that the much advocated linear integration model is not suitable for countries of very different levels of economic development.
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Argues that major barriers to intra-regional trade are often inadequate infrastructure and underdeveloped production structures, rather than tariffs or regulatory barriers.
Purpose of concluding the TFTA
The Agreement will facilitate:
-
harmonisation of trade regimes,
-
free movement of business persons, joint implementation of regional infrastructure projects and programmes;
-
development of regional value chains; and
-
legal and institutional arrangements for regional cooperation among the 26 countries who are members of COMESA, EAC and SADC.
This ratification request only relates to the trade liberalisation element of the agreement.
Key Features of the TFTA
-
Recognition of differentials in levels of economic development, i.e. Flexibility, Special & Differential Treatment.
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Variable geometry regarding pace of liberalisation across negotiating regions.
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Building on the existing acquis of the Regional Economic Communities (no backtracking).
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Objective to create a single TFTA market.
Potential Benefit for South Africa
-
Access to new and dynamic markets:
-
combined gross GDP of US$1.2 trillion, and
-
a combined population of approximately 626 million people, just over half the total African population and economy.
-
-
Some TFTA countries are among the fastest growing economies in the continent, i.e. Rwanda, Ethiopia, Tanzania etc.
-
South Africa will build on its current share of the African market and have access to a larger, more integrated, and growing regional market.
-
This has the potential to stimulate industrial development, investment and job creation.
-
It will promote intra-regional investment.
-
When negotiations commence on the investment chapter, South Africa will advance that core provisions of South Africa’s Protection of Investment Act must be taken into account.
-
Legal certainty and predictability of market in TFTA.
-
Legal protections for South African exporters, i.e. Agreement makes provision for dispute settlement mechanism that is delinked from national courts.
-
Possibility for the TFTA having a “single-rule book” for trade, investment, IPR and Competition.
-
The TFTA will boost intra-regional trade.
SA’s trade with the TFTA countries
South Africa’s trade with TFTA countries represents about 16% of SA’s trade with the world.
In 2017 total trade with TFTA countries was in the tune of US$27.6 billion. A bulk of the trade is with SADC countries. After SADC, Egypt, Kenya, Ethiopia and Uganda feature as export destinations of potential.
South Africa exports to Kenya account for 3.3% of TFTA exports. South Africa in turn receives about 2% of its TFTA imports from Egypt.
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Kenya Africa exports slide continues to new eight-year low
Kenya’s exports to key markets in Africa fell to an eight-year low in the first four months of the year, official statistics show, continuing a trend that has been reflected in annual data over the years.
Latest data by the Central Bank of Kenya (CBK) show earnings from the continent were about Sh71.44 billion, a 4.5 per cent drop compared to the same period in 2017 and the lowest since 2010.
Reduced trade between Kenya and the rest of Africa is in keeping with a trend observed in the 12 months to December 2017.
Kenyan factories have been losing their market share in Africa despite the country being a member of the six-nation East African Community (EAC) and 19-member Common Market for Eastern and Southern Africa (Comesa) partly due to import substitution amid dwindling industrial competitiveness.
Export orders from neighbouring Uganda, the country’s largest market in Africa, for example fell by 5.69 per cent in the period to Sh20.41 billion, maintaining a flat trend witnessed in recent years.
“We don’t get our VAT refund on time, we don’t get export incentives and that’s why our trade within the region has been reducing,” Kenya Association of Manufacturers (KAM) vice chairman Sachen Gudka said in an interview late April.
“The government should address competitiveness because when you look at Kenya in terms of global benchmarks, cost levels are at least 10 per cent higher.”
Kenya’s exports to Africa, however, accounted for 33.74 per cent of her total exports, which stood at Sh211.71 billion between January and April, the CBK data shows.
Intra-Africa trade remains at a lowly 10 per cent, meaning African countries trade more with other continents such as Europe than they do among themselves.
The country is championing a plan to remove trade barriers among African countries to grow movement of goods, services and labour through African Continental Free Trade Area (AfCFTA) which will create a market of at least 1.2 billion people upon ratification.
Kenya and Ghana on May 10 became the first countries to ratify the AfCFTA deal which requires a minimum of 22 countries to be operationalised.
President Uhuru Kenyatta’s administration also became the first country last Friday to present documents ratifying the proposed Comesa-EAC-Southern African Development Community (SADC) tripartite free trade area.
