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Sixth African Union Ministers of Trade (AMOT) meeting concludes in Dakar
Commissioner Muchanga reiterates dire need for all State-Parties to establish national AfCFTA consultative and coordinating mechanisms for regular dialogue
The 6th Meeting of African Union Ministers of Trade (AMOT) concluded on 4 June 2018 in Dakar, Senegal, after two days of deliberation. The meeting was preceded by the 11th Meeting of the African Continental Free Trade Area (AfCFTA) Negotiating Forum and the 6th Meeting of the AfCFTA Committee of Senior Trade Officials (STO).
In delivering his welcome address, H.E. Amb. Albert M. Muchanga, AU Commissioner of Trade and Industry congratulated the members of the new Bureau of the African Union Ministers of Trade (Uganda, Democratic Republic of Congo, Mauritania, South Africa and Cote D’Ivoire) who will lead the AfCFTA process for the next twelve months.
This includes completing the remaining tasks of the Phase 1 negotiations and starting the Phase 2 negotiations centered on investment, competition policy and intellectual property rights and possibly e-commerce.
Commissioner Muchanga added: “…there are emerging risks in the international trading environment as a result of the looming trade war. Fast tracking the coming into force of the legal instruments establishing the African Continental Free Trade Area and its resultant operation can mitigate the adverse impacts of the trade war if it occurs. Africa is innocent in this looming trade war but we can still be its victims. Let us all remember that innocent victims are part of the sad history of humankind.”
Since macroeconomic stability is crucial to economic integration, Ambassador Muchanga urged trade ministers to work closely with ministers responsible for finance and development planning in promoting alignment of macroeconomic stability and adherence to the AfCFTA agenda.
Considering the need for platforms for regular dialogue, the Commissioner reiterated the dire need for all State-Parties which do not already have national AfCFTA consultative and coordinating mechanisms to take steps to establish them.
In opening the meeting, H.E Mahammed Boun Abdallah Dionne, Prime Minister of the Republic of Senegal, noted the strong momentum on the AfCFTA. “It is up to Africa to develop Africa,” the Prime Minister said, emphasizing the importance for the continent to improve on its share of global GDP and investment flows.
At the end of the two day Ministerial Meeting, the Ministers adopted the recommendations of the STO on the legally-scrubbed annexes to (a) the AfCFTA Protocol on Trade in Goods (b) the Protocol on Rules and Procedures on the Settlement of Disputes (c) agreed on the five priority sectors (transport, communication, financial, tourism and business services) and the approach to be adopted in developing Schedules of Specific Commitments on Trade in Services.
The Ministers called on AUC, ECA and UNCTAD to undertake further analytical work to inform the preparation of Schedules of Tariff Concessions for Trade in Goods and to make them available to member states no later than end June 2018. This is to be followed by the preparation of templates for Schedules of Tariff Concessions for Trade in Goods and Schedules of Specific Commitments on Trade in Services by the end of July 2018.
The meeting of the 12th AfCFTA-NF tentatively scheduled to be held in September is expected to approve the templates for the operationalization of the AfCFTA. The Schedules of Tariff Concessions for Trade in Goods and Schedules of Specific Commitments on Trade in Services will be submitted to the January 2019 Session of the AU Assembly of Heads of State and Government for adoption.
The Ministers were given an audience with H.E. Macky Sall, President of the Republic of Senegal who commended the strong effort to conclude the outstanding technical issues for the operationalization of the AfCFTA. President Sall underscored the importance of the AfCFTA for the transformation of the continent. He disclosed that Senegal’s ratification process is underway and is expected to be completed before the end of the year.
In addition to Member States, the meeting was also attended by Regional Economic Communities and the United Nations Economic Commission for Africa.
Commenting on the outcome, ATPC Coordinator David Luke noted that the meeting was very productive. This underscores the seriousness with which the African authorities are approaching the operationalization of the AfCFTA.
South Africa to begin AfCFTA ratification processes after a successful AMOT Dakar meeting
The Deputy Minister of Trade and Industry, Mr Bulelani Magwanishe attended the 6th AMOT meeting in Dakar, Senegal. As per the recommendation of the Senior Trade Officials, Ministers considered amongst others the legally scrubbed Annexes of the Protocols to the Agreement establishing the AfCFTA and the disciplines on the modalities for Tariff Liberalisation.
Deputy Minister Magwanishe said that the conclusion of the annexes to the Protocol on Trade in Goods and the annexes to the Protocol on Dispute Settlement is a significant achievement.
“The conclusion of this work enables South Africa to rapidly commence domestic processes for signature of the AfCFTA.... We must ensure that the disciplines on modalities for tariff liberation support the creation of commercially meaningful value-chains in Africa, such that we attract investment in job creating productive sectors.”
The outcomes of the 6th AMOT meeting will be submitted and considered by the AU Assembly of Heads of State and Government to be held in Mauritania in July 2018.
On 21 March 2018 in Kigali, Rwanda, an Extra-Ordinary Summit of the African Union Heads of State and Government resulted in the signing of the AfCFTA Agreement by forty-four (44) countries and the signing of the Declaration establishing the AfCFTA by forty-three (43) countries.
The AfCFTA offers an opportunity to create larger economies of scale, a bigger market and improve the prospects of the African continent to attract investment. South Africa is, therefore, committed to a coordinated strategy to boost intra-Africa trade and to build an integrated market in Africa that will see a market of over 1 billion people with a GDP of approximately US$3.3 trillion.
Beyond the Tripartite Free Trade Area (TFTA), the AfCFTA will provide new export opportunities for South African products in West Africa and North Africa.
The AfCFTA is being pursued under the development integration approach that combines market integration with industrial and infrastructure development to ensure that we address Africa’s productive capacity and supply side constraints, promote the diversification of Africa’s export base from dependence on raw materials to value added products, as well as alleviate the infrastructure deficit in Africa.
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EAC tables US$100m budget proposals to EALA for 2018/2019 financial year
The East African Community (EAC) has presented for consideration Budget estimates for the Financial Year 2018/2019, totaling $99,770,716 to the East African Legislative Assembly Sitting. The Chairperson of the EAC Council of Ministers, and Second Deputy Prime Minister, Republic of Uganda, Rt Hon Dr Ali Kirunda Kivenjija, presented the Budget Speech to an attentive House.
The 2018/2019 Budget, themed “Enhancing Prosperity and Welfare of EAC Citizens”, is a step-down from $110,130,184 presented to the House in the previous Financial Year.
According to the Chair of Council of Ministers, the Priority Interventions for FY 2018/2019 will focus on enhanced free movement of goods in the region and further liberalization of free movement of labor and Services; improved cross-border infrastructure to ease cost of doing business in the region; and enhanced regional agricultural productivity.
Other priority interventions include enhanced industrial development through investment in key priority sectors including leather and textile; skills development, technological advancement and innovation to stimulate economic development.
The implementation of the roadmap for the attainment of the EAC Monetary Union; strengthened Peace, Security and Good Governance and Institutional Framework for EAC Political Confederation are also set for consideration.
The 2018/2019 Budget is allocated to the Organs and Institutions of the EAC as follows; East African Community Secretariat ($46,693,056), East African Legislative Assembly ($17,885,852) and the East African Court of Justice ($3,982,446). The Inter-University Council for East Africa shall receive ($6,847,969), Lake Victoria Basin Commission ($13,357,673) while $ 2, 518,137 is earmarked for the Lake Victoria Fisheries Organization.
On their part, the East African Science and Technology Commission shall receive ($ 1,661,779), East African Kiswahili Commission ($ 1,605,353) and the East African Health Research Commission ($ 4,204,032). The East African Competition Authority is to benefit from $1,014,418 in the Financial Year 2018/19.The 2018/2019 Budget is to be financed by Partner State contributions through the Ministries of EAC Affairs ($50,227,920); Ministries responsible for Education – ($ 4,466,210) and Ministries responsible for Fisheries ($ 1,551,032). Development Partners will support the Community to the tune of ($42,925,613) while Member Universities will inject in to the kitty $ 333,970. The miscellaneous revenue is pegged at $ 265,971.
Other key areas Rt. Hon Dr Kivenjija said, include further consolidation of the Single Customs Territory (SCT) to enhance intra-EAC trade, leading to reduction in the cost of doing business in the region and the development of regional infrastructure, thereby reducing transport costs, and easing cross-border movement of people, goods and services. The funds are also earmarked to enhance implementation of the EAC Common Market Protocol, with particular emphasis on free movement of skilled labour across the Partner States.
Promotion of peace, democracy and security across the Partner States as well as efforts towards full participation of the Republic of South Sudan in the activities of EAC are other areas of priority for the Community in the coming Financial Year.
The EAC is further expected to streamline and further consolidate its operational systems to achieve the desired level of efficiency, accountability, and value for money.
Last Financial Year, the august House approved a Budget of USD110, 130,184. The said amount was earmarked for among others; consolidation of the Single Customs Territory (SCT) to cover all imports and intra-EAC traded goods; Infrastructural development in the region and liberalization of free movement of skilled labour across the Partner States.
The second Deputy Prime Minister cited a number of assumptions on which this year’s budget is pegged on to include the continued and consolidated political support of the EAC integration and the availability of adequate financial resources and remittances. Political stability and good governance as well as safe and stable security across the region are other areas of consideration.
On the global economic performance outlook, the Minister informed the House the global economy had expanded by 3.7 % in 2017, which is approximately 0.5 % point higher than the growth in 2016. The pickup, Rt Hon Dr. Kivenjija added, in global growth was supported by a notable increase in global investment, trade, and industrial production, coupled with strengthening business and consumer confidence.
Accordingly, Sub-Saharan Africa’s real Gross Domestic Product (GDP) grew by 2.7 % in 2017 compared to a revised growth rate of 1.4 % registered in 2016. The accelerated growth was mainly due to favourable commodity export prices and strong agricultural production.
Rt Hon Dr. Kivenjija said the region had continued to realise significant growth and development even though there were mixed results. “Mr. Speaker, the EAC region maintained its position as the fastest-growing sub-region in Africa, with estimated growth of 4.6 % in 2017, up from 4.4 % in 2016,” the Chair said.
Strong growth was widespread in the region, with Kenya, Rwanda, Tanzania and Uganda growing at more than 5%. Growth in Kenya was supported by sustained investment in infrastructure and improvement in the service sectors, while in Uganda and Tanzania growth was mainly supported by strong performance in the industry sector. Rwanda’s growth was supported by favorable weather conditions and higher commodity prices.
However, the Chair said the economic growth in Burundi and South Sudan remained subdued in 2017, with some signs of steady recovery. GDP growth in Burundi contracted by 1.3 % in 2017 compared with a revised contraction of about 1.6 % in 2016. This was mainly due to sustained impact of suspension of financial aid by major donors, shortage of foreign exchange reserves, and declining investment.
Likewise, the Minister stated growth in South Sudan contracted by about 3.5 % in 2017 compared to a contraction of 13.8 % in 2016. Growth deceleration in South Sudan since 2015 has been largely contributed by the combination of low oil prices and reduction in oil production following the ongoing political challenges.
On legislation, the Minister informed the House the Community had enacted among others, the EAC Supplementary Appropriation Bill 2017; the EAC Appropriation Bill, 2017, the EAC Oaths Bill, 2018 and the EAC Polythene Materials Control Bill, 2017. He informed the House that a number of new Bills would be introduced in the coming Financial Year.
“Mr. Speaker, during the Financial Year 2018/2019 the Council will propose amendments to the EAC Standardization, Quality Assurance Metrology and Testing Act (SQMT) 2006. The proposals are intended to make it possible to make SQMT regulations by separating metrology matters from SQT matters. The Council also intends to review and bring amendments to laws relating to trade especially the EAC Competition Act, 2006”, Hon Dr Kivenjija said.
The Council of Ministers is to further initiate Bills that support the establishment of the East African Monetary Union. In particular, the Council shall initiate the East African Surveillance Compliance and Enforcement Commission Bill 2018 and the EAC Financial Commission Bill, 2018, in compliance with the Protocol on the Establishment of the East African Monetary Union.
The Chair of Council of Ministers further lauded the Assembly for the speed with which it is carrying out with its mandate.
“From what I see and from what I have already experienced in the six months with you, I can only hold the Members of the 4thAssembly in high esteem and high regard because you have hit the road with a lot of enthusiasm and focus. As Council, we only hope that you continue to excel and to hold us even more accountable”, he said.
On Infrastructure, the Minister informed the House of the completion of the Taveta – Mwatate road, which is part of the multinational Arusha – Holili/Taveta – Voi road and its commissioning in July, 2017. On the side of the United Republic of Tanzania, the dual construction of the14 Km long Sakina – Tengeru section, was completed while the construction of the 42-km long Arusha Bypass is in progress.
The Minister further informed the House of the completion of the Mombasa-Nairobi standard gauge railway (SGR) line in Kenya and stated the phase II from Nairobi to Naivasha was ongoing and expected to be completed by 2019. “These are backbone lines for the Mombasa-Nairobi-Kampala-Kasese/Kigali and Tororo-Pakwach/Gulu-Nimule-Juba SGR project along the Northern Corridor,” the Rt Hon Deputy Prime Minister informed the House.
Rt Hon Dr Kivenjija remarked that EAC was collaborating with the COMESA and SADC under the Infrastructure Development Pillar of the Tripartite Free Trade Area, to implement the Tripartite Transport and Transit Facilitation Programme. He remarked the collaboration was key in harmonization of policies, standards and specifications in the roads sector.
On Civil aviation and airport matters, the House was informed the EAC Secretariat had completed the draft regulations to guide the Partner States in quest to fully liberalize their Air Transport Services. The rationale for this, the Minister said is in order to achieve improved efficiency, enhancement in capacities and eventually lowering the cost of air transport in the Region.
During the period under review, the EAC Secretariat similarly coordinated the operationalization of the EAC aeronautical and maritime search and rescue agreement and the development of an EAC agreement in handling aircraft accident and incident investigation.
On agriculture and food security, the EAC Minister said the region remained committed to fully support implementation of the June 2014, African Heads of State Malabo Declaration on Agriculture Growth and Transformation in Africa.
“I am pleased to inform you that the EAC is strongly committed to support implementation of the June 2014, African Heads of State Malabo Declaration on Agriculture Growth and Transformation in Africa. In June 2017 Ministers responsible for Agriculture in the EAC Partner States and other key regional stakeholders signed the EAC Comprehensive African Agricultural Development Programme (CAADP) pact.
“Further, the EAC Regional Agriculture Investment Plan (RAIP), which will be a key instrument in rallying financial and technical support to spur agricultural transformation was developed and is now awaiting consideration and adoption by the 11th Sectoral Council on Agriculture and Food Security.”
The Minister called for heightened measures to ensure food security. “Mr. Speaker, the EAC region suffers from frequent food insecurity despite the huge resource endowments and great potential for production of adequate food. Food insecurity in the region is caused by both natural and policy related factors.
“The EAC Secretariat with the financial and technical support from USAID and East Africa Trade and Investment Hub (EATIH) has developed EAC Regional Food Security and Nutrition Security Strategy (FNSS) and its Action Plan (FSAP) to guide the implementation and actualization of the regional food security objectives,” he remarked.
The House is now expected to debate on the Budget proposals.
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EU’s Malmström: bad domestic policies also make trade unfair
EU Trade Commissioner Cecilia Malmström says domestic policy choices, such as taxation, are just as responsible as global trade rules for determining who benefits from globalization.
Rising discontent with how the spoils of globalization are distributed has targeted the rules of multilateral institutions, such as the World Trade Organization (WTO), but EU Trade Commissioner Cecilia Malmström has said that domestic policies, such as taxation, deserve their share of the blame.
The European Union’s top trade official was speaking in Geneva at the opening session of the annual gathering of UNCTAD’s governing body – the Trade and Development Board – meeting at the Palais des Nations from 4 to 12 June.
The discussion focused on the crises facing the multilateral trade system, the latest being what some analysts fear could turn into a “trade war” following Washington’s decision to impose tariffs on steel and aluminium, which prompted threats of retaliation from US allies Canada, the European Union and Mexico.
EU officials including Ms. Malmström have called the US decision illegal and a classic case of protectionism and opened a dispute settlement suit at the WTO.
While Ms. Malmström did address the current trade frictions with the United States – taking the opportunity to defend the EU’s stance and caution against talking about a “trade war” – she spoke more about the bigger picture of growing public backlash against multilateralism and trade.
She said that while international institutions should take to heart people’s concerns that trade is doing more harm than good, and ensure the rules are fair and respected by all – including the most powerful nations – organizations like the WTO can only do so much.
“It’s up to the individual countries to make sure the benefits of trade trickle down,” Ms. Malmström said.
She added: “We know that the benefits are there. [Trade] has lifted millions of people out of poverty…But it has to trickle down in a responsible way. It has to be distributed. There we have tax systems and social systems. And that is the responsibility of every country.”