The Comesa-EAC-SADC trade agreement, reached in June 2015 bringing together 27 Eastern, Central and Southern Africa’s countries, requires a minimum of 14 countries to ratify in order to come into force.
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Angola project begins work on ‘greening’ country’s trade
UNCTAD is holding a two-week workshop on identifying export sectors that could help diversify Angola’s economy and make growth more environmentally sustainable.
UNCTAD started a two-week workshop in Luanda on 11 June with government officials, business managers, industry representatives and university researchers to identify economic sectors that could help soften Angola’s dependence on oil exports and make growth more sustainable.
Angola enjoyed some of the fastest growth on the African continent during the past decades, but its economic success relied almost exclusively on oil, which accounts for 93% of total merchandise exports. So when oil prices crashed in 2014 growth fell below 1%, and government revenue followed in its wake.
As the country looks to diversify its economy the government has set its sights on sectors that could be friendlier to the environment and create more jobs for disadvantaged parts of society, such as the coffee and fisheries industries.
The workshop is the first step in the process of coming up with a national strategy for building competitive “green” economic sectors in Angola, which will be defined in the National Green Export Review.
Opening the workshop, Angola’s trade minister, Joffre Van-Dúnem Júnior said: “The National Green Export Review is a key factor for the transition from an economy focused on extractive industries and on the export of a single product to an economy focused on the export of more environmentally-friendly products.”
“The dynamic sectors of the green economy can make important contributions to the attainment of national development objectives related to economic diversification, poverty reduction, rural development, job creation and an overall improvement of social welfare,” he added.
The Angola National Green Export Review is one of the strategic components of a four-year, €5.5 million project funded by the European Union – the EU-UNCTAD Joint Programme of Support for Angola: Train for Trade II.
The EU’s ambassador to Angola, Tomás Ulicný, echoed the minister’s remarks, recalling that “export growth is a clear priority in the current context of Angola, and green sectors emerge among the most promising and with the greatest potential”.
“The strengthening of national capacity is indispensable in the long process of diversification of the economy. It is therefore essential to acquire solid knowledge on these issues. No doubt, the Train for Trade II programme will provide this opportunity,” Mr. Ulicný said.
Angola’s secretary of state, Amadeu Nunes, and its director of international cooperation, Rui Livramento, also attended the opening of the workshop.
The 30 participants include representatives from the Angolan Coffee Institute, the Angolan Industrial Association (AIA), the Angolan Agency for Private Investment and Export Promotion (AIPEX), the National Bank of Angola and the Angolan Bankers Association (ABAC).
Started in 2014, National Green Export Reviews have become a major part of UNCTAD’s work to help developing countries diversify their economies by building competitive green economic sectors.
So far, reviews have been completed for Ecuador, Ethiopia, Morocco and Vanuatu. In addition to Angola, reviews are currently underway for Lebanon, Madagascar, Moldova, Oman and Senegal.
“UNCTAD doesn’t promote trade for trade’s sake. We promote trade because we know that, when done right, it can improve lives and promote production processes that are better for the environment. That’s what the Green Export Review is all about,” said UNCTAD economist Henrique Pacini, who is part of the team leading the training in Luanda.
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tralac’s Daily News Selection
The second African Transformation Forum takes place next week in Accra. Access the conference agenda here.
UNCTAD convenes an expert meeting on statistical methodologies for measuring illicit financial flows next week in Geneva. Download the concept note (pdf).
Africa in the New Trade Environment: insights into the World Bank’s research agenda
The AfDB has posted an EOI for a study on unlocking the potential for the Fourth Industrial Revolution in Africa. The recruited firm will be expected to deliver a report on case studies and situational analysis on a set of emerging technologies of the fourth Industrial revolution and their adoption and/or supply in African countries.
Vera Songwe: Africa’s railway renaissance needs public private partnerships (UNECA)
Experts from Africa’s rail sector gathered this week in Johannesburg to discuss rail transport and how it can be developed to support the grand design for growth on the continent. Addressing the gathering, Vera Songwe, Executive Secretary of the UNECA, said that economic development in Africa needs an efficient, expanded, rail network and described the current condition of existing railway infrastructure and rolling stock in many countries as “sub-optimal.” Elaborating on the numerous opportunities for rail transport development in Africa, she said that with the operationalization of the AfCFTA, large volumes of goods and bulk commodities will be generated to create huge markets for rail transport. Additionally, Africa’s large land mass, which is marked by 16 landlocked countries will encourage the development of high speed, high capacity and efficient transport corridors. “This presents opportunities for rail transport development in Africa”, said Songwe adding, “the large-scale urbanization comes with transportation challenges that can only be handled by railways.”