Trade rules won’t fix the poverty crisis
UNCTAD Secretary-General Mukhisa Kituyi echoed Ms. Malmström’s view that trade rules are only part of the story.
“The crisis of poverty is not exclusively a crisis of trade rules,” Dr. Kituyi said. “Development is not only about rule making.”
While designing better rules is important, he said, countries must also ensure they have in place the institutions, infrastructure and skills necessary to trade effectively.
He gave the example of UNCTAD’s ASYCUDA programme, which helps developing countries automate their customs procedures, significantly reducing corruption and trade delays.
In Afghanistan, he said, it has helped reduce clearance times from 18 hours in 2003 to around an hour, and to increase customs revenue from $50 million to over $1 billion.
“We are very glad to demonstrate that one of the most successful acts of trade facilitation in the world is ASYCUDA. But ASYCUDA predates the WTO agreement on trade facilitation by decades,” he said.
Yonov Agah, the WTO’s second in command, agreed that countries often focus too much on gaining access to markets and not enough on ensuring they’ve got the right strategies to benefit.
“You could have market access but if your domestic policies do not gear you towards benefitting from those market access conditions, you lose out,” Mr. Agah said.
“What kinds of domestic policies are you putting in place to ensure that the benefits flow down to the different segments of your society?” he asked.
Mr. Agah said therefore that just as important as making the system fair is ensuring governments have the right policies in place, and that UNCTAD could help countries better understand the different policy options available to them depending on their own priorities.
“Whether you are a least developed country, developing or developed, each economy has to look at its specific social, political and sometimes even geographic conditions, and then, based on the analysis by UNCTAD, begin to look at the policy choices that it needs to make,” he said.
UNCTAD can help the WTO out of deadlock
Tudor Ulianovschi, Moldova’s foreign affairs and European integration minister, and outgoing head of the Trade and Development Board, said that UNCTAD could also play an important role in finding solutions to the current challenges facing multilateral trade discussions in the WTO, for example on ending harmful fisheries subsidies.
“UNCTAD is a conference, it’s a place for discussions without having this sword over its head. It doesn’t regulate like WTO and this is a particularly good opportunity,” he said.
“It puts people together to discuss on the issues where in other circumstances, or across the street in the WTO, they are not being discussed or they are from the beginning confrontational or contradictory,” he added.
For Ms. Malmström, UNCTAD is particularly well-suited to help WTO member countries out of the deadlock on the current round of negotiations, often referred to as the Doha Development Agenda since the fundamental objective is to improve the trading prospects of developing countries.
Officially launched in 2001 at the WTO’s fourth ministerial conference in Doha, Qatar, the negotiations have seen little progress.
She said that moving forward on the development agenda is key to securing the WTO’s future.
“UNCTAD is certainly very well suited to give us in the WTO guidance on how to come out of this situation,” she said.
“And the more UNCTAD can do here to feed into that discussion – it will take some time and it has to take its time as well – I think the better [the discussion] will be.”
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Dr Donald Kaberuka: There is a time for everything – the African Continental Free Trade Area (pdf, Wilson Center)
That said, the AfCFTA is not just about physical merchandise. It is also about services, logistics, finance, data, IT. It is important to emphasise this point because some countries who are not signatories have not fully appreciated that there are not only enough safeguards against things like dumping, non-respect of rules of origin, etc. They may also wish to take note of the fact that the services sector is probably as important as physical goods. Our calculations show that around 50% of all the welfare gains in the AfCFTA are generated by the services. So, even countries without large manufacturing sectors have a lot to gain.
Studies conclusively show that the welfare gains are probably four or five times higher if non-tariffs restrictions are also removed. By non-tariff restrictions, I refer here to quotas, import bans, excessive documentation, roadblocks, health and sanitary measures which are not justified, etc. Yet, we know that dealing with such NTBs is a much more complex process, politically. Eliminating NTBs will require a higher level political threshold. It will require the mobilisation of the citizens, the businesses who provide the services, to the varying domestic constituency interests, to demonstrate that this is not a “zero sum game”.
Conference of African Ministers of Finance, Planning and Economic Development: Ministerial statement, Committee of Experts
(i) Report of the Conference of Ministers on the work of its 51st session: Annex 1 – Ministerial statement (pdf). We acknowledge the importance of national plans and strategies to seize the opportunities presented by the African Continental Free Trade Area. These national plans and strategies should be designed to complement the broader trade policy of each State and identify the key trade opportunities, current constraints and steps required to take full advantage of the African market, including the empowerment of women and young people;
We are mindful that the current infrastructure bottlenecks in Africa remain a serious impediment to the continent’s integration, and commit ourselves to pursuing efforts to modernize and expand our infrastructure assets, in particular the railways, which remain the most efficient and environmentally sustainable way of moving people and goods. In this regard, we note the importance of international instruments on matters specific to railway rolling stock;
We note that the short-term impact of the African Continental Free Trade Area on tariff revenue is likely to be minimal and will be outweighed in the medium and long term by positive impacts of revenue from other sources of taxes as a result of expected increases in growth and economic diversification;
In this regard, we recognize the importance of enhancing fiscal space and sustainability in our countries and maintaining investment in the social sector, in particular in health and in education. In particular, we will strengthen efforts to increase our tax revenue by boosting our tax-to-gross domestic product ratios to achieve a minimum level of 20 per cent over the next three years in each of our economies. Efforts will also include action to pursue new sources of tax revenue, including levies on financial transactions, royalties, income taxes, land taxes and leases, and by encouraging private sector growth and moving informal businesses into the formal sector;
We also underscore the need to take steps to tackle harmful competition among African countries, including by using the second phase of the African Continental Free Trade Area negotiations on competition policy;
(ii) Report of the Committee of Experts: extracts (pdf). Experts noted that growth in some African countries was driven mostly by services and that the agreement on the African Continental Free Trade Area included a protocol on trade in services. At the same time, there were considerable gaps in statistics on trade in services in most African countries that needed to be addressed for effective evidence-based decision-making during the implementation of the African Continental Free Trade Area. In that regard, it was observed that building the capacities of African countries in the area of statistics on trade in services was critical.
2018 African Sovereign Wealth Funds Summit: Accra meeting highlights (GBN)
According to the 2018 African Sovereign Wealth Funds Index, there is a total of $7 trillion dollars’ worth of sovereign wealth funds globally, with 12 African countries having a total of $90bn, representing 1.4% of the total global sovereign wealth funds. The Index is a multi-year project designed around seven main indicators namely; governance and public disclosure, size of fund, domestic investment mandate, source of funding (diversification sources), financial performance, economic impact, and sustainability.
The 2018 SWFs Index ranked Nigeria, Rwanda and Ghana as countries on the continent with the best managed sovereign wealth funds in Africa in first, second and third order. The Index mentioned other African countries that had established sovereign wealth funds as; Algeria, Libya, Senegal, Botswana, Gabon, Mauritania and Equatorial Guinea. It is observed that majority of the SWFs were established by countries after they had discovered and started producing crude oil in commercial quantities except Rwanda, Morocco and Senegal that had set up SWFs although they do not produce oil or major mineral resource exports. [Ghana to establish a Ghana Asset Management Corporation to manage the state’s asset portfolio]
pdf ACP negotiating mandate for a post-Cotonou Partnership Agreement with the European Union (1.00 MB) . Pillar 1: Trade, Investment, Industrialisation and Services
The objectives under this Pillar in the Post-Cotonou Agreement will include the following: Strengthening institutional arrangements necessary to build and scale up the capacity of the private sector and governments to take advantage of trade arrangements, including the Economic Partnership Agreements, as well as other ACP regional and continental trade arrangements such as the CARICOM Single Market and Economy and the African Continental Free Trade Agreement; Providing support to further tap into the potential of trade in services among ACP countries, between ACP regions and with the EU by, inter alia, promoting sustainable development initiatives such as the digitalization of the public sector in order to enhance service delivery, productivity and Private Sector Development; Supporting measures aimed at addressing vulnerabilities and building economic resilience; Promoting policy measures that will encourage ACP financial institutions (including development banks) to develop instruments to expand access to finance and improve payment systems for trade and investment including for micro, small and medium enterprises (MSMEs); and Improving the leveraging of industrial opportunities associated with natural resources and the green and blue economies. [Adopted, 30 May, by the 107th Session of the ACP Council of Ministers, held in Lomé; ACP-EU Council of Ministers: Future EU-ACP Partnership after 2020]
The 65th session of UNCTAD’s Trade and Development Board began today in Geneva. High-level segment themes: New ways in which the UN could address the crisis of multilateralism and trade and its development machinery and what the contribution of UNCTAD would be; Industrial policies and productive capacity policies for a digital economy; Plugging financial leakages and mobilizing domestic and international resources to deliver on the Sustainable Development Goals; Building resilience to multiple shocks affecting people and sustainable development. [UNCTAD’s Civil Society Hearing: Civil society calls for more honest narrative about benefits of trade]
The AfDB’s Civil Society Forum: recommendations
The African Development Bank organized the Civil Society Forum 2018, as a three-day event at HQ in Abidjan, on the topic: “Engaging civil society to accelerate Africa’s industrialization”. For the first time in the Bank’s history, the Forum took place separately from the Annual Meetings. This new format provided an enhanced platform for the continent’s CSOs to engage in dialogue and exchange views with the Bank – upholding the Bank’s commitment to engage with CSOs, and view them as key partners to successfully implement and achieve the High 5 priorities. The Forum brought together over 300 participants from across the continent. During the Forum’s closing ceremony, the CSO representatives presented the conclusions of the three working group sessions, with three respective recommendations to the Bank: Create a multi-stakeholder platform with representatives from the public sector, private sector, the Bank and Civil Society – to guarantee the involvement of all actors in the development of industrial policies and projects; Promote equal access to digital tools for networking, capacity building, skills improvement, and data production purposes – to inclusively accelerate Africa’s industrialization; Establish capacity building programs that integrate gender lens training in the design of Bank policies and strategies – to improve the business environment in regional member countries so all entrepreneurs can grow and flourish.
Ghana’s impending GDP rebasing decision: insights from Databank Research (GhanaWeb)
Ghana’s GDP could now be valued as high as GH¢300billion after the expected rebasing this month, which is the second in less than 10 years according to an in-depth analysis of Ghana’s Public Debt Management in 2017 by Databank Research. The economic and policy analysis, which is predicting a 30-45% increase in nominal GDP, points out that the economy’s size should move from the GH¢205.91billion recorded in December 2017, to GH¢300billion or 63.4bn after the rebasing or revision of the methods and base data used to calculate GDP. Government is expected to announce the rebasing in the last week of the month. The higher nominal GDP is expected to suppress the debt-to-GDP ratio to between 50–60% in 2018 from the high of 68% recorded in 2017, according to the latest data from the Bank of Ghana – which could catalyse the potential for positive reviews of Ghana’s credit ratings. With a lower debt to GDP ratio, government might be tempted to increase its rate of borrowing, while the tax revenue-to-GDP ratio could drift further below government’s medium-term target of between 20–25%.
(i) 2018 Article IV Consultation: Mali is a fragile state, facing severe security challenges and social tensions. The authorities struggle with the implementation of the 2015 peace agreement, and persistent insecurity in northern and central Mali associated with limited State presence, highlights the lack of a peace dividend and explains limited societal buy-in. The economic recovery has entered its fifth year, and growth is projected to remain robust in the near term. However, poverty remains high and social discontent is growing. The economic outlook is also subject to downside risks from the volatile security conditions and potential pressures on policy implementation ahead of the 2018 elections.
With exception of some improvement since the mid-2000s, export diversification has stagnated, and export quality has been generally stable (Figure 4). In 2016, cotton and gold represented 80% of exports. Mali’s export diversification indices have remained relatively low throughout the past five decades and are still lower than many other LICs, primary commodity producers, the SSA or the WAEMU averages. The export complexity (Text Figure 11), an index that measure the sophistication of a country’s exported products, shows that Mali exports few products and that the exported products are not very sophisticated.
(ii) Selected Issues Report: Tax revenue mobilisation in Mali (extract). Mobilizing more revenue to keep up with raising spending will be critical to implement the new government’s priorities while preserving fiscal sustainability in the context of declining external support. This paper shows that the tax-to-GDP ratio, at about 12.6% is low relative to West African Economic and Monetary Union and SSA averages. Using the peer (SSA) analysis and stochastic frontier approach, the tax revenue gap in Mali is estimated at about 0.7% of GDP in 2010-15, implying a significant potential to raise revenue. The estimated gap is even larger for trade taxes at about 2 ½-3 percentage points of GDP below their tax capacity during the same period. The analysis suggests that closing the tax policy and tax gap will require sustained reforms, both in tax policy and tax administration.
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Africa Day 2018: Moving forward with the implementation of the Africa Continental Free Trade Area – Opportunities and challenges
On May 24, 2018, the Wilson Center Africa Program hosted a discussion on “Moving Forward with the Implementation of the Africa Continental Free Trade Area – Opportunities and Challenges.”
The event, hosted in partnership with the African Ambassadors’ Group, was part of the Africa Day celebrations. H.E. Dr. Arikana Chihombori-Quao, the African Union Ambassador to the United States, offered welcome remarks. The discussion was moderated by Dr. Monde Muyangwa, Director of the Wilson Center Africa Program.
Speakers included Dr. Donald Kaberuka, the African Union High Representative for Financing of the Union and Peace Fund and former President of the African Development Bank; Ambassador Stephanie Sanders Sullivan, the Acting Principal Deputy Assistant Secretary at the Bureau of African Affairs at the U.S. Department of State; and, H.E. Dr. Kerfalla Yansane, the Ambassador of Guinea to the United States. The Ambassador of Cameroon to the United States, H.E. Étoundi Essomba, offered closing remarks.
H.E. Dr. Arikana Chihombori-Quao opened the discussion by framing the historical context for the importance of the African Union and the Continental Free Trade Area (AfCFTA). The African Union is the successor of the Organization of African Unity, which was founded in 1963.
Ambassador Chihombori-Quao highlighted recent achievements of the African Union – including the CFTA, the Single Africa Air Transport Market, and the African Passport – which have signaled progress towards the goal of minimizing obstacles that impede African unity, in context to the long history of colonialism and artificial borders. These recent achievements mark important milestones that should be celebrated.
As she noted: “Finally, we, the children of Africa, the 55 African leaders, the 1.27 billion people are now getting it and realizing that our strength is in our unity… that which has been dividing us over the years must be destroyed, and that boundaries which are not ours must be destroyed, and that Africa must speak with one voice, one heart, and one mind.”
Dr. Donald Kaberuka added further detail to the importance of the AfCFTA and the benefits that could accrue from the agreement. He also highlighted potential concerns and obstacles to implementation and the ways forward for overcoming the obstacles and maximizing the benefits of the agreement. He noted that the AfCFTA was probably the most historic decision that Africa has made since independence.
Utilizing lessons from other continents, namely Europe and the founding of the European Union, Dr. Kaberuka argued that the significance of the AfCFTA does not only lie in promoting trade, but also in advancing security, safety, and prosperity.
While acknowledging concerns by some countries regarding dumping, rules origin, and potential loss of jobs, he noted that many of these concerns are addressed directly in the agreement. For example, the AfCFTA is 90 percent free trade and not total liberalization, which allows for protection for some infant and sensitive industries.
When implemented, the AfCFTA could help the continent move away from its dependence on commodity exports and towards developing human capital and industrialization.
While some sub-regions in Africa are still lagging behind in terms of trade, the Southern African Development Community and East African Community show higher levels of intra-regional trade; the AfCFTA will help build on and expand current successes of regional cooperation and integration. Notably, the agreement will not only benefit countries that rely on trade in physical goods; half of the benefits of the AfCFTA will accrue from trade in services.
Other key benefits of the agreement will come from reducing both tariff and non-tariff barriers to trade, including burdensome and inefficient customs processes, insufficient infrastructure, excessive paperwork, and security checks.
Dr. Kaberuka argued that the AfCFTA is a significant step in larger African efforts to create jobs, promote development, and capitalize on the demographic dividend by creating jobs and a larger economic space for youth.
Ambassador Stephanie Sanders Sullivan echoed many of the benefits of the AfCFTA from the perspective of the United States as a key international partner to Africa. She noted that this agreement, which lowers barriers to trade, would make Africa more competitive on the global market, and is, therefore, good for Africa and for the United States.
Ambassador Sullivan also stated that the United States is prepared to assist with promoting economic opportunity and trade capacity-building in Africa, as it has done with the Africa Growth and Opportunity Act (AGOA). Between 2000 and 2017, non-oil exports from Africa to the United States have increased from USD 1.3 billion to USD 4.3 billion. Likewise, U.S. exports to Sub-Saharan Africa rose from USD 5 billion to USD 14.1 billion during the same period.