But the railway renaissance comes with a large price-tag for governments and, as noted by Ms. Songwe, states’ financial resources are being stretched to the limit and this becomes even more precarious when commodity prices fall. Innovative business models and an urgent recognition that the renaissance of the African rail sector requires a major injection of capital to bring the infrastructure up to an acceptable level are required, according to Songwe. Furthermore, private sector and public-private partnerships, she said, would give the private sector access to secure, long-term investment opportunities. Private sector partners can profit from PPPs by achieving efficiencies, based on their managerial, technical, financial and innovation capabilities.
Related updates: African rail operators should jump to digital networks, says DB venture architect; Medium-speed rail systems sufficient for Africa, most continents
Zambia, Zim and SA transport experts meet (The Mast)
Speaking during the three-day trilateral joint route management group meeting for Zambia, Zimbabwe and South Africa, transport and communications director in-charge of transport Nicholas Chikwenya called on road transport agencies in the region to develop systems and procedures that would lead to attainment of an efficient transport system. He said the three countries and other SADC members should make joint efforts towards harmonising border regulations as this was essential in reducing the cost of doing business. Chikwenya said there was need for Zambia, Zimbabwe and South Africa to review transport systems and identify factors that hamper the transportation of goods and people along the North-South corridor. He urged the three countries to embrace international best practices and fast-track the process of implementation of the bilateral or multilateral cross-border road transport agreements. And Soko said the meeting in Livingstone was aimed at ensuring the implementation of the establishment of the multilateral forum for member countries and other stakeholders
Channing Arndt, Simon Roberts: Key issues in regional growth and integration in Southern Africa (Development Southern Africa)
The decade to 2015 saw rapid growth in trade between SADC countries. Much of this growth reflected South African exports to its neighbours of diversified manufactured goods to meet growing urban consumption and to supply inputs to mining and infrastructure. While most SADC countries, aside from South Africa, grew quite rapidly over this period, their exports remained oriented to a narrow range of minerals and agricultural commodities destined to go outside the region. Drawing from a series of sectoral studies, we assess key regional issues including the investment and production decisions of firms whose operations stretch across borders, and consider the implications for a bottom-up integration agenda that could build productive capabilities across countries. Our evaluation highlights the importance of the spread of supermarkets, the need to address transport and logistics, and value chains whose competitive advantages are inherently regional, as in the cases of poultry and mining. [Sandy Lowitt: Cross-cutting logistics issues undermining regional integration across SADC]
The African Continental Free Trade Area: The day after the Kigali summit (UNCTAD)
The single market in goods would be created over a transition period of 5 years by the 21 non-least developed countries, and 10 years by the 33 least developed countries. Some 90% of all tariff lines would be subject to progressive tariff cuts. The remaining 10% of tariff lines would comprise (a) sensitive products that can be liberalized over 10 years by the non-least developed countries and 13 years by the least developed countries; and (b) products excluded from liberalization (the list of such products could be reviewed after 5 years through negotiations). The sensitive and exempted product lists should be carefully identified, negotiated and agreed upon, as the exemptions of products actually traded among African countries may undermine the benefits of trade growth.
These connectivity improvements with the larger market can attract investment to stimulate the development of regional and continental value chains, diversification and industrialization across Africa. Moreover, trade within Africa has better quality than its trade with the rest of the world. The former has higher manufacturing (46.3%), and medium- and high-technology content (27.1%) (figures 1 and 2), as well as more product diversity than the latter. Therefore, the Free Trade Area can help African countries expand domestic productive capacity, climb up the value chain and diversify local production and export baskets by facilitating the transformation of commodity-dependent economies into exporters of more sophisticated, processed goods.
Ethiopia pockets $2.35bn from exports over past 10 months (Xinhua)
The amount marked a $64.5m increase compared with the corresponding period in the previous fiscal year, state affiliate Fana Broadcasting Corporate reported, quoting the Ethiopian Ministry of Trade. Boosting the country’s export trade was the Ethiopian government’s major economic goal as it recently devalued the Ethiopian Birr by 15% - a move the Ethiopian National Bank (NBE) said would boost the current fiscal year’s export performance. While agricultural products remain the largest contributor of export earnings, with $1.79bn during the past 10-months, the Ethiopian government has recently revealed the addition of natural gas as one of Ethiopia’s major export commodities in the near future.
South Africa: Staff concluding statement for the 2018 Article IV mission (IMF)
Externally, tighter global financial conditions and capital flow volatility recently experienced by EMs bring to the fore a risk of sudden reversals in investor sentiment. Structurally weak growth in key advanced markets, or a disruption in trade due to growing protectionism could widen the fiscal and current account deficits, and dampen growth. Weakening growth in South Africa could have negative and lasting spillover effects on neighbouring countries. The time is now to put the South African economy on a trajectory toward strong and inclusive growth. Removing policy and regulatory uncertainty, combined with forceful implementation of an ambitious reform agenda would further strengthen confidence, attract private investment durably, support job creation, and distinguish South Africa further from other EMs at a time sentiment towards EMs is weakening.
Kenya, Singapore ink deal to cut taxes, boost investments (Business Daily)
Treasury secretary Henry Rotich and Singapore’s Trade and Industry minister Koh Poh Koon signed an agreement on avoidance of double taxation committing to give up levies already collected in each other’s jurisdiction. “We have had a long negotiation on these documents which we have finally signed today,” said Mr Rotich. “We hope to see more Singaporean investments set up here in Nairobi and vice versa.” Trade between the two states has nosedived in the last five years with Kenya’s annual imports falling from Sh19.4bn in 2013 to Sh5.8bn last year and exports dropping from Sh1.8bn to Sh375m. [Enterprise Singapore opens overseas centre in Kenya]
Indian, Rwandan companies to do business under the Rwanda Innovation Growth Programme (New Times)
Over 10 Indian and Rwandan companies have finally signed Business Engagement Agreements for the first year of India-Rwanda Innovation Growth program focusing on four sectors that include agriculture, IT, health and energy. This was revealed on Monday this week during a Business Acceleration and Capacity Building Workshop in Kigali. The National Industrial Research and Development Agency and the Federation of Indian Chambers of Commerce & Industry are implementing the India-Rwanda innovation growth program programme. A database of over 230 Indian technologies in over 26 value chains have been identified and ready for acquisition by Rwandan existing entrepreneurs, public institutions and business startups. [India, South Africa bilateral ties: New opportunities in trade and investment]
Private Equity Africa Investor Summit: address by UK’s Africa minister, Harriett Baldwin (DFID)
We know that private equity is a vital source of financing for growing businesses, yet the total fundraising into the African private equity market in 2016 was just $1.6bn. This is less than 1% of the total UK financial flows into Africa. I think you will agree that there is clearly room for growth for the private sector and for private equity. The good news is that we can see healthy signs of investor interest and an appetite for investment opportunities that make a difference to people’s lives: 12% of impact investing is in Sub-Saharan Africa and it is growing. We are working across Government to mobilise private investment into Africa in three key ways:
UN to partner with Africa to lower cost of remittances (Xinhua)
Bishar Hussein, Director General of the International Bureau of the Universal Postal Union, told Xinhua in Nairobi that the Regional Project on Electronic Postal Payment Services in Africa will make the national postal sector play a key role in facilitating financial remittance for international migrants. “We are going partner with the International Organization for Migration to leverage on the expansive network of government owned postal sector to bring down the cost of remittances in Africa to about 5% in order to promote financial inclusion,” Hussein said during the 25th East African Communications Organization meeting of assemblies. Hussein said some commercial firms charge above 10 %for African migrants to remit money back home. He said state owned postal firms are ideal partners because they are mostly nonprofit making entities and have branches in even the remotes villages of Africa. The first beneficiary of the Regional Project on Electronic Postal Payment Services in Africa will be Burundi.
Craig Atkinson: From Facilitation 2.0 to trade policy 3.0 – opportunities to expand and extend the rules of global trade (ICTSD)
This discussion provides a response to the piece by Meléndez-Ortiz and explains that the promise of Facilitation 2.0 is well-aligned with my classification of the functional, version history of trade policy. Both are relevant to policymakers and negotiators in conceptualising trade rules in the digital era. [Roberto Azevêdo: World trade has fought its way back to health. These tensions risk it all]
Today’s Quick Links: African Trade Insurance sees annual portfolio doubling to $7bn by 2022 Quality key to international trade: Minister Rob Davies First Stears Summit: The future of money, markets and marketplaces (24 July, Lagos) Global Illicit Trade Environment Index: downloads Trade impact of the Belt and Road Initiative UN chief welcomes formation of unity government in Madagascar David Donaldson – Sherlock of Trade: a profile and a podcast by Bruce Edwards |
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Africa’s railway renaissance needs public-private partnerships
Experts from Africa’s rail sector gathered this week in Johannesburg to discuss rail transport and how it can be developed to support the grand design for growth on the continent.