The AfCFTA offers significant promise for the continent and for her international partners. By some estimates, the AfCFTA can result in a 1 to 6 percent increase in GDP for Africa and increase Africa’s industrial exports by over half by 2022.
In addressing a question about the potential conflicts between Africa’s push for a regional and multilateral approach to trade and the United States’ preferred approach of bilateral trade deals, Ambassador Sullivan said the United States was not seeking to undermine Africa but was looking to find a foothold that would induce more interest among American investors and deepen the U.S.-Africa trade relationship, and also would continue its consultations to figure out how best to move forward in the most mutually beneficial way. Through it all, the United States would continue to stand as a ready partner in advancing economic opportunity, security, and peace in Africa.
H.E. Dr. Kerfalla Yansane re-emphasized the historical and future importance of the AfCFTA for African unity and prosperity. One key challenge ahead will be remedying the fragmentation of the African market and African infrastructure, which are legacies of colonial rule. However, the demographic dividend is a hopeful piece of the equation.
While the African market is already significant at over 1 billion people, it will continue to grow and act as a “life insurance” for the continent against the mounting forces of economic nationalism and protectionism, if Africa is able to unify economically. Free, fair, and equitable trade, and solidarity among the African countries is a key condition for the success of the AfCFTA.
Further areas for future attention include important improvements in communication, and technological and physical infrastructure, which are necessary if the continent hopes to realize the benefits of the agreement. The private sector must be included not only as a source of funding but also as a voice in the negotiation and planning stages. With the cooperation of governments, civil society actors, and the private sector, the challenges can be met and opportunities realized.
H.E. Étoundi Essomba offered closing remarks that drove home the potential benefits of the AfCFTA for the continent. The Ambassador shared his appreciation for the event, which provided a forum for discussing the potential challenges, benefits, and ways forward for the AfCFTA.
The AfCFTA will provide a stronger starting-point for Africa’s trade negotiations with partners and could set the stage for more intra-African trade as well as trade with other regions, which could subsequently open the doors for a more prosperous and unified Africa in the future.
There is a time for everything: The African Continental Free Trade Area
Remarks by Dr Donald Kaberuka
The context of why Africa must reinforce its unity, its organs and its purpose at this very challenging time:
A time when multilateralism is deficient: from trade, security, epidemics, migration, refugees, let alone economic cooperation;
A time when the geopolitical situation is ever more complex;
A time when populism is gathering force, appeals to narrow nationalism, and more dangerously, as during the Cold War, African countries are called upon to take sides in conflicts which are external to Africa.
Most importantly, all three developments are taking place when the Continent is set to have the largest working force in the world, which represents both an opportunity, but also a challenge.
So what is the AfCFTA?
It is an initiative to remove tariffs among and between African nations, to be complemented by efforts to lower non-tariff restrictions, promote free movement of persons and a single Africa aviation market.
When countries wish to expand trade among themselves, they may go through several stages:
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Preferential Trade Agreements: lower tariffs compared to non-members, but not necessarily elimination;
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Free-Trade Areas: eliminate tariffs among members, but keep them against non-members and free to treat external parties differently.
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Customs Union: eliminate tariffs among members but also have one common tariff for non-members;
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Along the way, Nations may then progress to Common Markets, Monetary unions or Total Economic Unions, and maybe even some degree of political union.
In the past 50 years, African Countries have undertaken these different arrangements with varying degrees of success.
The reality however is that trade levels have remained quite modest.
If successful, the AfCFTA would raise trade levels by 52% and create one of the largest and most ambitious economic space in the World.
What the AfCFTA is not
The AfCFTA is only 90% liberalisation.
It is a pragmatic, sequential arrangement with a view to proceed cautiously bearing in mind political realities and current regional arrangements.
Each country still has the option of pointing out products that are sensitive; Products that require time, infant industries that need a period of adjustment to full competition.
It also has provisions for a “Negative List”; products that will remain protected.
That said, the AfCFTA is not just about physical merchandise. It is also about services, logistics, finance, data, IT.
It is important to emphasise this point because some countries who are not signatories have not fully appreciated that there are not only enough safeguards against things like dumping, non-respect of rules of origin, etc.
They may also wish to take note of the fact that the services sector is probably as important as physical goods. Our calculations show that around 50% of all the welfare gains in the AfCFTA are generated by the services.
So, even countries without large manufacturing sectors have a lot to gain.
I want to suggest that as AU member states move through the tortuous stages of ratifications and implementation, this moment should not simply be seen as one about elimination tariffs - but of a potential to generate a change in mindsets.
Complementary measures
While, Agreement on a free trade area is a significant achievement. It is important to understand that the existence of a free-trade area does not on its own necessarily lead to free-trade.
Tariffs are only one part of the problem, often not even the most important one. Studies conclusively show that the welfare gains are probably four or five times higher if non-tariffs restrictions are also removed.
By non-tariff restrictions, I refer here to quotas, import bans, excessive documentation, roadblocks, health and sanitary measures which are not justified, etc.
Yet, we know that dealing with such non-tariff barriers (NTBs) is a much more complex process, politically.
Eliminating (NTBs) will require a higher level political threshold. It will require the mobilisation of the citizens, the businesses who provide the services, to the varying domestic constituency interests, to demonstrate that this is not a “zero sum game”.
Finally, and above all, the timing: the geopolitical context in particular and the weakening multilateral trade context.
You just have to look at the outcomes of the last 11th WTO Ministerial Conference in Buenos Aires (Argentina). Little progress or none at all: all around.
Gone are the days of the bullish sentiments of the Uruguay Round or even the modest hopes which were pinned on the Doha Round.
The AfCFTA should therefore be seen as much more than a tariffs elimination exercise.
It should be a quantum jump in how our continent repositions itself in the context of a weak multilateral system and on the eve of a potential “demographic cliff” for Africa, for lack of a better word.
That is why dealing with fears, convincing doubters or even cynics who think all this is a utopia, is so critical.
You just have to listen carefully to the debate on Brexit! Three additional issues in particular have been pointed out:
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The implications for the RECs; will the Regional Economic Communities co-exist seamlessly with the AfCFTA?
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AU’s implementation track record of its decisions; will member countries implement?
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The challenge of adequate supportive infrastructure, how will the Free Trade Area function, without adequate highways, etc.
Concerning the RECs, I believe Article 21 and two other Articles provide the necessary clarity: the AfCFTA will build on and strengthen rather than weaken the RECs.
In relation to infrastructure, it is well known that the AfCFTA will be accompanied by an African Trade Development Plan of action.
That is why the Single Air Market is so critical or is one of the ways of the intensifying commercial links and progressively lowering costs of doing business.
The Africa Trade Action Plan is quite comprehensive; it concerns:
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Trade-related infrastructure;
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Trade Finance;
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Payment Systems;
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Investment policy harmonisation;
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Movement of Persons
As for whether member countries of the AU will see through the implementation, I would like to respond this way: that is the whole essence of the AU reforms.
The ordinary citizens of Africa want an AfCFTA within a stronger African Union which is focused, effective, relevant, and which funds itself rather than remaining dependent on the outside world, half a century of independence!
These are all the matters over which President Paul Kagame of Rwanda has made proposals.
These proposals have been adopted, at the highest level. The first of which is precisely to deal with the implementation crisis – decisions taken and not implemented.
It is an existential issue for the AU and the expectations is that it will be resolved this time.
Part of the problem is that we do not mobilise the African Citizenry enough.
Hence one of President Kagame’s proposals is to figure out a way to bring the AU closer to the people, such as the African Volunteer Corps.
In that spirit, the people of Africa need to be mobilised for the AfCFTA and the AU Reform.
At the end of the day, it is by promoting economic growth through trade and investment that a fiscal space will emerge to meet the upcoming demographic challenges, while moving up the global value chains.
That is the promise of the AfCFTA.
A necessary first step to an eventual Continental Economic and Monetary Union.
Through the AfCFTA, we will boost Intra-Africa trade, increase market size, depth and diversity, increase opportunities for business, consumers, producers, diversify our economies to complex products; thereby expanding fiscal possibilities.
It is only by doing so, that we can build resilience in the global system and avoid the demographic cliff.
The adoption of the AfCFTA is not a technical choice Africa is making. It is a fundamentally, historic political choice which will have far reaching impact if successful.
That is why, everything must be done to ensure safe arrival at destination.
It will not be easy, it will require astute political management and trade off at each juncture but there is no more choice.
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Outcomes of the 51st Session of the Conference of African Ministers of Finance, Planning and Economic Development
The African Continental Trade Area (AfCFTA) should be shaped and implemented to enable Africa to create opportunities for its citizens; spur the continent’s industrialization agenda; and ensure inclusive growth, says Ethiopia’s Prime Minister, Abiy Ahmed.
Speaking at the recently-concluded 51st session of the Conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa, Mr. Ahmed said with the AfCFTA, Africa’s economic integration was inevitable.
“Together we will grow; together we will give our young people a stake in the future of our continent. We will harness their energy and creativity for collective wellbeing,” the Prime Minister said, adding: “We need to also increasingly engage the private sector in ensuring economic integration and introduce aggressive policies to broaden women’s access to economic opportunities.”
He said governments on the continent were looking up to their finance ministers and Central Bank Governors for leadership that will ensure that trade was not an end in itself but the means to advance the wellbeing of Africans.
Mr. Ahmed said Ethiopia was fully aware of the opportunities that the free trade agreement offered and was ready to “follow Rwanda and Ghana for their pioneering role in the ratification of the AfCFTA”.
He urged other African countries to sign-up to the AfCFTA and those that have already done so, to ratify quickly so the agreement can soon come into force. At least 44 countries signed up to the agreement that will bring together 1.2 billion people with a combined gross domestic product (GDP) of more than US$2 trillion.
By creating a single continental market for goods and services, the continent hopes to boost trade between African countries.
Ministerial Statement
We, African ministers of finance, planning and economic development,
Meeting in Addis Ababa on 14 and 15 May 2018 for the fifty-first session of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development,
Honoured by the video address of the Champion of the African Continental Free Trade Area, the President of the Niger, Mahamadou Issoufou, in which he called upon all African countries to expedite the ratification of the African Continental Free Trade Area,
Honoured by the presence of the Prime Minister of Ethiopia, Abiy Ahmed; the Deputy Chairperson of the African Union Commission, Thomas Kwesi Quartey; and other high-level dignitaries and special guests,
Inspired by the opening statements of Mr. Kwesi Quartey; the Minister of Economics, Finance, and Planning of the Republic of Senegal, Amadou Ba; the Executive Secretary of the Economic Commission for Africa, Vera Songwe; and the Governor of the Central Bank of Ireland, Phillip Lane,
Having deliberated on the theme “African Continental Free Trade Area: fiscal space for jobs and economic diversification” and cognizant that, with the signing of the Agreement Establishing the African Continental Free Trade Area by 44 member States of the African Union, the continent has laid the foundation for a new phase of African integration,
Do hereby state that:
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We note that the gross domestic product of Africa grew at a rate of 3.1 per cent in 2017, up from 1.6 per cent in 2016, registering the second-fastest growth rate of any region in the world, after East and South Asia. This economic performance was due mainly to continued improvement in macroeconomic management, increased public and private investment, growth in private consumption and a rebound in trade. Africa is expected to continue its recovery, growing at 3.6 per cent in 2018 and 3.8 per cent in 2019. Potential risks to growth in Africa could, however, include a slow recovery in advanced and emerging economies, the tightening of financial markets in developed economies, weather-related shocks and security concerns in some countries;
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We recognize that Africa has made significant progress in achieving desired economic and social outcomes, with poverty rates declining in the various subregions, albeit at a slow pace. Notwithstanding these improvements, a number of challenges remain. Poverty and unemployment, in particular among young people, persist, together with increasing income and gender inequalities;
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We acknowledge that promoting peace and security as well as stability, along with combating violent extremism and terrorism, are critical undertakings for Africa in its endeavour to achieve inclusive and sustainable development. We therefore call upon member States to continue collaborative efforts to ensure that peace and security are upheld in Africa and throughout the world;
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We recognize that African countries have made progress on the various dimensions of regional integration, such as trade, regional infrastructure, financial and productive integration, including regional payment systems, the free movement of persons and the right of establishment. Numerous obstacles still need to be surmounted in this regard, however;
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We reaffirm our commitment to regional integration as a major driving force behind inclusive economic development in Africa, and welcome the new milestone reached in African integration through the signing of the Agreement Establishing the African Continental Free Trade Area in Kigali on 21 March 2018 by 44 member States of the African Union;
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We welcome the launch of the single African air transport market in January 2018, which has the potential to improve the efficiency of continental air transport and to contribute to the growth of the continent’s global share of the aviation and tourism industry, and encourage all member States to join this initiative;
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We recognize the potential of the African Continental Free Trade Area to advance African industrialization, economic diversification and development that sustain the creation of decent jobs on the continent and foster prosperity for all Africans, consistent with Agenda 2063 of the African Union and the 2030 Agenda for Sustainable Development. Accordingly, we note the importance of promptly ratifying and implementing the legal instruments of the African Continental Free Trade Area;
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We acknowledge the importance of national plans and strategies to seize the opportunities presented by the African Continental Free Trade Area. These national plans and strategies should be designed to complement the broader trade policy of each State and identify the key trade opportunities, current constraints and steps required to take full advantage of the African market, including the empowerment of women and young people;
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We note the need to pursue policies and investment to make the most of the opportunities presented by the African Continental Free Trade Area, as outlined in the Action Plan for Boosting Intra-African Trade. This will include supporting trade facilitation measures, including simplified trade regimes for informal cross-border traders, upgrading infrastructure and improving the business environment to attract the private sector, which will help African firms to take advantage of the opportunities presented by the African Continental Free Trade Area;
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We are mindful that the current infrastructure bottlenecks in Africa remain a serious impediment to the continent’s integration, and commit ourselves to pursuing efforts to modernize and expand our infrastructure assets, in particular the railways, which remain the most efficient and environmentally sustainable way of moving people and goods. In this regard, we note the importance of international instruments on matters specific to railway rolling stock;
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We note that the short-term impact of the African Continental Free Trade Area on tariff revenue is likely to be minimal and will be outweighed in the medium and long term by positive impacts of revenue from other sources of taxes as a result of expected increases in growth and economic diversification;
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In this regard, we recognize the importance of enhancing fiscal space and sustainability in our countries and maintaining investment in the social sector, in particular in health and in education. In particular, we will strengthen efforts to increase our tax revenue by boosting our tax-to-gross domestic product ratios to achieve a minimum level of 20 per cent over the next three years in each of our economies. Efforts will also include action to pursue new sources of tax revenue, including levies on financial transactions, royalties, income taxes, land taxes and leases, and by encouraging private sector growth and moving informal businesses into the formal sector;
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We also acknowledge the importance of increasing the efficiency of tax administration in our countries by modernizing tax systems, further improving economic and corporate governance in the extractive sector and mobilizing additional revenue from natural resource rents;
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We note the significant losses of tax revenue that result from base erosion and profit shifting by multinational corporations and are cognizant of the need to take measures to tackle these problems. We encourage the investment chapter that will be negotiated under the second phase of the African Continental Free Trade Area to address loopholes that encourage treaty shopping and enable multinational corporations to reduce their tax liabilities using existing intra-African international investment agreements;
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We also underscore the need to take steps to tackle harmful competition among African countries, including by using the second phase of the African Continental Free Trade Area negotiations on competition policy;
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We note the need to improve the quality and efficiency of public spending. In this regard, we encourage African countries to implement integrated resource mobilization, budgeting and development planning processes and decentralized public financial management; to intensify efforts to combat corruption; and to simplify subsidy and procurement regimes and approval processes for investment;
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We note that private finance presents a large potential source of capital to fund public projects. Accordingly, we are cognizant of the need to develop and deepen domestic capital markets and leverage private capital for development projects, while ensuring that such projects provide balanced risk-sharing and accountability within a coherent overall development strategy;
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We recognize the need to make use of government borrowing as a source of financing for development, while ensuring that borrowing remains within sustainable limits. We also recognize that decisions to implement the African Continental Free Trade Area can assist us in gaining access to additional international financial resources;
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We acknowledge the continued efforts of the Economic Commission for Africa and other United Nations agencies, working closely with the African Union Commission, the African Development Bank, the Planning and Coordinating Agency of the New Partnership for Africa’s Development, the African Capacity- Building Foundation and the regional economic communities, to make African integration a reality. This effort will be enhanced by the African Union-United Nations framework for the implementation of Agenda 2063 and the 2030 Agenda for Sustainable Development;
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We also underscore the benefits of migration for economic and human development in Africa. We therefore stress the importance of cooperation at the national, regional and international levels to ensure safe, orderly and regular migration with respect for the human rights and dignity of migrants, regardless of their origins or status;
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We call upon the Economic Commission for Africa to continue its close collaboration with the African Union Commission and other regional, continental and international institutions such as the regional economic communities, the African Development Bank and the United Nations Conference on Trade and Development to provide technical support to facilitate the ratification process and implementation of the African Continental Free Trade Area;
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We also call upon the Economic Commission for Africa to support member States in enhancing their fiscal space and mobilizing additional domestic resources through strengthening tax administration, improving the efficiency and effectiveness of public spending, developing and strengthening capital markets and leveraging private financing, and improving debt sustainability;
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We are cognizant of the significant and preeminent role of human and institutional capacity development in the achievement of the aspirations of Agenda 2063, the Sustainable Development Goals and the African Continental Free Trade Area. We appreciate the commendable work that the African Institute for Economic Development and Planning is undertaking in this respect. We call upon the United Nations to continue and to increase its support to the African Institute for Economic Development and Planning in support of the structural transformation of Africa;
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We welcome the offer by Morocco to host the fifty-second session of the Conference of African Ministers of Finance, Planning and Economic Development.
Vote of thanks
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We thank the Government and people of Ethiopia for the hospitality that they have continued to afford the Economic Commission for Africa and for the courtesies extended to us, which have ensured the success of our meetings;
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Lastly, we wish to extend our gratitude to the Economic Commission for Africa for successfully convening the fifty-first session of the Conference of African Ministers of Finance, Planning and Economic Development.
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ACP negotiating mandate for the Post-Cotonou Partnership Agreement with the European Union unanimously adopted
The Africa, Caribbean and Pacific (ACP) negotiating mandate for the Post-Cotonou Partnership Agreement with the European Union was unanimously adopted at the 107th Session of the ACP Council of Ministers which took place in Lomé, Togo, on 30th May.
Central to the discussions in Lomé were the revision of the Georgetown Agreement and the adoption of an ACP negotiating mandate for the Post-Cotonou Partnership Agreement with the European Union. The Council meetings were crucial to opening new negotiations with the European Union (EU), in the quest for the attainment of sustainable development in all ACP countries.
Apart from the discussions on the future of the ACP Group and its relations with the European Union, the 107th Session of the ACP Council of Ministers addressed strategic matters such as repositioning the ACP group as a more effective global player in order to respond better to the needs and aspirations of its ACP Member States. Ambassador Faure, Secretary of State for Foreign Affairs in the Department of Foreign Affairs, heading the Seychelles delegation, made a presentation to the special session on this subject.
Ministers also addressed ways of leveraging the principles of complementarity and subsidiarity between the ACP Group and the Regional and Continental organisations, sustaining financing of the Group and lastly advancing the climate change agenda in a repositioned ACP Group.
Other key items on the agenda included commodities and trade issues, sustainable economic development, and development finance. In his interventions on these issues, Ambassador Faure wished for the inclusion of the fisheries sector to be featured under the Ministerial Consultation on Commodities given the importance of fisheries sector to Seychelles.
He called on the member states to sign the instruments for the Joint Undertaking on the Customs Cooperation Agreement with the objective of increasing intra-ACP partnership and deepening integration. To note that only 13 countries, including Seychelles, out of the 79 have signed this agreement.
The 107th Session of the ACP Council of Ministers was immediately followed by the 43rd Session of the ACP-EU Council of Ministers.
43rd session of ACP-EU Council of Ministers: both sides commit to enhance their cooperation
The annual meeting of Ministers from the European Union and the countries in Africa, the Caribbean and the Pacific was an opportunity to hold fruitful and constructive discussions on the way forward for their future relationship and to take stock of the progress already made.
The meeting, which took place in Lomé, Togo, was hosted by the President of Togo, Faure Gnassingbé and co-chaired by H.E. Ms Kamina Johnson Smith, Minister of Foreign Affairs and Foreign Trade of Jamaica and H.E. Ms Ekatarina Gecheva-Zahareva Deputy Prime Minister for Judicial Reform and Minister of Foreign Affairs of Bulgaria.
Future EU-ACP Partnership after 2020
The EU welcomes the adoption by the African, Caribbean and Pacific Group of States of its Negotiating Mandate, which will lead its members to start meaningful negotiations soon. This ACP-EU 43rd Session was crucial in taking preparatory steps towards the negotiations and underlined the importance the longstanding partners attach to their cooperation including after 2020.
The EU Commissioner for International cooperation and Development, Neven Mimica, expressed his gratitude for the excellent collaboration in Lomé, and called for a new ambitious partnership: “This is a very defining moment. We are determined to strengthen and reinforce our relationship with the ACP even further and to conclude an ambitious political partnership, which will allow us to jointly address our common challenges and opportunities – to the benefit of all our citizens, both in Europe and in the ACP countries alike.”
For her part, Senator the Honourable Kamina Johnson Smith, Minister of Foreign Affairs and Foreign Trade of Jamaica stated that the imminent expiry of the current Cotonou Partnership Agreement provides a unique opportunity for us to modernize our relationship that is fit for purpose and will help us together to refine our approaches to national and regional issues, and define our ability to contribute collectively to a stable and progressive international environment, leaving no one behind.
Outcomes of the Ministerial meeting
As like-minded partners, the ACP Group of States and the EU agreed to increase their international cooperation in key areas, such as climate change, migration and throughout the upcoming UN Conferences this year. A specific calendar should be developed accordingly in the coming weeks.
Further cooperation is expected in the area of inclusive sustainable growth as the EU and the ACP Group of States exchanged views on how to increase trade, strengthen investment and management of natural resources, addressing the vulnerabilities of ACP Countries and the situation of middle income countries and take appropriate steps in relation to issues of EU list of non-cooperative jurisdictions for tax purposes.
Both partners reaffirmed their commitment to tackling climate change through a joint declaration in anticipation of the upcoming UNFCC 24th COP on Climate Change to be held in December 2018 in Katowice, Poland.
Background
The EU-ACP partnership is one of the oldest and most comprehensive frameworks of cooperation of its kind. Uniting more than one hundred countries and over 1.5 billion people, the Cotonou Agreement governing EU-ACP relations is due to expire in February 2020.
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Engaging civil society to accelerate Africa’s industrialization
The African Development Bank organized the Civil Society Forum 2018, as a three-day event at HQ in Abidjan, on the topic: “Engaging Civil Society to Accelerate Africa’s Industrialization”.
For the first time in the Bank’s history, the Forum took place separately from the Annual Meetings. This new format provided an enhanced platform for the continent’s civil society organisations (CSOs) to engage in dialogue and exchange views with the Bank – upholding the Bank’s commitment to engage with CSOs, and view them as key partners to successfully implement and achieve the High 5 priorities.
The Forum brought together over 300 participants from across the continent. The delegates included civil society organizations, non-governmental organizations (NGOs), social entrepreneurs, representatives from the private sector, and Bank Senior Management and staff. Discussions revolved around the Bank’s engagement with Civil Society, and the key mechanisms needed to strengthen future collaborations.
The plenaries and parallel sessions focused on the central theme of this year’s Forum “Industrialization”. The sessions addressed the key challenges to Africa’s industrialization, and the role that Civil Society can play in ensuring the implementation of the Bank’s pdf “Industrialize Africa” strategy (5.68 MB) is inclusive and sustainable.
To ensure that the Forum reflected the diverse concerns of CSOs on Africa’s industrialization, the Bank provided the opportunity for CSOs to organize and lead six parallel sessions. The CSO led sessions were very innovative and constructive with topics on: (i) Agriculture-based Inclusive Industrialization in Africa; (ii) The Blue Economy and Blue Energy (New nuclear power): Invaluable Assets in Accelerating Africa’s Industrialization; (iii) Accelerating Africa’s Industrialization: A Panacea for Youth Unemployment; (iv) Bridging Energy Access Gap for the Industrialization of Africa; (v) Digital Equality for Africa’s Industrialization, and; (vi) Illicit Financial Flows in Extractives – Implications for Industrialization.
Moreover, CSO representatives were also given the lead to moderate working group sessions on three of the enablers that the “Industrialize Africa” Strategy relies on to successfully industrialize Africa: inclusive industrial policy, fourth industrial revolution, and competitive talents and entrepreneurship.
During the Forum’s closing ceremony, the CSO representatives presented the conclusions of the three working group sessions, with three respective recommendations to the Bank:
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Create a multi-stakeholder platform with representatives from the public sector, private sector, the Bank and Civil Society – to guarantee the involvement of all actors in the development of industrial policies and projects.
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Promote equal access to digital tools for networking, capacity building, skills improvement, and data production purposes — to inclusively accelerate Africa’s industrialization.
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Establish capacity building programs that integrate gender lens training in the design of Bank policies and strategies – to improve the business environment in regional member countries so all entrepreneurs can grow and flourish.
A historical mark in the closing ceremony was the launch of the new AfDB Civil Society Committee, and its 11 CSO members working on one or more of the Bank’s Hi5 priorities. The Committee will be an advisory board and a key channel of communication to guide the Bank’s engagement with Civil Society. The re-launch of the AfDB Civil Society Committee shows the Bank’s institutional commitment to engaging with Civil Society, following the creation of the Civil Society and Social Innovation Division (AHGC2).
Alongside the Forum, an interactive, action-oriented workshop took place on May 9th on the Fourth Sector Development in Africa: Scaling Private Enterprises for Public Good. The Workshop was organized to bring together Bank staff interested in emerging alternative development approaches, social impact entrepreneurs, and civil society leaders from across Africa dedicated to positive social and environmental impacts. The objective, which was successfully achieved, was to engage in vigorous discussions on the opportunities and barriers associated with the new Fourth sector model for sustainable, inclusive development across Africa.
The dynamism that resulted from the change in format of the Forum was remarkable. The participants applauded the Bank, and agreed that separating the Forum from the Annual meetings allowed more effective interactions, and enriched exchanges in lessons learned and experience-sharing amongst the delegates and the Bank. The Civil Society representatives are now counting on the Bank to implement the recommendations they provided, and to continue being engaged as key partners at the Bank.
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Africa, global passenger traffic data for April 2018 (IATA)
African airlines’ had a 5.1% traffic increase in April. Capacity rose 4.6%, and load factor edged up 0.4 percentage point to 72.8%. The upward demand trend remains strong, helped by continuing signs of improvement in the region’s largest economies: Nigeria and South Africa. This is only the fourth time in the past 41 months that both economies have been on an upward trajectory at the same time.
MEFMI’s Caleb Fundanga: African economy needs more usage of Chinese yuan (Xinhua)
Executive director of the Macroeconomic and Financial Management Institute of Eastern and Southern Africa, Caleb Fundanga, said a forum for financial experts earlier in the week had agreed that there was need to use the Chinese yuan as a reserve currency because China was playing an active role in their economies. Fundanga said the coming in of the yuan would give the region more options for managing its reserves. “One of the issues we discussed though was that sometimes if you have borrowed from China they want to bill you in US dollars. Now we are saying our government must start discussing with Chinese enterprises (and) government so that we’re billed in yuan and then we can pay in yuan. Because there is no point if we start keeping our reserves in yuan but we’re billed in dollars. It is no good.”
SACU Stabilisation Fund to offset cyclical revenue fluctuation (New Era)
Part of the ongoing discussions regarding the revision of the revenue sharing arrangement between SACU member states includes the consideration of a Stabilisation Fund to offset the cyclical fluctuation of SACU receipts. This was confirmed this week when a SACU team, led by Executive Secretary, Paulina Elago, met with President Hage Geingob and other senior government officials at State House. The meeting took place to brief Geingob on the upcoming sixth SACU Heads of State Summit scheduled to take place in Gaborone, at the end of June. President Geingob’s Economic Advisor, Dr John Steytler, yesterday told New Era that a SACU Stabilisation Fund would have made a world of difference to the Namibian economy, particularly during the challenging economic performance of the domestic economy during the last two years.
SADC Sub-Committees on Customs and Trade Facilitation: WCO, SADC deepen cooperation
The Sub-Committees noted with satisfaction that the WCO and the SADC Secretariats are exploring the possibility to launch a joint donor-funded regional programme in 2019 to support the SADC Membership with implementation of the SADC Regional Trade Facilitation Programme. The Sub-Committees acknowledged that the WCO expertise in Customs matters and other areas focussed in effective border management will be particularly beneficial to the SADC Members in their regional trade facilitation efforts. The WCO also held bilateral meetings with institutional and development partners such as the EU, GiZ, USAID Trade and Investment Hub to discuss the SADC Trade Facilitation Programme in order to explore synergies and avoid potential duplication of activities.
Mozambique: CDN surpasses its target for goods transport (AIM)
About 100,000 tonnes of cargo were transported in the first quarter of this year by the Northern Development Corridor, which operates the port of Nacala, and the railway which runs from Nacala across Nampula and Niassa provinces to the Malawian border. This figure is around 25% more than CDM’s target for goods transport in the January to March period, which was only 79,955 tonnes. Businesses in Niassa have taken to using the railway to take goods from Nacala to Lichinga, following a substantial reduction in the rates charged by CDN. The cost to take a tonne of goods by rail from Nacala to Lichinga fell in February from 2,900 to 2,150 meticais (from $48 to $39 at current exchange rates), a fall of 26%.
South Africa: Active role by business in BRICS will promote investment (IOL)
Nigeria: AfCFTA, trade updates
Nigeria won’t force African peers to adjust AfCFTA – VP Osinbajo (Punch)
Asked if Nigeria would sign the agreement, the Vice President said: “I don’t think the question is whether we will not sign. I think what we will sign is probably the more important thing for us. What sort of negotiations will go on? Don’t forget that Nigeria is the largest market; so, we have more to lose. There are countries that are waiting for this big Nigerian market to open up. But we have to be a lot more careful. The question for us is: what will we sign? How will it play out for our private sector people?”
Asked if Nigeria would force countries that had already signed the agreement to take another look at it and make some adjustments, the Vice President said: “No; that is not even correct. Let me explain how it works: First, there is a framework; then the actual negotiations, and the actual negotiations haven’t started. So, we are going to negotiate. For us, it is important to sit back and take a look at those negotiations first before heading even into the framework, which is really what we are doing at the moment. Where we are at is that we are looking at the nitty-gritty. Really, we are not saying we are going to negotiate the framework; the framework is already there. Our major concern is with the specifics, and those specifics have to be negotiated, and we are at a point where before we go into that, we will certainly make sure that we are happy with the terms and conditions.”
NBA urges federal government to sign Africa free trade agreement (Today)
The Nigeria Bar Association has urged the Federal Government to endorse the AFCFTA to enable Nigeria reap economic benefits of intra African trade. Mr Olamide Akpata, Chairman, NBA Section on Business Law, said Nigeria’s endorsement of AFCFTA would greatly enhance legal practice in the country. Akpata spoke with newsmen in Lagos on the forthcoming 12th Annual Business Conference of the NBA-SBL, 27-28 June in Abuja. “The economy will be greatly impacted by the AFCFTA as it would improve the lives of Nigerian citizens and take the legal profession continental. The dynamics of the legal profession will change and we lawyers would examine the opportunities available for us when the AFCFTA takes effect,” he said.
Nigeria records 59.9% export growth – Udoma (Leadership)
Minister of Budget and Planning, Sen. Udoma Udo Udoma, on Thursday said the country’s total exports appreciated by 59.9% between 2016 and 2017 following the implementation of the Economic Recovery and Growth Plan. Speaking at the FT Nigeria Summit, Udoma said the non-oil sector accounted for the growth recorded. He said the agricultural sector export grew from N6.7bn in 2016 to N170bn in 2017, and that yam was among the products exported. Udoma said the solid minerals export also rose from N44bn in 2016 to N102bn in 2017.
Nigeria: FG cuts rice import bill to $160m (ThisDay)
Cereal market performance in Ethiopia: policy implications for improving investments in maize and wheat value chains (World Bank)
The objective of this study is to provide an updated overview on the performance of cereal markets in Ethiopia. Specifically, the study seeks to inform and guide project operations for the Government of Ethiopia and the World Bank. Currently, there is little private sector investment in grain storage facilities. Most storage warehouses at the primary cooperative and farmers’ union levels are funded by the public sector. About $32.7m of IDA funds under the Agriculture Growth Project were allocated for market infrastructure development, including piloting the construction of forty-four storage warehouses with the objective of further scaling up. Under AGP 2, the government requested $11m toward the construction of more storage warehouses for unions and primary cooperatives. Before constructing more warehouses, though, it is important to shed light on why the private sector is not investing in grain storage.