Addressing the gathering, Vera Songwe, Executive Secretary of the Economic Commission for Africa (ECA), said that economic development in Africa needs an efficient, expanded, rail network and described the current condition of existing railway infrastructure and rolling stock in many countries as “sub-optimal.”
Currently, Africa has one kilometer of rail track for every 400 square kilometers of land. The rail coverage is 20% broken down to 60% standard gauge), 60% cape gauge and 18% meter gauge, creating what she described as “incompatible and expensive enclaves within the Trans African Railways.”
“Rail will be the future land transport mode of choice for Africa,” said Songwe.
Elaborating on the numerous opportunities for rail transport development in Africa, she said that with the operationalization of the African Continental Free Trade Area (AfCFTA), large volumes of goods and bulk commodities will be generated to create huge markets for rail transport.
Additionally, Africa’s large land mass, which is marked by 16 landlocked countries will encourage the development of high speed, high capacity and efficient transport corridors.
“This presents opportunities for rail transport development in Africa,” said Songwe adding, “the large-scale urbanization comes with transportation challenges that can only be handled by railways.”
The Executive Secretary made reference to the need for climatic resilience, stressing that coupled with environmental and safety issues, “will put railways at the forefront of all transport modes.” Furthermore, noted Songwe, “the socio-economic impact of a modal shift of freight from road to rail would achieve maximum greenhouse gas mitigation in the transport sector.
But the railway renaissance comes with a large price-tag for governments and as noted by Ms. Songwe, States’ financial resources are being stretched to the limit and this becomes even more precarious when commodity prices fall.
The recently commissioned 34 km Addis Ababa Light Rail Transit city transport cost $475 million; the bill for the rehabilitation of the Ethiopia-Djibouti Railway was just over $4bn and the new Mombasa to Nairobi rail line is said to have raised Kenya’s external debt by 17%. In South Africa, it is estimated that more than $110 billion will be needed to convert the country’s 20,000 km of the Cape gauge rail track into a standard gauge.
Innovative business models and an urgent recognition that the renaissance of the African rail sector requires a major injection of capital to bring the infrastructure up to an acceptable level are required, according to Songwe.
Furthermore, private sector and public-private partnerships, she said, would give the private sector access to secure, long-term investment opportunities. Private sector partners can profit from PPPs by achieving efficiencies, based on their managerial, technical, financial and innovation capabilities.
Raising finance for rail development would also be boosted by the Luxembourg Rail Protocol, which noted Songwe, offers some solutions. The Protocol, due to enter into force in late 2019, will protect private investment in the rail sector.
“This protocol creates a new worldwide legal framework to recognize and regulate security interests of lenders secured by railway rolling stock, lessors and vendors selling under conditional sale agreements,” she said.
It applies to all rolling stock, from high-speed trains to trams and will create a common African legal regime, allowing creditors to repossess financed assets on default or insolvency of the debtor, subject to public interest safeguards, and protecting operators and owners as well as financiers as trains move across national borders within Africa.
Ms. Songwe called on governments to ratify the Protocol, saying it would enable the private sector to be tapped into finance delivery and management of the rail sector. This, she stressed, “is important for Africa’s rail renaissance and vital for the future of Africa economic integration; it is an opportunity we dare not let slip through our fingers.”
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The African Continental Free Trade Area: The day after the Kigali Summit
The African Continental Free Trade Area is a remarkable achievement. At a time when trade is questioned in some parts of the world, African leaders gathered in Kigali on 21 March 2018, and took a bold step in favour of trade and of the economic integration of the continent.
This policy brief examines the expectations for the Free Trade Area and outlines areas that require prompt action by African nations for the agreement to deliver on its expectations. In the challenges that lie ahead, including the next chapter of the Kigali pdf Agreement on the African Continental Free Trade Area (973 KB) , UNCTAD will continue supporting African nations.