Uganda imposes WhatsApp and Facebook tax ‘to stop gossip’ (GhanaWeb)
Uganda’s parliament has passed a law to impose a controversial tax on people using social media platforms. It imposes a 200 shilling [$0.05, £0.04] daily levy on people using internet messaging platforms like Facebook, WhatsApp, Viber and Twitter. President Yoweri Museveni had pushed for the changes, arguing that social media encouraged gossip. The law should come into effect on 1 July but there remain doubts about how it will be implemented. The new Excise Duty (Amendment) Bill will also impose various other taxes, including a 1% levy on the total value of mobile money transactions - which civil society groups complain will affect poorer Ugandans who rarely use banking services. State Minister for Finance David Bahati told parliament that the tax increases were needed to help Uganda pay off its growing national debt. [Ghana: Increase ‘sin tax’ to augment NHIS – Philips Africa CEO]
Conference on digital trade in Africa and its implications for inclusion and human rights (UNECA)
Ms Songwe cautioned that too much government intervention could kill innovation. “Digitalization is essentially about owning an identity which is a fundamental human right. With a portable digital identity, the question of identity can be solved for migrants.” The ECA chief talked about India’s growing digital space which has opened vast economic opportunities for its citizens and what Africa could learn from the south Asian country. Mr Carlos Lopes, a Visiting Professor at the University of Cape Town, said African countries should prepare themselves for a digital economy that could possibly be difficult and challenging to adjust to. He said the advantages were, however, immense. For example, the youth bulge was advantageous to Africa as populations in the West and countries like Japan shrink in the next 20 years. Africa’s youth repository will adapt quickly so that’s a huge advantage to the continent as countries navigate the digital economy, he added. “So we need to tell our policymakers that they need to go fast because the windows are closing really, really fast.”
Addressing e-payment challenges in global e-commerce (WEF)
This white paper informs discussion on e-payment challenges and solutions. It provides brief context on the e-payment ecosystem, the opportunities the sector presents for small business and financial inclusion and the payment-related hurdles faced by small players dealing digitally across borders. Given that trade frameworks can address international commercial frictions and support e-payment development, the paper enhances understanding of relevant efforts to date, and reflects on what else could be done. Extract (pdf):
In Africa, despite major increases in phone use with associated m-payment potential, cash-on-delivery is the preferred payment method, used in just under half of all all e-transactions by value.30 Top barriers for e-payment uptake include poor infrastructure – particularly in terms of internet and telecommunications – as well as financial illiteracy. Issues also exist around withdrawal from international payment service suppliers – for example, payments cannot be received or withdrawn from PayPal in a number of African countries. A range of combined regulatory and operational issues can make providing cost-effective e-payment services difficult, as can limitations on the type of services e-payment suppliers may provide or partnerships that can be established. [Landry Signé, Kevin Signé: Global cybercrimes and weak cybersecurity threaten businesses in Africa]
Today’s Quick Links: AfDB’s Akinwumi Adesina: A roadmap for African industrialization Options for updating Competition Assessment Toolkit in light of digitalisation: OECD Secretariat note (pdf) Commission on harmonisation of regulatory framework for the electricity market in Africa: first progress report Nigeria SWF: $650m capital injection raises savings in SWF to $2.15bn Aliko Dangote Foundation: update on the gender focus for micro-grant scheme Ghana to establish Innovation and Research Commercialisation Centre Arvind Subramanian: India’s new tax breaks down old barriers World Bank: China Economic Update |
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Africa needs to increase access to internet if digital trade is to be meaningful, says Vera Songwe
A two-day conference on “Digital Trade in Africa: Implications for Inclusion and Human Rights”, opened in Addis Ababa Thursday, with a high level panel discussion on the importance of digital technologies in the advancement of trade and Africa’s development.
The panelists at the opening session were Vera Songwe, Executive Secretary of the United Nations Economic Commissioner for Africa; UNCTAD’s Secretary-General, Mukhisa Kituyi; former ECA Executive Secretary, Carlos Lopes; and Amani Abou-Zeid, African Union Commissioner for Infrastructure and Energy.
Ms. Songwe hailed Kenya for leading the continent in terms of internet penetration, adding much more still needs to be done across Africa for digital trade to make a difference.
“For digital trade to be meaningful we need to increase access to the internet, make it affordable, reliable and fast. Many countries, especially our landlocked countries, still have very limited connectivity,” she said.
She said the human rights part of the digital economy debate was important and should be discussed more on the continent. Ms. Songwe cautioned that too much government intervention could kill innovation. She also noted that digitalization is essentially about owning an identity which is a fundamental human right. “With a portable digital identity, the question of identity can be solved for migrants,” she said.
The ECA Chief talked about India’s growing digital space which has opened vast economic opportunities for its citizens and what Africa could learn from the south Asian country.
“India under the Adhaar program has the largest digital revolution taking place with 1.1 billion Indians registered and 300 million people verifying their IDs every day for transactions. Africa can do the same,” said Ms. Songwe.
The Internet of Things industry in India is expected to reach $15 billion by 2020 with the digital infrastructure creating tremendous opportunities for technology players and in key applications such as smart cities, smart utilities, smart healthcare, smart transportation and more.
“This is a space that is growing in amazing leaps and bounds and as a continent we should be part of it,” said Ms. Songwe.
“When we start talking about digital systems and what we need to do, then the question is; how well is Africa equipped to get into the digital age. We have phones and payment systems but I think we need to get to the next level. There’s a lot more work that needs to be done.”
She also highlighted governance systems; shared responsibility for broadband networks; internet security and use of information; civil registration; and financial inclusion for those at the bottom.
Preparedness
Mr. Lopes, who is currently a Visiting Professor at the University of Cape Town, said African countries should prepare themselves for a digital economy that could possibly be difficult and challenging to adjust to.
He said the advantages were, however, immense.
For example, said Mr. Lopes, the youth bulge was advantageous to Africa as populations in the West and countries like Japan shrink in the next 20years.
Africa’s youth repository will adapt quickly so that’s a huge advantage to the continent as countries navigate the digital economy, he added.
“We need to tell our policymakers that they need to go fast because the windows are closing really, really fast.”
Ms. Abou-Zeid said the African Union Commission was doing a lot of work with its partners, including the ECA, to prepare African nations on how to regulate and deal with digital economy issues.
“The idea is that we want this digital economy to be an equalizer; to encourage democratic tendencies in our countries and making sure that we are bridging the gap between those in the rural and urban areas, especially ensuring girls and women also have access to the digital economy,” said Ms. Abou-Zeid.
For his part, Mr. Kituyi said there was need for more political will on the continent to embrace electronic commerce. He said sometimes there’s a defeatist tendency by some governments on the continent that e-commerce is too advanced and that they cannot do it.
“The transformational power of digitalization cannot be overemphasized. We need to dream and our governments must respond and become responsive,” Mr. Kituyi said.
The conference is providing a platform for stakeholders to share and brainstorm ideas on the important inclusion and human rights implications of digital trade in Africa.
It was co-organized by the African Trade Policy Centre (ATPC) of the ECA, the Office of the United Nations High Commissioner for Human Rights (OHCHR) East Africa Regional Office and the Friedrich-Ebert-Stiftung (FES) Geneva Office.
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African economy needs more usage of Chinese yuan: financial expert
There has been a general consensus among some eastern and southern African countries that there should be more usage of the Chinese yuan in the region because of China’s growing influence in business and trade, a financial expert said Thursday.
Executive director of the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) Caleb Fundanga said a forum for financial experts earlier in the week had agreed that there was need to use the Chinese yuan as a reserve currency because China was playing an active role in their economies.
The forum was attended by deputy central bank governors and deputy permanent secretaries of finance from 14 countries that fall under MEFMI.
“The general conclusion is that we should use the yuan more because its time has come. We are doing more business (with China) so it’s natural that we use the currency of the country with which we are trading.
“Just the way we have been using the (U.S.) dollar and the Euro, we want to use the Chinese currency more in our transactions because it is to our benefit,” he said.
He said use of the yuan could protect the region from currency volatilities.
The forum had also discussed the implications of using the Chinese currency and agreed that there was need for more information on markets and products on which it could be invested.
“At the moment that information is not freely available,” he said, suggesting further that Chinese financial experts should make the information available at such fora.
Fundanga said the coming in of the yuan would give the region more options for managing its reserves.
The use of the yuan also came in handy because China was giving loans to the region and other African countries.
“One of the issues we discussed though was that sometimes if you have borrowed from China they want to bill you in U.S. dollars. Now we are saying our government must start discussing with Chinese enterprises (and) government so that we’re billed in yuan and then we can pay in yuan. Because there is no point if we start keeping our reserves in yuan but we’re billed in dollars. It is no good,” he said.
He acknowledged, however, that some countries were already being billed in yuan for Chinese goods and services.
Fundanga said there was also discussion on possible currency swaps like what China had done with Nigeria, where Nigerians travelling to China could easily access the yuan from their local banks.
MEFMI argues that the bulk of reserves for most countries in the region are invested in U.S. dollars, yet their composition has not kept pace with the large shifts in the world economy. This is particularly so since China and India continue to shape global economic trends as they remain major trade partners for the region.
MEFMI countries comprise Angola, Botswana, Burundi, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
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tralac’s Daily News Selection
Launching tomorrow, in Accra: the inaugural edition of the African Sovereign Wealth Funds Index (conducted by Konfidants, in partnership with the AfroChampions Initiative and PG and Partners)
Economic Development in Africa Report 2018: Migration for structural transformation
African migration could boost growth and positively transform the structure of the continent’s economy, UNCTAD’s 2018 Economic Development in Africa Report (pdf) reveals. In 2017, the top five intra-African migration destinations were South Africa, Cote d’Ivoire, Uganda, Nigeria, and Ethiopia (all exceeding 1 million migrants). The contribution of migrants to GDP was measured at 19% in Côte d’Ivoire (2008), 13% in Rwanda (2012), 9% in South Africa (2011) and 1% in Ghana (2010).
Meanwhile, remittance inflows from outside and within Africa rose on average from $38.4 billion (2005-2007), to $64.9 billion (2014-2016). These accounted for 51% of private capital flows in Africa in 2016, up from 42% in 2010. This is why both intra and extra-continental migration are needed for supporting Africa’s structural transformation.
The report also provides evidence on the “intimate correlation between two sides of the same coin: migration and trade” according to UNCTAD’s Junior Roy Davis, a lead author on the report. Africa is on the cusp of tremendous change, following the recent signing of the agreement establishing the AfCFTA, Protocol on Free Movement of Persons, and the launch of the Single African Air Transport Market in January 2018. “In this context the report contributes to a better understanding of the implications of intra-African migration for the continent’s socio-economic transformation,” he said.
US trade and investment with Sub-Saharan Africa: recent developments (USITC)
Rising per capita incomes, growing urbanization, the need for improved infrastructure, and expanding healthcare contributed to growth in US exports in some sectors to sub-Saharan Africa between 2010 and 2016, reports the United States International Trade Commission in its publication pdf US Trade and Investment with Sub-Saharan Africa: recent developments (5.61 MB) . The USITC conducted the investigation at the request of the USTR. Highlights of the report include:
The fastest growing US imports of goods from SSA between 2010 and 2016 were cocoa, chocolate, and confectionery; apparel; refined copper; catalytic converters; and edible nuts. Growth in these sectors was due to the long-term renewal of AGOA to 2025, the increased presence of FDI in these sectors, SSA production cost advantages relative to other global suppliers, and expanding manufacturing capacity in SSA. Apparel, edible nuts, footwear, and raw cane sugar show potential for growth in US imports from SSA under AGOA.
In 2015, the latest year for which data are available, merchandise exports to SSA by U.S. SMEs were approximately $5.8bn, a decrease from 2010. Over 40% of the 2015 exports were concentrated in South Africa and Nigeria. Some challenges faced by SMEs are high tariffs and poor protection of intellectual property rights.
The stock of US FDI in SSA declined from 2010 to 2016, with mining, including crude petroleum, being the largest destination sector. Sectors with the greatest potential for US FDI in SSA are professional and business services, financial services, textiles and apparel, renewable energy, and mining. The three largest destinations for US FDI in SSA in 2016 were Mauritius ($7.0bn), South Africa ($5.1bn), and Nigeria ($3.8bn).
Kenya: US trade secretary, Wilbur Ross, set for Kenya visit (The Standard)
US Commerce Secretary Wilbur Ross is scheduled to visit Kenya at the end of next month for a bi-lateral trade summit. This will be Mr Ross’ first official visit to Africa and will see the top US trade envoy accompanied by more than 70 delegates from the US private sector, looking to broaden trade and investment ties with Kenya. Outgoing US Ambassador Robert Godec announced the end-June trade summit yesterday, stating that US investors were keen on exploring opportunities around the Government’s ‘Big Four’ agenda. “Kenya and the US share a long and strong trade relationship and with a move to strengthen these ties the US Commerce Secretary will lead a 70-person delegation to Kenya at the end of June,” explained Godec.
South Africa: Trade statistics for April 2018 (pdf, SARS)
The South African Revenue Service today released trade statistics for April 2018 recording a trade balance surplus of R1.14bn. The year-to-date (01 January to 30 April 2018) trade balance deficit of R17.65bn is a deterioration on the surplus for the comparable period in 2017 of R8.52bn. Exports year-to-date decreased by 0.3% whilst imports for the same period showed an increase of 7.2%. South Africa’s trade statistics with BLNS countries only recorded a trade balance surplus of R7.34bn.
Ghana: Only a single textile container was officially declared in 2016 – trade minister (GhanaWeb)
Trade and Industry Minister, Alan Kyerematen has revealed that in 2016, the country recorded only a single textile container declared as coming through the ports of entry. He made this revelation at the joint press conference on the happenings in the textiles industry on last Wednesday. Currently, the combined production of the four local textile companies operating in the country does not exceed 40 million yards of print annually, out of the 120 million yards demand. This reflects the high level of smuggling of textiles into the country and loss of revenue to government. Hence, this has led to government implementing certain measures to mitigate the current challenges bedevilling the industry. These include the impending implementation of import restrictions on textile prints into the country expected to begin on September 1, 2018. The minister explained that the reason for the transition period of three months is to ensure that all smuggled goods in the country are cleared out of the market.
Ghana lost GHC1.9bn to illegal fuel trade in 2017 (GhanaWeb)
The Chamber of Bulk Oil Distributors is blaming the persistent issues of illegal fuel trade on what it says is the weak commitment of security agencies in addressing the issue. A latest industry report by the Chamber said the illegal fuel trade cost the country some 1.9 billion cedis in 2017. The report cited three main factors as accounting for the losses to the country. For instance, transfer pricing cost the country some 148 million cedis. Also, unreported ESLA receipts amounted to 915 million cedis between 2016 and 2017. In addition, smuggling and dumping of fuel products in the country led to losses of about 1.4 billion cedis. CEO of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi describes the situation as worrying.
South Africa: Carrim calls on FIC, Hawks, SARS and NPA to stem tax losses for SA (Fin24)
AfCFTA updates
Nigeria and the AfCFTA: LCCI urges caution as debate on African trade treaty rages (Business Day)
The Lagos Chamber of Commerce and Industry says some of the issues raised by Nigeria for not signing the AfCFTA are genuine. The chamber, just like the Manufacturers Association of Nigeria, urges caution to ensure the country makes no mistakes in this regard. Speaking at a stakeholders’ forum in Lagos, Babatunde Ruwase, president of the chamber, said the high point of argument for Nigeria not signing the AfCFTA was its fear of numerous bilateral trade agreements of some AU countries with the rest of the world and Nigeria’s underdeveloped industrial and infrastructural sector. “It has been argued that this will potentially make Nigeria a dumping ground due to our uncompetitive manufacturing profile, market size and population. To us at LCCI, these are legitimate concerns. It is therefore imperative to deepen consultation across all sectors, in order to address these genuine concerns from stakeholders.” [African Business: Continental Free Trade Area – game-changer or pipe dream?; FT Nigeria Summit: Signing AfCFTA will hurt Nigeria’s private sector, VP Osinbajo says]
AfroChampions Initiative, African Union AfCFTA sensitisation tour updates:
In Dakar: “Senegal is the second largest economy in Francophone West-Africa, and therefore represents a strategic market. We must convince local economic actors that the AfCFTA is a true opportunity for their activity” said Mr Albert Muchanga, AU Commissioner in charge of Trade and Industry. “Senegal will play a pivotal role, particularly because of its relationship with North Africa and its efforts to deploy strategic infrastructures, and we need to help it become a driving force in the future AfCFTA.”
African leaders committed to building a digital economy (World Bank)
During the Spring Meetings in April, the World Bank Group launched the Digital Economy for Africa Initiative (DE4A), which brought together African finance and ICT ministers, central bank governors, global tech and telecom giants, as well as local and regional internet platforms, think tanks and thought leaders, digital entrepreneurs and development partners. The event underlined the role of the digital economy as a new driver of growth, discussed how to build its foundations, and looked at the risks of being left behind. DE4A is now working with a group of countries on a Digital Economy Country Assessment, which will form the basis for digital economy country strategies. [Martin Mühleisen: The long and short of the digital revolution]
Christine Lagarde: Creating a better global trade system (IMF)
Think about it: between 1986-2008, global trade in goods and services grew at more than twice the rate of the global economy. In recent years, however, growth in this more traditional type of trade has barely exceeded global GDP growth. At the same time, digital flows have been booming. According to Cisco, the amount of cross-border bandwidth used grew 90-fold between 2005 and 2016, and is expected to grow an additional 13-fold by 2023. This is not just about video streaming, Skype calls, and social media posts. It is about the role of data in boosting other flows, especially by making services more tradable - from engineering, to communications, to transportation. So in many ways, the future of trade is the future of data. This is a huge opportunity for policymakers to build new economic bridges between countries, and to create a better global trade system. Let me highlight 4 building blocks of better trade:
OECD sees stronger world economy: but risks loom large (OECD)
The global economy is experiencing stronger growth, driven by a rebound in trade, higher investment and buoyant job creation, and supported by very accommodative monetary policy and fiscal easing, according to the OECD’s latest Economic Outlook. The pace of global expansion over the 2018-19 period is expected to hover near 4%, which is close to the long-term average. However, the Outlook also underlines that significant risks posed by trade tensions, financial market vulnerabilities and rising oil prices loom large, and more needs to be done to secure a strong and resilient medium-term improvement in living standards. Extract: Policy challenges from closer international trade and financial integration (pdf)
While gross trade flows give a strong indication of physical trading activity, trade in value added (Figure 2.4) gives a better picture of the income flows associated with trade. The two metrics can differ. For instance, total merchandise trade flows between China and the Dynamic Asian Economies are smaller when measured in value-added terms than in gross terms due to strong GVC linkages and sizeable trade in intermediates (Figures 2.3 and 2.4). In contrast, trade flows for Japan and Korea are relatively larger in value-added terms, as are flows between the United States and China.
There is still substantial room to reduce barriers to trade (Box 2.1) and stimulate trade integration, but there is also a possibility that technological advances could reduce trade intensities, at least for goods, and change trade patterns in the future. International trade is now starting to be affected by developing digital technologies, including the internet of things, big data, the cloud, autonomous robotics and 3D printing, all of which may act as a brake on GVC expansion (Baldwin, 2016). [Profiled highlights: Projections by country; General assessment of the macroeconomic situation; Policy challenges from closer international trade and financial integration; Statistical annex; Compare your country – data visualisation. South Africa: Economic forecast summary]
Unrealized potential: the high cost of gender inequality in earnings (World Bank)
Globally, countries are losing $160 trillion in wealth because of differences in lifetime earnings between women and men. This amounts to an average of $23,620 for each person in the 141 countries studied by the World Bank Group in a new report released Wednesday. The study examines the economic cost of gender inequality in lost human capital. The losses in wealth from inequality in earnings between men and women vary by region. The largest losses—each between $40 trillion and $50 trillion—are observed in East Asia and the Pacific, North America, and Europe and Central Asia. This is because these regions account for most of the world’s human capital wealth. Losses in other regions are also substantial. In South Asia, losses from gender inequality are estimated at $9.1 trillion, while they are estimated at $6.7 trillion in Latin America and the Caribbean and $3.1 trillion in the Middle East and North Africa. In Sub-Saharan Africa, the losses are estimated at $2.5 trillion.
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Migration in Africa plays growing development role, report reveals
A comprehensive analysis of population movement within Africa demonstrates it could have unexpected economic benefits and support development on the continent.
African migration could boost growth and positively transform the structure of the continent’s economy, UNCTAD’s 2018 Economic Development in Africa Report reveals.
“Population movements across borders often offer individuals a chance for a better life, with the social and economic benefits extending to both source and destination countries, as well as future generations,” UNCTAD Secretary-General Mukhisa Kituyi said.
“Our analysis shows this to be true for millions of African migrants and their families. Yet much of the public discourse, particularly as it relates to international African migration, is rife with misconceptions that have become part of a divisive, misleading and harmful narrative.”
The new report, subtitled “Migration for Structural Transformation”, does much to counter this narrative. Historically and in line with established trends, the report says that most African migrants move within the continent.
In 2017, the report says, 19 million international migrants moved within Africa and 17 million Africans left the continent. In addition, Africa is a migration destination for 5.5 million people who came from outside the continent.
Behind the numbers
The report follows the stories of Mamadou and Ramatoulaye from Senegal, and Afwerki from Ethiopia. While they are fictional avatars for two different types of migrants – skilled and low-skilled – their stories illustrate the benefits and pitfalls that intra-Africa migration has for trade and development on the continent.
In 2017, the top five intra-African migration destinations (receiving countries in descending order) were South Africa, Cote d’Ivoire, Uganda, Nigeria, and Ethiopia (all exceeding 1 million migrants), the report says.
Behind the numbers lies economic analysis that shows the net benefit of migration in Africa.
The contribution of migrants to GDP was measured at 19% in Côte d’Ivoire (2008), 13% in Rwanda (2012), 9% in South Africa (2011) and 1% in Ghana (2010).
Meanwhile, remittance inflows from outside and within Africa rose on average from $38.4 billion (2005-2007), to $64.9 billion (2014-2016). These accounted for 51% of private capital flows in Africa in 2016, up from 42% in 2010.
This is why both intra and extra-continental migration are needed for supporting Africa’s structural transformation.
Migration and trade
The report provides evidence on the “intimate correlation between two sides of the same coin: migration and trade” said UNCTAD’s Junior Roy Davis, a lead author on the report.
“Africa is on the cusp of tremendous change,” he said. “On 21 March 2018, 44 African countries signed the establishment of the African Continental Free Trade Area and 30 of them signed the Protocol on the Free Movement of Persons.”
He added: “These critical milestones follow the launch of the Single African Air Transport Market in January 2018. In this context the report contributes to a better understanding of the implications of intra-African migration for the continent’s socio-economic transformation.”
Facts and Figures
There were about 41 million people counted as international migrants from, to, or within Africa. Of these:
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19 million resided in Africa,
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17 million left the continent,
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and 5.5 million were immigrants from the rest of the world.
Intra-African migration as a mechanism for fostering economic growth and promoting structural transformation.
Migration can contribute to economic growth and structural transformation in the following ways:
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As a catalyst for economic growth, intra-African migration can positively impact structural transformation in destination countries. If properly managed, intra-African migration could lead to a substantial increase in GDP per capita for Africa by 2030.
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Through trade (including in food imports from sending countries and heritage (nostalgia) trade) and by increasing within-sector productivity in agriculture, construction, mining, services, information technology (IT) and manufacturing.
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By fostering inclusive growth and poverty reduction, including through remittances and diaspora investment in countries of origin, and through taxes and consumption in destination countries. Intra-African migration also provides opportunities for Africa’s female migrants who comprised 47 per cent of Africa’s international migrants in 2017, and youth (ages 15-24) who accounted for 16 per cent of the continent’s international migrants.
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African countries can yield further benefits from migration:
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by aligning migration, trade and investment policies with development objectives;
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leveraging remittances and harness diaspora for productive investment;
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adopting more flexible labour policies to ease migrants’ mobility;
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integrating migrants in labour markets and by allocating resources to address structural determinants of Africa’s socio-economic development; and
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By adopting gender-sensitive policy measures in order to unlock the potential of female migrants to benefit from migration and contribute to African’s development.
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International migration’s contribution to economic growth
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Migration is projected to boost Africa’s GDP per capita from $2,008 in 2016 to $3,249 in 2030; growing at an annual rate of 3.5% from 2016.
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Migration contributes to destination countries’ development – through taxes and consumption (migrants spend an estimated 85% of their incomes in destination countries).
Intra-African migration and trade
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Migration stimulates trade (it's associated with increased food imports from sending countries). Intra-African migrants’ demand for food products increased food imports from sending countries. Emigration from Zimbabwe and the Democratic Republic of Congo (DRC) to other African countries in 2000 and 2013 corresponded to the increase in food imports from these countries (reflected in the value of food imports from Zimbabwe which rose from $100,000 to $ 1 million, and from the DRC from $100,000 to $650,000 during this time period).
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Migration can also stimulate heritage (nostalgia) trade. Diaspora populations can play an important role as bridges to broader markets, through the promotion of trade and tourism in their countries of origin.
Intra-African migration and structural transformation (economic sector productivity)
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Intra-African migration is positively associated with within-sector productivity as an increase in migration stocks is associated with higher sector productivity in agriculture, construction, mining, services, information technology (IT) and manufacturing.
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If immigration grows at the 10-year average growth rate of 54% in 1990-2000 and 2000-2010, it could boost growth in within-sector productivity and potentially result in a growth take-off for countries with the lowest labour productivity.
Intra-African migration is a driver of inclusive growth
Migration reduces poverty through remittances and diaspora investment.
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Female migrants are contributing to inclusive growth in both countries of origin and destination.
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Africa’s female migrants contribute just as much in remittances (in terms of cash and in-kind remittances) as their male counterparts.
Intra-African migration and employment
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Unemployment has been a key driver of migration in Africa (internal and international). Youth unemployment is a key driver of extra-continental migration from northern Africa migration. In 2016, the youth unemployment in Northern Africa stood at 29.3 %, well above Sub-Saharan Africa’s rate (10.9%).
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Demand for labour in economic sectors has been a key driver of intra-African migration.
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Demand in education (Rwanda), engineering (Rwanda), financial services (South Africa, Tanzania and Uganda), and IT (Rwanda and South Africa) has been a key driver of highly-skilled migration to the continent’s regional markets;
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Demand in construction (Cote d’Ivoire and South Africa), mining (South Africa and Gabon) and services for semi-skilled migration, and
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Demand in agriculture (Cote d’Ivoire and South Africa) and domestic service (South Africa and Mauritania) and informal cross border trade (in Southern, Eastern and Western Africa) for low-skilled migration.
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Intra-African migration generates positive effects for migrants:
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It can contribute to upskilling, with improved skills resulting in better paid, stable employment while enhancing migrants’ productivity. For example, low-skilled migrant farmers from Burkina Faso gained new skills in Cote d’Ivoire that enabled them to secure more stable employment in higher-skilled occupations that was often better remunerated.
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Employment-related benefits for countries: Destination countries can fill critical skills and labour market gaps, and countries of origin can accrue benefits from knowledge and skills transfer, and through domestic skills development.
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Lack of policy frameworks that recognize academic and professional qualifications in destinations and high costs associated with obtaining work permits impede highly-skilled migrants’ mobility in regional labour markets.
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Intra-African migration and gender
Female migration is growing in importance in Africa.
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In 2017, international female migrants in Africa represented 47%. The absolute number of international female migrants increased from 6.9 million in 2000 to 11.6 million in 2017.
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International female migration in Eastern Africa exceeded the continental average (50 % vs. 47%).
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International female migrants in Africa engage in vulnerable employment in domestic service and informal cross border trade. In addition to being in vulnerable employment, women migrate under more challenging circumstances, given riskier migration journeys, family and care responsibilities at home.
Migration and remittances
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Remittance inflows to Africa rose from $38.4 billion in 2005-2007, to $64.9 billion in 2014-2016, on average. Remittances accounted for 51% of private capital flows to Africa in 2016, up from 42% in 2010.
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Countries with a high dependence on remittance inflows as a share of GDP include Liberia (26.7%) and Lesotho (18.2%).
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The cost of sending remittances in Africa exceeds the global average; Africa 8.9% on average for sending $200 vs. Global average of 7.3%.
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Within some African corridors, remittance-sending costs exceed the average cost for Sub-Saharan Africa, which stands below 10%.
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According to the African Institute for Remittances, in 2016, South Africa-Botswana, South Africa – Angola, South Africa – Lesotho, South Africa – Swaziland and Tanzania – Uganda were the costliest corridors in Africa, with the costs of sending remittances exceeding 15%.
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Conversely, at 4%, Senegal-Mali was one of the least expensive corridors in the world.
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OECD sees stronger world economy, but risks loom large
The global economy is experiencing stronger growth, driven by a rebound in trade, higher investment and buoyant job creation, and supported by very accommodative monetary policy and fiscal easing, according to the OECD’s latest Economic Outlook.
The pace of global expansion over the 2018-19 period is expected to hover near 4%, which is close to the long-term average. However, the Outlook also underlines that significant risks posed by trade tensions, financial market vulnerabilities and rising oil prices loom large, and more needs to be done to secure a strong and resilient medium-term improvement in living standards.
Low, albeit gradually rising interest rates coupled with fiscal easing in many countries will continue underpinning the expansion, which will see moderate rises in both wage growth and inflation. Unemployment in the OECD area is expected to drop to the lowest levels since 1980, but more can be done to bring more people into the workforce.
“The economic expansion is set to continue for the coming two years, and the short-term growth outlook is more favourable than it has been for many years,” said OECD Secretary-General Ángel Gurría. “However, the current recovery is still being supported by very accommodative monetary policy, and increasingly by fiscal easing. This suggests that strong, self-sustaining growth has not yet been attained.”
“Policymakers need to put greater focus on structural policies to boost skills and to improve productivity to achieve strong, sustainable and inclusive growth,” Mr Gurría said.
The Outlook highlights a range of risks to the current expansion. Oil prices have risen significantly in the past year, and, if sustained, could add to inflation while softening real household income growth. The threat of trade restrictions has begun to adversely affect confidence, and, if such measures were implemented, they would negatively influence investment and jobs.
Risks also remain that the normalisation of interest rates in some economies, notably the United States, could expose financial vulnerabilities and tensions created by elevated risk-taking in financial markets and high debt, especially in emerging market economies with high levels of foreign currency debt. Procyclical fiscal easing exacerbates these risks.
The Outlook calls for reforms to be stepped up, against the background of favourable short-term conditions and the need to secure more robust and more inclusive growth. It urges countries to boost investment in education and skills, as part of improvements in the use of tax and spending policies to raise living standards across the income distribution.
It recommends policies to boost job creation and business dynamism in the economy, including improvements to digital and physical infrastructure, enhanced R&D collaboration between universities and industry, reduced barriers to entry in professional services sectors and less red tape.
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AfroChampions Initiative and African Union undertake sensitization program on the African Continental Free Trade Area
AfCFTA awareness-raising campaign: West African tour
The AfroChampions Initiative and the African Union Commission began their first roadshow to raise local entrepreneurs’ awareness on the African Continental Free Trade Area (AfCFTA) on 28 May 2018 with a meeting in Accra, organized in partnership with the Association of Ghana Industries (AGI).
Attendees included mostly Ghanaian entrepreneurs, operating in the manufacturing sector which should be boosted by the free movement of goods, services and people expected to result from the implementation of the AfCFTA Agreement.
“We are very pleased with these discussions with the Ghanaian business community,” said His Excellency Albert Muchanga, AU’s Commissioner for Trade and Industry.
“While we were able to present the opportunities offered by free movement of goods and services on the continent and the end of tariff and non-tariff barriers, we also received many questions and comments on the best schedule of actions to implement AfCFTA’s protocols, challenges relating to the simplification of customs procedures or logistical infrastructures. This will inform our future reflections during the implementation phase of the AfCFTA agreement and we thank AGI for its support,” he added.
Dr. Yaw Adu-Gyam fi, President of the AGI, was pleased that “the roadshow started in Ghana, which, is, along with Kenya, the first country that deposited instruments to ratify the AfCFTA agreement”.
For him, “it is very important that the African Union can receive suggestions from the private sector to ensure that the future AfCFTA is one that is aligned with the realities of the companies already involved in cross-border trade. We are happy to contribute to this dialogue between public decision-makers and economic players, which is a fairly new approach on our continent.”
Speaking on behalf of the AfroChampions Initiative, which designed and financed this awareness-raising roadshow, Mr Kuseni Dlamini, Chairman of Massmart and member of the AfroChampions Club, highlighted “the structuring role of intra-African trade for the development of the continent” and presented the AfroChampions Charter for African economic integration.
Abidjan welcomes the AfroChampions Initiative and the AU for the second stop
The second stop of the West African roadshow was in Abidjan. Organized in collaboration with the Côte d’Ivoire Chamber of Commerce and Industry, the meeting brought together Ivorian economic operators, particularly from the sectors of agriculture, logistics and transport, as well as representatives from the subsidiaries of major international groups established in Côte d’Ivoire.
Many strategic issues were addressed, such as non-tariff barriers, the situation of cross-border workers and traders, and the monitoring and traceability of products exported from Côte d’Ivoire to the rest of the sub-region.
For His Excellency Mr. Albert Muchanga, AU’s Commissioner in charge of Trade and Industry of the African Union, “it is essential that strategic markets, such as Côte d’Ivoire, which are regional hubs, drive the implementation of the AfCFTA. This is really our goal with this dialogue that we have initiated and that we hope to continue in partnership with the Chamber of Commerce and Industry of Côte d’Ivoire which we thank for its support.
“Here we have a perfect reflection of Africa’s economic diversity, with local, sub regional, and international actors, each facing different issues and whose feedback is very useful to prepare for the AfCFTA implementation phase.”
The President of the Chamber of Commerce and Industry of Côte d’Ivoire, Mr. Faman Touré, considered that the dialogue and consultation launched by the AfroChampions Initiative and the African Union as a pioneering approach.