The ambition of the African Continental Free Trade Area
The Framework Agreement on the African Continental Free Trade Area, the Protocol on Trade in Goods and the Protocol on Trade in Services and related annexes and appendices (some of which remain to be completed) were signed by 44 of 55 African Union member States. The Free Trade Area will be constructed on the principles of substantial liberalization, flexibility and building on what has been accomplished so far, especially under the African regional economic communities. A dedicated institutional framework on the Free Trade Area, including a secretariat, will be set up to manage and administer it.
The single market in goods would be created over a transition period of 5 years by the 21 non-least developed countries, and 10 years by the 33 least developed countries. Some 90 per cent of all tariff lines would be subject to progressive tariff cuts. The remaining 10 per cent of tariff lines would comprise (a) sensitive products that can be liberalized over 10 years by the non-least developed countries and 13 years by the least developed countries; and (b) products excluded from liberalization (the list of such products could be reviewed after 5 years through negotiations). The sensitive and exempted product lists should be carefully identified, negotiated and agreed upon, as the exemptions of products actually traded among African countries may undermine the benefits of trade growth.
The agreement will be buttressed by cooperation on measures relating to trade in goods, namely rules of origin, customs cooperation, transit, trade facilitation, non-tariff barriers,4 technical barriers to trade, sanitary and phytosanitary measures, and trade remedies. These can increase connectivity and efficiency of trade, adding to the gains realized from the Free Trade Area.
The agreement on trade in services includes the progressive elimination of barriers to the movement of African services and service suppliers by lifting restrictions to the various means of supplying services, including the temporary movement of natural persons, supply across borders and commercial establishment. The liberalization, consistent with article V of the General Agreement on Trade in Services of the World Trade Organization, will take place through successive rounds of services negotiations on sector-specific obligations and would bring further stimulus to intra-African trade and welfare improvement.
Expected effects of the African Continental Free Trade Area
The implementation of the Free Trade Area over the transition period is expected to boost African welfare, intra-African trade and GDP. UNCTAD estimates that under a full liberalization scenario – 100 per cent liberalization of tariffs on trade in goods – the continent would realize the gains depicted in figure 1.6 For example, total employment is expected to increase by 1.2 per cent, and most of these gains will be in the manufacturing and agricultural sectors. With GDP presently valued at $2.1 trillion, most African countries will register an increase of between 1 and 3 per cent GDP. The growth rate may not be even among African countries, and some may experience a slight decrease in the absence of compensatory measures and built-in flexibilities. Overall, Africa will benefit from the agreement, which should bring about $16.1 billion in welfare gains.
Dynamic economic gains could arise from improved trade facilitation and customs operations, services trade reform and collaboration on investment, intellectual property and competition. These connectivity improvements with the larger market can attract investment to stimulate the development of regional and continental value chains, diversification and industrialization across Africa. Moreover, trade within Africa has better quality than its trade with the rest of the world. The former has higher manufacturing (46.3 per cent), and medium- and high-technology content (27.1 per cent), as well as more product diversity than the latter. Therefore, the Free Trade Area can help African countries expand domestic productive capacity, climb up the value chain and diversify local production and export baskets by facilitating the transformation of commodity-dependent economies into exporters of more sophisticated, processed goods.
The economic gains expected from the Free Trade Area are made at an aggregate level and may not be equally distributed among countries. As a result, a few countries may experience unintended tariff revenue and welfare losses, as well as the costs of adjustment to a competitive environment, including potential job losses. This is a major concern for several countries that can be addressed by way of built-in flexibilities in liberalization schemes, compensatory measures and adequate flanking policies and adjustment measures. At the same time, such losses could be smaller, as the current level of intra-African trade is lower. Further, the expected expansion in intra-African trade can minimize fiscal revenue losses resulting from reductions in tariffs.
Policy recommendations
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In the global economy where megaregional trade agreements are designed to navigate world trade, the Free Trade Area will provide African countries with an opportunity to counteract and respond to current trends. Therefore, the Free Trade Area should be put into effect as soon as possible to maximize its benefits.
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Urgent ratification of the signed agreement by 22 signatory countries is essential. It should not follow past experiences of low ratification of treaties.
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After the Kigali summit, unfinished business concerning some of the detailed market access conditions should be concluded urgently, including national schedules of tariff concessions and rules of origin. The second phase of negotiations should also be undertaken.
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The sensitive and exempted product lists of the Free Trade Area should be considered with caution, as the exemptions of products actually traded among African countries may undermine the trade benefits.
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African countries should build and bolster the infrastructure linkages among them, especially in the least developed, landlocked and small island economies, to facilitate the smooth flow of goods across Africa, to boost intra-African trade and make it more inclusive.
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To increase the connectivity and efficiency of trade in the Free Trade Area, cooperation on rules of origin, customs, trade facilitation, transit, non-tariff barriers, technical barriers to trade, sanitary and phytosanitary measures, and trade remedies should be enhanced.
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Private Equity Africa Investor Summit: New paradigm investing
Keynote address by Harriett Baldwin, Minister of State for Africa, UK Government
Thank you so much for that very kind introduction and for giving me this platform to speak to a room of investors in Africa.
As a former investment manager myself I am really excited now in my new role to be able to share with you the point of view of the UK Government in terms of working across this vast and exciting continent.
Because Africa really matters. And Africa really matters to the UK.
The UK and Africa – with our long-standing bilateral friendships – share common interests in inclusive growth, in increasing trade and investment, and in resilient economic partnerships that will help make people in the UK and people in Africa healthier, more secure, and more prosperous.
African success, in the form of better governance, greater peace, growing prosperity, stimulates a virtuous circle, for us here in the UK as well.
Together the UK and our African partners can advance our shared economic interests with a stronger focus on inclusive growth, trade, investment and economic partnerships.
Of course, rising prosperity is a virtuous circle. It has the power to create an environment that’s more conducive to trade, creating the jobs that enable people to work, do business and fulfil their potential – helping communities and countries move into a future free from a dependence on aid.
And, of course – when our African partners are prosperous and trading, this has many benefits here in the UK.
Huge strides have been made across the continent over the last few decades – these have helped to reduce poverty, reduce hunger and conflict, and improve education, health and democracy.
According to Africa In Data, literacy rates have risen dramatically for the younger generation across Africa and startlingly between 1950 to 2015, life expectancy in Africa has increased from 36 to 61 years.
But there are still significant challenges to overcome and vast potential to unlock.
On current trends, the populations of some African countries are expected to rise rapidly in the next few decades. And this can provide a fantastic opportunity to generate economic growth. But if Africa’s youth cannot find decent jobs that improve their life-chances, we risk economic stagnation and social instability.
And so it is imperative that we support the ambitions of our partners across Africa to develop economies, build opportunities, and create the millions of jobs needed for the growing numbers of young people entering the job market every year.
As the UK Prime Minister said at last year’s G20, we want long-term partnerships which support African countries’ aspirations for trade, for investment, for jobs and growth.
It’s about working with our partners across Africa to marry the UK’s strengths to the continent’s needs and ambitions.
To realise that potential we all need to work together to stimulate investment, create jobs, and bank the progress already made – placing particular emphasis on building markets in the growing number of middle-income countries in Africa, and others that are approaching that status.
All of these things will be vital if African countries are to fully realise the vision of the internationally agreed Sustainable Development Goals. These United Nation goals are the blueprint for a better future. They include ambitions spanning universal access to electricity and clean water, good health and a quality education for all, and – above all – more jobs.
Unlocking, mobilising and facilitating finance and investment is going to be crucial in achieving those goals – and British expertise in investment and finance offers a clear advantage to our African partners.
Estimates suggest that an additional $2.5 trillion of investment per year is needed to make real progress towards those goals. To put that into perspective, total overseas development assistance to all developing countries in the world was just $130 billion last year.
At the same time, there are an estimated $12 trillion worth of investable opportunities and 380 million new jobs that can be supported by 2030. This brings enormous opportunities to the private sector.
And that is why we in the UK are focussed on unlocking investment opportunities and flagging them to business.
It is also why we are helping to mobilise more resources, by increasing access to export finance and development finance – you’ll be hearing more from CDC, our private investment arm, later on today.
We know that private equity is a vital source of financing for growing businesses, yet the total fundraising into the African private equity market in 2016 was just $1.6 billion.
This is less than 1% of the total UK financial flows into Africa. I think you will agree that there is clearly room for growth for the private sector and for private equity.
The good news is that we can see healthy signs of investor interest and an appetite for investment opportunities that make a difference to people’s lives: 12% of impact investing is in Sub-Saharan Africa and it is growing.
The CDC – which is very much one of the UK’s best kept secrets, established some 70 years ago by Lord Reith and funded by the UK taxpayer – has an initial $12 million investment in M-KOPA, for example, and M-KOPA’s ability to raise a further $80 million in debt highlights the attractiveness of certain sectors in Africa.