“The AfCFTA Agreement is a strategic development for Africa, but it is true that entrepreneurs need to be better informed. This is an unprecedented opportunity; when we know that intra-African trade accounts for only 16% of the continent’s trade, there is definitely scope for improvement! Economic actors must prepare, inform themselves, put in place the right teams. At the CCI-CI, we want to play our role and support them on all these aspects.”
“In Abidjan too, the AfroChampions Charter for Economic Integration has been well received and we hope to gather many signatories soon,” added Jean-Louis Billon, Former Minister for Trade, Crafts and SMEs in Côte d’Ivoire, Chairman of SIFCA, and Vice-president of the AfroChampions Club for Western Africa who is the first signatory of the Charter on behalf of SIFCA.
Third stop in Dakar for the Senegalese business community
Dakar was selected as the third stop of the AfCFTA awareness roadshow. In partnership with Sy Investments and ADS group, both members of the AfroChampions Club, a meeting was organized with several local business federations and agencies, including the National Confederation of Senegalese Employers (CNES), the ASEPEX (Senegalese Agency to Promote Exports), the UNACOIS (Senegalese Industry and Trade Federation), the COSEC (National Council of Chargers of Senegal) and CNP (Senegalese Employers Union).
Keynote speakers also included Ms Assome Aminata Diatta, Director for External Trade at the Ministry for Trade, Informal Sector, Consumption, promotion of local products and SME, and Mr Muhammad M. Jagana, Chairman of the Gambia Chamber of Commerce and Industry. The meeting focused on strategic issues, such as the elimination of non-tariff barriers, as well as other complimentary measures necessary for the success of the AfCFTA.
“Senegal is the second largest economy in Francophone West-Africa, and therefore represents a strategic market. We must convince local economic actors that the AfCFTA is a true opportunity for their activity,” said His Excellency Mr. Albert Muchanga, Commissioner in charge of Trade and Industry of the African Union.
“Senegal will play a pivotal role, particularly because of its relationship with North Africa and its efforts to deploy strategic infrastructures, and we need to help it become a driving force in the future AfCFTA,” he added.
As managing Director of Sy Investments and Advisor to the AfroChampions Executive Committee, Alpha Sy explained how he had organized the meeting with the business community: “It was very important for us to bring together a broad range of business federations to propose to the African Union a 360° viewpoint on issues confronting Senegalese economic actors in relation to the AfCFTA.
“The participants were happy to be able to ask their questions directly to the AU Commission and, following the initial sensitization meetings in Accra and Abidjan, to learn more about the reactions and projects proposed in west African countries about the AfCFTA.”
As co-founder of the AfroChampions Initiative and Special Adviser to its Executive Committee, Samba Bathily, Founder and CEO of ADS Group, commented later on the event and the presence of the Gambian Chamber of Commerce and Industry at the meeting which allowed “for a better appreciation of the specific challenges resulting from economic integration both for major African markets and for those of smaller size, but also the synergies that can be identified while the AfCFTA is implemented. Everyone needs to win, both the economic actors and the African states, and this is the philosophy behind the AfroChampions Charter for African Economic Integration presented by the AfroChampions Initiative.”
After Ghana, Côte d’Ivoire, and Senegal, the AfCFTA roadshow continued in the Republic of Guinea on May 31, 2018. More tours are planned throughout this year in other regions of the continent, to mobilize local entrepreneurs but also to accompany the AfCFTA ratification process.
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U.S. trade and investment with sub-Saharan Africa in certain sectors has grown and continues to have potential, says USITC
Rising per capita income, growing urbanization, the need for improved infrastructure, and expanding healthcare contributed to growth in U.S. exports in some sectors to sub-Saharan Africa (SSA) between 2010 and 2016, reports the United States International Trade Commission (USITC) in its publication U.S. Trade and Investment with Sub-Saharan Africa: Recent Developments.
The USITC, an independent, non-partisan, fact-finding federal agency, conducted the investigation at the request of the U.S. Trade Representative (USTR).
In requesting the study, the USTR noted that: “As the Administration works to encourage fair and reciprocal trade with our African trading partners, it is important to have factual information on where we are succeeding in African markets, where we have the greatest prospects for increased trade and investment, and the factors that could impede that progress.”
The USTR also asked for similar information on SSA’s trade performance and on future prospects for its exports to the United States, including those under the African Growth and Opportunity Act (AGOA).
The USITC held a public hearing in connection with the investigation on January 23, 2018. Selected testimonies are available to download here.
As requested by the USTR, the USITC report:
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provides an overview of U.S. exports to and imports from SSA of goods and services, as well as U.S. foreign direct investment (FDI) in SSA countries over the 2010-2016 period;
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discusses exports of goods and services from U.S. small and medium-sized enterprises (SMEs) to SSA, as well as challenges faced by them exporting to the region;
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performs a qualitative and, to the extent possible, quantitative assessment of the non-crude petroleum sectors and SSA markets that present the greatest potential for growth in U.S. exports and imports of goods and services, as well as FDI flows;
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profiles seven SSA economies; and
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summarizes recent developments in regional integration efforts in SSA, as well as strategies by AGOA countries to increase trade with the United States.
Highlights of the report include:
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Among the fastest growing U.S. exports of goods to SSA during 2010 to 2016 were aircraft; floating oil platforms; natural gas and components; power generating equipment; and pharmaceuticals. Other sectors with the potential for increased U.S. exports to SSA include motor vehicles, ethyl alcohol, poultry, and refined petroleum products. U.S. exports of financial services, insurance services, and information and communication technology services show potential for growth.
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The fastest growing U.S. imports of goods from SSA between 2010 and 2016 were cocoa, chocolate, and confectionery; apparel; refined copper; catalytic converters; and edible nuts. Growth in these sectors was due to the long-term renewal of AGOA to 2025, the increased presence of FDI in these sectors, SSA production cost advantages relative to other global suppliers, and expanding manufacturing capacity in SSA. Apparel, edible nuts, footwear, and raw cane sugar show potential for growth in U.S. imports from SSA under AGOA.
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In 2015, the latest year for which data are available, merchandise exports to SSA by U.S. SMEs were approximately $5.8 billion, a decrease from 2010. Over 40 percent of the 2015 exports were concentrated in South Africa and Nigeria. Some challenges faced by SMEs are high tariffs and poor protection of intellectual property rights.
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The stock of U.S. FDI in SSA declined from 2010 to 2016, with mining, including crude petroleum, being the largest destination sector. Sectors with the greatest potential for U.S. FDI in SSA are professional and business services, financial services, textiles and apparel, renewable energy, and mining. The three largest destinations for U.S. FDI in SSA in 2016 were Mauritius ($7.0 billion), South Africa ($5.1 billion), and Nigeria ($3.8 billion).
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To date, 15 out of 38 AGOA beneficiary countries have prepared specific strategies to identify sectors that have the potential to increase exports to the United States under AGOA. Many SSA countries are also a part of Regional Economic Communities working to lessen trade barriers that hamper AGOA utilization, with negotiations ongoing for a continental FTA.
About USITC investigations
USITC general factfinding investigations cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission’s objective findings and independent analyses on the subjects investigated.
The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requester for national security reasons.
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Creating a better global trade system
Recent news on global trade has tended to focus on protectionist measures and diplomatic tensions. These challenges have raised concerns over growth and jobs across the world.
Yet what is often lost in the current discussions is that we are entering a new era of trade – an era in which data flows are becoming more important than physical trade.
The new era
Think about it: between 1986-2008, global trade in goods and services grew at more than twice the rate of the global economy. In recent years, however, growth in this more traditional type of trade has barely exceeded global GDP growth.
At the same time, digital flows have been booming. According to Cisco, the amount of cross-border bandwidth used grew 90-fold between 2005 and 2016, and is expected to grow an additional 13-fold by 2023.
This is not just about video streaming, Skype calls, and social media posts. It is about the role of data in boosting other flows, especially by making services more tradable – from engineering, to communications, to transportation.
So in many ways, the future of trade is the future of data.
This is a huge opportunity for policymakers to build new economic bridges between countries, and to create a better global trade system.
Let me highlight 4 building blocks of better trade:
1. More trade in services
The good news is that global trade in services has been growing relatively fast. It now accounts for one-fifth of global exports. And according to some estimates, half of the global trade in services is already driven by digital technology.
But this is an area where trade barriers are still extremely high, equivalent to tariffs of some 30 to 50 percent.
I believe that by reducing these barriers and making trade more digital, services could become the main driver of global trade. Who would benefit most?
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Advanced economies, because they are globally competitive in many service sectors, especially financial, legal, and consulting.
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Developing economies such as Colombia, Ghana, and the Philippines, because they are promoting growth in tradable services, such as communications and business services.
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Millions of small businesses and individuals who can use digital tools to leverage their expertise in the global marketplace.
But that is just the beginning. I believe that we can build the Wealth of Nations in the 21st-century on trade in services.
2. More productive
We can achieve this goal by making trade more productive. How? By encouraging a further shift in the composition of trade flows – from “physical” to more data-driven trade.
For example, increasing automation is making it easier for companies to repatriate, or “reshore”, some of their operations – effectively, reversing some of the “outsourcing” of the past two decades.
This could help rejuvenate manufacturing industries in many advanced economies, holding out the promise of more domestically-based factories with higher-paying jobs.
3-D printing could also prompt companies to move production closer to their customers. One large shoe brand, for instance, is bringing bespoke shoemaking to the mass-market by printing customized soles in their high-street shops.
If these trends were to continue, many supply chains would become shorter, more productive, and less carbon-intensive.
At the same time, digitalization will intensify competition in global trade, pushing companies to boost their investment in new technologies and more efficient business practices.
New IMF analysis shows that greater competition accelerates the diffusion of technology across countries and even the rate of innovation itself.
This, in turn, helps lower prices for companies and consumers. It is estimated that the poorest 10 percent of consumers gain almost two thirds of their purchasing power from trade.
3. More inclusive
Gains like that show the enormous benefits of building economic bridges between countries. And yet, too many people have continued to live in the shadow of these bridges.
The digital revolution in trade will bring its own challenges, putting further pressure on those workers who are less well-equipped to compete.
That is why we need greater inclusiveness. Consider the benefits of scaling up investment in training and social safety nets, so that workers can upgrade their skills and transition to higher-quality jobs.
For instance, experiences in Canada and Sweden show that on-the-job training is more effective than classroom learning.
In these and many other areas, the IMF is helping countries gear up for the new era of trade.
At the global level, we analyze exchange rates and monitor global economic imbalances.
At the country-level, we work with all our 189 members on policies to help remove trade and investment barriers, encouraging more open economies where the private sector can thrive and create jobs.
In short, we believe that for trade to improve, it needs to be more services-based, more productive, and more inclusive – so that everyone can benefit.
To achieve these objectives, trade also needs to be more internationally cooperative.
4. More international cooperation
Over the past 70 years, countries have worked together to create a multilateral trade system that has lifted hundreds of millions of people out of poverty, while boosting incomes and living standards in all countries.
But this system needs improvement as it adapts to the new era of trade.
For example, many governments are struggling with major issues that do not fall squarely within WTO rules. These include various state subsidies, restrictions on data flows, and the protection of intellectual property.
To address these issues, we could use “plurilateral” trade agreements – that is, deals among like-minded countries that agree to work within the WTO framework. There is also room to negotiate new WTO agreements on e-commerce and digital services.
On these issues, one can take encouragement from the new Trans-Pacific Partnership, or TPP-11. For the first time in a broader trade agreement, TPP-11 countries will guarantee the free flow of data across borders for service suppliers and investors.
Now is the time to push for further trade reforms in a multilateral setting where rules are respected, where countries work in partnership, and where everyone is committed to fairness.
I believe that by building new economic bridges, by shaping a new era of trade, we can foster more prosperous and more peaceful communities across the world.
Christine Lagarde is the Managing Director of the International Monetary Fund.
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tralac’s Daily News Selection
AfCFTA presentations by ATPC’s David Luke to recent Canada-Africa Chamber of Business events (Toronto, Ottawa)
(i) What the African Continental Free Trade Area means for Africa and its trading partners (pdf)
Rationale for consolidating Africa: Africa’s economic structure is broadly similar to India’s. Population: India, 1.3bn, Africa, 1.2bn; GDP: India, 2.6tn, Africa, 2.5tn; Tax revenue to GDP: India, 20.4%, Africa, 20%. India is a single consolidated market (7th biggest in the world): allows scale economies and competitive businesses; Africa is fragmented over 54 countries and 107 unique land borders: businesses face average tariffs of 6.9% and non-tariff barriers
Trade policy coherence: The AfCFTA is expected to go beyond a traditional free trade area and in doing so will serve as a basis for continental trade policy coherence. Rather than a patchwork of individual agreements, a consolidated Africa would ensure that all African countries are brought along together in a manner that better suits regional value chains and trade integration. In looking forward to trade negotiations with the EU, the US post-AGOA plans, and potentially emerging markets like India and China, this will give Africa a stronger negotiating footing.
AfCFTA timeline: next steps to bring the agreement into effect: Entry into force after 22nd instrument of ratification deposited with the AUC; Implementation Roadmap (target Jan 2019): prepare schedules of concessions for trade in goods, prepare schedules of concessions for trade in services, conclude specific list rules of origin; Conference of State Parties meet to adopt structure of AfCFTA Secretariat, staff rules and regulations, and budget – as well as establish the host country; AfCFTA committees convene to begin facilitating implementation
(ii) The AfCFTA and its implications for Canada (pdf). Draw from Canadian expertise: A services trade and investment focus should be emphasized; Canada can leverage its expertise in tertiary education, clean energy development, technological cooperation on climate change, and agricultural productivity services; Canada’s cooperation model with mining companies for improved corporate social responsibility provides lessons for deeper engagement in Africa: lessons learned – both good and bad – can help develop new bilateral trade and investment relationships; But also a change in perspective: need to good beyond traditional investment and trade opportunities.
(i) @AUTradeIndustry: The African Union, in partnership with the @AfroChampions, started, Monday, the 1st AfCFTA sensitization tour in West Africa. The first step was Accra where they discussed with Association of Ghana Industries under the theme, A win-win approach to successfully implement the AfCFTA. “We rely on the investments and the entrepreneurial spirit of the private sector to make the AfCFTA deliver tangible benefits to African people through employment & supply of quality & affordable goods & services” stated Amb. Albert Muchanga, AU Commissioner for Trade & Industry.
(ii) @TradeOfficeNG: South-South Zone unanimously adopts Calabar Communique, strongly endorsing the AFCFTA. Cross River State Executive Governor, Prof Ayade, accepts role of AFCFTA Champion, bestowed by Forum Stakeholders
Starting today, in Harare: African finance leaders to debate China’s yuan as a reserve currency (Xinhua)
Central bankers and officials from 14 African nations will discuss the viability of using China’s yuan as a reserve currency for the region, the official Xinhua news agency said on Tuesday. Seventeen top central bankers and officials from the region will meet at a forum in Harare to consider the possibility of using the yuan in national reserves, Xinhua said, citing a statement from the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI). The forum, to take place on Tuesday and Wednesday, will be attended by deputy permanent secretaries and deputy central bank governors, as well as officials from the African Development Bank, Xinhua reported. “Most countries in the MEFMI region have loans or grants from China and it would only make economic sense to repay in renminbi (Chinese yuan),” said MEFMI spokesperson Gladys Siwela-Jadagu. MEFMI statement:
The theme for the 2018 Forum is Trends in sovereign reserve management (pdf) and is driven by the lingering concerns of the weakening external positions that are faced by the region following the aftermath of the global economy slowdown. As at the end of 2017, for most of the countries in the MEFMI region, official reserves stood barely at or below the traditional three months of import cover benchmark. There has also been an increasing pattern of foreign portfolio investment flows in the domestic debt markets, which are volatile in nature and susceptible to reversals. All these point to increasing external vulnerabilities and the need for the region to act swiftly to implement much needed policy adjustments to ensure macroeconomic stability and strengthening of external buffers.
Here are 5 ways to make West Africa more competitive (WEF)
Country updates
Ghana: Govt calls the bluff of freight forwarders on UNIPASS (GhanaWeb)
The government has insisted that it will not be liable for any judgment debt with the introduction of the UNIPASS system at the country’s ports. The Ministry of Trade and Industry which signed on behalf of the government maintains that the new system is crucial for the blocking of all revenue leakages at the ports. The UNIPASS is expected to replace all trade facilitation roles involving the clearing of goods and tracking of revenue at the ports, currently being carried out by GCNet and WestBlue. The freight forwarders have complained of the distortions to their operations. But a Deputy Trade and Industry Minister, Carlos Ahenkorah tells Citi Business News they will not back down on their decision.
Liberia: Weah’s tariff cut ultimatum backfires (Daily Observer)
Today, May 29, is the deadline for LRA Commissioner General Elfreda Stewart-Tamba to make a report in compliance with the 72-hour ultimatum. The LRA is expected to present a new schedule, to ensure immediate tariff reduction on a wide range of basic commodities and other consumables imported into the country. The president’s decision has triggered a bipartisan response from members of the 54th Legislature, with Nimba County District #8 Representative Larry Younquoi arguing that the 1986 Constitution gives the authority to the Legislature, to review and approve treaties and financial instruments, including tariffs. The House Chairman on the Committee on Good Governance & Government Reform, Rep. Larry Younquoi, told the Daily Observer in an exclusive interview that the ECOWAS CET Tariff was adopted by Liberia as part of the Protocol or Treaty as member of ECOWAS. Representative Younquoi said the House of Representatives and the Liberian Senate approved the ECOWAS CET Tariff, attested by former President Ellen Johnson-Sirleaf and in accordance with the Constitution; therefore the reduction of the ECOWAS CET Tariff must be done by the Legislature.
Nigeria: Lack of scanners at ports, Customs checkpoints hurting investors (Business Day)
The Organised Private Sector says poor state of equipment at the Nigerian ports and multiplicity of checkpoints by the Nigerian Customs Service are major issues affecting manufacturers and importers, discouraging investors from further pumping money into key sectors of the economy. “The current state of some equipment in use by some operators at the ports is worrisome,” said Iyalode Alaba Lawson, national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture at a press briefing in Lagos on Monday. According to her, this was confirmed during a recent on-the-spot visit to sea and border posts in South West by NACCIMA as a member of the National Trade Facilitation Committee. She stressed the need for Nigeria to embrace modern technology at the ports to speed clearance processes and provide confidence to investors.
Rwanda: African nations are fed up with the West’s hand-me-downs – but it’s tough to keep them out (Washington Post)
This week, Rwanda faces the suspension of some of its duty-free trading privileges pertaining to clothing under the African Growth and Opportunity Act. Its efforts to foster a domestic clothing industry, meanwhile, have yielded few results. And Rwandans who work in the used-clothing business are complaining that they are suffering. The deadlock between the world’s economic giant and one of Africa’s fastest-growing economies doesn’t exactly qualify as a trade war — it’s more like a scuffle. Rwanda’s total used-clothing imports were less than 7% of all of East Africa’s in 2016, according to government statistics. And its clothing exports to the United States were a minuscule $2 million. But it reflects the difficulties that even a low-wage country like Rwanda can have developing an industry in an intensely competitive global market. [The authors: Max Bearak, David J. Lynch] [Related: African Cotton, Textiles & Apparel Monitor – #11]
Kenya: Lovers of imported goods to pay more in bid to shield local firms (Business Daily)
Mauritius Declaration on Digitalisation and Sustainable Tourism
We, the delegates, gathered at Le Meridien, Pointe aux Piments, launch the following appeal (extracts): to create a Working Group on Digital Platforms aimed at identifying, analysing and proposing a balanced approach, exchanging best practices and helping in developing regulatory framework and policies to create a level playing field for tourism service suppliers; to ensure compliance with the General Data Protection Regulation of the European Union, the Travel and Tourism Industry shall take proper steps in collecting consumers’ data with their explicit consent and protecting same during any transfer from Europe to any countries; to acquire adequate and coordinated support from tourism operators to keep policy-makers and regulators aligned on recent developments thereby narrowing the gap between innovation and regulation; to establish an Indian Ocean Agency on “Climate Change and protection and conservation of the biodiversity”
Malawi: pdf Public Service Management Policy 2018-2022 (447 KB) (GoM)
The Public Service Management Policy fills a gap that has existed for many years. Government is aware that the Malawi Public Service did not have a unified policy to effectively support management and delivery of public services in a multi-party dispensation which among other things, calls for greater transparency, accountability and citizen participation in the management and delivery of public services. This policy underscores the importance that government places on the Public Service as the engine for development and comes at an opportune time when Government is about to launch the MGDS III. [ pdf Annex 1: Implementation Plan (281 KB) ]
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Free trade in Africa: Opportunities for Canada
As part of its 2nd Annual Africa Day Celebration in Ottawa, the Canada-Africa Chamber of Business on 24 May 2018 held a presentation / panel discussion on the African Continental Free Trade Area (AfCFTA) Agreement, followed by a networking cocktail reception.
Keynote speakers for the afternoon session included David Luke, Coordinator of the African Trade Policy Centre, Regional Integration and Trade Division, United Nations Economic Commission for Africa; and Jesse Moore, Chief Executive Officer, M-KOPA Solar. Download their presentation, Africa leapfrogs to wireless energy (pdf).
The event was co-sponsored by the Gowling WLG (Canada) LLP and Global Affairs Canada.
David Luke also addressed a Toronto audience on 23 May on the AfCFTA and what it means for Africa and its trading partners.
AfCFTA and the opportunities and implications for Canada
Presentation by David Luke in Ottawa
AfCFTA: What it means and state of play
On 21 March 2018, 44 African countries sign the AfCFTA, indicating considerable political commitment at the highest level. The Agreement establishing the African Continental Free Trade Area consists of:
Protocol on Trade in Goods
- Elimination of duties and quantitave restrictions on imports
- Imports shall be treated no less favourably than domestic products
- Elimination of non-tariff barriers
- Rules of Origin
- Cooperation of customs authorities
- Trade facilitation and transit
- Trade remedies, protections for infant industries and general exceptions
- Cooperation over product standards and regulations
- Technical assistance, capacity-building and cooperation
Protocol on Trade in Services
- Transparency of service regulations
- Mutual recognition of standards, licensing and certification of services suppliers
- Progressive liberalization of services sectors
- Service suppliers shall be treated no less favourably than domestic suppliers in liberalized sectors
- Provision for general and security exceptions
Protocol on Dispute Settlement
- Rules and Procedures for Settlement of Disputes within the AfCFTA
Phase 2 negotiations
- Intellectual property rights
- Investment
- Competition policies
What does the AfCFTA mean in concrete terms?
Businesses, traders and consumers will no longer pay tariffs on a large variety of goods that they trade between African countries;
Traders constrained by non-tariff barriers, including overly burdensome customs procedures or excessive paperwork, will have a mechanism through which to seek the removal of such burdens;
Cooperation between customs authorities over product standards and regulations, as well as trade transit and facilitation, will make it easier for goods to flow between Africa’s borders;
Through the progressive liberalization of services, service suppliers will have access to the markets of all African countries on terms no less favourable than domestic suppliers;
Mutual recognition of standards, licensing and certification of service suppliers will make it easier for businesses and individuals to satisfy the regulatory requirements of operating in each other’s markets;
To protect against unanticipated trade surges, State Parties will have recourse to trade remedies to ensure that domestic industries can be safeguarded, if necessary;
A dispute settlement mechanism provides a rule-based avenue for the resolution of any disputes that may arise between State Parties in the application of the agreement.
And why does it matter?
70% of Africa’s exports to the RoW comprise extractives (oil, gas, minerals, and metals). These create revenues, but are capital intensive, and volatile in price.
Intra-African trade is different, with extractives only 40%: more value-added, industrial, and better diversified, helping to generate employment, industrialization and sustainable growth.
The AfCFTA helps promote such intra-African trade: ECA estimate it will have the potential to boost intra-African trade by between 52 and 100%, depending on the extent to which tariffs and NTBs are eliminated.
In turn, this helps to fuel sustainable development in Africa.
Next steps for the AfCFTA
Entry into force after 22nd instrument of ratification deposited with the AUC. So far: Kenya, Ghana, Rwanda and Niger have reportedly ratified. After 22nd ratification the AfCFTA Secretariat will be established.
By Jan 2019 countries must also submit:
- Schedules of concessions for trade in goods
- Schedules of concessions for trade in services
- Rules of origin
Countries will begin negotiating Phase II issues by start of 2019: Competition, investment, intellectual property rights and potentially e-commerce
Trade and investment: Canada-Africa opportunities
Canada exports foodstuffs and advanced machinery to Africa. Growth has been slow over last decade. And imports mostly petroleum oils, precious stones, and agricultural products. Imports have fallen with oil prices.
No explicit sectoral investment data for ‘Africa’, but Africa accounts for about 50% of ‘other countries’ to which 2/3rds of Canada’s outward investment comprises oil & gas and mining
Opportunities: Need for new thinking
Changing African opportunities
Currently a market of 1.2 billion people, and a combined continental GDP of about $2.5 trillion. The middle class in Africa now represents almost a third of Africa’s current population and is growing.
However, by 2050 Africa will be home to 2.5 billion people – more than a quarter of what will be the world’s population, with an economy estimated to be worth as much as $29 trillion. By then, the market of just Nigeria will account for around 8 times as many people as Canada. With the AfCFTA, this is an increasingly integrated market.
Petroleum oils, gas and mining will continue to be important for Africa. However Africa now represents new investment opportunities, many of which can draw from Canadian expertise:
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Education: Africa has a skill gap of 4.3m engineers and 1.6m agricultural scientists and researchers (ACBF)
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Infrastructure: AfDB’s Programme for Infrastructure Development in Africa (PIDS) initiative comprises projects focusing on integration, power generation, ICT and water resources – total cost of all projects by 2040 is $360bn
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Agriculture and processed agriculture: food security
Draw from Canadian expertise
A services trade and investment focus should be emphasized
Canada can leverage its expertise in tertiary education, clean energy development, technological cooperation on climate change, and agricultural productivity services
Canada’s cooperation model with mining companies for improved corporate social responsibility provides lessons for deeper engagement in Africa: lessons learned – both good and bad – can help develop new bilateral trade and investment relationships.
But also a change in perspective: need to good beyond traditional investment and trade opportunities
AfCFTA: what it means for Africa and its trading partners
Presentation by David Luke in Toronto
Rationale
Africa’s economic structure is broadly similar to India’s:
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India is a single consolidated market (7th biggest in the world) – Allows scale economies and competitive businesses
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Africa is fragmented over 54 countries and 107 unique land border – Businesses face average tariffs of 6.9% and non-tariff barriers
But India creates far greater excitement for investors.
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Consolidating Africa’s market helps create more exciting opportunities: Facilitating regional value chains; Fostering economies of scale and scope; Better allowing businesses to gain from Africa’s excellent market dynamics
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Providing incentives for investors and opportunities for African businesses
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And re-orientating African exports away from extractives dependency: Petroleum oils & gas, minerals, ferrous and precious metals; Volatile prices, produce few jobs, and fluctuating revenues
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Because intra-Africa trade is less extractive dependent: Only 40% is extractives (compared to 70% of exports to outside Africa). More balanced and sustainable exports deliver more sustainable growth; More labour intensive and better at fostering structural transformation and long-term sustainable growth
This provides a real development case for continental integration
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ECA estimate that the AfCFTA has the potential to boost intra-African trade by 52.3% by eliminating tariffs
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With the reduction of NTBs, intra-African trade doubles
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ECA estimate all African countries to experience welfare gains
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We forecast that the AfCFTA will benefit particularly industrial and value-added exports
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These sectors create more jobs for Africa’s bulging youth population and opportunities for MSMEs than does Africa’s trade with the rest of the world, which tends to be fuels and minerals
Beyond Africa
Increasing importance of intra-African trade
Intra-African trade will grow, helping to diversify and create a more stable African trade profile – this is because a far larger share of intra-African trade is non-extractives, which are less volatile.
Establishes a more economically reliable and prosperous trading partner.
Trade policy coherence
The AfCFTA is expected to go beyond a traditional free trade area and in doing so will serve as a basis for continental trade policy coherence.
Rather than a patchwork of individual agreements, a consolidated Africa would ensure that all African countries are brought along together in a manner that better suits regional value chains and trade integration.
In looking forward to trade negotiations with the EU, the US post-AGOA plans, and potentially emerging markets like India and China, this will give Africa a stronger negotiating footing.
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Mauritius Declaration on Digitalisation and Sustainable Tourism
Tourism is one of the largest and fastest growing sectors in the world that is fueling growth, creating jobs, opening up business opportunities for SMEs and providing pathways out of poverty for millions.
For many countries, especially developing and least developed ones, tourism is a major economic pillar and an important source of foreign currency earnings. Governments across the world are leveraging on tourism as an engine of economic growth and a driver for economic diversification.
However, the tourism industry is faced with a number of challenges that will characterize its future development such as climate change, digitalisation and sustainability. Digitalisation and tourism success are inherently and intrinsically linked. The rapid progress in Information and Communication Technology (ICT) is fast transforming tourism globally, creating opportunities and challenges for destinations and tourism businesses.
During the last decade, the tourism industry has witnessed the transformational effect of ICT in terms of wider scope for global interaction between national and international players and for promoting Sustainable Tourism. Destinations, however, have yet to harness the full opportunities offered by ICT and the digitalisation process to foster the sustainability of the industry.
Mauritius Declaration on Digitalisation and Sustainable Tourism
Acknowledging the economic potential of tourism whereby the tourism sector accounts for 10% of global GDP, 10% of total employment worldwide and 7% of the world’s exports, equivalent to USD 1.4 trillion in 2016. International tourist arrivals have increased from 25 million in 1950 to 1.322 billion in 2017 and tourism receipts attained USD 1.2 trillion. It is forecasted that by 2030 international tourist arrivals would reach 1.8 billion;
Taking note that for many countries, especially developing and small island economies, tourism is a major economic pillar and an important source of foreign currency earnings. Governments across the world are leveraging tourism as an engine of economic growth and a driver for economic diversification;
Recalling the UN Conference on Small Islands Developing States (the SAMOA Pathway 2014) recognition that sustainable tourism represents an important driver of sustainable economic growth and decent job creation, which strongly supports Small Island Developing States.
Recalling the Conference of Parties (COP 21) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015 (the “Paris Agreement”) for the need to improve transparency in emissions reporting, strengthening resilience of countries with a view to reducing the vulnerability to climate change;
Bearing in mind that all stakeholders need to acknowledge that sustainable tourism implies, inter-alia,
- the optimum use of environmental resources;
- respect for the socio-cultural authenticity of the host communities;
- viable, long term economic operations; and
- the provision of socio-economic benefits including stable employment;
Considering that tourism is one of the driving forces of global economic growth;
Re-affirming that tourism must adopt sustainable consumption and production, develop and implement tools to monitor sustainable impacts and to promote local culture and products;
Further re-affirming that especially for small island developing states, coastal and maritime tourism rely on healthy marine ecosystems and the promotion of an integrated coastal zone management aiming at our priorities for a sustainable Blue Economy;
Taking note that the General Data Protection Regulation (“GDPR”) of the European Union is coming into force on 25 May 2018 and recognising its implications in the tourism industry;
Recognising that the rapid progress in Information Communication Technology and the fact that digitalisation of the tourism sector is impacting destinations by bringing new challenges and opportunities to host countries, private providers and customers;
Being aware of a new generation of tourists (Gen Y – Millennials and Gen Z) which will constitute 50% of travel by 2025 and the need for host destinations and its tourism organisations to embrace new technology at all levels of the tourism value chain;
Acknowledging that information technology provides several opportunities to promote sustainable tourism by allowing destinations:
- to develop evidence-based policies;
- to better manage their resources through the use of ICT platforms; and
- to improve the timely measurement of the impacts of tourism;
Being conscious that digital adaptation is indispensable for destination promotion and management in order to respond to the ever ending consumer demands and needs;
Further recognising digitalisation as an opportunity for businesses to reinvent their service products and towards this end to initiate actions for training and acquiring new skills;
We, the delegates, gathered at Le Meridien, Pointe aux Piments, launch the following appeal:
- to create a Working Group on Digital Platforms aimed at identifying, analysing and proposing a balanced approach, exchanging best practices and helping in developing regulatory framework and policies to create a level playing field for tourism service suppliers;
- to promote and diversify sustainable tourism by including the development of ecotourism, agro-tourism, medical tourism and cultural tourism;
- to ensure that there are necessary national regulatory and policy frameworks that require the tourism industry to protect the privacy of visitors;
- to ensure compliance with the General Data Protection Regulation of the European Union, the Travel and Tourism Industry shall take proper steps in collecting consumers’ data with their explicit consent and protecting same during any transfer from Europe to any countries;
- to acquire adequate and coordinated support from tourism operators to keep policy-makers and regulators aligned on recent developments thereby narrowing the gap between innovation and regulation;
- to ensure the transition of the workforce by reskilling current employees through training;
- to consider the rigorous application of “Green ICT” techniques to ensure minimal environmental impact being given that a connected world together managing the resulting data will in itself impose an environmental load;
- to optimise the use of geoinformatics technologies for the conservation and promotion of cultural heritage;
- to establish an Indian Ocean Agency on “Climate Change and protection and conservation of the biodiversity”; and
- to invite International Organisations to provide financial and technical support to developing countries and small island economies to fully embrace Information Communication Technology in sustainable tourism.
Adopted on 24 May 2018 in Pointe aux Piments, Republic of Mauritius