But sustainable growth requires much more than one-off transactions: investors need to be prepared to be in it for the long term.
We are confident that the kind of sustainable returns sought by institutional investors can be met by the growth and diversity of the African continent.
But I can’t emphasise enough how important it is that investments are responsible, mutually beneficial, and that they support progress towards the Sustainable Development Goals.
That is why we are supporting Aviva, the Index Initiative and the UN Foundation to establish the Sustainable Development Goal Index.
This will rank companies on their contribution to achieving the Sustainable Development Goals, and will provide insights that companies themselves are seeking on their own impact. A key objective of our support for this initiative is that it builds on the best of the reporting already available and only suggests new benchmarks where there is a current lack of existing market information.
We are also developing new and flexible approaches to collaborating with business around the Sustainable Development Goals. The Business Partnerships Fund supports initiatives that generate commercial value whilst also improving the lives of poor people.
The fund is working with Pearson to pilot a mentoring programme in South Africa to help young people build skills and find secure jobs. And in Malawi we are collaborating with Unilever and Sainsbury’s to pilot the use of Blockchain in the tea sector, helping companies to verify the source of their tea and help farmers to secure credit and demonstrate the viability of their businesses.
Put simply: Global Britain wants to develop modern, energetic and mutually beneficial partnerships across Africa. This is an historic moment in a conversation between UK government and investors about how we can best support the objectives and ambitions of nations and businesses in Africa.
We are working across Government to mobilise private investment into Africa in three key ways:
First, we are working with African partners to address risks, and improve the investment climate by encouraging regulatory reforms, tackling corruption, boosting transparency, and reducing the costs of cross-border trade.
For example, our support for reforms in Nigeria has helped the country climb 24 places in the 2018 Ease of Doing Business rankings.
On the other side of the continent, we have funded the TradeMark East Africa programme, which has significantly reduced the time it takes to clear and transport cargo through Mombasa port and beyond, encouraging trade in and out of the country.
The second thing we are doing is to leverage the capital and expertise of the City of London to help deliver our development objectives.
UK Aid has funded work by the Climate Bonds Initiative to develop green bonds markets in Kenya and Nigeria; and work by the Chartered Institute for Securities and Investment to introduce professional certification across Africa.
And at the Commonwealth Summit in April, the Development Secretary announced a package of new initiatives to deepen our partnership with the City. This included learning partnerships between the Bank of England and central banks in Sierra Leone, in Ghana and South Africa, as well as funding to help developing countries access global capital markets in their own currencies, building on the success of the Masala Bond market here in London.
Third – we are mobilising investment in Africa by putting our money where our mouth is and investing in challenging markets and new sectors ourselves, by providing new capital channelled through CDC.
CDC currently has a portfolio of £2 billion in Africa and has targeted its capital at the sectors that promote local business and support participation in global value chains.
To date it has invested £75 million of equity in African impact funds. That may not sound like very much to those of you sitting here today, but it is building the capacity to channel investment towards young, growing African businesses with strong social impact.
The Sustainable Development Goal investment gap that I mentioned earlier is most obvious in infrastructure, which is where we all know there is vital need to growing the private sector.
And that is why DFID is the largest investor in the Private Infrastructure Development Group, shortened to the unlovely acronym of PIDG. PIDG has invested nearly £1.5 billion in Africa since 2012 to support newer, higher risk projects, and to attract private capital to fill critical infrastructure gaps.
These efforts are creating that vital infrastructure to support the growth of other industries. Getting the basics like transport and electricity up and running will allow investments to flow through to other economically productive sectors.
The Department for International Development is already supporting these other productive sectors, especially through our wide range of research investments – from solar fridges, to mobile money, to ‘scuba rice’. These are all brilliant inventions from Global Britain’s brilliant boffins that can be taken up and commercialised by investors like you.
So, in conclusion, the UK Government is fully committed to supporting economic development across Africa. Our approach is guided by the needs and ambitions of the individual countries, and the Sustainable Development Goals.
You will certainly see Global Britain’s footprint expanding in Africa in the next decade. Helping to mobilise private sector investment – including by mitigating some of the remaining challenges to investors – is a central part of our strategy, because we know that it will play an absolutely critical role in Africa’s success.
Global Britain is the world’s meeting place for the world’s investors and the world’s greatest investment opportunities.
We are confident that investing in Africa makes sense from a hard-headed business perspective. And I hope that today will encourage more of you to join us in supporting growing prosperity in Africa.